ACE TYRES PRIVATE LIMITED,HYDERABAD vs. DCIT., CENTRAL CIRCLE-1(2), HYDERABAD

ITA 1087/HYD/2025Status: DisposedITAT Hyderabad24 September 2025AY 2017-1878 pages
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What did the Tribunal hold?

The Tribunal addressed the grounds concerning the validity of reassessment proceedings. It noted that the assessee's primary contention was that the material seized from the employee's residential premises could not be considered as seized from the assessee's possession, thus not fulfilling the conditions for invoking Section 148. The Tribunal also considered the arguments regarding the mechanical approval and sanction under Sections 148B and 151. The judgment indicates that the Tribunal was to decide on the validity of the reassessment proceedings and the specific addition. The specific findings and reasoning on these issues, including the ratio decidendi and operative directions, are not fully detailed in the provided excerpt, as the judgment appears to be truncated. However, the appeal is directed against the CIT(A)'s order which dismissed legal grounds and sustained part of the addition.

What were the facts?

The assessee, M/s ACE Tyres (P) Ltd, along with other group companies, was subjected to search and seizure operations under Section 132 of the Income Tax Act on January 4, 2023. During the search at the residential premises of the Senior Accounts Manager, certain loose sheets, promissory notes, and Excel sheets containing details of cash receipts and payments were seized. A laptop with FOCUS 5.5 software was also found. The Accounts Manager stated that the software recorded unaccounted receipts from scrap sales and cash expenditures for business purposes, including loans. The MD of the group admitted unaccounted income of Rs. 107.63 crores for the group, with Rs. 42.15 crores attributable to the assessee. For Assessment Year 2014-15, the assessee admitted Rs. 1.13 crores, but the Assessing Officer made a further addition of Rs. 0.27 lakhs. The assessee appealed to the CIT(A), who dismissed the legal grounds regarding the validity of the Section 148 notice and sustained an addition of Rs. 0.07 lakhs after giving relief of Rs. 0.20 lakhs. The assessee is now appealing to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated by issuing notice under Section 148 of the Income Tax Act are valid, considering the alleged incriminating material was found from the laptop of an employee and not directly from the assessee's possession, thus not satisfying the conditions of Explanation 2(iv) to Section 148? The assessee argued that the material seized from a third person's premises under a separate authorization cannot be considered as books of account or documents seized from the assessee's possession, rendering the invocation of Section 148 invalid. The assessee also contended that the Assessing Officer failed to record satisfaction and obtain prior approval before issuing the notice. 2. Whether the approval granted by the Additional CIT/JCIT (Range head) under Section 148B and the sanction granted under Section 151 of the Act were mechanical and without proper satisfaction, making the notice under Section 148 bad in law? The assessee argued that the approval and sanction were granted without due application of mind, particularly concerning the applicability of Section 149(1)(b)(i) and (ii) or (iii), rendering them nullities. 3. Whether the CIT(A) erred in sustaining the addition of Rs. 7,35,052/-? The assessee challenged this specific addition made by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 147,Section 148,Section 148B,Section 149,Section 151

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Income Tax Appellate Tribunal, Hyderabad DB-B‘ Bench, Hyderabad

Before: Shri Vijay Pal Rao, Vice- & Shri Manjunatha, G.

Per Vijay Pal Rao, Vice President

These six appeals by the assessee are directed against the six separate orders dated 29/05/2025, 30/05/2025, 04/06/2025, 096/06/2025, 17/06/2025 and 14/07/2025 of the learned CIT (A)-11, Hyderabad arising from the assessment order passed u/s 143(3) r.w.s. 147 of the Act, pursuant to the search & seizure operations u/s 132 of the Act, dated 04/01/2023 in case of Exel Group of Companies including the assessee for the A.Ys 2014-15 to 2019-20 respectively. Since common issues are raised in these gr

The order continues below.

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