TaxTMI 
TaxTMI 
2026 (5) TMI 690
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....als against the order of the ld. CIT (A) dated 25.07.2025 for AYs 2018-19 & 2019-20. The assessee, Ardee Industries Limited has filed appeal against the order of ld. CIT (A) dated 23.07.2025 for AY 2023-24. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. First we take up the cross appeals of assessee (Pilot Industries Limited) and Revenue for Assessment Years 2020-21 to 2023-24. 3. There is delay in filing the appeals by the revenue, after considering the reasons for delay and considering the submissions of both parties, we proceeded to condone the delay and proceeded to adjudicate the issues under appeals. 4. Brief facts of the case are, the assessee company is engaged in the business of manufacturing lead alloys, lead oxide and lead acid batteries. Search and seizure action u/s. 132 of the Income Tax Act, 1961 (for short 'the Act') was carried out in the case of the assessee on 30.05.2023. The Assessing Officer has completed assessment after making certain additions on account of disallowance of purchase, disallowance of warranty expenses, commission paid, unaccounted sales etc. ....
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.... 3,34,51,635 35,38,464 2,99,13,171 2023-24 143(3) Alleged Bogus/Non Genuine Purchase (@ 3.27% of certain purchases) 1,05,46,982 0 1,05,46,982 Unaccounted sales u/s. 28 1,70,70,503 18,23,130 1,52,47,373 Warranty expenses u/s. 37 85,71,801 0 85,71,801 Inflated expenses u/s. 37 2,93,23,228 29,32,235 2,63,90,993 Over invoicing through freight carriers u/s. 37 77,06,550 77,06,550 0 Total 7,32,19,064 1,24,61,915 6,07,57,149 A.Y. 2024-25 (u/s 143(3) 2024-25 143(3) Unaccounted sales 42,27,240 42,27,240 0 Unexplained investment u/s. 69 5,23,711 5,23,711 0 Unexplained investment u/s. 69 33,12,076 33,12,076 0 Unexplained money u/s. 69A 3,47,685 3,47,685 0 Alleged Bogus/Non Genuine Purchase (@ 3.27% of certain purchases) 26,56,271 0 0 26,56,271 Disallowance warranty expense u/s. 37 25,48,000 25,48,000 ESI/PF 19,063 19,063 0 Total 1,36,34,046 52,23,334 52,04,271 4. Now both the assessee as well as Revenue....
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....company. 7. Further, he submitted that the AO has applied the rate of 3.27% in totally arbitrary manner. There is no basis of applying rate of 3.27% by the AO. The AO has erred in comparing the incriminating documents of hand written slip with the records of books of accounts of another company namely Bindal Smelting Private Limited and on the basis of such comparison has inferred that the assessee company being in the similar line of business is also indulge in booking bogus purchases however actual material is received from other suppliers at low rate. 8. He submitted that the inference made by the AO is totally erroneous and without any documentary evidence. The AO has merely presumed that the assessee company being in the similar line of business is also involved in such kind of practice. The AO has acted upon suspicion, conjecture and surmise. The addition has been made by the AO solely on the basis of assumption and presumption. It is a settled law that suspicion, however strong, cannot take place of proof. In this regard, he relied on the decision of Umacharan Shaw &Bros Vs. CIT [1953] 37 ITR 271) and Dhakeshwari Cotton Mills Ltd. vs. CIT 26 ITR 775 (SC). 9. Further....
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....lant company being in the similar line of business is also involved in such kind of practice. 6.7 The AO in para 8 to 8.2 discussed the issue of bogus purchases and investigation in the case of parties covered under search proceedings and noted that parties such as Sh. Aman and Sh. Bijendar carried out manufacturing of lead alloy/ingots. 6.8 At the end, out of 13 parties identified, the AO finally considered only 9 parties as bogus and adopted average rate of 3.27 % for disallowance. The basis of 3.27% was stated to be the price difference between invoiced and without invoiced material sold by M/s Bindal Smelting Pvt. Ltd. Here, it is pertinent to mention that M/s Bindal Smelting is an independent entity and the finding in that case cannot be borrowed that too where search has taken place in the case of appellant. The addition should have been based on cogent material found during the course of search u/s. 132 of the Act. 6.9 As discussed above that the AO has neither rejected books of account nor questioned the sales corresponding to the alleged bogus purchase made from the parties mentioned in para 10.20 of order for sum of Rs. 58.02 crores for the year....
