DADU STEEL & POWER LTD., DHARSIWA,RAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1), RAIPUR, RAIPUR

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ITA 497/RPR/2025Status: DisposedITAT Raipur31 July 2026AY 2011-1216 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the non-supply of relevant documents and materials relied upon by the Assessing Officer for forming the 'reasons to believe' vitiates the reassessment proceedings. This failure violates the principles of natural justice.

What were the facts?

The assessee challenged the reassessment proceedings initiated under Section 148 of the Income Tax Act. The primary contention was that the 'reasons to believe' for reopening the assessment were not accompanied by the relevant material relied upon by the Assessing Officer.

What were the issues?

Whether the reassessment proceedings are bad in law due to the non-supply of relevant material along with the reasons to believe, thereby violating principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, “DB” RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & DR. DIPAK P. RIPOTE

For Appellant: Shri Ravi Agrawal, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 27.07.2026Pronounced: 31.07.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM:

The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 01.08.2025 for the assessment year 2011-12 as per the following grounds of appeal: “1. That, on the facts and in law, the notice u/s.148 dt. 31/03/2018 and the consequential order passed thereunder dt. 30/12/2018, both are liable to be quashed as no "material" as referred in the "reasons" was supplied to the appellant alongwith the copy of reasons and therefore the notice u/s 148 and the consequential order are liable to be quashed, following the judgment of Hon'ble Rajasthan High Court in case of Micro Marbles Pvt. Ltd. Vs. ITO [ 457 ITR 569 ] which, in turn, has been followed by our Bench in case of Leeladhar Chandrakar Vs. ITO-1(3), Bhilai in ITA no. 442 & 443 /2025, vide order dt. 07/08/2025. 2. That, on the facts and law, notice issued u/s 148 dt. 31/03/2018 and the consequential order dt.31/12/2018 are not sustainable in law as copy of "approval granted by specified authority " u/s 151 has not been furnished to the appellant alongwith "reasons to believe" in accordance with the judgment of Hon'ble Delhi in case of Tia Enterprises Pvt Ltd. Vs. ITO [ 468 ITR 5 ] which has been confirmed Hon'ble Supreme Court with the dismissal of SLP, in case of ITO Vs. Tia Enterprises Pvt. Ltd. [ 468 ITR 10] 3. That, on facts and in law, Ld. CIT(A) erred in confirming the addition of Rs.83,81,276.00 u/s 68 made by the AO, without considering the nature and source of commodity profits earned by the appellant and the impugned addition is liable to be deleted. 4. That, on the facts and in law, Ld. CIT(A) erred in confirming the addition of Rs.1,45,05,000.00 u/s 68 made by the AO, treating the share capital and share premium as unexplained, without appreciating the facts of the case and hence the impugned addition is liable to be deleted. 5. That, Ld. AO erred in not allowing the set off of unabsorbed depreciation and business losses of earlier years and those ought to have been adjusted against the impugned additions.

3 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

6.

That, the appellant reserves the right to add, alter or delete any ground.

2.

At the time of hearing, the Ld. Counsel for the assessee submitted that if the Ground of appeal No.1 is answered in favour of the assessee, rest all other grounds stands academic since Ground of appeal No.1 is on legal issue which goes to the root of the matter. The said Ground of appeal No.1 is extracted as follows:

“1. That, on the facts and in law, the notice u/s.148 dt. 31/03/2018 and the consequential order passed thereunder dt. 30/12/2018, both are liable to be quashed as no "material" as referred in the "reasons" was supplied to the appellant alongwith the copy of reasons and therefore the notice u/s 148 and the consequential order are liable to be quashed, following the judgment of Hon'ble Rajasthan High Court in case of Micro Marbles Pvt. Ltd. Vs. ITO [ 457 ITR 569 ] which, in turn, has been followed by our Bench in case of Leeladhar Chandrakar Vs. ITO-1(3), Bhilai in ITA no. 442 & 443 /2025, vide order dt. 07/08/2025.”

3.

