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

ITA 735/RJT/2026Status: DisposedITAT Raipur23 September 2026AY 2018-1921 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the issues in ITA No. 346/Rjt/2025 (Solo Ceramics) were covered by a co-ordinate bench's decision in similar appeals for AY 2018-19, which had quashed the PCIT's order under Section 263. For ITA No. 735/Rjt/2026 (Delta Ceramic), the Tribunal found that the assessee had stated before the lower authorities that no transaction was made with Shri Haresh Vajubhai Sojitra. The AO did not find cogent evidence to prove the transaction. The Tribunal concluded that the addition of Rs. 34,00,000/- was based on guesswork and conjecture, and since the assessee had explained the transaction satisfactorily by denying it, the addition sustained by the CIT(A) was deleted. The ratio decidendi is that additions based on mere surmise and conjecture, without cogent evidence, are unsustainable, especially when the assessee denies the transaction and the AO fails to provide corroborating proof. The Tribunal allowed both appeals.

What were the facts?

The appeals by M/s. Solo Ceramics (ITA No. 346/Rjt/2025) and Delta Ceramic (ITA No. 735/Rjt/2026) concern Assessment Year 2018-19. Solo Ceramics challenges an order under Section 263 of the Income Tax Act, 1961, passed by the Principal Commissioner of Income Tax (PCIT) on 21.03.2025, which set aside the assessment order. Delta Ceramic challenges an order dated 24.03.2026 passed by the Commissioner of Income-tax (Appeals) [CIT(A)]. Both assessees are stated to have deposited cash in the bank accounts of M/s. Hari Enterprise, operated by Shri Haresh Vajubhai Sojitra, who allegedly issued cheques/DDs in lieu of cash on a commission basis. The Assessing Officer (AO) made additions for alleged unaccounted transactions. Delta Ceramic's stay application was dismissed as not pressed.

What were the issues?

1. Whether the order passed by the PCIT under Section 263 of the Act, holding the AO's assessment order to be erroneous and prejudicial to the revenue due to lack of proper inquiry into a cash transaction of Rs. 35,00,000/- with M/s. Hari Enterprise, is valid and requires quashing? (Assessee's contention: The PCIT erred in law and facts; the order should be quashed. Revenue's contention: Relied on AO's findings). 2. Whether the proceedings initiated under Section 147 of the Act are invalid and the assessment finalized thereon deserves to be quashed, as the CIT(A) erred in rejecting the ground related to the validity of the notice issued under Section 148 of the Act? (Assessee's contention: Proceedings are invalid and should be quashed. Revenue's contention: Not recorded). 3. Whether the addition of Rs. 34,00,000/- on account of alleged unaccounted transactions with Haresh Sojitra is justified and confirmed by the CIT(A), or if it deserves to be deleted? (Assessee's contention: Addition confirmed without considering facts and deserves deletion. Revenue's contention: Relied on AO's findings). 4. Whether the CIT(A) erred in rejecting the ground related to not providing an opportunity for cross-examination of the third party?

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 148,Section 148A,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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