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....fficer. 13. Considered the rival submissions and material placed on record. We observed that the AO has observed, the assessee had purchases from the parties, according to him are bogus for the reason that the assessee had not recorded any freight charges against any of the purchases. On these findings/issues, the assessee made detailed submissions in this regard before Ld CIT(A) and the Ld CIT(A) had appreciated the fact that these purchases are made by the assessee on the basis of CIF i.e., freight charges are included in the price of goods purchased by the assessee. In this regard, the assessee had submitted relevant documents in support of the same and Ld CIT(A) had adjudicated that there is no requirement to submit separate bills for freight charges. 14. With regard to adoption of rate applied by the AO to make GP addition which was taken from the search carried out in the case of Bindal Smelting Private Limited, it is fact on record that they have taken bogus purchases to book in their books of account and determined the above rate of GP, whereas there is no finding that the assessee had also indulged in such activities of bogus purchases. It is only the presumption of ....
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....vision for Warranty as shown in the Balance sheet was claimed as deduction. 17. He further submitted that it is also pertinent to point out that same type of expense was incurred/claimed in the earlier years and subsequent years which have been duly accepted by Income tax department in the order of assessment passed u/s. 143(3)/143(1). - Details of the expenses allowed/accepted in the earlier years in the assessment u/s. 143(3)/143(1)are as under: - F. Year Turnover (in Lacs) Warranty Expenses Claimed (In Lacs) Assessment order reference 2015-16 47,113.66 42.17 Order u/s. 143(3) dated 12.12.2018 2016-17 48,056.20 119.86 Order u/s. 143(3) dated 10.12.2019 2018-19 65,269.68 165.09 As per intimation u/s. 143(1) 2019-20 69,746.80 493.50 Order u/s. 143(3) dated 23.09.2022 2020-21 68,369.11 59.23 Order u/s. 143(3) dated 29.12.2022 18. From the above, he submitted that it is evident that warranty expenses have been consistently allowed in the earlier years and subsequent years in the assessments made u/s. 143(3) prior to date of search. There is no change in the facts and circumstances of the present case as com....
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....ries Ltd. (1981) 128 ITR 610 (Ori), - it was held that where the nature of an expenditure has been determined in any particular year, it will not be open for the revenue to come to a diametrically opposite conclusion in another year in the absence of any fresh compelling facts. 24. In view of the above, it is submitted that disallowance of warranty expenses made by the assessing officer is totally erroneous. 25. He submitted that the ld. CIT(A) has considered the issue in a detailed manner and has deleted the addition made by the AO by holding as under: "7.1 It is seen that the appellant company is in the business of manufacturing of different types of batteries for different segments with considering different designs & developments, techniques, applications, uses and life cycles. The warranty expenses are necessary considering the nature of business of the appellant company. 7.2 It is pertinent to note that such warranty expenses were incurred/claimed in the earlier years and subsequent years also which has been duly accepted by the assessing officer in the assessment made u/s. 143(3). Moreover, the warranty expenses claimed in the year under appeal was al....
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....isions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable." 7.6 In view of the above, the disallowance of warranty expenses made by the assessing officer cannot be held to be justified. Accordingly, the addition of Rs. 1,58,04,122/- made by the AO is directed to be deleted. The ground of appeal is thus allowed. 26. Accordingly, he pleaded that there is no infirmity in the findings of ld. CIT (A) and the same may be upheld. 27. On the other hand, ld. DR of the Revenue submitted that the method adopted by the assessee is not scientific basis, therefore deserved to be disallowed and he relied on the findings of the Assessing Officer. 28. Considered the rival submissions and material placed on record. We observed that the assessee is in the business of selling batteries and giving warranty is part of the business. It has computed the warranty expenses and created the provisions based on the past experience and replaced the batteries as when the parties return the defective batteries. In this regard, it was brought to our notice that the assessee treats the replacement cost of new ba....
