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

ITSSA 21/JAB/2018Status: DisposedITAT Jabalpur06 October 2026AY 2013-1438 pages
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What were the facts?

The Revenue has filed seven appeals challenging the orders of the CIT(A) which vacated additions made by the AO in a consolidated assessment order dated 23/12/2016. The assessment was framed under Section 153A read with Section 143(3) of the Income Tax Act, 1961, for assessment years (AY) 2009-10 to 2015-16. The assessee, M/s Kalindi Ispat Pvt. Ltd., is engaged in manufacturing sponge iron. A search and seizure action under Section 132(1) was conducted on 16/10/2014, covering 27 locations, including the assessee's premises and directors' residences, where incriminating material was found. The AO made additions based on estimated differential production/sales and excess stock valuation. The CIT(A) allowed the assessee's appeals by vacating these additions.

What did the Tribunal hold?

The Tribunal held that the addition based on estimated differential production/sales for the block period of six assessment years (AY 2009-10 to 2014-15) was not permissible. The Tribunal relied on the Supreme Court's ruling in 'PCIT Vs Abhisar Buildwell (P.) Ltd.' (2023) 454 ITR 212 (SC), which held 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 the six assessment years, the extrapolation of incriminating material to multiple years was unlawful. Therefore, the six appeals by the Revenue concerning these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found that the AO had correctly brought to tax the suppressed value/under-valuation of inventory. The CIT(A)'s deletion of this addition was set aside as being devoid of facts and merits, and the addition was restored. Consequently, the Revenue's appeal for AY 2015-16 was allowed.

What were the issues?

1. Whether the addition of Rs 4,98,31,227/- made by the AO on account of unaccounted production/sale of sponge iron by applying a standard consumption rate and estimating net profit at 3.85% is sustainable, considering the scope of reassessment under Section 153A is limited to incriminating material found during search, and whether such material can be extrapolated to multiple years? - Assessee's Contention: Not explicitly recorded, but implicitly supported by the CIT(A)'s order which deleted the addition. - Revenue's Contention: The CIT(A) erred in deleting the addition made on account of unaccounted production/sale. 2. Whether the addition of Rs 88,94,688/- made by the AO on account of excess stock of raw material found during the search and seizure operation, based on a valuation by the DVO, is sustainable, and whether the CIT(A) erred in granting relief of Rs 88,59,014/- out of this addition? - Assessee's Contention: Not explicitly recorded, but implicitly supported by the CIT(A)'s order which deleted the addition. - Revenue's Contention: The CIT(A) erred in granting relief on the addition made on account of excess stock of raw material.

Which sections of the Income-tax Act were involved?

Section 253,Section 250,Section 153A,Section 143(3),Section 132(1),Section 132(4),Section 139,Section 246A,Section 249,Section 292C,Section 133A

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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

The order continues below.

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