M/S. SHAH FOILS LTD.,AHMEDABAD V. THE ITO, WARD-4(1)(3), AHMEDABAD

MA 88/AHD/2025

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Shah Foils Ltd. filed a Miscellaneous Application under section 254(2) seeking rectification of an earlier order concerning the validity of reassessment under section 147 and the substantive addition under section 69A for the assessment year 2011-12. The application was admitted for adjudication despite a noted delay in filing. The Tribunal examined the challenges to the reassessment jurisdiction and the substantive additions, considering the materials and precedents cited by the assessee. The Tribunal concluded that the original order had adequately addressed all the legal and factual issues raised, and the mere non-reference to certain documents or precedents did not amount to a mistake apparent from the record.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788728 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 01-09-2025
• Other Referred Cases: Sabh Infrastructure Ltd. vs. ACIT, Tata Capital Financial Services Ltd. vs. ACIT, Futura Ceramics Pvt. Ltd. & Anr. vs. State of Gujarat
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMESHWAR P MEENA
• Assessee Lawyers: K C THAKER
• Keywords: Assessment record; Reason to believe; Tangible material
• Section: 147; 148; 10

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद Ɋायपीठ “C”, अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ŵी टी.आर. सŐिथल क ुमार, Ɋाियक सद˟ एवं ŵीमकरंद वसंत महादेवकर, लेखा सद˟ क े समƗ। BEFORE SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER M.A. No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) (Assessment Year: 2011-12) Shah Foils Ltd., 26, Block-B, Galaxy Signature, Science City Road, Sold, Ahmedabad-380060 Vs. Income Tax Officer, Ward-4(1)(3), Ahmedabad [PAN No.AAICS0490F] (Appellant) .. (Respondent) Appellant by : Shri K C Thaker, AR Respondent by: Shri Rameshwar P Meena, Sr. DR Date of Hearing 28.11.2025 Date of Pronouncement 28.11.2025 O R D E R PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER: This Miscellaneous Application has been filed under section 254(2) seeking rectification of the order of the Bench dated 31.01.2025 in ITA No. 1852/Ahd/2019. The assessee contends that certain submissions, documents and legal precedents were not considered, resulting in an alleged mistake apparent from record. 2. At the outset, it is noted that the Registry has pointed out a delay of 32 days in the filing of this Miscellaneous Application. The assessee Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 2– has filed an application for removal of defect, explaining that the limitation is to be computed with reference to the date of receipt of the order and not the date of pronouncement. It has been submitted that although the order was pronounced on 31.01.2025, the true copy of the order was endorsed by the Assistant Registrar only on 05.02.2025, the registered post bears the date 10.02.2025, and the postal tracking slip indicates actual posting from Ellis Bridge Post Office on 12.02.2025. It is therefore contended that the order was effectively received in February 2025 and that the six-month period expired on 31.08.2025. Since 30th and 31st August 2025 were Saturday and Sunday, the filing on 01.09.2025, being the next working day, is within the limitation as per section 10 of the General Clauses Act, 1897. Having considered the explanation and the supporting material placed on record, we are satisfied that the Miscellaneous Application has been filed within the time permissible in law. Accordingly, the defect noted by the Registry stands removed and the Miscellaneous Application is admitted for adjudication on merits. 3. The assessee has, in Part I of the Miscellaneous Application, alleged several mistakes apparent from record in respect of Ground No. 1 relating to the validity of reassessment under section 147. These are dealt with hereunder. I. a) and b) Challenge to jurisdiction and reasons recorded 4. The assessee contends that it had raised a legal ground challenging the jurisdiction of the Assessing Officer to reopen the assessment under Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 3– section 147 and that in the reasons recorded the Assessing Officer merely referred to information received from DGCEI, evidence gathered and findings recorded by DGCEI regarding clandestine procurement of SS strips and alleged cash consideration of Rs. 7,51,35,438/-, without incorporating the underlying material or enclosing the report with the reasons supplied to the assessee. 