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....he course of assessment proceeding, the AO issued notice under section 133(6) to the payees, and all the payees confirmed the receipt of commission. He further submitted that it is worthwhile pointing out that in the original assessment made u/s. 143(3) for A.Y. 2021-22, the assessing officer had made the disallowance of commission. On appeal, the CIT(A) had deleted the addition made by the assessing officer. Thereafter, the assessing officer accepted the order of CIT(A) on this issue and no further appeal was filed before ITAT on this issue. 36. After going through all these facts and submissions, we are of the view that how can the same commission be disallowed in regular assessment and the same commission was accepted by FAA. The revenue finds it acceptable and does not prefer to appeal against the above order. On exact fact on record, the same commission was once again disallowed and even after the payee's confirm the genuineness of the transaction by filing confirmation, the same commission is being sustained by the subsequent FAA. There cannot be two facts on the same transaction. After considering the peculiar facts on record, the payee's had already confirmed the transac....
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....e. In the light of Hon'ble Supreme Court in the case of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC), we are inclined to admit the additional grounds and take up the same for adjudication herein below. 40. At the time of hearing, ld. AR of the assessee submitted that in the present case, search u/s. 132 was conducted on 30.05.2023 i.e. F.Y. 2023-24 relevant to A.Y. 2024-25. In this regard, he brought to our notice Explanation 2 to section 148 which read as under: - Explanation 2.-For the purposes of this section, where,- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub-section (2A) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any o....
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....e the assessment after obtaining prior approval u/s. 148B before passing assessment order. In the present case, there is no compliance by the AO either on the provisions of section 148 or on the provisions of section 148B of the Act, therefore, the assessment proceedings initiated and also assessment order passed by the AO is bad-in-law and without jurisdiction. In this regard, he relied on the following case laws:- (i) Deepak Agarwal Vs DCIT, CC-25, New Delhi, 2025 (10) TMI 1101 - ITAT DELHI (ii) Montage Enterprises Pvt. Ltd. Vs. DCIT/ACIT, Central Circle-II, Noida, ITA No. 5458/ Del/ 2025 & 5906/ Del/ 2025 ITAT Delhi (iii) M/s Malbros International Pvt. Ltd Vs. DCIT Central Circle-2 Ludhiana and (Vice-Versa) And M/s Om Sons Marketing Pvt. Ltd. Vs. DCIT Central Circle-2 Ludhiana and (Vice-Versa), 2026 (1) TMI 983 - ITAT Chandigarh \ (iv) Jamna Dass Nikkamal Jain Saraf Private Ltd. Vs. The DCIT Central Circle-1, Ludhiana And (Vice-Versa), 2025 (12) TMI 171 - ITAT Chandigarh (v) Homelife Buildcon Private Limited Vs. The DCIT Central Circle-1, Ludhiana, Punjab And (Vice-Versa), 2025 (7) TMI 1231 - ITAT Chandigarh 42. In reference of the....
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....n was founded /initiated on basis of impugned approval of PCIT (Central) Delhi dated 28.06.2022. This approval is also subject matter of assail from assessee side being rubber stamp/mechanical and with only "approved" remarks and "unsigned" on face of it. Then centralization order u/s. 127 of the Act was passed on 03.01.2022 by PCIT Central. Admittedly the impugned assessment action is made u/s. 143(3) of the Act vide impugned assessment order dated 11.02.2023. Same mentions that approval is taken on 15.07.2022 from Range Head. 10.1 It is submitted by ld. Counsel that after 01.04.2021 vide Finance Act 2021, legislature made a policy shift in assessment of search related matters and search cases which were earlier separately assessed u/s. 153A/153C of the Act respectively for searched and non searched person, said search related cases are brought under ambit of Sec 148 of the Act by way of reopening under income escaping assessment vide Explanation 2 to sec 148 of the Act which in turn deals with deemed escapement cases. The relevant date is search action initiated after 01.04.2021. Notably for search action after 01.09.2024, again block assessment scheme u/s. 158B to Sec 1....
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....eneral provision. (ii) In the case of Montage Enterprises Pvt. Ltd. Vs. DCIT/ACIT, Central Circle-II, Noida (supra), ITAT Delhi held as under: - 2. We notice at the outset that there arises the first and foremost issue of validity of the impugned section 143(3) assessment itself framed by the learned DCIT, Central Circle-II, Noida as per the assessee's pleadings in its appeal ITA No.5458/Del/2025. A combined perusal of both these case files indicates that the assessee/appellant is engaged in the business of manufacturing and sale of flexible packaging material etc. It has filed its return for the impugned assessment year 2022-23 on 29.10.2022, declaring loss of Rs.64,53,88,702/-. And the same was taken for scrutiny. The learned departmental authorities thereafter carried out section 132 search action as well as section 133A survey in its case on 21.02.2023. There is further no dispute that the learned Assessing Officer then proceeded to frame the impugned assessment on 30th March, 2024 in its case inter alia making various disallowances/additions etc., involving varying sums, which stand partly upheld in the CIT(A)'s lower appellate discussion. 3. It is i....
