SIDDHARTHA BRONZE PRODUCTS PVT.LTD.,BHAVNAGAR vs. DCIT,CICLE-1 ,BHAVNAGAR, BHAVNAGAR AAYAKAR BHAWAN

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ITA 305/AHD/2026Status: DisposedITAT Ahmedabad19 June 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the transaction was not a case of accommodation entry or bogus purchases, as the amount was returned. The PCIT's revision order was considered unjustified and without jurisdiction.

What were the facts?

The assessee paid Rs. 59,70,000/- to M/s. Kasturi Commodities Pvt. Ltd. as advance for purchases, which was later returned. The PCIT invoked revision powers under Section 263, finding the assessment order erroneous and prejudicial to revenue due to lack of uniformity in explanations.

What were the issues?

Whether the PCIT was justified in revising the assessment order under Section 263 when the transaction was explained and the amount was returned, and if the assessment order was indeed erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Aseem Thakkar, A.R, Shri R P Rastogi, CIT. DR
For Respondent: Shri R P Rastogi, CIT. DR
Hearing: 08/04/2026

Per Sanjay Garg, Judicial Member:

The present appeal has been filed by the assessee against the revision order of the Ld. Principal Commissioner of Income Tax, Ahmedabad-1, (hereinafter referred to as “PCIT”), dated

ITA No.305/Ahd/2026[Siddhartha Bronze Products Pvt. Ltd. vs. DCIT] A.Y. 2017-18 - 2 –

31.12.2025 passed under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2017-18.

2.

The brief facts of the case are that the AO received information that the assessee was one of the beneficiaries and availed accommodation entries amounting to Rs.59,70,000/- from M/s. Kasturi Commodities Pvt. Ltd., which entity was allegedly involved in providing accommodation entries to various beneficiaries. The assessment in the case of the assessee was, therefore, reopened u/s 147 of the Act. During assessment proceedings, it was found that the said amount of Rs.59,70,000/- was given by the assessee to M/s. Kasturi Commodities Pvt. Ltd., about which, the assessee explained that the same was given as advance for purchases. However, no purchases were made and the said advance was returned back to the assessee. However, in response to the notice issued u/s 133(6) of the Act, M/s. Kasturi Commodities Pvt. Ltd. responded that the said amount was short term loan availed by it and was repaid to the assessee. The AO, though, did not find any reason to make any addition in respect of the said transaction, however, made addition @2% of the said amount alleging the same to be commission income on the said transaction. Thereafter, the Ld.PCIT exercised his revision jurisdiction u/s 263 of the Act and observed that there was no uniformity in the replies of both the parties i.e. the assessee and M/s. Kasturi Commodities Pvt. Ltd. The assessee had stated that

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he had given advance of Rs.59,70,000/- to the said party, which was returned back, whereas, M/s. Kasturi Commodities Pvt. Ltd. had replied that it had availed short term loan, which was repaid to the assessee. The Ld.PCIT observed that since, there was no uniformity in the replies of both the parties and, hence, the transactions remained unexplained. He observed that the AO added only commission income and failed to include the full transaction amount u/s 69A of the Act as the assessee was the beneficiary of the said transaction. He, therefore, held that the assessment order was erroneous and prejudicial to the interest of the Revenue. He, therefore, set aside the assessment order dated 22.05.2023 passed u/s 147 of the Act with a direction to the AO to pass a fresh assessment order in accordance with law in the light of observations made by him.

3.

Being aggrieved by the said order of the Ld.PCIT, the assessee is in appeal before us.

4.

We have heard rival contentions and gone through the records. A perusal of the assessment order reveals that the AO had thoroughly examined the ledger / bank accounts of the assessee. He has given a categorical finding that the assessee has given advances three times to M/s. Kasturi Commodities Pvt. Ltd., however, the same were returned back by M/s. Kasturi Commodities Pvt. Ltd. to the assessee within a short span of time.

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The assessee explained that since the goods ordered (propeller) was not up to the mark, hence, the same were not purchased. M/s. Kasturi Commodities Pvt. Ltd., however, had replied that it had availed short term loan from the assessee, which was repaid. Whatever the nature of the said transaction was, the fact on record is that the assessee had paid the amount in question to M/s. Kasturi Commodities Pvt. Ltd. and there is no allegation that the said amount paid by the assessee was from any undisclosed sources or that the assessee could not explain the source of the same. Whether the assessee had given the amount as a short term loan or as advances for purchases, it makes no difference when there is no allegation that the said amount was advanced by the assessee from any undisclosed sources. It is also an admitted fact that the said amount was returned back by M/s. Kasturi Commodities Pvt. Ltd. to the assessee in a short span of time of 2- 3 days, therefore, it is apparently not a case of any accommodation entry received by the assessee. We fail to understand as to how even the AO can conclude that the assessee might have earned some commission on the payment of this amount through banking channel to M/s. Kasturi Commodities Pvt. Ltd. and especially when, the same was refunded, as such, to the assessee by the said party. Neither apparently it is a case of accommodation entry received by the assessee nor of any bogus purchases as the assessee admittedly did not purchase goods rather the amount was refunded to the assessee. The exercise of revision u/s 263 of the Act by the PCIT in this case is wholly unjustified. The revision

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order passed by the Ld.PCIT is, therefore, without jurisdiction as assessment order passed in no case can be said to be prejudicial to the interest of the Revenue. The impugned revision order of the PCIT passed u/s 263 of the Act, is hereby, quashed.

5.

In the result, the appeal of the assessee stands allowed.

This Order pronounced on 19/06/2026

Sd/- Sd/- (NARENDRA PRASAD SINHA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 19/06/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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