5. In the appellate order dated 31.01.2025, the Bench has already recorded the factual background of the DGCEI search, the seized diary A/8, the statements of concerned persons and the reasons recorded by the Assessing Officer [paragraphs 5 to 6]. The Bench then examined the challenge to reopening and, after considering the rival submissions, held at paragraph 10 that: “…information from DGCEI - evidencing cash payments through seized diary (A/8), corroborated by multiple statements - constituted fresh tangible material. This suffices to form the requisite ‘reason to believe’ that income had escaped assessment, thereby justifying the issuance of notice under section 148 of the Act.” 6. Thus, the Bench has consciously adjudicated the jurisdictional challenge, accepting the existence of tangible material and holding that the formation of belief was valid. Whether the Assessing Officer ought to have annexed the DGCEI report or whether non-supply thereof would vitiate the proceedings are debatable questions of law which were part of the assessee’s arguments and have been implicitly rejected. Such rejection, even if the assessee considers it erroneous, cannot be treated as Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 4– a mistake apparent from the record. It would amount to seeking a review of the legal conclusion, which is outside the scope of section 254(2). I(c): Reliance on Sabh Infrastructure and Tata Capital Financial Services 7. The assessee has pointed out that, in the Synopsis filed on 31.12.2023, it relied on Sabh Infrastructure Ltd. vs. ACIT (2017) 398 ITR 198 (Del) and Tata Capital Financial Services Ltd. vs. ACIT (2022) 443 ITR 127 (Bom) and that relevant extracts were reproduced to contend that if references are made to another document, letter or report, such document, letter or report must be enclosed with the reasons recorded. It is argued that omission to refer to these judgments in the order is a mistake apparent from record. 8. We are unable to accept this contention. The Bench was aware that the assessee was challenging the reopening on the ground that the underlying DGCEI report and statements were not supplied along with the reasons. The Bench considered the challenge and held that there was fresh tangible material and that the reassessment was valid. The fact that the order does not expressly name or discuss Sabh Infrastructure and Tata Capital Financial Services does not mean that the legal contention was not considered. Rectification under section 254(2) lies where a contention is not considered at all, not where it is considered but decided Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 5– against the party or where particular authorities cited in support are not specifically discussed. 9. Non-reference to every precedent cited cannot, by any stretch, be equated with a patent error. At best, the assessee is aggrieved by the conclusion drawn, which is a matter for appeal, not rectification. I(d), (e) & (f): Direction to DR, subsequent letter and AO’s email 10. The assessee has referred to the proceedings dated 06.12.2023 where the Bench directed the ld. DR to place on record information/documents/report, if any, supplied to the assessee along with reasons recorded, and the subsequent adjournment on 12.02.2024 when the ld. DR sought further time to verify whether DGCEI report and statements were furnished. The assessee then refers to the letter dated 24.04.2024 addressed by the ld. DR to the Assistant Registrar, enclosing an e-mail from the Assessing Officer stating: “…it appears that the then Assessing Officer has not supplied the report of DGCEI/statements of directors of assessee along with reasons recorded for reopening the case of the assessee.” 11. It is argued that the Bench has not considered these documents and therefore a mistake apparent from record has occurred. 12. We find no merit in this grievance. The question whether non- supply of the DGCEI report or statements along with the reasons invalidates the reopening was part of the assessee’s jurisdictional Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 6– challenge. The Bench, having noted the background and the manner in which reassessment was initiated, came to a reasoned conclusion in paragraph 10 that the information from DGCEI constituted tangible material and that the notice under section 148 was validly issued. Once such a conscious adjudication has taken place, mere non-reference to a particular letter or e-mail contained in the record cannot be treated as a self-evident mistake. 13. It is trite that a judicial order is to be read as a whole and that the Bench is not required to refer to every document or piece of correspondence which forms part of the record. The letter of the ld. DR and the e-mail of the Assessing Officer, even accepting the assessee’s reading, only confirm that the report was not enclosed with the reasons. The Bench has, in substance, rejected the proposition that such non- enclosure vitiates the proceedings. To characterise this rejection as a “mistake apparent” would be to convert the rectification jurisdiction into an appellate or review jurisdiction, which is impermissible. I(g) & (h): Omission to consider documents and case law as “mistake apparent” 14. The assessee then broadly pleads that omission to consider the “relevant document placed on record by the party (ld. DR) to answer the query raised by the Bench” and omission to consider the judgments relied upon while passing the appellate order amount to mistakes Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 7– apparent from record and therefore the appeal deserves to be restored for fresh adjudication. 