ITAT Jabalpur Judgments — October 2026

The Tribunal held that for the six assessment years (AY 2009-10 to 2014-15) falling within the block period, the Revenue was unlawful in drawing extrapolated presumptions about incriminating material. The Tribunal relied on the Supreme Court's ruling in PCIT Vs Abhisar Buildwell (P.) Ltd., which mandates that assessments stemming from search actions must be grounded on incriminating material with a direct, year-wise connection. In the absence of such material for each of these six years, no addition is permissible under Section 153A. Consequently, the additions made on the estimation of net profit attributable to unaccounted production/sale were set aside, and the six assessment orders were quashed. The Revenue's appeals for these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found merit in the Revenue's ground. It observed that the AO had correctly identified a discrepancy in the valuation of physical stock as against the value recorded in the books, based on the DVO's report. The CIT(A)'s deletion was considered to have overlooked the valuation aspect and focused on quantitative details. Therefore, the Tribunal set aside the CIT(A)'s adjudication, restoring the addition of the differential value of stock in terms of the assessment order. The Revenue's appeal for this year was allowed.

The Tribunal upheld the rejection of the assessee's books of accounts under Section 145(3) due to the non-maintenance and non-production of essential records like stock/inventory registers and purchase/sales ledgers, citing precedents like Dhondiram Dalichand Vs CIT, Bastiram Narayandas Vs CIT, and Kachwala Gems Vs Jt. CIT. However, the Tribunal found the estimation of net profit (NP) at 14.72% by the AO and its restriction to 8% by the CIT(A) to be ad-hoc and lacking rationale. It set aside this estimation and directed the AO to determine the NP based on the simple average NP earned by the assessee in the five assessment years preceding AY 2017-18, with a further direction that no addition would be permissible if the re-computed NP fell below the declared NP. Regarding the addition of ₹32,50,800 on account of sundry creditors, the Tribunal, citing CIT Vs Jansampark Advertising & Marketing (P) Ltd., granted the assessee one more opportunity to furnish necessary evidence and explanations regarding the nature and source of the change in audited figures, restoring this issue for verification.

The Tribunal held that the ex-parte dismissal of the assessee's appeal by the CIT(A) could not be sustained. The Tribunal noted that the first eight notices issued by the CIT(A) fell within the period of the COVID-19 pandemic and the exclusion period directed by the Hon'ble Apex Court, which provided sufficient reason for the assessee's inability to respond. Furthermore, for the subsequent notices, the assessee had provided reasons such as the severe illness and hospitalization of his counsel and a personal accident. While acknowledging the CIT(A)'s mandate to dispose of old pending cases, the Tribunal emphasized that this should not come at the cost of violating the principles of natural justice. Relying on the judgments of the Delhi High Court in CIT Vs Jansampark Advertising & Marketing (P) Ltd. and the Supreme Court in Raheem Shah & ANR Vs Govind Singh & Ors., the Tribunal stated that a justice-oriented approach should be adopted. The Tribunal set aside the impugned order and remitted the matter back to the CIT(A) for adjudication de novo, directing the CIT(A) to decide the taxability of capital gains and the deductibility of the exemption claimed in accordance with the law, ensuring compliance with Section 250(6) of the Act. The first ground of appeal was considered partly allowed for statistical purposes.

The Tribunal held that the addition based on estimated differential production/sales for the block period of six assessment years (AY 2009-10 to 2014-15) was not permissible. The Tribunal relied on the Supreme Court's ruling in 'PCIT Vs Abhisar Buildwell (P.) Ltd.' (2023) 454 ITR 212 (SC), which held that assessments stemming from search actions must be grounded on incriminating material with a direct, year-wise connection. In the absence of such material for each of the six assessment years, the extrapolation of incriminating material to multiple years was unlawful. Therefore, the six appeals by the Revenue concerning these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found that the AO had correctly brought to tax the suppressed value/under-valuation of inventory. The CIT(A)'s deletion of this addition was set aside as being devoid of facts and merits, and the addition was restored. Consequently, the Revenue's appeal for AY 2015-16 was allowed.

The Tribunal held that the addition based on estimated differential production/sales for the block period of six assessment years (AY 2009-10 to 2014-15) was not permissible. The Tribunal relied on the Supreme Court's ruling in 'PCIT Vs Abhisar Buildwell (P.) Ltd.' (2023) 454 ITR 212 (SC), which held that assessments stemming from search actions must be grounded on incriminating material with a direct, year-wise connection. In the absence of such material for each of the six assessment years, the extrapolation of incriminating material to multiple years was unlawful. Therefore, the six appeals by the Revenue concerning these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found that the AO had correctly brought to tax the suppressed value/under-valuation of inventory. The CIT(A)'s deletion of this addition was set aside as being devoid of facts and merits, and the addition was restored. Consequently, the Revenue's appeal for AY 2015-16 was allowed.

The Tribunal held that the addition based on estimated differential production/sales for the block period of six assessment years (AY 2009-10 to 2014-15) was not permissible. The Tribunal relied on the Supreme Court's ruling in 'PCIT Vs Abhisar Buildwell (P.) Ltd.' (2023) 454 ITR 212 (SC), which held that assessments stemming from search actions must be grounded on incriminating material with a direct, year-wise connection. In the absence of such material for each of the six assessment years, the extrapolation of incriminating material to multiple years was unlawful. Therefore, the six appeals by the Revenue concerning these years were dismissed. Regarding the addition for the search year (AY 2015-16) on account of excess stock valuation, the Tribunal found that the AO had correctly brought to tax the suppressed value/under-valuation of inventory. The CIT(A)'s deletion of this addition was set aside as being devoid of facts and merits, and the addition was restored. Consequently, the Revenue's appeal for AY 2015-16 was allowed.