DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), KOLKATA, KOLKATA vs. NILACHAL IRON AND POWER LIMITED, M/S.OCL IRON & STEEL LTD. (SUCCESSOR-IN INTEREST OF M/S. NILACHAL , KOLKATA

ITA 3050/KOL/2025Status: DisposedITAT Kolkata13 October 2026AY 2015-1621 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the Ld. CIT(A) and dismissed the Revenue's appeal. Regarding the first issue, the Tribunal found that the AO rejected the books of account without pointing out specific defects or deficiencies. The reasons cited by the AO were vague and ambiguous. The Ld. CIT(A) had comprehensively dealt with the issue and rightly held that the rejection was not sustainable in law without a careful study of the book results and supporting material evidence. The Tribunal agreed with the Ld. CIT(A)'s finding that the AO's estimation of revenue was vague and lacked proper verification. On the second issue, the Tribunal found that the addition made by the AO was without any basis and based on presumptions and surmises. The Ld. CIT(A) had rightly deleted the addition after a detailed analysis, concluding it was made on surmise. Consequently, both grounds of appeal raised by the Revenue were dismissed.

What were the facts?

The Revenue filed an appeal against the order of the Commissioner of Income-tax (Appeals) for Assessment Year 2015-16, with a delay of 72 days which was condoned. The assessee, Nilachal Iron and Power Limited, engaged in manufacturing and sales of sponge iron, had filed a return showing a total loss of ₹24,91,49,420/-. The Assessing Officer (AO) rejected the assessee's books of accounts under section 145(3) of the Income-tax Act, 1961, and made additions/disallowances on account of estimated turnover, undisclosed sales, stock valuation, and inflated expenditure. The Ld. CIT(A) reversed the AO's decision on the rejection of books and subsequent additions. The Revenue's appeal contested these deletions.

What were the issues?

1. Whether the Ld. CIT(A) was justified in holding the rejection of the assessee's books of accounts under section 145(3) of the Income-tax Act, 1961, by the AO as invalid? - Assessee's Contention: The Ld. CIT(A) rightly held that the AO rejected the books without proper study, material evidence, or pointing out glaring inconsistencies. The AO's reasons were vague and the rejection was unsustainable in law, especially as books were accepted in prior years. - Revenue's Contention: The AO rejected the books based on several reasons including understating revenue, incorrect stock valuation, and dubious trading sales, which were valid grounds for rejection. 2. Whether the Ld. CIT(A) was justified in deleting the addition of ₹6,95,35,221/- on account of sales of iron made by the AO under section 68 of the Act? - Assessee's Contention: The AO's addition was based on assumptions and presumptions, without any evidence. The AO incorrectly compared sales rates of different grades of sponge iron and made arbitrary calculations regarding closing stock and undisclosed sales. - Revenue's Contention: The AO noted discrepancies between the audit report and the profit and loss account regarding sales of iron, justifying the addition.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

For Appellant: Shri A.K. Tulsiyan
For Respondent: Shri Vikas Singh, DR
Hearing: 24.08.2026Pronounced: 13.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata- 20, (hereinafter referred to as the “Ld. CIT(A)”] dated 21.07.2025 for the AY 2015-16. 2. At the outset, we observe from the appeal folder that there is a delay of 72 days in filing the appeal by the department and in support of which a condonation petition was filed. It was stated in the condonation petition that the delay has occurred Nilachal Iron and Power Limited; A.Y. 2015-16 due t

The order continues below.

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