Irish House Food and Beverages Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Cryptic CIT(A) Order Cannot Stand: ITAT Restores Irish House’s Depreciation and Acquisition Disputes
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) set aside an appellate order that sustained three disputed additions merely by referring to the Assessing Officer’s findings. The Tribunal held that the order was cryptic and lacked independent reasoning on material issues, despite detailed submissions and documentary evidence furnished by the assessee.
In The Irish House Food and Beverages Pvt. Ltd. vs. DCIT 8(3)(1), ITA No. 5568/M/2026, concerning Assessment Year 2016-17, the Tribunal restored all grounds to the first appellate authority.
Judicial Member Narender Kumar Choudhry and Accountant Member Bijayananda Pruseth pronounced the order on 14 October 2026.
Running Businesses Acquired Through Slump Sale
The assessee acquired running businesses operating under the name “Irish House” from Contemporary Kitchen Private Limited (CKPL) and Global Kitchen Private Limited (GKPL).
The acquisitions were made under slump sale agreements dated 13 December 2015, for lump-sum consideration of ₹15 lakh each.
The company filed its original return on 17 October 2016, declaring a loss of ₹27,70,303, and subsequently revised the return on 16 March 2017.
Its case was selected for scrutiny. The assessment resulted in disputes concerning depreciation on acquired assets, cash received with the business and differences between unaudited and audited accounts.
Three Adjustments Challenged
The Assessing Officer disallowed depreciation of ₹83,82,174, citing insufficient supporting evidence regarding acquisition of fixed assets.
He also made an addition of ₹26,20,242 concerning cash received upon business acquisition.
A further ₹62,45,576 was added for unreconciled differences between the unaudited and audited accounts.
The assessee challenged these adjustments before the CIT(A)/NFAC and furnished detailed submissions. Those submissions were reproduced over several pages of the appellate order.
Nevertheless, the CIT(A) upheld the adjustments and dismissed the appeal through an order dated 17 November 2025, prompting the company’s appeal before the Tribunal.
Limited Scrutiny Jurisdiction Also Disputed
Before the Tribunal, the assessee raised both legal objections and arguments on merits.
Its representative submitted that the Assessing Officer had exceeded the scope of limited scrutiny under CASS without obtaining the requisite approval, contrary to CBDT instructions.
The assessee cited decisions in Bholanath R. Shukla, Arjun Transport Company, Sterling Greenwood Ltd. and Rakesh Arora in support of this objection.
This was a separate challenge to the permissible scope of the assessment proceedings. The company requested adjudication of that legal ground alongside its factual objections to the three adjustments.
The Tribunal ultimately included the limited-scrutiny objection within the matters requiring fresh appellate consideration.
Acquisition Records Relied Upon for Depreciation
On depreciation, the assessee argued that it had acquired a running business together with fixed assets having a book value of ₹11,75,89,329, against a tax written-down value of ₹15,19,07,889.
It maintained that the differences in valuation had been explained through Forms 3CEA, audited accounts and supporting documents.
According to the company, these records substantiated the acquisition and answered the concerns underlying the depreciation disallowance.
The Tribunal did not determine the final depreciation entitlement. It considered whether the first appellate authority had properly examined the acquisition records, valuation explanation and related submissions before sustaining the disallowance.
Cash and Accounting Differences Explained
For the ₹26,20,242 addition, the company submitted that the amount represented cash-in-hand received upon acquisition of GKPL’s business.
It relied on the transferor’s confirmation, balance sheet and an auditor’s certificate to support that explanation.
Regarding ₹62,45,576, the assessee contended that the differences between unaudited and audited accounts had been reconciled through documentary evidence. It also argued that the addition was unjustified without rejection of the books of account.
The company’s central grievance was that these explanations and documents had not received meaningful consideration in the appellate decision.
Tribunal Finds Absence of Independent Reasoning
The Tribunal observed that detailed material had been furnished concerning asset acquisition and valuation, depreciation, acquired cash and accounting reconciliations.
It also noted the legal objection concerning expansion beyond limited scrutiny.
However, the CIT(A) had sustained the additions merely by referring to the assessment order, without examining the issues and evidence in their proper perspective.
The Tribunal therefore concluded that the appellate order could not be sustained. Its criticism concerned the absence of independent reasoning on the material issues, rather than a final finding that every adjustment was necessarily incorrect.
All Grounds Restored for Speaking Order
Considering the circumstances and the agreement of both parties, the Tribunal restored the matter to the CIT(A) for fresh adjudication on all grounds.
The authority must examine the documents, reconciliations and submissions already on record or subsequently furnished, including the limited-scrutiny jurisdiction objection.
Each issue must be decided through a reasoned and speaking order, after providing a reasonable hearing. The assessee must furnish relevant documents and cooperate.
The appeal was allowed for statistical purposes. The Tribunal did not delete the adjustments on merits or invalidate the assessment; those questions remain for fresh appellate determination.
Cases Discussed
- Bholanath R. Shukla — cited by the assessee on limited scrutiny; exact case URL not verified.
- Arjun Transport Company Private Limited Vs ITO — cited by the assessee on limited scrutiny.
- Sterling Greenwood Ltd. — cited by the assessee on limited scrutiny; exact case URL not verified.
