ASIA PACIFIC RESOURCES PRIVATE LIMITED,AHMEDABAD vs. INCOME TAX OFFICER WARD 1(1)(3), AHMEDABAD

ITA 477/AHD/2026Status: DisposedITAT Chandigarh24 September 2026AY 2013-1412 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of the assessment was invalid. The reasons recorded by the AO did not demonstrate a live and rational nexus between the information available and the conclusion that income had escaped assessment due to a transaction with M/s. Ayan Trading Co. The alleged transaction was neither identified during reassessment nor established in the assessment order. Furthermore, the addition ultimately made by the AO related to different parties and different transactions (bogus purchases from M/s. SP Trading Company and M/s. Patel Trading Company) without a necessary nexus to the transaction forming the basis of reopening. The Tribunal relied on the Gujarat High Court decision in CIT v. Mohmed Juned Dadani, which held that if no addition is made on the reopened issue, no other addition can be made. Consequently, the reassessment order and the additions made therein were quashed as the assumption of jurisdiction for reassessment was invalid. The grounds related to reopening were allowed, rendering other grounds inconsequential. The same reasoning was applied to AY 2014-15.

What were the facts?

The assessee, Asia Pacific Resources Private Limited, filed appeals against orders of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Years (AY) 2013-14 and 2014-15. The Assessing Officer (AO) reopened the assessment for AY 2013-14 based on information that M/s. Ayan Trading Co. was involved in fund rotation and the assessee received a credit of Rs. 6 crores from them as an accommodation entry. The assessee denied any transaction with M/s. Ayan Trading Co. The AO, however, examined transactions with M/s. Patel Trading Company and M/s. SP Trading Company, treating alleged bogus purchases through these entities as unaccounted income and making an addition of Rs. 6 crores. The CIT(A) dismissed the assessee's appeal. The issues in both appeals are identical.

What were the issues?

1. Whether the reopening of assessment is bad in law on grounds of vague reasons, lack of specific information, failure to respond to the assessee's request for information, and disposal of objections without consideration, as per Section 147 of the Income Tax Act. 2. Whether the entire assessment is bad in law for not serving a draft assessment order upon the assessee, as required by Section 148 of the Income Tax Act. 3. Whether the assessment is bad in law due to gross violation of principles of natural justice, with the assessee's submissions not being considered. 4. Whether the AO erred in disallowing purchases as bogus, when they were substantiated and related to exports, and the AO did not question the sales/exports. 5. Whether the assessment order is liable to be set aside for not being a speaking order. Assessee's Contentions: The reopening was based on incorrect information as there were no dealings with M/s. Ayan Trading Co. The AO failed to provide details of the alleged Rs. 6 crore transaction. The addition was made on account of bogus purchases from M/s. SP Trading Company and M/s. Patel Trading Company, which cannot be treated as credits. The AO could not make additions for other transactions when the original basis for reopening was not established. The assessment order was not a speaking order and violated principles of natural justice. The purchases were substantiated and exported. Revenue's Contentions: A survey at Axis Bank revealed dubious transactions in accounts of M/s. SP Trading Company and Patel Trading Company, whose proprietors admitted their accounts were used for fund rotation. The AO rightly initiated proceedings under Section 147 based on detailed reasons about the modus operandi. The reference to M/s. SP Trading Company and M/s. Patel Trading Company was circumstantial evidence of unaccounted transactions.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144B,Section 143(1),Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Tarun Jamnadas Ghia, CA
For Respondent: Shri Kiran Unavekar, CIT-DR & Amit Pratap Singh, Sr
Hearing: 15.07.2026Pronounced: 24.09.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

These two appeals are filed by the Assessee against separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] both dated 23.12.2025 for the Assessment Years (A.Y.) 2013-14 and 2014-15 in the proceeding u/s 147 r.w.s. 144B of the Income Tax Act [hereinafter referred as “the Act”]. As the issues involved in these two appeals are identical, both the matters were heard together and are being disposed of vide this common order for the sake of convenience. We w

The order continues below.

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