In this regard, the Ld. Counsel for the assessee took us through the reasons recorded by the A.O for reopening for A.Y.2011-12 which is extracted as follows:

4 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

5 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

4.

In this regard, the Department was provided an opportunity to submit report and the Ld. Sr. DR had placed on record a report dated 19.06.2026. The said report is extracted as follows:

6 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

7 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

5.

That as evident from the said report, it does not mention anything of providing relevant materials to the assessee for its response, it does not spell out facts that those materials/documents that had been relied upon by the Department at the time of forming satisfaction for “reasons to believe” that income chargeable to tax had escaped assessment, those relevant documents/materials were never shared with the assessee. The said report is silent on the fact that those relevant documents/materials were neither shared with the assessee nor was confronted to the assessee for its response.

6.

That further countering the report of the Department, the Ld. Counsel for the assessee submitted reply dated 23.06.2026 which is extracted as follows:

8 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

Therefore, grievance of the assessee is that what were those credible information as pointed at No.1 of the “reasons recorded”, what were those

9 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

data received from DDIT, Unit-3(1), Kolkata at Point No.2 of “reasons recorded”, what were those Forwards Market Commission (FMC) report as pointed at No.3 of the “reasons recorded”, the statement recorded on oath u/s. 131 of the Income Tax Act, 1961 of the concerned persons as pointed at No.4 and others as pointed at No.5 in the “reasons recorded”, there is also on record but what is there on record, it has not been furnished to the assessee. It is not known whose statements the Revenue is banking upon recorded on oath u/s.131 of the Act, such statement was also not furnished to the assessee. Similarly, what are credible information and FMC report, all these relevant documents emanated from the “reasons to believe” were never shared with the assessee and therefore, reassessment framed u/s.147/143(3) of the Act is arbitrary, bad in law and liable to be quashed.

We find that the Hon’ble High Court of Rajasthan, Jodhpur Bench 7. in the case of Micro Marbles Private Limited Vs. Office of the Income Tax Officer (2023) 475 ITR 569 (Raj.) has held and observed as follows:

“27. In the case at hand, as previously mentioned, reason to believe supplied to the petitioner refers to information received from the Deputy Director of Income Tax, Investigation as also to (12 of 14) [CW-13719/2021] the statement of Deepak Jain recorded under Section 132 (4) of the Act during the course of the investigation pursuant to the search and seizure carried out at his premises as also the entries in the form of bogus loan/purchase/sale of Rs.93,21,520/- appearing in the books of M/s Sanmatri Gems Pvt. Ltd. for the Assessment Year 2017-18. Neither of the above documents have allegedly been supplied to the

10 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

petitioner. The petitioner in the grounds to the petition has taken a categorical stand that the respondents failed to furnish the information which formed the basis for reopening the assessment. It was not even provided with the statement of Deepak Jain, on which heavy reliance was being placed. There is no averment in the reply of the respondents anywhere that any such information or a copy of the statement was supplied to the petitioner along with the reasons to believe. 28. In view of the above, the reasons to believe, as supplied to the petitioner, on the face of it are incomplete and do not afford the petitioner due and proper opportunity to file objections against such reassessment. The non-supply of the above material is within the teeth of the directions of the Division Bench of the Delhi and Bombay High Courts. 29. The submission of Shri Bissa that reasons to believe cannot be equated with the final conclusion and as long as the Assessing Officer has sufficient material to demonstrate that he had bonafidely formed the opinion that the income chargeable to tax has escaped assessment, the requirement of law stands satisfied is of no avail as there are no two opinions on the above aspect. Sufficiency of material is one thing and supply of the same is another, which is mandatory in nature. Therefore, the non-supply of the material referred to in the reasons to believe would be (13 of 14) [CW-13719/2021] enough to render the proceedings bad, even though the material for forming the opinion may be sufficient. 30. The argument of Shri Bissa is that information furnished by the Deputy Director of Income Tax, Investigation, by itself is sufficient for reopening the proceedings, more particularly when the said information was confirmed from other sources. Again the sufficiency of the information is not in question, nor its confirmation. What is questionable is the effect of its non-supply, to which there is no answer. 31. Thus, in the light of the decisions of the Delhi and the Bombay High Courts, as referred to above, the non-supply of the material, especially the documents of entry in the books of M/s Sanmatri Gems Pvt. Ltd. and the statement of Deepak Jain recorded under Section 132 (4) of the Act, is sufficient to vitiate the proceedings. 32. It may be noted that the statement recorded under Section 132 (4) of the Act can be used in evidence for

