M/S. ADINATH ELECTRONICS,CHENNAI vs. ITO, NCW-9(1), CHENNAI

ITA 1480/CHNY/2026Status: DisposedITAT Chennai05 October 2026AY 2015-1612 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO failed to establish the factual foundation for the alleged purchases and the statutory foundation for treating the entire purchase value as unexplained money under Section 69A. The Tribunal noted that the assessee denied the purchases, provided its purchase register, financial statements, and bank statements, and stated it had no dealings with LRIPL or its associates. The name in the IVMS database was materially different. The AO's reliance on the IVMS data, without independent corroboration, consignment notes, transport records, or delivery documents, was insufficient. The Tribunal found that the AO did not demonstrate that the investigation into LRIPL resulted in independent evidence proving the alleged purchases by the assessee. Similarly, low returned income in other years does not establish a specific purchase transaction. The Tribunal clarified that Section 69A applies to money, bullion, jewellery, or other valuable articles found with the assessee and not recorded in books, where the nature and source are unexplained. The addition made represented alleged purchase value, not unexplained money or assets owned by the assessee outside its books. The conditions for invoking Section 69A were not demonstrated. Therefore, the addition of Rs. 34,13,862/- made under Section 69A was deleted. The Tribunal refrained from deciding the legal issues regarding reassessment proceedings as the addition failed on merits.

What were the facts?

The assessee, M/s Adinath Electronics, filed appeals against orders of the CIT(A) NFAC for assessment years 2014-15 to 2018-19. These orders arose from assessments under Section 147 read with Section 144B. For AY 2014-15, the Assessing Officer (AO) added Rs. 34,13,862/- under Section 69A, treating alleged cash purchases from Laxmi Remote India Private Limited (LRIPL) as unexplained money. This information originated from search proceedings in the LRIPL case, indicating discrepancies between LRIPL's IVMS data and its ERP software. The IVMS data showed the assessee's name in connection with alleged cash purchases. The AO initiated reassessment proceedings under Section 148 based on this information. The assessee denied any purchases from LRIPL, stating its name was materially different in the IVMS database and that no corroborative evidence for the purchases was provided.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 148 were valid, considering the information was solely based on details from a searched person and not independently verified, and whether Section 153C should have been invoked instead of Section 148. - Assessee argued that reliance on searched person's details without independent verification renders the Section 148 invocation and consequent assessment order bad in law. It contended that Section 153C should have been invoked. - Revenue's arguments are not recorded. 2. Whether the AO erred in treating details from LRIPL's IVMS as valid information for initiating assessment proceedings without recording separate satisfaction, and whether the addition under Section 69A was justified without establishing actual purchases and the nature and source of unexplained money. - Assessee argued that the AO failed to verify the information from the searched person and erred in treating IVMS data as valid without independent satisfaction, making the assessment invalid. It also argued that the AO failed to provide details and wrongly treated aggregate values as unexplained money under Section 69A, contrary to facts. - Revenue's arguments are not recorded. 3. Whether the CIT(A) erred in dismissing the appeal when the case was covered by the Hon'ble Apex Court's decision in Principal Commissioner of Income Tax vs. Abhisar Buildwell (P) Ltd., which states no additions can be made without incriminating materials. - Assessee argued that the CIT(A) dismissed the appeal despite the case being covered by the Abhisar Buildwell decision. It also contended that the CIT(A) disregarded submissions and evidence without providing counter-material. - Revenue's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 69A,Section 115BBE,Section 143(1)(a),Section 148,Section 153C,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA

Hearing: 14.07.2026

PER BENCH:

These appeals, bearing ITA Nos. 1479 to 1483/Chny/2026, are directed against the respective orders dated 28.11.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“Ld. CIT(A)”], for the assessment years 2014-15 to 2018-19, arising out of the assessments completed under Section 147 read with Section 144B of the In

The order continues below.

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