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

ITA 80/JAB/2018Status: DisposedITAT Agra06 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 arise from a search and seizure action under Section 132(1) of the Income Tax Act, 1961, conducted on October 16, 2014, at 27 locations, including the assessee company, M/s Kalindi Ispat Pvt. Ltd. Incriminating material was found, and statements of directors were recorded under Section 132(4). The assessee's business and registered premises were covered. Assessments for AY 2009-10 to 2014-15 were made under Section 153A, and for AY 2015-16 under Section 143(3). The AO made additions on account of estimated differential production/sales and excess stock valuation. The CIT(A) deleted these additions, leading to the present appeals by the Revenue.

What did the Tribunal hold?

The Tribunal held that the additions made for the block period of six assessment years (AY 2009-10 to 2014-15) were impermissible in the absence of specific incriminating material for each of those years. The Tribunal relied on the Supreme Court's decision in PCIT Vs Abhisar Buildwell (P.) Ltd., which mandates that assessments under Section 153A must be grounded on incriminating material with a direct, year-wise connection. Since the incriminating material found during the search did not specify the year of the transactions, extrapolating it to multiple years was unlawful. Consequently, the addition on account of estimated net profit attributable to unaccounted production/sale for these six years was set aside. Regarding the addition for AY 2015-16 (search year) concerning excess stock valuation, the Tribunal found that the AO had correctly identified a discrepancy in the valuation of physical stock compared to the books. The CIT(A)'s deletion of this addition was based on an oversight of quantitative details rather than the valuation discrepancy. Therefore, the addition of the differential value of stock was restored. The Tribunal dismissed the Revenue's appeals for AY 2009-10 to 2014-15 and allowed the appeal for AY 2015-16.

What were the issues?

1. Whether, on the facts and in the circumstances, the CIT(A) erred in deleting the addition of ₹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% (Section 153A r.w.s. 143(3)). 2. Whether, on the facts and in the circumstances, the CIT(A) erred in granting relief of ₹88,59,014/- out of the total addition of ₹88,94,688/- made by the AO on account of excess stock of raw material found during the search and seizure operation (Section 143(3)). Assessee's Contentions: The assessee's primary contention, as reflected in the CIT(A)'s order, was that the additions made by the AO were not supported by incriminating material directly linked to each assessment year within the block period. The assessee relied on judicial precedents emphasizing that assessments under Section 153A must be based on incriminating material found during the search pertaining to specific years. Revenue's Contentions: The Revenue contended that the CIT(A) erred in deleting the additions. For the first issue, the Revenue argued that the AO correctly estimated unaccounted production/sales based on government agency reports and profit estimation. For the second issue, the Revenue argued that the AO correctly identified excess stock of raw material and added the differential value to the income.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(1),Section 132(4),Section 133A,Section 143(3),Section 153A,Section 250,Section 253,Section 253(2),Section 292C

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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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