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....refore, the only permissible statutory course was to issue notice u/s. 148 and obtain prior approval u/s. 148B before passing assessment order. 13.2 As the Assessing Officer completed the assessment under section 143(3) of the Act without issuing the notice under section 148 of the Act. Therefore, the question before us is whether the assessment proceedings initiated under section 143(3) of the Act can be validly continued and completed after a search under section 132 has been conducted in the case of the same assessee, without following the procedure prescribed under section 148 (Explanation 2) of the Act. 13.3 In our considered opinion, the answer lies in the scheme of the Act itself. Section 143 provides the general framework for regular assessment, whereas sections 147-148 (post-2021 regime) deal with reassessment based on information suggesting escapement of income, including that unearthed during a search. 13.4 A plain reading of section 143(2) shows that such notice can be issued only when a return of income is furnished under section 139 or in response to a notice under section 142(1). It empowers the Assessing Officer to scrutinize that return i....
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....ub-section shall be issued after the expiry of three months from the end of the financial year in which the return is furnished. 13.6 This position finds substantial support from the ratio of various decisions of Hon'ble High Court and Hon'ble Supreme Court. The Courts unanimously held that once a search has been conducted and proceedings are triggered under section 153A, the Assessing Officer cannot continue parallel proceedings under section 143(3) or section 147 for the same assessment year, because the entire assessment for that year stands merged in the search assessment. The Courts emphasized that the existence of a special procedure for assessment consequent to a search is a complete code in itself; 5 | P a g e ITA Nos.5458/Del/2025 & 5906/Del/2025 therefore, ordinary assessments abate and cannot coexist with the search-based assessment. 13.7 Drawing this analogy to the current regime, it is evident that when a search takes place and information is unearthed suggesting escapement of income, the Assessing Officer must act under section 148 (which now performs the role formerly assigned to section 153A) rather than continuing with a pending section 14....
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....owever, the said circular merely in the nature of guidelines for compulsory selection of returns for complete scrutiny during the financial year 2023-24. After going through the Circular, we find that this circular merely contains parameters for compulsory selection of returns for complete scrutiny. The relevant clause 2(ii) which apply to the facts of present case, provide that assessment in search & seizure cases / requisition cases u/s. 132 / 132A conducted on or after 01-04-2021 shall be selected with prior administrative approval of Pr. CIT / Pr. DIT / CIT / DIT concerned who shall ensure that such cases are transferred to central charges u/s. 127 of the Act within 15 days of service of notice u/s. 143(2) / 142(1) of the act by the jurisdictional AO. The same is thus merely administrative in nature and prescribe a procedure to be followed in search cases which have been conducted after 01-04-2021. The same do not address the various legal issues as raised by Ld. AR before us and which have been enumerated in preceding paragraphs. Therefore, this circular does not render any assistance to the case of the revenue. 12. Finally, considering the entirety of facts and circu....
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.... of the Act. 13.3 In our considered opinion, the answer lies in the scheme of the Act itself. Section 143 provides the general framework for regular assessment, whereas sections 147-148 (post-2021 regime) deal with reassessment based on information suggesting escapement of income, including that unearthed during a search. 13.4 A plain reading of section 143(2) shows that such notice can be issued only when a return of income is furnished under section 139 or in response to a notice under section 142(1). It empowers the Assessing Officer to scrutinize that return if he considers that income has been understated or tax underpaid. However, when a search under section 132 takes place and materials are found indicating possible escapement of income, the statute envisages a different route for carrying out assessment or reassessment under section 147 read with section 148, which is the special mechanism for bringing to tax the income discovered in consequence of a search. 13.5 Although section 148 (inserted w.e.f. 01.04.2021) does not begin with a non-obstante clause similar to the erstwhile section 153A, its context and Explanation 2 make it clear that wh....
