ITAT Visakhapatnam Judgments — December 2025

The Tribunal held that the AO's conclusion was based on statements recorded under Section 133A, which do not have evidentiary value. The Tribunal noted that the assessee made payments through banking channels, establishing that purchases were accounted for and payments were made. The AO doubted purchases from M/s. Rajendra Ispat due to non-payment, but the Tribunal stated that outstanding balances alone cannot justify doubting purchases without material evidence. The AO also did not doubt the accounting of purchases, sales, or inventory, only the availment of accommodation entries for certain invoices. Given these facts, the Tribunal found that estimating 8% of bogus purchases in the hands of the assessee was not justified. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and dismissed the grounds raised by the revenue, allowing the grounds raised by the assessee by deleting the additions made by the AO and the estimation of profit made by the Ld. CIT(A). The decision for AY 2015-16 was applied mutatis mutandis to AYs 2016-17 and 2017-18.

The Tribunal held that the AO's conclusion was based on statements recorded under Section 133A, which do not have evidentiary value. The Tribunal noted that the assessee made payments through banking channels, establishing that purchases were accounted for and payments were made. The AO doubted purchases from M/s. Rajendra Ispat due to non-payment, but the Tribunal stated that outstanding balances alone cannot justify doubting purchases without material evidence. The AO also did not doubt the accounting of purchases, sales, or inventory, only the availment of accommodation entries for certain invoices. Given these facts, the Tribunal found that estimating 8% of bogus purchases in the hands of the assessee was not justified. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and dismissed the grounds raised by the revenue, allowing the grounds raised by the assessee by deleting the additions made by the AO and the estimation of profit made by the Ld. CIT(A). The decision for AY 2015-16 was applied mutatis mutandis to AYs 2016-17 and 2017-18.

The Tribunal held that cotton waste used as raw material by open-ended spinning mills is not 'scrap' as defined under Section 206C. The Tribunal also noted that the failure to file Form 27C could be condoned as a technical breach.

The Tribunal held that the provisions of Section 206C are not attracted in the case of the assessee. The Tribunal noted that the CIT(A) prima facie agreed that cotton waste sold by the assessee is not liable for TCS but concluded against the assessee due to the non-furnishing of Form No. 27C. Citing the Gujarat High Court in CIT v. Adisankara Spinning Mills (P.) Ltd. and the Madras High Court in CIT v. A.N. Arunachalam, the Tribunal opined that the non-furnishing of Form No. 27C is a technical breach that can be condoned. The Tribunal remitted the matter back to the Assessing Officer (AO) to examine whether the supplies were made to 'open-ended spinning mills' where cotton waste is used as raw material. The AO was directed to allow the assessee's claim in accordance with law after this examination. The grounds raised by the assessee were allowed for statistical purposes.

The Tribunal held that the assessment order passed under section 144 r.w.s. 144B is null and void due to the non-issuance of a valid notice under section 143(2) of the Income Tax Act, 1961. The Tribunal noted that while the AO's affidavit claimed notices were sent with attachments, the screenshot of the email provided by the assessee clearly showed no attachment. Furthermore, the Revenue authorities could not obtain archived records from the Technical Department to categorically establish that the notice under section 143(2) was attached to the email sent to the assessee. Given these circumstances, the Tribunal concluded that there was no proper service of notice under section 143(2), rendering the consequent assessment proceedings unsustainable and void ab initio. The legal ground raised by the assessee was allowed. As a result, other grounds raised on merits were left undecided.

The Tribunal held that the AO's conclusion was based on statements recorded under Section 133A, which do not have evidentiary value. The Tribunal noted that the assessee made payments through banking channels, establishing that purchases were accounted for and payments were made. The AO doubted purchases from M/s. Rajendra Ispat due to non-payment, but the Tribunal stated that outstanding balances alone cannot justify doubting purchases without material evidence. The AO also did not doubt the accounting of purchases, sales, or inventory, only the availment of accommodation entries for certain invoices. Given these facts, the Tribunal found that estimating 8% of bogus purchases in the hands of the assessee was not justified. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and dismissed the grounds raised by the revenue, allowing the grounds raised by the assessee by deleting the additions made by the AO and the estimation of profit made by the Ld. CIT(A). The decision for AY 2015-16 was applied mutatis mutandis to AYs 2016-17 and 2017-18.

The Tribunal held that the AO's conclusion was based on statements recorded under Section 133A, which do not have evidentiary value. The Tribunal noted that the assessee made payments through banking channels, establishing that purchases were accounted for and payments were made. The AO doubted purchases from M/s. Rajendra Ispat due to non-payment, but the Tribunal stated that outstanding balances alone cannot justify doubting purchases without material evidence. The AO also did not doubt the accounting of purchases, sales, or inventory, only the availment of accommodation entries for certain invoices. Given these facts, the Tribunal found that estimating 8% of bogus purchases in the hands of the assessee was not justified. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and dismissed the grounds raised by the revenue, allowing the grounds raised by the assessee by deleting the additions made by the AO and the estimation of profit made by the Ld. CIT(A). The decision for AY 2015-16 was applied mutatis mutandis to AYs 2016-17 and 2017-18.

The Tribunal held that the AO's conclusion was based on statements recorded under Section 133A, which do not have evidentiary value. The Tribunal noted that the assessee made payments through banking channels, establishing that purchases were accounted for and payments were made. The AO doubted purchases from M/s. Rajendra Ispat due to non-payment, but the Tribunal stated that outstanding balances alone cannot justify doubting purchases without material evidence. The AO also did not doubt the accounting of purchases, sales, or inventory, only the availment of accommodation entries for certain invoices. Given these facts, the Tribunal found that estimating 8% of bogus purchases in the hands of the assessee was not justified. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and dismissed the grounds raised by the revenue, allowing the grounds raised by the assessee by deleting the additions made by the AO and the estimation of profit made by the Ld. CIT(A). The decision for AY 2015-16 was applied mutatis mutandis to AYs 2016-17 and 2017-18.