DELTA CERAMIC,MORBI vs. ITO, WARD-1, MORBI, MORBI

ITA 735/RJT/2026Status: DisposedITAT Rajkot23 September 2026AY 2018-1921 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue was covered by a coordinate bench decision in the case of M/s. Hilltop Ceramic, M/s. Acme Ceramic, and M/s. Noken Vitrified Pvt. Ltd. for the same assessment year. In that decision, the Tribunal had quashed the PCIT's order under section 263. The Tribunal noted that the assessee in ITA No. 735/Rjt/2026 had denied any transaction with Shri Haresh Vajubhai Sojitra. The Assessing Officer had made an addition of Rs. 34,00,000/- based on the information that the assessee had deposited cash in the bank accounts of M/s. Hari Enterprise, which was engaged in issuing cheques/DDs in lieu of cash on a commission basis. The Tribunal found that the assessee had explained the transaction satisfactorily by stating no transaction occurred, and the addition was based on guesswork and conjecture. Therefore, the addition sustained by the CIT(A) to the tune of Rs. 34,00,000/- was deleted. Consequently, the appeal filed by the assessee in ITA No. 735/Rjt/2026 was allowed. As both appeals involved identical issues, both were allowed.

What were the facts?

These appeals by M/s. Solo Ceramics (ITA No. 346/Rjt/2025) and Delta Ceramic (ITA No. 735/Rjt/2026) pertain to Assessment Year 2018-19. ITA No. 346/Rjt/2025 challenges an order passed by the Principal Commissioner of Income Tax (PCIT) under section 263. ITA No. 735/Rjt/2026 challenges an order passed by the Commissioner of Income-tax (Appeals) [CIT(A)]. The core issue in both appeals relates to alleged cash transactions with M/s. Hari Enterprise, proprietor Shri Haresh Vajubhai Sojitra. The PCIT had revised an assessment order passed by the Assessing Officer (AO) under section 147, stating the AO had not applied his mind properly regarding a cash transaction of Rs. 35,00,000/-. The CIT(A) had confirmed an addition of Rs. 34,00,000/-. A stay application filed by Delta Ceramic was dismissed as not pressed.

What were the issues?

1. Whether the order passed by the PCIT under section 263 of the Income Tax Act, 1961, quashing the assessment order passed by the AO, was valid, considering the AO's alleged lack of proper inquiry into a cash transaction of Rs. 35,00,000/- with M/s. Hari Enterprise? (Question of law and fact, concerning Section 263). - Assessee's contention: The PCIT's order is bad in law and invalid, and the assessment order should be quashed. The AO's order was not erroneous or prejudicial to the revenue. - Revenue's contention: Relied on the findings of the Assessing Officer. 2. Whether the proceedings initiated under section 147 of the Income Tax Act, 1961, and the consequent assessment order were invalid, and whether the addition of Rs. 34,00,000/- on account of alleged unaccounted transactions with Shri Haresh Vajubhai Sojitra was justified? (Question of law and fact, concerning Section 147 and Section 69A). - Assessee's contention: Proceedings under Section 147 are invalid. The addition of Rs. 34,00,000/- is unjustified and deserves to be deleted. The assessee also argued for the right to cross-examine third parties. - Revenue's contention: Not explicitly recorded, but implied reliance on the AO's findings.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 148,Section 148A,Section 144B,Section 131(1A),Section 69A

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Heard together (2 matters)

ITA No. 346/Rjt/2025
ITA No. 735/Rjt/2026

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अिधकरण, राजकोट "यायपीठ, राजकोट । In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member आयकरअपीलसं./ITA No. 346/Rjt/2025 [ "नधा"रणवष"/Assessment Year: 2018-19 ] M/s. Solo Ceramics, The Pr. Commissioner of Income- 8-A, National Highway, At.

Tax, Rajkot-1, Rajkot, Vs.

Lalpar, Dist. Morbi, Aayakar Bhavan, Race Course Ring Gujarat-363641 Road, Rajkot, Gujarat-360001 "थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABGFS5907F (अपीलाथ"/Appellant) (""यथ"/Respondent) आयकरअपीलसं./ITA No. 735/Rjt/2026 [ "नधा"रणवष"/Assessment Year: 2018-19 ] Delta Ceramic, The Income-tax Officer, 8-A, National Highway, At. Lalpar, Vs.

Ward-1, Morbi, Tal. Morbi, Income-tax Office, Shakti Chamber, Gujarat-363642 Morbi, Gujarat-363642 "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAIFD3582C (अपीलाथ"/Appellant) (""यथ"/Respondent)

Stay Application No. 09/Rjt/2026 [ In ITA No. 735/Rjt/2026 ] [ Assessment Year: 2018-19 ] Delta Ceramic, The Income-tax Officer, 8-A, National Highway, At. Lalpar, Ward-1, Morbi, Vs.

Tal. Morbi, Income-tax Office, Shakti Chamber, Gujarat-363642 Morbi, Gujarat-363642 "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAIFD358

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