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....hasized that the existence of a special procedure for assessment consequent to a search is a complete code in itself; therefore, ordinary assessments abate and cannot coexist with the search-based assessment. 13.7 Drawing this analogy to the current regime, it is evident that when a search takes place and information is unearthed suggesting escapement of income, the Assessing Officer must act under section 148 (which now performs the role formerly assigned to section 153A) rather than continuing with a pending section 143(3) proceeding. The legislative intent remains the same - to prevent multiplicity of proceedings and ensure that only one comprehensive order is passed, factoring in both the pre-search and post-search materials. 13.8 The rationale is further reinforced by the well-settled principle of generalia specialibus non derogant - the special provision overrides the general. Section 148 (as a special provision triggered by search information) must prevail over section 143 (the general provision for regular scrutiny). Allowing the Assessing Officer to continue and conclude proceedings under section 143(3) after a search would defeat this legislative scheme ....
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.... bring all searches conducted on 20 or after 1st April 2021 within the ambit of the new reassessment regime under section 147 of the Income-tax Act, 1961. This new regime was introduced through significant amendments to section 147 and section 148, along with the insertion of Explanations 1 and 2, and the concept of "information suggesting escapement of income" was explicitly defined. From the reading of Explanation 2 to Section 147, it is evident that in cases where a search is initiated on or after 1st April 2021, the Assessing Officer shall be deemed to have information, which suggests that income chargeable to tax has escaped assessment for three assessment years immediately preceding the assessment year relevant to the previous year, in which, the search is initiated, provided that books of account, documents, assets, bullion, jewellery, or other valuable articles are seized or requisitioned in the course of the search. This deeming provision is not limited only to the person searched, but also extends to "other persons", provided that due procedure under the law-specifically, the recording of satisfaction that such seized material belongs to the assessee and obtaining prior a....
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....nt framework, including recording of satisfaction and obtaining prior sanction from the PCIT. Therefore, the assessment framed under section 143(3), because of being based on third-party material without adhering to statutory safeguards, is bad in law. The AO was only empowered to verify the return of income and restrict his scope of inquiry accordingly; he was not permitted to expand the assessment by importing and relying upon third-party seized material without following the mandatory procedure laid down under the law. 29. Furthermore, there exists a mandatory statutory requirement that in all cases involving search-related assessments falling within the assessment year, immediately preceding the year of the search, the prior approval of the Joint Commissioner is required under section 148B of the Income-tax Act, 1961. In the present case, the Assessing Officer (AO) has proceeded without obtaining such approval, which is a clear violation of the procedural safeguards envisaged under the law and, as such, vitiates the assessment proceedings. In the present case, approval has been granted for assessment framed u/s. 143(3) only. The relevant provision of section 1....
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.... Not expressly stated Explanation 2 creates a legal presumption: AO is deemed to have information suggesting income has escaped assessment in specified cases 31. This requirement has also been explicitly discussed in the Explanatory Memorandum to the Finance Bill, 2022, which emphasizes the need to protect taxpayer rights by ensuring that no reassessment is carried out without proper sanction and due process. It is further seen that the Joint Commissioner has not even been supplied seized material relied upon as seized from third-party in the present assessment. There exists a prescribed procedure under which such seized material (including material found from third-party premises) is to be forwarded to the approving authority at least 30 days in advance of granting approval. This procedural safeguard is crucial to prevent arbitrary and unregulated use of third-party material. 32. In the present case, there is no evidence to demonstrate that the prescribed procedure was followed, or that the Joint Commissioner was apprised of the seized material by forwarding copies of the documents found from the third party prior to framing the assessment. The complete fai....
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....ve heavily relied upon on such seized material and it only states that the appraisal report have been considered without any reference to any original documents seized for statutory procedure outlined u/s. 148. Thus, in view of above, the assessment as framed by Assessing Officer vide order dated 24.08.2023 is quashed." 14. With respect to Additional Ground No. 4 the Ld. AR submitted that the assessment has arisen from a search action wherein voluminous incriminating documents were seized. The panchnama and inventory of loose papers and diaries seized from the business premises are placed in the Paper Book at pages 116 and 121-122, comprising 1,596 pages. Further seized documents were obtained from the residence of the director, Shri Manak Chand. 15. It was submitted that the Ld. DCIT forwarded the draft assessment order to the Ld. Addl. CIT on 31.03.2024 seeking approval and on the very same date, approval was granted. It was contended that there is no material on record to establish that the seized material was forwarded to the Ld. Addl. CIT for his consideration while according approval. 16. Considering the volume of seized documents running into 1,596....
