AMIT STONES,JAJPUR vs. ACIT, CENTRAL CIRCLE -2, BHUBANESWAR, BHUBANESWAR

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ITA 349/CTK/2026Status: DisposedITAT Cuttack26 May 2026AY 2021-225 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that while search proceedings allow for reopening, assessments must be supported by evidence found during the search. The AO's rejection of books was vague, lacking specific defects or reliance on seized materials.

What were the facts?

The assessee, engaged in stone processing, was subject to a search. Subsequently, assessments were reopened, and the Assessing Officer (AO) rejected the assessee's books and estimated income at varying percentages for three assessment years.

What were the issues?

Whether the AO can reject books of account and estimate income in a search assessment without relying on specific incriminating materials found during the search.

Which sections of the Income-tax Act were involved?

Section 132,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI GEORGE MATHAN & RAJESH KUMAR

For Appellant: Shri S.K.Sarangi, CA
For Respondent: Shri Vijaya Singh, ld Sr. DR
Hearing: 26/05/2026Pronounced: 26/05/2026

1 ITA Nos. 349 to 351 /Ctc/2026 Assessment Years: 2021-22 to 2023-24

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL MEMBER AND RAJESH KUMAR, ACCOUNTANT MEMBER ITA Nos. 349 to 351 /CTC/2026 Assessment Years: 2021-22 to 2023-24 Amit Stones, Plot No.117, Vs. ACIT, Central Circle-2, Baramania, Dharmasala, Jajpur Bhubaneswar. PAN/GIR No. AASFA 5298 C (Appellant) .. ( Respondent) Assessee by : Shri S.K.Sarangi, CA Revenue by : Shri Vijaya Singh, ld Sr. DR Date of Hearing : 26/05/2026 Date of Pronouncement : 26/05/2026

O R D E R Per Bench These are appeals filed by the assessee against the separate orders of the ld CIT(A),Bhubaneswar-2 all dated 30.3.2026 in Appeal No. CIT(A),Bhubaneswar- 2/10126/2020-21,CIT(A),Bhubaneswar-2/10010/2021-22, CIT(A),Bhubaneswar2/10014/2022-23 for the assessment years 2021-22 to 2023- 24. 2. Shri S.K.Sarangi, ld AR appeared for the assessee and Shri Vijaya Singh, ld Sr. DR appeared for the revenue. 3. It was submitted by ld AR that the assessee is in the business of processing of stones and selling of stone chips. There was a search on the premises of the assessee on 3.4.2023. Consequence to the search, assessments for the assessment years 2021-

2 ITA Nos. 349 to 351 /Ctc/2026 Assessment Years: 2021-22 to 2023-24

22, 2022-23 and 2023-24 came to be reopened, wherein, following reasons are recorded:

“

3 ITA Nos. 349 to 351 /Ctc/2026 Assessment Years: 2021-22 to 2023-24

4.

It was the submission that after reopening, the assessments came to be completed, wherein, the Assessing Officer without referring to any of the seized materials, rejected the books of the assessee and estimated the income of the assessee at 11% for the assessment year 221-22, 31% for the assessment year 2022- 23 and 11% for the assessment year 2023-24. It was the submission that assessment which has been made estimating the income without referring to any seized materials cannot be made. It was the prayer that the addition as made by the Assessing officer and confirmed by ld CIT(A) may be deleted. It was the further submission that the ld CIT(A) had upheld the assessment years for all the three years, however, for the assessment year 2022-23, the ld CIT(A) has reduced the percentage from 31% to 11%.

5.

In reply, ld Sr DR submitted that there are defects in the books of account resulting the rejection of books of account. Once the books are rejected, then the income of the assessee is to be estimated. It was the submission that the ld CIT(A) has given substantial relief in the form of depreciation, salary to partners and interest to bank and partners estimating the income at 11%. It was the prayer that the orders of the ld CIT(A) be upheld.

6.

We have considered the rival submissions. A perusal of the explanation -2 to section 148 clearly shows that once the search is initiated u/s.132 of the Act, then Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee, the search is

4 ITA Nos. 349 to 351 /Ctc/2026 Assessment Years: 2021-22 to 2023-24

initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. For the purpose of reopening, proceedings of search are adequate. However, for an assessment to be made, same has to be supported by evidence found in the course of search. Just because, the reopening has been done by invoking the provisions of section 148, does not mean that books can be blindly rejected and income estimated. Rejection of books of account as done by the Assessing Officer is clearly vague. No specific defects, as such, have been pointed out. Also no addition has been made on the issue or documents on which the AO has relied upon for reopening the assessment. This being so, as it is noticed that the assessment has been done by estimating the income in case of search assessment, and the addition has been made though the reasons recorded for the purpose of reopening was referring to any incriminating materials and documents found during the search, the addition made by the AO and confirmed by ld CIT(A) stands deleted. 7. In the result, appeals of the assessee stand allowed.

Order dictated and pronounced in the open court on 26/05/2026.

Sd/- Sd/- (RAJESH KUMAR) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack ; Dated: 26/05/2026 RS

5 ITA Nos. 349 to 351 /Ctc/2026 Assessment Years: 2021-22 to 2023-24

Copy of the Order forwarded to : 1. The Appellant : Amit Stones, Plot No.117, Baramania, Dharmasala, Jajpur

2.

The respondent:ACIT, Central Circle-2, Bhubaneswar. 3. The CIT(A), Bhubaneswar-2 4. Pr.CIT, 5. DR, ITAT, 6. Guard file. //True Copy// By order Asst. Registrar. ITAT, Cuttack

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