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Facts
The PCIT initiated revisionary proceedings under Section 263 against the assessee's assessment order (u/s 143(3) r.w.s. 144B) for AY 2020-21. The PCIT alleged that the assessee's purchases from M/s B B Medicare Pvt. Ltd. were from a shell company with a mismatched business profile and a suspended trading license, leading to an erroneous and prejudicial assessment due to the AO's failure to conduct adequate inquiries and a potential revenue loss of Rs. 4.12 Crores.
Held
The Tribunal quashed the PCIT's revisionary order, holding that the PCIT violated principles of natural justice by not confronting the assessee with adverse information and by disregarding corroborative evidence provided by the assessee. The Tribunal found that the PCIT passed the order based on external information without proper examination and opportunity for the assessee to rebut, rendering the Section 263 order unsustainable.
Key Issues
Whether the PCIT validly exercised revisionary powers under Section 263 without providing the assessee an effective opportunity of being heard and confronting them with adverse material. Whether the PCIT's order was sustainable when the assessee had provided evidence contradicting the PCIT's observations during assessment proceedings.
Sections Cited
Section 263 of the Income Tax Act, 1961, Section 143(3) of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 68 of the Income Tax Act, 1961, Section 69C of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
Ardent Steels Private Limited, v Pr. Commissioner of Income Tax, s F-9, Hira Arcade, Near Bus Stand, Central Revenue Building, Civil Lines, Raipur-492001, C.G. Raipur, C.G. PAN: AAGCA3302G (अपीलाथ"/Appellant) . (""थ" / Respondent) . िनधा"रतीकीओरसे /Assessee by : Shri R. B. Doshi, CA राज"कीओरसे /Revenue by : Shri S. L. Anuragi, CIT-DR सुनवाईकीतारीख/ Date of Hearing : 23.07.2025 : 17.10.2025 घोषणाकीतारीख/Date of Pronouncement आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeal is filed by the assessee against the revisionary order passed u/s 263 of the Act, 1961 (in short “the Act”) dated 28.03.2025 by the Principal Commissioner of Income Tax, Raipur -1, (in short “Ld. PCIT”), for the Assessment Year 2020-21, which in turn arises from the assessment order u/s 143(3) r.w.s. 144B of the Act, dated 26.09.2022 passed by Assessment Unit, Income Tax Department (in short “Ld. AO”).
2 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 2. In present case, the assessment u/s 143(3) r.w.s. 144B was completed on 26.09.2022, wherein the return income declared by the assessee for Rs. 72,42,52,170/- was enhanced to Rs. 72,90,68,114/- by making a disallowance on account of Health & Education Cess paid for Rs. 47,34,164/- and claimed as expenditure under any other item allowable as Deduction in Schedule BP in ITR. Subsequently, the case record of the assessee are examined by the Ld. PCIT and have observed that during the relevant period the assessee company made purchases of Iron Ore fines to the tune of Rs.3,94,56,149/- from M/s B B Medicare Pvt. Ltd., which is a shall company as per list (SI. No. 70829) circulated by SEBI. It is alleged that the transaction of the said company are only in paper, as no documentary evidence pertaining to receipt of goods or payment details are found in the assessment records to substantiate that the transaction was rarely executed, thus, he doubted the genuineness of the transaction. It is observed by the Ld. PCIT that the aforesaid amount should have been added back to the income of the assessee, which on account of omission had resulted into the loss of revenue from tax amounting to Rs. 4.12 Crores. Considering the aforesaid facts after recording the satisfaction, Ld. PCIT held that the order dated 26.09.2022 passed u/s 143(3) r.w.s. 144B of the Act was erroneous in so far as prejudicial to the interest of revenue, therefore, the same needs to be revised under the provisions of section 263 of the Act.
3 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 3. With the aforesaid observations, Ld. PCIT issued a show-cause notice dated 27.09.2024 asking the assessee to furnish reply with supporting evidence. In compliance, the assessee filed submission on 18.11.2024 raising the contention that the powers u/s 263 of the Act were wrongly exercised by the Ld. PCIT, as the assessment order passed by Ld. AO was not an erroneous assessment, therefore, the proceedings initiated u/s 263 are liable to be dropped under intimation to the assessee.
