ACIT Vs N.R Ispat & Power Pvt. Ltd (ITAT Raipur)
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, in the case of ACIT vs N.R. Ispat & Power Pvt. Ltd. (ITA No. 06 to 10/RPR/2021 & CO Nos. 12 to 15/RPR/2022), ruled in favour of the assessee by quashing assessments and additions made by the Assessing Officer (AO) under Section 143(3) read with Section 153A of the Income Tax Act. The ITAT’s decision revolved around the critical finding that no incriminating material was found during the search proceedings under Section 132 of the Act conducted on 24.10.2017.
Background of the Case
The assessee, N.R. Ispat & Power Pvt. Ltd., had been subjected to search and seizure operations by the Income Tax Department. The AO passed consolidated assessment orders for Assessment Years (AYs) 2010-11 to 2018-19 making additions based on documents marked as Page 44 and Page 20 of seized file LPS-1. The additions primarily pertained to alleged unexplained share capital, share premium, and share application money from investor companies, which the department contended were shell entities.
Disputed Additions and Documents
Two documents formed the foundation of the department’s case:
-
Page 44 of LPS-1: Reflected capital infusion data for AYs 2007-08 to 2015-16, showing figures for paid-up capital and share premium.
-
Page 20 of LPS-1: Contained year-wise entries of funds received from entities like M/s Prithvi Dealcom Pvt. Ltd., M/s Eternity Commercial Pvt. Ltd., and others, amounting to ₹9.89 crore in AY 2013-14.
The AO alleged that these were accommodation entries routed through paper companies to introduce unaccounted income into the books of the assessee. However, the assessee countered by showing that the entries were part of its audited financials and were already disclosed in returns filed earlier.
Tribunal’s Key Observations
