DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), RAIPUR vs. SHILPHY STEELS PRIVATE LIMITED, RAIPUR

आयकर अपील�य अ�धकरण �यायपीठ रायपुर म�। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, “DB” RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.805/RPR/2025 CO No.10/RPR/2026 �नधा�रण वष� / Assessment Year : 2019-20 The Deputy Commissioner of Income Tax, Circle-1(1), Raipur (C.G.)

........अपीलाथ� / Appellant बनाम / V/s.

Shilphy Steels Private Limited 7, Jeewan Plaza, Avanti Bai Chowk, Shankar Nagar, Raipur (C.G.)-492 001 PAN: AAHCS7975A ……��यथ� / Respondent

Assessee by : Shri R.B Doshi, CA Revenue by : Shri Piyush Tripathi, Sr. DR

सुनवाई क� तार�ख / Date of Hearing : 28.07.2026 घोषणा क� तार�ख / Date of Pronouncement : 31.07.2026

2 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 आदेश / ORDER PER BENCH: The captioned appeal preferred by the Revenue and corresponding cross objection filed by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 07.10.2025 for the assessment year 2019-20 as per the grounds of appeal on record.

3 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 Limited amounting to Rs.1,24,39,601/- during the F.Y. 2018- 19 relevant to A.Y. 2019-20……”

4 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 genuineness regarding the above matter, before passing any adverse order against us. We further request your honour to please provide us with a copy of any order passed against the above named entity M/s Sairam Ingot Pvt. Ltd. "as M/s Sairam Ingot Pvt Ltd. (SRIPL) is mere a paper company as per information uploaded". As because if on the basis of the above "Search" it is disclosed that the company provides accommodation entries then definitely your department must have taken action against the said entities and all the companies. Please provide us an order which is passed by the department against them before passing any adverse order against us. Moreover we strongly object to the proposed addition @ 10% as commission paid for availing such purchase which comes to Rs.12,28,795/- as unexplained expenditure u/s 69C of the Act, as we have not paid any commission of such amount to M/s Sairam Ingot Pvt. Ltd. for arranging the above purchase transaction. Now with regard to the variation proposed in the above show cause notice of addition of transaction of shares of M/s Stampede Capital Limited amounting to Rs.1,24,39,601/- by treating it as bogus LTCG on the basis of the following information: "Further, as per the investigation carried out by the DDIT(Inv.)-5(1), New Delhi and report uploaded under High Risk CRIU/VRU data, Stampede Capital limited was identified as a penny scrip where manipulation in trade by way of complex web of prearranged or artificial web of transactions was carried out to book bogus LTCG/STCL entries. The assessee made bogus LTCG/STCG in Stampede Capital Limited amounting to Rs.1,24,39,601/- during the F.Y. 2018- 19 relevant to A.Y. 2019-20." In this regard we would like to inform your honour as already earlier stated vide reply dated 26.12.2023, that during the F.Y. 2018-19 relevant to A.Y. 2019-20 we have sold equity shares of M/s Stampede Capital Limited amounting to Rs.42,55,733/-only and not Rs 1,24,39,601/- as alleged by your honour in the above show cause notice. Other than the above transaction of shares amounting to Rs.42,55,733/- we have not made any other transactions of shares of M/s Stampede Capital Limited. Hence we request your honour to kindly provide us the full details/information of the amount of Rs.1,24,39,601/-

5 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 claimed as LTCG as alleged by your honour in the above show cause notice as according to our records we have sold equity shares of M/s Stampede Capital Limited amounting to Rs.42,55,733/- only during the year under consideration. It is further to inform your honour, that the said shares of M/s Stampede Capital Limited are held as stock in trade during the year under consideration and the sale of such shares is taxable under the head Profit and Gains of Business & Profession (PGBP) not under capital gain as it was not a capital assets ever and we duly recognized/disclosed the income from sale of such shares under PGBP amounting to Rs.42,55,733/- and not Rs.1,24,39,601/-.”

6 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 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. Relevant observation of the Hon’ble High Court are extracted as follows:

“17) The Tribunal also recorded the fact that the so called incriminating information that the lender company being classified by the SEBI as shell Company coupled with some adversarial statement of one Amit Kumar Kedia which has been relied by the PCIT post assessment, were not supplied to the assessee despite requests made by him that those information and statement would enable him to place its defence. Therefore, a serious flaw was committed by the PCIT. The assessment order also records the fact that GTPL is a NBFC registered with RBI and is a Company of sound financial standing and a regular tax payer of huge amounts year after year, therefore, withholding certain documents which is used against the assessee by the PCIT defeats the rules of natural justice of doctrine of audi alteram partem. 18) A perusal of the order of Tribunal would further reflect that after assessment of the factual aspect of applicability of Section 43CA it records that the transaction was duly reported in tax audit report and the appellate authority was unable to find any error in action of the Assessing Officer to accept the transaction outside the ambit of Section 43CA where the variations in actual consideration qua assessable value for the purposes of stamp duty does not exceed 10%. The Tribunal has upheld the direction of PCIT to the extent that the difference upto 10% is only saved by the amendment made in the Finance Act and the enquiry directed by PCIT in respect of transaction covered u/s 43CA where the difference exceeds 10% appears to be justified and the direction of the PCIT to the limited extent was upheld. Therefore considering the totality of the aforesaid averments, we are of the view that the order of Tribunal does not give rise to a substantial question of law warranting interference of this Court in the order of Tribunal.

7 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 19) In view of the aforesaid discussion and after going into the merits of the case, we are of the considered view that the appeals do not involve any substantial question of law and accordingly, both the appeals are dismissed.”

“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. The Hon’ble High Court of Rajasthan, Jodhpur 7. 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.

8 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 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. 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. The Hon’ble Chhattisgarh High Court in the case of 9. 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

9 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 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 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.”

10 Shilphy Steels Private Limited ITA No. 805/RPR/2025 CO No.10/RPR/2026 arbitrary, bad in law and legally unsustainable, hence, the reassessment order is quashed. Thus, cross objection filed by 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. Samiran आदेशानुसार / BY ORDER, Bera, Sr. PS, // True Copy // Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur. ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.07.31 13:32:49 +05'30'