Ld. PCIT considered the submissions of the assessee but had not found it tenable. Ld. PCIT further described certain more information about the alleged shall company M/s B B Medicare Pvt. Ltd. and have mentioned that as per MCA Website, business of the said company shall “Involved in manufacturing of Radio, Television and communication equipment and apparatus.” Accordingly, it is noted by him that the work profile of the company does not match with the impugned trading of Iron ore fines with the assessee. Ld. PCIT further observed that M/s B B Medicare had complied for grant of trading license of iron ore, vide its application no. 21330 dated. 06.04.2017 with Ministry of Mines. As per letter dtd 30.05.2017 issued by Indian Bureau Of Mines, Indira Bhawan, Nagpur, the application for registration was accepted and registration no. IBM/21330/2017 has been allotted. However, the application for trading of iron ore minerals and granting of license vide 4 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 Application No. NLA11796/2017, dated 04.09.2017 was suspended by IBM vide License Code 091813471011, said information was extracted from the Website of Indian Bureau of Mines. Based on aforesaid information from the website of MCA and Bureau of Mines, Ld. PCIT observed that the license of trading of M/s B B Medicare Pvt. Ltd. were suspended by IBM in a year prior to the impugned period i.e., financial year 2019-20, therefore, the veracity of purchase transaction was not properly verified by Ld. AO during the course of assessment proceedings, Ld. AO squarely failed to enquire on the aforesaid issue which renders the assessment as erroneous as well as prejudicial to the interest of revenue. Ld. PCIT further mentioned certain details regarding the vehicles used for transportation of goods and doubted about the veracity of transportation of goods. Ld. PCIT also extracted a copy of list circulated by SEBI showing name of M/s B B Medicare Pvt. Ltd. mentioned at Sr. No. 70829. Ld. PCIT further placed reliance on the order of ITAT, Raipur in the case of Aarti Sponge & Power Ltd for the AY 2014-15 in dtd 06.09.2023, and had concluded that the Ld. AO had not conducted proper and correct enquiries, therefore, as per Explanation-2 introduced in section 263 w.e.f. 01.06.2015 provides that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner, the order is passed without making inquiries. Finally, Ld. PCIT decided to set aside the 5 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 order passed by Ld. AO with the direction to pass a fresh assessment order in a speaking manner after making necessary inquiries required and after providing due and adequate opportunity of being heard to the assessee.
Being aggrieved with the aforesaid revisionary proceedings and order u/s 263, the assessee preferred an appeal before the ITAT, for raising the following grounds of appeal:
(a) That on the facts and in the circumstances of the case and in law, the exercise of revisionary powers by the Learned Commissioner of Income Tax (“Ld. CIT’) is not in accordance with provisions of section 263 of the Income Tax Act, 1961 (‘Act’) as the preconditions necessary for exercise of such powers are not fulfilled.
(b) That, on the facts and in the circumstances of the case, impugned order and directions of Ld. CIT under section 263 of the Act, is contrary to law laid down by courts, based on extraneous considerations, unsubstantiated presumptions, ignoring to consider all relevant facts and relevant law, re bad in law.
(c) That on the facts and in the circumstances of the case, the Learned CIT erred in initiating revision proceedings without appreciating that the order passed by the Assessing Officer (‘AO’) under section 2022 is neither erroneous nor prejudicial to the interest of revenue.
(d) That on the facts and in the circumstances of the case and in law, the Ld. CIT erred in holding that the AO has failed to examine the issues and his non application of mind has led the order passed by him as erroneous in so far as it is prejudicial to the interest of revenue, without appreciating that all the documents and evidences were submitted before the AO during the course of assessment proceedings and course of assessment proceedings and were considered by him while making the assessment. 2. a) The Appellant submits that the each of above grounds is independent and without prejudice to one another. b) The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon’ble Tribunal to decide on the appeal in accordance with the law.
6 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 6. At the outset, Ld. AR representing the assessee for furnishing the written submission proposed on 21.07.2025, stating that the facts and arguments on behalf of the assessee, the same is extracted hereunder for the sake of completeness of facts:
7 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 8 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 9 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 10 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 11 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 12 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 13 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 14 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 15 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1
Based on aforesaid submissions, it was contended by the Ld. AR that the transaction undertaken between the assessee and M/s B B Medicare Private Limited are genuine, such paper transactions are only book adjustments as the company M/s B B Medicare is a bogus company. Based on such evidences which were with the Ld. PCIT which were never provided to the assessee to rebut on the same to dislodge such observations of the Ld. PCIT, the assessee furnished copy of Ledger Account of M/s B B Medicare Pvt Ltd., Master Data from the website of MCA (Ministry of Corporate Affairs) showing that the said company is an active and compliant, copy of relevant bills and 16 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 purchase bills / vouchers, copy of Bank statement showing payment to M/s B B Medicare, as a proof of actual purchases made and payment through proper banking channel / account payee cheques, copy of transit pass issued by Govt. Of Orissa, Department of Steels & Mines showing actual transportation of goods from the place of supply to the place of delivery clearly showing the name of consignee as M/s B B Medicare Pvt. Ltd. and destination M/s Ardent Steels Limited, Phuljhar (the assessee). All the aforesaid evidence were duly furnished before the Ld. PCIT, which are not even examined by the Ld. PCIT nor any adverse observation have been drawn to disbelieve such evidences by the Ld. PCIT, therefore, the case was made out by the Ld. PCIT only on the foundation of presumption without even looking into such evidences or to make any further enquiry in this respect.
