M/S NAHAR INDUSTRIAL ENTERPRISES LTD.,LUDHIANA vs. ACIT,CIRCLE-1, LUDHIANA

ITA 712/CHANDI/2022Status: DisposedITAT Lucknow28 September 2026AY 2012-1331 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the material on record was insufficient to sustain the impugned addition. The Assessing Officer relied on the statement of the proprietor of M/s Vinayak Traders, recorded behind the assessee's back, without providing an opportunity for cross-examination. The subsequent withdrawal of funds by the supplier, even if established, was a circumstance giving rise to suspicion but did not conclusively establish that the assessee's purchases were bogus or that only accommodation bills were obtained, especially without establishing a nexus with the assessee's transactions and other corroborative evidence. The Tribunal distinguished between material sufficient for reopening and material sufficient to sustain an addition. The revenue failed to bring on record independent and corroborative material or afford an effective opportunity for cross-examination. Therefore, the addition could not be sustained merely on the basis of the uncorroborated statement. The benefit of doubt was given to the assessee, and the addition was deleted. The appeal was allowed.

What were the facts?

The assessee, Nahar Industrial Enterprises Limited, filed an appeal against the order of the CIT(A), NFAC, Delhi, for Assessment Year 2012-13. The assessment was reopened under Section 147 based on information from the Investigation Wing that M/s Vinayak Traders provided accommodation entries for bogus purchases. The assessee was alleged to have made purchases of Rs. 3,62,73,160/- from this entity. The proprietor of M/s Vinayak Traders admitted to providing accommodation entries in a statement recorded by the ADIT. The Assessing Officer treated the purchases as unverifiable and made an addition of Rs. 29,41,753/-, representing 8.11% of the alleged purchases, which was the assessee's declared gross profit rate. The assessee requested a copy of the statement and an opportunity for cross-examination, which were not provided. The final assessed income was a loss of Rs. 1,06,07,04,932/-.

What were the issues?

1. Whether the reopening of assessment under Section 148 was valid, given the alleged lack of conclusive evidence and reliance on presumptions, surmises, and conjectures, making it void ab initio. 2. Whether the addition of Rs. 29,41,753/- was justified without confronting the assessee with evidence and providing an opportunity for cross-examination of the proprietor of M/s Vinayak Traders. Assessee's Contentions: - The reopening was based on presumptions and conjectures, not conclusive evidence, rendering it void ab initio. (Ground 1) - The addition was made without confronting the assessee with evidence and denying the opportunity for cross-examination of the supplier. (Ground 2) - The purchases from M/s Vinayak Traders were treated as bogus without documentary evidence, and the profit element was added without establishing that the company's Gross Profit (GP) was low. (Additional Ground) - The sanction for reopening was mechanical and without jurisdiction. (Additional Ground) - The reopening was a result of a change of opinion, not warranted by Section 147. (Additional Ground) - The notice under Section 148 was illegal and without jurisdiction. (Additional Ground) Revenue's Contentions: - The judgment records no specific contentions for the revenue regarding the issues raised by the assessee. The revenue relied on the statement of the proprietor of M/s Vinayak Traders and the subsequent cash withdrawals by the supplier.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
आयकर अपीलीय अिधकरण,च"ीगढ़ "ायपीठ “बी” , च"ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE "ी लिलत कुमार, "ाियक सद" एवं "ी िवजय वमा" , लेखा सद" BEFORE: SHRI. LALIET KUMAR, JM & SHRI. VIJAY VARMA, AM आयकर अपील सं./ ITA No. 712 /Chd/ 2022 िनधा"रण वष" / Assessment Year : 2012-13 Nahar Industrial Enterprises Limited बनाम The ACIT Focal Point, Ludhiana-141010 Circle-1 Punjab Ludhiana "ायी लेखा सं./PAN NO: AACCN3563A अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Dr. Sanjay Bansal, Sr. Advocate with Shri Navdeep Sharma, Advocate and Shri Iman Singla, Advocate राज" की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl.CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 03/09/2026 उदघोषणा की तारीख/Date of Pronouncement : 28/09/2026

आदेश/Order PER VIJAY VARMA, A.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 14/10/2022 for the Assessment Year 2012-13. 2. In the present appeal Assessee has raised the following grounds:

1.

That Worthy CIT(A)- NFAC, Delhi, erred in law and on facts in upholding the decision of the Assessing Officer, for reopening the assessment u/s 148, which was made

The order continues below.

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