Alang Steel Recycling Private Limited Vs PCIT-1 (ITAT Ahmedabad)
The appeal before the Income Tax Appellate Tribunal (ITAT) arose from an order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income-tax Act, 1961 for Assessment Year 2018-19. The assessee also sought condonation of an 83-day delay in filing the appeal. The Tribunal noted that the delay occurred because the company’s former Chief Accountant left without handing over the income-tax portal credentials and information regarding pending proceedings. Upon finding that the delay was neither deliberate nor mala fide, the Tribunal condoned the delay and admitted the appeal.
On merits, the assessee had originally filed its return declaring income of ₹10,75,470. The assessment was reopened under Section 147 based on information alleging that the assessee had obtained accommodation purchase bills from entities stated to be issuing bogus invoices without actual supply of goods. During the reassessment proceedings, the Assessing Officer (AO) examined the purchases aggregating to ₹77,61,745 and treated them as non-genuine, disallowing the entire amount under Section 37 while completing the reassessment.
The PCIT initiated revision proceedings under Section 263 on the ground that the AO should have invoked Section 69C read with Section 115BBE instead of Section 37. According to the PCIT, the assessee had failed to establish the genuineness of the transactions or the source of expenditure and, therefore, the assessment order was erroneous and prejudicial to the interests of the Revenue. As the assessee did not respond to the notices issued during the revision proceedings, the PCIT proceeded ex parte, relied upon BSES Rajdhani Power Ltd. v. Pr. CIT, and set aside the assessment with a direction to frame a fresh assessment after examining the issue afresh.
