Shakambhari Ispat & Power Limited Vs DCIT (ITAT Kolkata)
Summary: ITAT Kolkata dealt with cross-appeals of Shakambhari Ispat & Power Limited and the Revenue for AYs 2016-17 to 2021-22 arising from reassessment proceedings following a search on the Agarwal Group on 17.09.2021. Taking ITA No. 931/Kol/2025 for AY 2019-20 as the lead case, the Tribunal first rejected the assessee’s jurisdictional challenge to notice under section 148. It held that under the post-01.04.2021 search reassessment regime, issuance of notice under section 148 did not require incriminating material to have been found during the search itself; the existence and relevance of material for additions was to be examined during assessment proceedings. The Bench respectfully disagreed with the Chandigarh Bench ruling in Rosha Alloys (P) Ltd. on this point. On merits, however, substantial relief was granted.
The principal addition concerned alleged undisclosed coal purchases from the Anup Majee Group, inferred from documents seized in a third-party search. The assessee consistently denied the transactions, the relied-upon documents were not properly confronted, the concerned persons were not examined or offered for cross-examination, and no corroborative evidence of corresponding unaccounted manufacture or sales was brought on record. The Tribunal therefore held that neither the AO’s addition of the alleged purchases under section 69C nor the CIT(A)’s estimation of profit at 8.01% could survive, and directed deletion. The Tribunal also considered the addition relating to purchases from Reeja Trading Pvt. Ltd., where the AO had acted on a CGST investigation report. It examined the treatment of alleged bogus purchases and the principle that, where purchases and corresponding sales are accepted, only an embedded profit element may in appropriate cases be brought to tax.