11 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

making the assessment only if such statement is made in context with other evidence, or material discovered during search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger the assessment. 33. In view of the aforesaid facts and circumstances, we are of the opinion that shorn of all other technical aspects which may have been raised before us, the very fact that the material referred to in the "reasons to believe" was not supplied to the petitioner, the entire proceedings for the reopening of the assessment and leading to the consequential assessment stand vitiated in law.”

8.

Reverting to the facts of the present case, admittedly, the very fact that the materials/documents referred to in the “reasons to believe” as appearing in the foregoing paras was never supplied to the assessee, therefore, the entire proceedings of reopening leading to consequential assessment stands vitiated in law.

Further, the Hon’ble Chhattisgarh High Court in the case of ACIT, 9. Circle-1, Raipur (C.G.) Vs. Sun and Sun Inframetric Pvt. Ltd., TAXC No. 5 of 2022 and TAXC No.7 of 2022, dated 03.08.2022, had upheld the findings of the Tribunal observing that information and statement which were used against the assessee without enabling the assessee to put forth his defence, such procedure defeats the rules of natural justice of doctrine of audi alteram partem.

12 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

10.

That similar issue arose for consideration before this Bench in the case of Jeewan Kukreja Vs. DCIT, Circle-1(1), Raipur, 2026 (5) TMI 852-ITAT, Raipur wherein it was held and observed as follows:

“5.2 Third contention of the Ld. Counsel for the assessee was that at Page 6 of the assessment order, the Department has relied on the screen shot from Investigation Department which was also not shared with the assessee to furnish his response regarding the same, therefore, principles of natural justice thereby has been violated since all these information were used by the Department for making addition at the back of the assessee without providing any opportunity to the assessee to place his submission on the aforesaid. 6. The Ld. Sr. DR could not bring on record any evidence to even suggest that these information were shared with the assessee. On the contrary, the Ld. Sr. DR submitted that these information only emanates from the assessment order and there is no record to suggest that they were shared with the assessee for his response. He also submitted upon query from the Bench that the screen shot chart as appearing at Page 6 of the assessment order is received from the DIT (Inv.) and the A.O has simply relied on such screen shot without providing any opportunity to the assessee. 7. The Hon’ble High Court of Rajasthan, Jodhpur Bench in the case of Micro Marbles Private Limited Vs. Office of the Income Tax Officer (2023) 475 ITR 569 (Raj.) has held and observed as follows: “31. Thus, in the light of the decisions of the Delhi and the Bombay High Courts, as referred to above, the non-supply of the material, especially the documents of entry in the books of M/s Sanmatri Gems Pvt. Ltd. and the statement of Deepak Jain recorded under Section 132 (4) of the Act, is sufficient to vitiate the proceedings. 32. It may be noted that the statement recorded under Section 132 (4) of the Act can be used in evidence for making the assessment only if such statement is made in context with other evidence, or material discovered during search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger the assessment.

13 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

33.

