SANMATI METALS,NAHAN vs. DCIT, CENTRAL CIRCLE 1, DELHI, DELHI

ITA 5156/DEL/2026Status: DisposedITAT Delhi30 September 2026AY 2023-245 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Ld. CIT(A) had dismissed the assessee's appeal ex-parte due to the assessee's failure to submit evidence despite notices. Before the ITAT, the assessee's counsel requested one more opportunity to present its case before the CIT(A) on merits. The Revenue's counsel opposed this, citing the assessee's non-compliance before the first appellate authority. The Tribunal, considering the interest of justice and adherence to principles of natural justice, decided to grant the assessee one more opportunity to present its case before the Ld. CIT(A). The Ld. CIT(A) was directed to adjudicate all grounds raised by the assessee, both legal and on merits. The grounds of appeal were allowed for statistical purposes. The operative direction is to remand the matter back to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, Sanmati Metals, a partnership firm engaged in manufacturing lead ingots and products, filed its return for AY 2023-24 declaring income of Rs. 1,22,10,570/-. The case was selected for scrutiny following a survey under Section 133A on M/s Saraswati Spinning & Weaving Mills (SSWM), which revealed SSWM was involved in providing accommodation entries. The Assessing Officer (AO) identified the assessee as a party with financial transactions with SSWM and, based on investigation findings of suspicious purchases by SSWM, treated transactions totaling Rs. 164,73,51,719/- as non-genuine. The AO added Rs. 5,38,68,401/-, representing an estimated profit of 3.27% on these purchases. The CIT(A) dismissed the assessee's appeal ex-parte, upholding the addition. The assessee appealed to the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in passing an ex-parte order, contrary to the principles of natural justice? - Assessee's contention: The CIT(A) erred in passing an ex-parte order. - Revenue's contention: Not recorded. 2. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs. 5,38,68,401/- made by the AO on account of alleged bogus purchases by estimating additional profit at 3.27%, which is arbitrary and unjustified? - Assessee's contention: The addition is arbitrary, unjustified, and liable to be deleted. The CIT(A) erred in upholding the AO's action of treating purchases as non-genuine, relying heavily on survey findings in the case of M/s Saraswati Spinning & Weaving Mills (SSWM) and on material not confronted to the assessee, violating principles of natural justice. - Revenue's contention: Not recorded. 3. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the AO's action of treating purchases as non-genuine by heavily relying on the alleged survey findings conducted in the case of M/s Saraswati Spinning & Weaving Mills (SSWM) and on basis of material which were never confronted to the assessee and without following the principles of natural justice? - Assessee's contention: The CIT(A) erred in upholding the AO's action by relying on survey findings and un-confronted material, violating natural justice. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 133A,Section 143(2),Section 142(1),Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “B” NEW DELHI

For Appellant: Shri Subhash Agarwal
For Respondent: Shri Rajesh Kumar Dhanesta
Hearing: 03.09.2026

Per Kavitha Rajagopal, J M:

This appeal is filed by the assessee, challenging the order of the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’ for short], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act', for short), pertaining to the Assessment Year (‘A.Y.s’ for short) 2023-24. 2

2.

The assessee has raised the following grounds of appeal:- “1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in passing an ex-parte order.

2.

For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred both in law and on facts in confirming the addition of Rs. 5,38,68

The order continues below.

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