Ld. AR also submitted that during the assessment stage, details of purchase were filed before the Ld. AO along with the postal address, Mobile Number and Email ID of the sellers. The assessee maintains day to day quantitative details of goods which is verifiable from tax audit report in Form No. 3CD, however, no discrepancy whatsoever nature was found by the revenue authorities. It is contended that sales of the assessee was duly accepted and quantitative details of the assessee are also not disturbed thereby, the Ld. AO has accepted the books of accounts and results therein 17 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 with no defects since all the information was furnished before the Ld. AO, he examined the same and have passed the assessment order with no adverse inference to the purchase of the assessee, therefore, it cannot be said that the Ld. AO has not examined the issue. As per settled principal of law no adverse remark in the assessment order cannot be construed that, there was no enquiry or examination conducted by the Ld. AO. Under such circumstances revisionary provisions of Section 263 are uncalled for.
Ld. AR also objected to the observation of the Ld. PCIT, wherein he observed that M/s B B Medicare Pvt Ltd belongs to Kolkata, whereas the said company was based at Orissa, it is evident from MCA Master data furnished and placed at page no. 90 of the assessee’s PB. Copy of assessee company’s status on the website of MCA is extracted hereunder for ready reference:
18 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 19 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1
10. Allegedly, Ld. AR further argued that while drawing negative inference against the assessee by the Ld. PCIT while issuing the notice u/s 263 certain information was referred by him and produced in the order for drawing such inference, however, such information or material was never provided to the assessee even after the specific requirement made by the assessee as per the written submission before the Ld. PCIT dated 18.01.2024, wherein the assessee has made the following request:
“We also request your Honor to kindly provide the SEBI list along with order as referred in the notice wherein BBM has been shown as a shell company for better understanding of the assessee. Even for the sake of arguments, it is assumed that BBM has been shown as a shell company by the SEBI, then also we humbly submit that assessee has duly undertaken the purchase transactions which is properly reflected in the tax invoice transit pass issued by Government of Orissa and Bank statement (already enclosed herewith. Moreover, as per MCA records, BBM is an active compliant company and hence cannot be considered as shell company as alleged by your goodself.
20 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 Hence the impugned allegations by your Honor that the transaction undertaken by assessee company was only book adjustment is without any basis and accordingly same is unfounded and uncalled for.”
It was the submission by Ld. AR that the revised order was passed on material or information kept by Ld. PCIT with himself only, the same was never confronted to the assessee. The assessee had no occasion to look into such information and evidence used against it, so as to observe such information / documents to rebut to the same, whereas sufficient information and material has been furnished by the assessee, which were not even look into by the revisionary authority, if the Ld. PCIT would have considered the evidences furnished by the assessee, the allegation made regarding genuineness of transactions with M/s B B Medicare Pvt Ltd would have been clarified and the genuineness would have established. It is further submitted that if certain material is being utilized against the assessee, it is incumbent by the Ld. PCIT to provide the same beforehand to the assessee to rebut on the same. It is the trite law that no material can be utilized against the assessee without confronting with the same or granting the liberty to rebut and clarify. If some material is used without confronting the assessee, the same is liable to be ignored. Ld. AR placed his judgment on the following decisions:
21 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 12. Ld. AR placed his reliance on the following decision:
I. Kishinchand Chellaram vs CIT (1980) 125 ITR 713(SC). II. Sabh Infrastructure Ltd. Vs. ACIT (2017) 398 ITR 198 (Del.), SLP dismissed vide (2024) 461 ITR 339 (SC). III. ACIT vs Sun & Sun Inframetric P. Ltd. (2024) 460 ITR 258 (Chhattisgarh) IV. Heirs & LRs of Late Laxmanbhai S Patel vs CIT (2010) 327 ITR 290, 304(Guj.).
