SHANTI TIMBERS TRADERS, BILASPUR ROAD,BILASPUR ROAD, BHANPURI vs. COMMISSIONER OF INCOME-TAX (APPEALS), DELHI

ITA 134/RPR/2026Status: DisposedITAT Raipur24 June 2026AY 2020-202111 pages
AI SummaryAllowed

What were the facts?

The assessee, Shanti Timber Traders, is appealing an order for Assessment Year 2020-21. The case originated from a search at M/s. Radha Krishna Ply & Board Industries, from whom the assessee purchased plywood. During the search, a handwritten ledger was found, and a partner of the firm, Shri Rakesh Khurana, admitted in a statement under Section 132(4) that the ledger recorded sales, with 'TRF' indicating cash transactions. The Assessing Officer (AO) initiated reassessment proceedings under Section 147/148A, alleging bogus purchases by the assessee from M/s. Radha Krishna Ply & Board Industries. The assessee's request for cross-examination of Shri Rakesh Khurana was denied, and the statement was not provided during assessment proceedings, only later before the ITAT. The addition of Rs. 25,92,792/- was made based on the 'TRF' entries in the ledger.

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings and the assessment order were vitiated due to a blatant defect in terms of the principles of natural justice. The Tribunal noted that the statement recorded under Section 132(4) of Shri Rakesh Khurana, which formed the basis of the addition, was never shared with the assessee during the reassessment proceedings, despite requests. Furthermore, the assessee's right to cross-examine Shri Rakesh Khurana was denied. The Tribunal relied on several judicial pronouncements, including those from the Hon'ble High Court of Chhattisgarh in ACIT vs. Sun and Sun Inframetric Pvt. Ltd., and the Hon'ble Supreme Court, emphasizing that the non-supply of material and denial of an opportunity to defend oneself vitiates proceedings. Consequently, the reassessment order was quashed as arbitrary, bad in law, and legally unsustainable. Since the reassessment was quashed, all subsequent proceedings were rendered non-est. Other grounds were deemed academic.

What were the issues?

1. Whether the reassessment proceedings and the consequent assessment order are vitiated due to the non-supply of the statement recorded under Section 132(4) of Shri Rakesh Khurana and the denial of the assessee's right to cross-examine him, thereby violating the principles of natural justice, as argued by the assessee. The assessee contends that the entire addition was based on this statement, which was not shared, and cross-examination was denied, making the proceedings arbitrary and unsustainable. The revenue relied on the orders of the subordinate authorities. 2. Whether the reliance on information (specifically, the statement of Shri Rakesh Khurana and the 'TRF' entries) by the Assessing Officer without providing the assessee an opportunity to respond and defend itself, in violation of the principles of natural justice, renders the assessment order bad in law, as argued by the assessee. The assessee relies on various High Court and ITAT judgments to support this contention. The revenue did not present specific arguments against these points.

Which sections of the Income-tax Act were involved?

Section 132(4),Section 147,Section 148A,Section 138

AI-generated summary — verify with the full judgment below

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

Before: SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri R. B. Doshi, CA
For Respondent: Shri Piyush Tripathi, Sr. DR
Hearing: 24.06.2026Pronounced: 24.06.2026

PER PARTHA SARATHI CHAUDHURY, JM The present appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)/NFAC, dated 26.12.2025 for the assessment year 2020-21 as per the grounds of appeal on record.

2.

The facts are that the assessee is a trader in plywood and the assessee purchases plywood from M/s. Radha Krishna Ply & Board Industries. There was a search in the premises of M/s. Radha Krishna Ply & Board Industries and one hand written leger was found in the said premise

The order continues below.

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