In view of the aforesaid facts and circumstances, we are of the opinion that shorn of all other technical aspects which may have been raised before us, the very fact that the material referred to in the "reasons to believe" was not supplied to the petitioner, the entire proceedings for the reopening of the assessment and leading to the consequential assessment stand vitiated in law.” 8. Further, the Hon’ble Bombay High Court in the case of Tata Capital Financial Services Limited Vs. Assistant Commissioner of Income Tax Circle & Ors., while deciding Writ Petition No.546/2022 vide judgment and order dated 15.02.2022, had directed the Revenue to adhere to certain guidelines in reopening the assessment proceedings. It emphasized that the Assessing Officer shall not merely state the reasons to believe in the letter addressed to the assessee, but if the reasons make reference to any other document or a letter or a report, such document or letter or report should be enclosed to the reasons. Therefore, in view of the aforesaid decision also, it is mandatory on the part of the Assessing Officer to supply the assessee with all relevant documents, referred to in the reasons for reopening so that the assessee may file proper objections opposing such reopening of the assessment. 9. The Hon’ble Chhattisgarh High Court in the case of ACIT, Circle-1, Raipur (C.G.) Vs. Sun and Sun Inframetric Pvt. Ltd., TAXC No. 5 of 2022 and TAXC No.7 of 2022, dated 03.08.2022, had upheld the findings of the Tribunal observing that information and statement which were used against the assessee without enabling the assessee to put forth his defence, such procedure defeats the rules of natural justice of doctrine of audi alteram partem. The Hon’ble Supreme Court in the case of CIT Vs. 10. Amitabh Bachhan (2016) 384 ITR 200 (SC) while upholding the mandatory requirement for adhering to the principles of natural justice, in any proceedings by a quasi-judicial authority also referred to the decision in the case of the C.I.T., West Bengal, II, Calcutta Vs. M/s. Electro House, (1972) 82 ITR 824 (SC), wherein it was held and observed that a breach of principles of natural justice effects the legality of the order. Any contravention of the principles of natural justice vitiates the order passed by the authority. Accordingly, the Hon’ble Apex Court has ruled that it is mandatory to provide an opportunity to the assessee to be

14 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025

heard on all issues especially where conclusions are drawn adverse to the assessee. 11. Same view has been upheld by the ITAT, DB, Raipur in the case of ITO-3(1), Raipur Vs. Rahul Kathuria, ITA Nos. 151 & 152/RPR/2025, dated 26.11.2025 and also by the ITAT, SMC Bench, Raipur in the case of Rajesh Kumar Chandwani Vs. ITO, Ward-1(1), Raipur (C.G.), ITA No.207/RPR/2026, dated 28.04.2026. 12. Considering the entire facts and circumstances of the case and judicial pronouncements, even without going into the merits of the matter, that since relevant information/documents which are emanating in the assessment order were never shared with the assessee which therefore becomes blatant defect in terms with principles of natural justice and therefore, passing of the assessment order in such a case becomes arbitrary, bad in law and legally unsustainable, hence, the assessment order is quashed. 13. Since assessment itself is quashed, subsequent all other proceedings becomes non-est as per law. Rest other grounds stands academic only. 14. That as per above terms, the appeal of the assessee is allowed.”

11.

That in the facts and circumstances as examined afore-stated by us, the relevant documents and materials that had been relied upon by the Department for forming “reasons to believe”, those were never shared with the assessee, and entire reassessment order was passed by the Department without providing opportunity to the assessee for its response to the various documents which the Department had in its possession. In other words, liability was imposed on the assessee behind the assessee even without providing any opportunity to the assessee for furnishing its

15 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025 response regarding genuineness of those documents/materials which were there in the possession of the Revenue.

12.

Considering these facts and circumstances vis-à-vis judicial dictate as afore-stated, on the same parity of reasoning, reassessment framed therefore is arbitrary, bad in law, hence quashed.

13.

Since reassessment itself is quashed, rest all other proceedings becomes non-est as per law. Ground of appeal No.1 is answered in affirmative. Rest other grounds stands academic only.

14.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 31st July, 2026.

Sd/- Sd/- DR.DIPAK P. RIPOTE PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 31st July, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� /The Appellant. 2. ��यथ� /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड� फ़ाइल / Guard File. आदेशानुसार / BY ORDER,

16 Dadu Steel & Power Ltd. Vs. DCIT, Circle-1(1), Raipur (C.G.) ITA No. 497/RPR/2025 // True Copy // Samiran Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur. Bera, Sr. PS, ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.07.31 13:44:39 +05'30'

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