- DCIT Vs Rakesh Arora — cited by the assessee on limited scrutiny.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
This appeal has been preferred by the ASSESSEE against the order dated 17.11.2025, impugned herein, passed by the Ld. National Faceless Appeal Centre (NFAC), Delhi (in short ‘Ld. Commissioner’) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2016-17.
2. In the instant case, the Assessee acquired the running business under the name and style of “Irish House” from Contemporary Kitchen Private Limited (CKPL) and Global Kitchen (P) Limited (GKPL) under slump sale agreements dated 13.12.2015 for a lump sum consideration of Rs.15,00,000/- each. The Assessee originally filed its return on 17.10.2016, declaring a loss of Rs.27,70,303/-, which was subsequently revised on 16.03.2017. The case was selected for scrutiny, and the Assessing Officer disallowed depreciation of Rs.83,82,174/- for want of supporting evidence regarding acquisition of fixed assets. The Assessing Officer further made additions of Rs.26,20,242/- and Rs.62,45,576/- concerning cash received upon business acquisition and unreconciled differences between the unaudited and audited accounts, respectively.
3. The Assessee challenged the aforesaid additions before the Ld. Commissioner and filed detailed submissions, reproduced in paragraph 5.3, pages 18 to 29 of the impugned order. However, the Ld. Commissioner upheld the additions and dismissed the appeal by observing as under:
5.4 Decision:
I have carefully perused the assessment order and the written submissions filed by the appellant. In view of the findings given by the AO in the Assessment Order, there is no merit in the contention raised by the appellant.
In view of the above, the addition amounting to Rs. 83,82,174/- done by the AO is being upheld. Hence, ground no. 2 is dismissed.
6. Ground No. 3: In view of the findings given by the AO in the Assessment Order, there is no merit in the contention raised by the appellant.
In view of the above, the addition amounting to Rs. 26,20,242/- done by the AO is being upheld. Hence, ground no. 3 is dismissed.
7. Ground No. 4: In view of the findings given by the AO in the Assessment Order, there is no merit in the contention raised by the appellant. In view of the above, the addition amounting to Rs. 62,45,576/- done by the AO is being upheld. Hence, ground no. 4 is dismissed.
8. Ground No. 5: The appellant has not exercised the option during the appellate proceedings, therefore, this ground of appeal is dismissed.
9. In the result, the appeal is dismissed.
4. Thus, the Assessee, being aggrieved, is in appeal before us. The Ld. Counsel challenged the assessment on legal grounds as well as on merits and submitted that:
(i) The Assessing Officer exceeded the scope of limited scrutiny under CASS without obtaining the requisite approval, contrary to CBDT instructions. The Assessee relied upon the decisions in Bholanath R. Shukla, Arjun Transport Company, Sterling Greenwood Ltd. and Rakesh Arora.
(ii) The disallowance of depreciation of Rs.83,82,174/- was unjustified, as the Assessee had acquired a running business along with fixed assets having a book value of Rs.11,75,89,329/-, against a tax written-down value of Rs.15,19,07,889/-. The valuation differences were duly explained through Forms 3CEA, audited accounts and supporting documents.
(iii) The addition of Rs.26,20,242/- representing cash-in-hand received upon acquisition of GKPL’s business was unwarranted, being supported by the transferor’s confirmation, balance sheet and auditor’s certificate.
(iv) The addition of Rs.62,45,5 76/- arising from differences between unaudited and audited accounts was unjustified, as the discrepancies were duly reconciled through documentary evidence, without rejection of the books of account.
The Ld. Counsel further submitted that the Ld. Commissioner upheld the aforesaid additions without properly appreciating the detailed submissions and supporting documents. Thus, the Assessee sought appropriate relief on the legal ground as well as deletion of the additions on merits.
5. The Ld. DR, on the contrary, relied upon the orders passed by the authorities below.
6. Heard the parties and perused the material available on record. We observe that the Assessee furnished detailed submissions and documentary evidence concerning the acquisition and valuation of fixed assets, depreciation claimed, cash received from GKPL and reconciliation of differences between the unaudited and audited accounts. The Assessee also raised a legal objection regarding the Assessing Officer having travelled beyond the scope of limited scrutiny. However, the Ld. Commissioner, without examining these issues and the relevant evidence in their proper perspective, upheld the additions merely by referring to the assessment order. Thus, the impugned order, being cryptic and lacking independent reasoning on the material issues, cannot be sustained.
7. Considering the peculiar facts and circumstances and the agreement of both parties, we deem it appropriate, in the interest of substantial justice, to set aside the impugned order and restore the matter to the file of the Ld. Commissioner for fresh adjudication on all grounds, including the legal objection concerning limited scrutiny. The Ld. Commissioner shall examine the relevant documentary evidence, reconciliations and submissions already available on record or subsequently furnished by the Assessee, and decide each issue afresh in accordance with law by passing a reasoned and speaking order, after affording reasonable opportunity of being heard to the Assessee. The Assessee is also directed to furnish the relevant documents and extend necessary cooperation during the appellate proceedings.
7. In the result, the appeal filed by the Assessee stands allowed for statistical purposes.
Order pronounced in the open court on 14.10.2026.