Ld. AR further submitted that the assessee had kept and deprived off the information and material used against it in spite of making specific requests, it tantamount to no proper / effective opportunity of being heard. It was the submission that ‘after giving opportunity of being heard’ means confronting the assessee with a view point of the authority along with providing necessary evidences to support such view point, which was not done in the present case, therefore, the action u/s 263 was in violation of principle of natural justice and not providing alleged material amounts to denial of proper/ reasonable opportunity of being heard to the assessee. Reliance was placed on the decision of CIT Vs Amitabh Bachchan (2016) 384 ITR 200 (SC) and Kamlesh Jain & Sons HUF Vs ITO, dated 29.09.2021. Ld. AR further placed his reliance on the decision extracted (supra). Ld. AR also placed on record various comments qua the observations of Ld. PCIT, the 22 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 same are extracted (supra). Regarding license of Iron Ore by Department of Steel and Mines. Assessee placed before us, copy of license status report extracted from the website of Department of Steel & Mines, according to which License No. NLD11796/2018 was issued on 06.08.2018 valid for the period from 06.08.2018 to 05.08.2023, therefore, the inference by the Ld. PCIT that the license of M/s B B Medicare Pvt. Ltd. was suspended for the relevant period was a misconception, which could have been clarified if the same was confronted to the assessee. Therefore, it is submitted that the said license was very much inexistence as against the observation of Ld. PCIT that it was suspended in 2017.
In backdrop of aforesaid submission, it was the prayer by Ld. AR that the revisionary proceedings initiated by Ld. PCIT are not in accordance with the mandate of law, there is a clear violation of Principal of Natural justice and therefore the interpretations, observations and inference drawn by Ld. AR without confronting the assessee are in contradiction to the settled principle of laws. It is submitted that the assessee had duly addressed the issue raised by Ld. PCIT, submitting corroborative evidence to establish the genuineness of transactions with M/s B B Medicare Pvt. Ltd, if such corroborative evidences which were available before the Ld. PCIT but had not looked into, he just in haste had set aside the matter to the file of Ld. AO, which vitiates the entire 23 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 proceedings u/s 263. Accordingly, the order passed u/s 263 by the Ld. PCIT and contravention of the provisions of law is liable to be quashed.
Per contra, Ld. CIT-DR vehemently supported the order of Ld. PCIT and submitted a report from the concerned AO, highlighting the failure of the Ld. AO in examining the nature and source of transactions with M/s B B Medicare Pvt Ltd. The report so furnished before us for the sake of completeness of facts is culled out as under:
24 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 25 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1
We have considered the rival submission, perused the material available on record and the case laws relied upon by the assessee. Admittedly, in present case, certain information was received by the Ld. PCIT in the form of list from SEBI, license information of M/s B B Medicare Pvt Ltd. From the website of department of Steel & Mines by Government of Orissa is regarding the issuance of notice dated 30.05.2017 and suspension of notice 26 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 dated 04.09.2017. It is also observed by Ld. PCIT that the alleged company as per the SEBI details is a Kolkata based company, whereas the facts on record clarifies that the company is based at Orissa.
Before us Ld. AR submitted that the license of M/s B B Medicare Pvt Ltd. was active from 06.08.2018 from 05.08.2023 as per license no. 11796/2018 (extracted supra), This shows that the validity of license during the relevant period i.e., FY 2019-20 was very much in existence, however such facts was never enquired about by the Ld. PCIT from the assessee, Ld. PCIT has formed a belief based on the list of SEBI that the company is a Kolkata based company and is a sham company and accordingly, the transaction of purchase with the said company are ingenuine and are just book transactions. All the relevant evidence i.e., ledger account of M/s B B Medicare Pvt Ltd., bank statement showing transactions, Master data from MCA, copy of tax invoice, purchase vouchers of M/s B B Medicare Pvt Ltd., transit pass issued by Government of Orissa, Department of Steel & Mines are not referred by Ld. PCIT and concluded under preconceived notion that once the information is received from SEBI there is no need to refer the evidences which were furnished by the assessee before him, even for examining the veracity of such documents or to dislodge the genuineness of such documents. Ld. PCIT also failed to confront and in providing necessary documents and information to the 27 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 assessee so as to submit the clarification/ rebuttal to enlighten about the genuineness of the transactions but hurriedly he set aside the order of Ld. AO passed on the basis of external information to reach a unjustified conclusion. Such conduct and action of Ld. PCIT is against the principal of natural justice, wherein he decided the fate of Assessee’s case without even properly hearing the assessee. Under such factual position of the present case, we find substance in the contention of the assessee that the provision of Section 263 contemplates opportunity of being heard to be afforded to the assessee, failure to such opportunity would render the revisionary proceedings illegal. Reliance place on the decision of Hon’ble Apex Court in the case of Commissioner of CIT Vs Amitabh Bachchan (supra), wherein the Hon’ble Apex Court has held as under:
Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic pre- condition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being heard. It is in the context of the above position that this Court has repeatedly held that unlike the power of reopening an assessment under Section 147 of the Act, the power of revision under Section 263 is not contingent on the giving of a notice to show cause. In fact, Section 263 has been understood not to require any specific show cause notice to be served on the assessee.
