INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD., VEJALPUR vs. PEL INDUSTRIES LIMITED, ASHRAM ROAD

“(a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.116,01,95,815/- made by AO on account of accommodation entry in form of bogus Sales made to M/s. Pankaj Metals u/s. 68 of I.T. Act without appreciating that: (i) In this case, the information was received from DIT (Investigation) and DIT(I&CI) that the transaction made between the related parties including the assessee company with M/s. Pankaj Metals is only paper transaction and hence they are only providing entries. It was also proved from the contradictory statement of Directors of Pankaj Metal Centre Pvt. Ltd. that Ms. Pankaj Metal and its related parties are taking purchase or sale entries on paper only.

(Assessment Year: 2015-16) ITO vs. Pel Industries Ltd. Page 3 of 7 (ii) To verify the claim of the assessee regarding purchases, notices u/s 133(6) were issued and duly served to the purchase parties, asking them to confirm the details of transactions with M/s. PEL Industries Ltd. However, no reply has been received from any of these purchase parties confirming the alleged transactions with the assessee during the year under consideration. It is clear that the onus is on the assessee to prove that the genuineness of transaction with corroborative evidences but the assessee has failed to do so. The assessee has also failed to provide adequate corroborative evidence to substantiate the legitimacy of the purchase.

(iii) Regarding filing of MVAT along with transaction register by the assessee is concerned, it is submitted that the assessee could not establish the genuineness of the same and delivery of material.”

5. Shri Alpesh Parmar, Ld. CIT-DR submitted that the sale transactions made by the assessee to M/s. Pankaj Metals was paper transaction, which was apparent from the contradictory statement of the Director of M/s Pankaj Metals. He further submitted that the Assessing Officer had issued notice under Section 133(6) of the Act to the parties from whom purchases were disclosed by the assessee. However, no reply was received from them and the purchases were not confirmed. In the absence of any corroborative evidence regarding genuineness of purchases, the Assessing Officer had rightly treated the sales as shown by the assessee as accommodation entries. Therefore, he strongly defended the order of the Assessing Officer.

6.1 The Ld. AR further submitted that the Ld. CIT(A) had not adjudicated the legal grounds taken by the assessee in respect of reopening of the case for the reason that the quantum addition made by the Assessing Officer was deleted on merits. The Ld. AR invoked the provisions of Rule 27 of the Income Tax (Appellate Tribunal) Rules and submitted that the case for A.Y. 2015-16 could not have been reopened under Section 147 of the Act. He explained that notice under Section 148 of the Act was issued on 25.06.2021 which was subsequently treated as show cause notice under Section 148A of the Act. And after passing the order under Section 148A(d) of the Act on 24.08.2022, another notice under Section 148 of the Act was issued by the AO on 24.08.2022. According to the Ld. AR, the first notice dated 25.06.2021 was beyond the period of three years from the end of relevant A.Y. whereas the second notice dated 24.08.2022 was beyond the period of six years from the relevant A.Y. and none of the notices were valid. In this regard, he relied upon the judgement of Hon’ble Supreme Court in the case of Deepak Steel and Power Limited vs. CBDT, 174 taxmann.com 144 (SC) and also on the judgement of jurisdictional High Court in the case of Mayurkumar Babubhai Patel vs. ACIT, 176 taxmann.com 25 (Guj).

(Assessment Year: 2015-16) ITO vs. Pel Industries Ltd. Page 6 of 7 7.2 The second notice under Section 148 of the Act dated 24.08.2022 was beyond the period of six years from the end of the relevant A.Y. This aspect was examined by the jurisdictional High Court in the case of Mayurkumar Babubhai Patel (supra) and the relevant part of the order is reproduced below “15. Considering the facts of the case, it is not in dispute that the respondent Assessing Officer has issued the notice under section 148A(b) of the Act after the period of six years were over on 31.03.2022. As observed by the Hon'ble Apex Court in case of Deepak Steel and Power Limited (supra) and in view of the concession made by the Revenue before the Apex Court for the Assessment Year 2015-16, all the notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and therefore, nothing further is required to be adjudicated in the matters as the notice so far as the present petitions are concerned, though dated 31.03.2021, admittedly have been issued after 01.04.2021.

7.3 In the above referred case, the Hon’ble Gujarat High Court had held the notice issued under Section 148 of the Act on 27/28/29.07.2022 as time barred. Respectfully following this decision, the second notice issued under Section 148 on 24.08.2022 in this case, is also held as time barred.

7.4 In view of the above judicial pronouncement of the Hon’ble Supreme Court as well as the jurisdictional High Court, it is held that the proceedings under Section 147 of the Act initiated in this case was time barred. Since the assessee succeeds on the legal ground raised by it, we

Order pronounced in the open Court on this 4th September, 2025.