VINAY IRON FOUNDRY,AGRA vs. PCIT, AGRA

ITA 428/AGR/2026Status: DisposedITAT Agra07 October 2026AY 2022-2320 pages
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What were the facts?

The assessee, Vinay Iron Foundry, filed appeals against two orders dated February 27, 2026, passed by the Principal Commissioner of Income Tax-1 (PCIT), Agra, under Section 263 of the Income Tax Act, 1961. These orders pertained to Assessment Years (AY) 2019-20 and 2022-23. The appeals were filed with a delay of 15 days, which the Tribunal condoned due to unavoidable circumstances related to family functions. For AY 2019-20, the Assessing Officer (AO) had completed the assessment under Section 147 r.w.s. 144 r.w.s. 144B, making an addition of Rs. 12,50,09,943/- on account of bogus purchases from related parties. The PCIT initiated revision proceedings, alleging the assessment order was erroneous and prejudicial to the revenue, specifically noting that the bogus purchases should have been treated as unexplained income under Section 68 and taxed under Section 115BBE.

What did the Tribunal hold?

The Tribunal noted that the assessee had not submitted before the AO or the PCIT that the amounts of Rs. 1,74,70,476/- and Rs. 48,32,118/- relating to Shri Panna Lal Jain and Smt. Sarala Jain were unsecured loans advanced by the assessee, rather than loans taken. The assessee presented this claim for the first time before the Tribunal, supported by Schedule-J of the balance sheet showing 'sundry loans and advances' on the asset side. However, the Tribunal also observed that comparative figures for these loans in the balance sheet for the period ending March 31, 2021, to substantiate the claim of opening balance from the previous year, were not available on record. Additionally, an unsecured loan of Rs. 9,21,587/- from Shri Ratan Lal Jain was shown as a liability. Given these facts, the Tribunal was satisfied that the new claim required fresh examination by the PCIT. Accordingly, the order of the PCIT was set aside, and the matter was restored to the PCIT's file for re-examination and verification of the assessee's claims, with a direction to pass a fresh order after providing the assessee with a reasonable opportunity of being heard. The appeals were allowed for statistical purposes.

What were the issues?

1. Whether the assessment order for AY 2019-20, which disallowed bogus purchases of Rs. 12,50,09,943/- as expenses and added it to business income, was erroneous and prejudicial to the interest of the revenue, thereby warranting revision under Section 263 of the Income Tax Act, 1961, as contended by the revenue? 2. Whether the PCIT erred in directing the AO to examine the addition under Section 68 of the Act in respect of loans and advances given by the appellant, when Section 68 applies only to credit amounts and not amounts given by the assessee, as argued by the assessee? Assessee's Contentions: - The assessment order was passed after due application of mind by the AO and the twin conditions for Section 263 jurisdiction (erroneous and prejudicial to revenue) are not satisfied. - Section 68 of the Act can only be invoked on credit amounts, not on amounts given by the appellant. The amounts in question represented loans and advances given by the assessee to Shri Panna Lal Jain and Smt. Sarala Jain, reflected on the asset side of the balance sheet. - Relied on case laws for unsecured loans advanced. Revenue's Contentions: - The new claim that the amounts represented loans given by the assessee, rather than taken, was not stated before the AO or the PCIT during Section 263 proceedings. - The matter should be set aside to the PCIT to verify this new claim.

Which sections of the Income-tax Act were involved?

Section 263,Section 147,Section 144,Section 144B,Section 68,Section 115BBE,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA (DB

Before: SHRI SUNIL KUMAR SINGH & SHRI BRAJESH KUMAR SINGH

For Respondent: Ms. Sangeeta Yadav, CIT(DR)
Hearing: 22.07.2026Pronounced: 07.10.2026

PER : BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER: Both these appeals are directed against two separate orders both dated 27.02.2026 passed in Revision No. PCIT, Agra-1/Revision- 263/100000790783/2025 and PCIT, Agra-1/Revision- 263/100000790784/2025 by the ld. Principal Commissioner of Income Tax-1, Agra [hereinafter referred to as the “PCIT] u/s. 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2019-20 and 2022-23 respectively.

ITA No.427 & 428/Agr/2026

2.

Since, both these appeals are inter-related to the same assessee, they were heard together and are disposed of by this consolidated order for the sake of

The order continues below.

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