28 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 Rather, what is required under the said provision is an opportunity of hearing to the assessee. The two requirements are different; the first would comprehend a prior notice detailing the specific grounds on which revision of the assessment order is tentatively being proposed. Such a notice is not required. What is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. Reference in this regard may be illustratively made to the decisions of this Court in Gita Devi Aggarwal vs. Commissioner of Income Tax, West Bengal and others 1 and in The C. I. T., West Bengal, II, Calcutta vs. M/s Electro House 2. Paragraph 4 of the decision in The C. I. T. West Bengal, II, Calcutta vs. M/s Electro House (supra) being illumination of the issue indicated above may be usefully reproduced hereunder: “This section unlike Section 34 does not pre- scribe any notice to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard. The section does not speak of any notice. It is unfortunate that the High Court failed to notice the difference in language between Sections 33-B and 34. For the assumption of jurisdiction to proceed under Section 34. the notice as prescribed in that section is a condition precedent. But no such notice is contemplated by Section 33-B. The jurisdiction of the Commissioner to proceed under Section 33-B is not dependent on the fulfilment of any condition precedent. All that he is required to do before reaching his decision and not before commencing the enquiry, he must give the 'assessee an opportunity of heard and make or cause to make such enquiry as he deems necessary. Those requirements have nothing to do with the jurisdiction of the Commissioner. They pertain to the region of natural justice. Breach of the principles of natural justice may affect the legality of the order made but that does not affect the juris- diction of the Commissioner. At present we 29 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 are not called upon to consider whether the order made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice and if he was so required what that notice should have contained? Our answer to that question has al- ready been made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to proceed under Section 33-B. Therefore the question what that notice should contain does not arise for consideration. It is not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held under Section 33-B. Therefore, we refrain from spelling out what principles of natural justice should be observed in an enquiry under Section 33-B. This Court in Gita Devi Aggarwal v. CIT, West Bengal ruled that Section 33-B does not in ex- press terms require a notice to be served on the assessee as in the case of Section 34. Section 33-B merely requires that an opportunity of being heard should be given to the assessee and the stringent requirement of service of no- Lice under Section 34 cannot, therefore, be applied to a proceeding under Section 33-B." (Page 827- 828).
Further, similar issue is discussed by the Hon’ble Jurisdictional High Court of Chhattisgarh in the case of ACIT vs Sun & Sun Inframetric P. Ltd.