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....n a single day appears to have taken place. The grant of approval is not an empty formality as it has the trapping of a quasi-judicial function by the competent authority. The approval authority is bound to apply its mind, which reflects the application of its mind and the documents submitted to it. The record shows that there was a tiring hurry for granting the approval, without looking into the contents of the underlying documents and placing on record the replies, if any, received in the office and the queries raised by the Addl. CIT. 18.3 The Coordinate Benches, in AB Alcobev Pvt. Ltd. (supra) and Pushpanjali Construction Pvt. Ltd. (supra), have consistently held that approval granted in a mechanical manner without application of mind renders the assessment order invalid. The facts of the present case are squarely covered by these precedents. Once the statutory approval suffers from non-application of mind, the consequential assessment cannot survive in the eyes of law. 18.4 In AB Alcobev Pvt. Ltd. (supra), the Tribunal held that an assessment framed u/s. 143(3) for the year preceding the search year, without approval u/s. 148B, is non est in law being taken i....
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....sessment orders alongwith the seized material, then it is to be construed that approval granted by the Addl. CIT/JCIT is not in consonance with the scheme of Income Tax, rather it is being granted in a mechanical way which would render the assessment order unsustainable in the eyes of law. Accordingly, we allow this ground of appeal and quash all the assessment orders for A.Y. 2016-17, 2017-18 and 2019-20. 19. In the light of the above said discussion with respect to additional ground no. 3 & 4 we hold that the impugned assessment order dated 24.08.2023 is without jurisdiction, and the assessment order was passed without taking the approval from the competent authority as envisaged under the Act and further the approval granted under section 153D was mechanical and was not in accordance with law. In view of the above the assessment is required to be quashed and the additional grounds 3 & 4 are allowed. Consequently, the Revenue's grounds challenging partial relief also fail, as the foundation assessment does not survive. Nevertheless, since both parties argued the merits, we record findings thereon for completeness. (iv) In the case of Homelife Buildcon Private Li....
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....three assessment years immediately preceding the assessment year relevant to the previous year, in which, the search is initiated, provided that books of account, documents, assets, bullion, jewellery, or other valuable articles are seized or requisitioned in the course of the search. This deeming provision is not limited only to the person searched, but also extends to "other persons", provided that due procedure under the law-specifically, the recording of satisfaction that such seized material belongs to the assessee and obtaining prior approval from the PCIT-is followed. 25. In the present case, where the AO has admittedly relied upon material seized during searches conducted on other persons, i.e., Sh. Ravi Kapoor and Sh. Ajay Kumar Prabhakar, it was mandatory for the AO to invoke the provisions of section 147 and not to bypass the statutory framework by proceeding under section 143(3). Granting such unfettered powers to the AO to rely on third-party material without adhering to the safeguards under section 147 would defeat the very purpose of the amendment and open the floodgates to arbitrary assessments. 26. The relevant extract Memorandum explaining the fi....
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....ts falling within the assessment year, immediately preceding the year of the search, the prior approval of the Joint Commissioner is required under section 148B of the Income-tax Act, 1961. In the present case, the Assessing Officer (AO) has proceeded without obtaining such approval, which is a clear violation of the procedural safeguards envisaged under the law and, as such, vitiates the assessment proceedings. In the present case, approval has been granted for assessment framed u/s. 143(3) only. The relevant provision of section 148B reads as under: Prior approval for assessment, reassessment or recompilation in certain case. 148B. No order of assessment or reassessment or recompilation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iti) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director. 30. A comparison of the requirement of approval under section 153D and section 148B is drawn, from which it is....
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.... forwarded to the approving authority at least 30 days in advance of granting approval. This procedural safeguard is crucial to prevent arbitrary and unregulated use of third-party material. 32. In the present case, there is no evidence to demonstrate that the prescribed procedure was followed, or that the Joint Commissioner was apprised of the seized material by forwarding copies of the documents found from the third party prior to framing the assessment. The complete failure to comply with the mandatory provisions of section 148B renders the reassessment not only. procedurally defective but also without jurisdiction. 33. Even we find while framing the assessment under section 143(3), the Assessing Officer (AO) has, on the last page of the assessment order, referred to an approval obtained from the supervisory authority. However, a bare perusal of this approval shows that it was obtained in reference to F. No. 299/36/2020/1DAR/INV3(3)/577 dated 15.07.2022, i.e., in accordance with the CBDT Circular dated 15th July 2022, and not under the mandatory provisions of section 148B of the Income-tax Act, 1961. At the outset, it is important to note that the appr....
