PCIT Vs Laukik Paper Industries Pvt. Ltd (Bombay High Court)
The case of PCIT Vs Laukik Paper Industries Pvt. Ltd. involves an appeal admitted by the Bombay High Court on October 4, 2025, concerning the deletion of an addition made under Section 40A(3) of the Income Tax Act, 1961. This section mandates the disallowance of expenditure exceeding a specified limit (formerly ) if paid in cash.
The High Court admitted two substantial questions of law. The first questions whether the Income Tax Appellate Tribunal (ITAT) was correct in deleting the disallowance by relying on the judicial precedent of CIT Vs. Purshottam Lal Tamrakar Unchehra when the factual matrix, particularly the application of the “net profit rate,” differed significantly from the current case. The second question challenges the ITAT’s decision to delete the addition despite evidence, including bank statements and statements from key personnel, showing the assessee, Laukik Paper Industries Pvt. Ltd., made cash payments to creditors exceeding the statutory limit. The appeal seeks to determine if the ITAT and the Commissioner of Income Tax (Appeals) were wrong in either reducing the disallowance on a percentage basis or deleting it entirely. The appeal is pending service on the respondents.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
