ITAT Pune Remands Assessment Order: Non-Furnishing of Section 133(6) Replies and Baseless 7.5% Profit Estimation Held as Violation of Natural Justice
Case Overview
Case Name: Atul Mohan Bhandari Vs DCIT (ITAT Pune)
Relevant Assessment Year: 2023-24
Forum: Income Tax Appellate Tribunal, Pune Bench
Sections Involved: Section 143(3), Section 144B, Section 133(6), Section 145(2), Section 250, Section 270A of the Income Tax Act, 1961
Background and Facts of the Case
The assessee, an individual operating under PAN ABNPB2341K, was engaged in a multi-segment business comprising manufacturing of automotive tubular components, CNC machining, steel tube cutting, job work, and trading of steel tubes. For Assessment Year 2023-24, relating to Financial Year 2022-23, the assessee filed his return of income on 31.10.2023, declaring a total income of Rs. 4,74,06,090/-.
The case was flagged for complete scrutiny on the basis of an alleged discrepancy between the turnover reported in the Income Tax Return — amounting to Rs. 1,10,12,94,799/- — and the turnover disclosed in the GSTR-9C reconciliation statement, which stood at Rs. 1,10,30,14,277/-. Additionally, the revenue authorities noted that the assessee had used certain new business codes, including those belonging to the Other Services (21000 series), and had reportedly declared a profit that appeared disproportionately low relative to total revenue from operations.
Submissions Made by the Assessee During Assessment
During the scrutiny proceedings, the assessee responded diligently and on multiple occasions to notices issued under Section 142(1) of the Income Tax Act, 1961. The documents submitted across these responses included:
- Bank statements from Axis Bank (April 2022 to June 2022) and Standard Chartered Bank (April 2022 to March 2023)
- Capital ledger of Shubham Industries for FY 2022-23
- GST Returns and Form GSTR-9C reconciliation statement
- Party ledger detailed report for FY 2022-23
- Copy of ITR for AY 2021-22
- Details of unsecured loans and interest paid
- Complete bank account details for FY 2022-23
- Form 3CB and Form 3CD
- Block of assets ledger for Shubham Industries
- Service expenses bills, plant and machinery bills, furniture and fixture bills, and computer asset bills
- Rent bills from multiple parties including Sudhanshu Industries
- Purchase details from Amar Industries
- Profit and Loss Account and Balance Sheet of Shubham Industries as on 31st March 2023
- Tax invoices from Tata Steel
- Ledger account for purchase of raw material and loading/unloading charges
- Purchase registers for the periods April 2022 to September 2022 and October 2022 to March 2023
- Month-wise closing stock details for FY 2022-23
- Invoices for consumables and labour charges
Notwithstanding these extensive submissions, the Assessing Officer proceeded to pass an assessment order dated 26.03.2025 under Section 143(3) read with Section 144B of the Income Tax Act, 1961, determining the total income at Rs. 8,35,86,460/- against the returned figure of Rs. 4,74,06,090/-.
What the Assessing Officer Did
Section 133(6) Notices to Sundry Creditors
During the course of scrutiny, the Assessing Officer called for a list of sundry creditors and subsequently issued letters under Section 133(6) of the Act to various such parties. Upon receipt of replies from certain entities, the AO identified discrepancies between the amounts acknowledged by those parties and the figures reflected in the assessee's books of account. Several other parties failed to respond to the notices altogether.
The assessee was asked to provide an explanation for these differences. The AO held that the assessee failed to furnish a satisfactory reconciliation and, on that basis, proceeded to reject the books of account entirely.