Jaipur ITAT Deletes ₹15.35 Lakh Addition as GST Appellate Order Negates Foundation of Reassessment

Case Overview

Case Name: G.R. Corporation Vs ITO (ITAT Jaipur)
Appeal Number: I.T.A. No. 1802/JPR/2025
Date of Order: 28/08/2026
Assessment Year: 2020-21
Forum: Income Tax Appellate Tribunal, Jaipur

Background of the Dispute

G.R. Corporation, a partnership firm engaged in the manufacturing of tyres, had originally filed its Return of Income on 15.02.2021, disclosing a total income of ₹1,01,73,500/-. The matter appeared routine until information surfaced on the CIRU/VRU insight portal, flowing from a search operation conducted by the GST authorities under Section 67(2) of the CGST Act 2017 at the assessee's business premises on 10/10/2019.

The GST search resulted in an allegation that the assessee had engaged in clandestine removal of taxable goods — specifically tyres and tubes — with an estimated taxable value of ₹1,74,67,856/-, without discharging the applicable GST liability. This information was flagged and transmitted to the Income Tax Department, which initiated reassessment proceedings by issuing a notice under Section 148 dated 29/03/2024.

Upon completion of reassessment, the Assessing Officer (AO) proceeded under Section 147 read with Section 144B of the Income Tax Act, 1961, and made an addition of ₹15,35,425/- by estimating gross profit at 8.79% — the same GP rate as reflected in the assessee's audited accounts — applied on the alleged suppressed sales figure of ₹1,74,67,856/-. The assessment order was passed on 17.03.2025.

Proceedings Before the First Appellate Authority

The assessee challenged the assessment before the Commissioner of Income Tax (Appeals), NFAC, Delhi, under Section 250 of the Income Tax Act, 1961. However, the learned CIT(A) was not persuaded. Since the assessee had failed to produce any tangible documentary evidence to counter the allegation of unrecorded sales or clandestine removal of goods during the first appeal proceedings, the addition was sustained in its entirety. The CIT(A) passed the appellate order on 10.10.2025, dismissing the assessee's appeal.

Grounds of Appeal Before the Tribunal

Aggrieved by the order of the CIT(A), the assessee approached the ITAT Jaipur. The grounds raised before the Tribunal (as filed in Form 36) were broadly as follows:

  1. Jurisdictional Challenge: The reassessment order under Section 147 read with Section 143(3) and Section 144B dated 17.03.2025, along with notices issued under Section 148A(b), Section 148A(d), and Section 148, were challenged as illegal, without jurisdiction, lacking proper satisfaction of higher authorities, potentially barred by limitation, and contrary to the actual facts — thereby seeking their quashment.

  2. **Deletion of Addition of ₹15,35,425/-😗* The assessee contended that the CIT(A) gravely erred in confirming the trading addition of ₹15,35,425/- computed at 8.79% gross profit on alleged unaccounted sales of ₹1,74,67,856/-. It was argued that:

    • The books of account were never rejected
    • Provisions of Section 145(3) were not invoked
    • No specific provision of the Act was cited while making the addition
    • The addition was contrary to facts and beyond the scope of law

  3. Interest under Sections 234A, 234B, and 234C: The interest charged was contested as being contrary to the provisions of the Act and the facts of the case, with a prayer for its deletion.

  4. A general ground was reserved for adding, amending, or altering any grounds before or at the time of hearing.

The Decisive Development: GST Appellate Order