(2024) 460 ITR 258 (Chhattisgarh), wherein Hon’ble Jurisdictional High Court has categorically held that ‘withholding of certain documents which is used against the assessee by the Ld. PCIT defeats the rules of natural justice of 30 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 doctrine of Audi alteram partem. Relevant findings of Hon’ble Jurisdictional High Court of the aforesaid case are as under:
15) Further, apart from the aforesaid observations, the order passed by the PCIT also suffers from lack of due opportunity of hearing as the PCIT while making which was not a matter of lis. Therefore the reliance of credit worthiness of lender Company which dominated the track for PCIT to arrive at a finding to invoke Section 263 of I. T. Act was defective. Thereby the PCIT has not followed the rules of natural justice and admissibility of such document or the statement becomes doubtful as the rules of natural justice were given a go-bye. The finding of fact that the amount of unsecured loan got by the assessee from the lender Company was not received in assessment year in question on the basis of a finding which was never before the assessee to counter it. As such, section 68 cannot be invoked in the garb of Section 263 as fiscal statute is to be given a strict interpretation. 16) Further observation made by the appellate Tribunal that consequential direction towards genuineness of stamp paper of receipt of advance from GTPL etc., being relatable to receipt of loans in other assessment year are apparently far- fetched and have no relevance for assessment of income of this year, appears to be reasonable as no prejudice is caused to the interest of Revenue. A reading of the order would further would show that the Tribunal held that the repayment of loan and payment of interest expenditure was recorded in the books of transaction, which do not fall within the purview of section 69C of the Act. The Tribunal held that there is no dispute about the maintenance of book of accounts by the assessee and the same having been accepted in the past no defects were pointed out in the books maintained by the assessee. With respect to investment which is made in the property, there can be only two methods to find out the correct position - (i) When proper books of account are maintained, and (ii)
31 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 valuation report. The finding of the Tribunal shows that proper books of account were maintained and no defects are pointed out about enormous gap of any valuation and consequently the books were not rejected. Therefore the maintained by the assessee are defective or not reliable. It may have marginal difference with the valuation but that may be for various reasons but primarily aforesaid two conditions are required to be satisfied, which having not been present, the appellate Tribunal has rightly held the issue in favour of the assessee. 17) The Tribunal also recorded the fact that the so called incriminating information that the lender company being classified by the SEBI as shell Company coupled with some adversarial statement of one Amit Kumar Kedia which has been relied by the PCIT post assessment, were not supplied to the assessee despite requests made by him that those information and statement would enable him to place its defence. Therefore, a serious flaw was committed by the PCIT. The assessment order also records the fact that GTPL is a NBFC registered with RBI and is a Company of sound financial standing and a regular tax payer of huge amounts year after year, therefore, withholding certain documents which is used against the assessee by the PCIT defeats the rules of natural justice of doctrine of audi alteram partem.
In the aforesaid matter, during the hearing Ld. AR has also confronted with the case that the judgment of Hon’ble Jurisdictional High Court in the case of Chhattisgarh State Minor Forest Produce (Trading and Development) Co-operative Federation Limited Raipur vs. Pr.
32 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 Commissioner of Income Tax-1, Raipur, wherein Hon’ble Court had set aside the matter to the file of Ld. PCIT for fresh adjudication as the assessee’s replies and the documents were not considered by the Ld. PCIT. Ld. AR on this issue has submitted the said case, it was the request by assessee to set aside the matter to which the respondent i.e., Revenue had also conceded and, therefore, the matter was restored to the Ld. PCIT. Though, we are not agreed with the contention of the Ld. AR, however, we find that the facts in the case of Chhattisgarh State Forest Minor Produce (supra), are distinguishable from the facts of present case, as in present case certain information was used against the assessee by the Ld. PCIT without even providing the same to the assessee therefore, such contravention of principle of natural justice by the Ld. PCIT cannot be cured at this stage. The case of assessee, therefore, would squarely covered by the decision of Hon’ble Chhattisgarh High Court in the case of Sun & Sun Inframetric Pvt. Ltd. (supra), wherein the violation of principle of natural justice in terms of withholding of certain information and documents used against the assessee was a serious flaw committed by the Ld. PCIT and, therefore, the same defeats the rule of natural justice and doctrine of audi alteram partem.
We, thus, in terms of aforesaid decisions, facts and circumstances of the present case are of the considered opinion that the Ld. PCIT has grossly 33 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 erred in not providing the information or documents used against the assessee and furthermore have not even considered the submissions of assessee along with corroborative evidences to justify that the information available with the Ld. PCIT was not sacrosanct and if the evidences furnished by the assessee are looked into the genuineness of transactions would undoubtedly explained and established. Accordingly, we are satisfied with contention raised by the Ld. AR and hold that the Ld. PCIT has failed to adhere to the legal principles as per provisions of Act, as well as analogies drawn by Hon’ble Apex Court and Hon’ble Jurisdictional High Court. Ld. PCIT also failed in his conclusions on merits as well, as the relevant evidences regarding the place of alleged company, proof of payments i.e., bank statements, transportation of goods and availability of license of the alleged company i.e., M/s B B Medicare Pvt Ltd. which were very much before him but have brushed aside or had ignored. Consequently, the order u/s 263 under consideration before us was passed by the Ld. PCIT on the foundation of external information without examining the facts on record furnished by the assessee, under violation of legal principles, therefore, was bad in law, unsustainable and liable to be quashed. We, therefore, direct to do so. Accordingly, the sole controversy raised by the assessee on legal aspect as well as on merits stands decided in favour of the assessee.
34 Ardent Steels Private Limited vs. Pr. CIT, Raipur-1 21. In result, the appeal of the assessee is allowed in terms of our aforesaid observations.