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....aken by the assessees, Pilot Industries Ltd. and Ardee Industries Limited are allowed. 46. Since the additional grounds on legal issues are allowed, the issues on merit become academic, therefore, not deliberated upon. 47. In the result, the assessee's appeals for AY 2022-23 & 2023-24 in the cases of Pilot Industries Limited and Ardee Industries Limited in AY 2023-24 are allowed on the above terms. 48. With regard to Revenue's appeals for AYs 2022-23 and 2023-24, since we have quashed the assessment in assessee's appeals for AYs 2022-23 and 2023-24, the appeals filed by the Revenue are dismissed. 49. We are now taking up assessee's (Pilot Industries Ltd.) appeal for Assessment Year 2024-25. 50. The assessee has taken the following additional grounds:- "1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of the assessing officer in making the addition of Rs.5,23,711/- on account of alleged unexplained investment u/s. 69 r.w.s. 115BBE of the Act. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of the assessing officer in making the addition of R....
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....l stock and stock as per books of 2924 Kg (2318482 kg minus 2315558 kg) valued at Rs.5,23,711/- of stock. He further observed that the assessee itself accepted that it is not possible for them to count the physical stock and the onus is on the assessee to substantiate the difference of stock. Accordingly, Assessing Officer did not accept the contention of the assessee as assessee has failed to reconcile the difference of physical stock and stock as per books of accounts. He further observed that even director of the company, Sh. Sandeep Aggarwal was not able to reconcile the difference between the physical stock and stock as per books and the director of the assessee company also could not explain when confronted with the difference in stock as elaborated above not only during the course of search but in subsequent proceeding as well. Accordingly, he held that stock difference of Rs.5,23,711/- is found in excess of stock recorded in the books of account and value of the investment is deemed to be income of the assessee as per the provisions of section 69 of the Act. 57.1 With regard to addition of Rs.33,12,076/-, the Assessing Officer dealt with the issues at pages 60 to 63 of t....
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....ssee as per the provisions of section 69 of Act. 58. In appeal, ld. CIT (A) observed that the AO on account of unexplained investment u/s. 69 r.w.s 115BBE of the Act stated that stock differences of 294 kg amounting to Rs.5,23,711/- at bhiwadi plant and difference of 3355 kg amounting to Rs. 33,12,076/- at Pantnagar plant were found as excess of stock recorded in the books of account as undisclosed investment. Ld. CIT (A) after going through the submissions of the assessee and material available on record observed that there was time gap of 2-3 day in the receipt of goods and their entry in the financial book, hence as a result of this stock has been considered in the physical stock at the time of the search but they were not entered in financial books at the time of the search. He further observed that the assessee has also submitted reconciliation chart along with log sheet and purchase bill, e-way bill, Transportation production, MRN, logsheet alongwith production/consumption details. Further he observed that the assessee has also submitted confirmation of purchase parties which fortify the stand of the assessee that certain stock which were received during the intervening pe....
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.... and Rs. 5,23,711/- on account of alleged unexplained investment in stock amounts to double addition. He submitted that the assessee is entitled to telescoping benefit. Therefore, the addition of Rs. 33,12,076/- and Rs.5,23,711/-are liable to be deleted. 60. At the same time, ld. DR heavily relied on the detailed findings of Assessing Officer and findings of ld. CIT (A) in rectification order u/s. 154 of the Act. 61. Considered the rival submissions and material placed on record. We observed that during the survey, it was found that there is difference in stock maintained by the assessee with regard to Pant Nagar Plant and Bhiwadi Plant. The Assessing Officer observed that the assessee could not reconcile the difference even though sufficient time was granted. Assessing Officer treated the difference in stock and the corresponding investment in stock as undisclosed investment. 62. After careful consideration, we noticed that the difference is between physical stock vs. book stock. We observed that the excess stock found is in book stock not in physical stock. We noticed that the stock difference of raw material as per Busy Data and physical stock as under :- 63. From th....