ASSISTANT COMMISSIONER OF INCOME TAX (CENTRAL), JABALPUR vs. M/S. KALINDI ISPAT PVT. LTD., BILASPUR

ITA 80/JAB/2018Status: DisposedITAT Jabalpur06 October 2026AY 2015-1638 pages
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What were the facts?

The Revenue has filed seven appeals challenging orders of the CIT(A) which vacated additions made by the AO. These appeals pertain to assessment years 2009-10 to 2015-16. A search and seizure action under Section 132(1) of the Income Tax Act, 1961, was conducted on October 16, 2014, covering the assessee company, M/s Kalindi Ispat Pvt. Ltd., and its directors' premises. Incriminating material was found, leading to statements recorded under Section 132(4). The assessee's business and registered offices were searched. Consequently, reassessment proceedings under Section 153A were initiated for the block period AY 2009-10 to 2014-15, and the search year AY 2015-16 was subject to scrutiny under Section 143(3). The AO made additions on estimation basis for the block period and for the search year, which were challenged before the CIT(A).

What did the Tribunal hold?

The Tribunal held that for the six assessment years (AY 2009-10 to 2014-15) falling within the block period, the Revenue was unlawful in drawing extrapolated presumptions about incriminating material. The Tribunal relied on the Supreme Court's ruling in PCIT Vs Abhisar Buildwell (P.) Ltd., which mandates that assessments stemming from search actions must be grounded on incriminating material with a direct, year-wise connection. In the absence of such material for each of these six years, no addition is permissible under Section 153A. Consequently, the additions made on the estimation of net profit attributable to unaccounted production/sale were set aside, and the six assessment orders were quashed. The Revenue's appeals for these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found merit in the Revenue's ground. It observed that the AO had correctly identified a discrepancy in the valuation of physical stock as against the value recorded in the books, based on the DVO's report. The CIT(A)'s deletion was considered to have overlooked the valuation aspect and focused on quantitative details. Therefore, the Tribunal set aside the CIT(A)'s adjudication, restoring the addition of the differential value of stock in terms of the assessment order. The Revenue's appeal for this year was allowed.

What were the issues?

1. Whether the Tribunal had jurisdiction to delete additions made under Section 153A for assessment years where no incriminating material pertaining to those specific years was found, relying on the principle that assessments under Section 153A must be grounded on incriminating material directly linked to the year in question (Section 153A r.w.s. 143(3)). - Assessee's Contention: The CIT(A) correctly deleted additions as there was no incriminating material linking to the block period years, relying on Supreme Court judgments in PCIT Vs Abhisar Buildwell (P.) Ltd. and other precedents limiting the scope of Section 153A to material found during search. - Revenue's Contention: The AO was justified in making additions based on estimated differential production/sales by applying a standard consumption rate and estimating net profit, as incriminating material was found during the search. 2. Whether the CIT(A) erred in deleting the addition made on account of excess stock of raw material found during the search and seizure operation, where the AO had added the difference in valuation based on DVO's report (Section 143(3)). - Assessee's Contention: The CIT(A) correctly deleted the addition, as the AO had noted no discrepancies in the quantity of stock but only in valuation, and the assessee had provided explanations. - Revenue's Contention: The CIT(A) erred in deleting the addition as the AO had correctly brought to tax the suppressed value/under-valuation of inventory based on the DVO's report.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(1),Section 132(4),Section 143(3),Section 153A,Section 253,Section 253(2),Section 246A,Section 249,Section 292C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JABALPUR BENCH, MP

Before: HON’BLE SHRI KUL BHARAT & SHRI G.D. PADMAHSHALI

For Appellant: Mr Sumit Nema [‘Ld. AR’]
For Respondent: Mr Dhananjay Wanjari [‘Ld. DR’]
Pronounced: 06/10/2026

PER G. D. PADMAHSHALI ; This bunch of seven appeals filed u/s 253(2) of the Income Tax Act, 1961 [‘the Act’] by the Revenue challenges separate orders passed u/s 250 of the Act by the Commissioner of Income Tax, Appeals-1, Jabalpur which dealt with consolidated order of assessment dt. 23/12/2016 passed u/s 153A r.w.s. 143(3)/143(3) of the Act in relation captioned assessment years [‘AY’].

ITAT-Jabalpur M/s Kalindi Ispat Pvt. Ltd. Vs DCIT ITA Nos. 017 to 022 & 080/JAB/2018

2.

Since facts of these cases & issues raised therein are arising out of common & co

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