15. For reasons already stated, we do not find any merit in this plea. The Bench’s order demonstrates that the reasons recorded and DGCEI material were considered, the jurisdictional challenge was examined, and a conscious finding was recorded upholding the reassessment. 16. Whether that view is right or wrong in the assessee’s perception does not render it an “apparent error”. Section 254(2) does not authorise the Tribunal to recall its order because a party feels that more elaborate discussion or different appreciation of material was required. I(i): Allegation of relying on “extraneous material” in paras 5 to 10 of the order 17. The assessee lastly contends that, in the initial part of the impugned order, the Tribunal has recorded facts in paragraphs 5 to 10 based on discussion in the assessment order and that such “additional facts” were not relevant in determining the jurisdictional issue which, as per the assessee, ought to be confined strictly to the reasons recorded. It is urged that consideration of such “extraneous material” is also a mistake apparent from record. 18. This contention is also devoid of substance. Paragraphs 5 to 10 of the order are primarily a summary of the factual matrix emerging from Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 8– the assessment order, DGCEI proceedings and other materials that formed the basis of the Assessing Officer’s belief regarding escapement of income. Summarising the factual background from the assessment record cannot, by any standard, be termed a mistake much less a mistake apparent from the record. It was necessary for the Bench to set out the context in which the reopening took place and the nature of evidence relied upon. 19. Even otherwise, whether while deciding the jurisdictional ground the Bench could look beyond the bare reasons to the materials referred therein is a purely legal issue, on which more than one view is possible. A conclusion taken on such issue, even assuming it to be debatable, does not fall within the limited ambit of rectification. 20. Accordingly, all the objections raised under Part I of the Miscellaneous Application fail. 21. In Part II of the Miscellaneous Application, the assessee has raised objections relating to the substantive ground of addition under section 69A and the Bench’s decision to proceed with the hearing instead of awaiting the outcome of assessee’s appeal before the CESTAT in excise proceedings. II(a), (b) & (e): Adjournment applications and reliance on Futura Ceramics Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 9– 22. The assessee points out that it had been filing adjournment applications on several hearing dates viz. 12.02.2014, 25.04.2014, 30.07.2024, 20.08.2024, 29.10.2024, 13.11.2024 and 09.12.2024 requesting that the appeals before the Bench be adjourned and “blocked” until the assessee’s appeal before the CESTAT against the Excise Order-in- Original was decided. Typical text from such applications has been reproduced in the Miscellaneous Application. The assessee states that its request was in consonance with the view of the Hon’ble Gujarat High Court in Futura Ceramics Pvt. Ltd. & Anr. vs. State of Gujarat, (2015) 40 taxmann.com 404 (Guj) and therefore the Bench ought to have postponed the hearing till the CESTAT decided the excise matter. 23. We are unable to accept this argument as disclosing any mistake apparent from the record. 24. First, the question whether an adjournment should be granted or whether a matter should be kept pending awaits the outcome of another proceeding is a matter of judicial discretion at the time of hearing. The Bench considered the repeated adjournment requests and decided to proceed with the appeals. Even if the assessee feels that the Tribunal ought to have exercised discretion differently, that would not give rise to a rectifiable error under section 254(2). 25. Secondly, the order dated 31.01.2025 does not rest its findings on the outcome of the excise proceedings nor does it derive any support Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 10– from the Order-in-Original or the pendency of CESTAT appeal. The order proceeds entirely on the income tax material, namely DGCEI investigation, seized diary A/8, statements of concerned persons and the assessee’s explanations, and then determines the quantum of income to be taxed by applying the profit-element theory. The question whether excise appeal is pending or decided has no bearing on these findings. Hence, even if the principles stated in Futura Ceramics are assumed in favour of the assessee, non-grant of adjournment or non-reference to that judgment does not render the Bench’s decision erroneous on the face of the record. 26. The rectification jurisdiction cannot be employed to reopen the entire hearing only on the ground that a party wished the income tax appeal to be tagged with or deferred till completion of another forum’s proceedings. II(c) & (d): Alleged wrong assumption that “third party appeal” was pending 27. The assessee states that, on 20.08.2024, the Tribunal declared its decision to proceed with the hearing “without waiting for order of CESTAT”, mentioning incorrectly that “appeal in the case of the third party is pending since 2015”, whereas in all adjournment applications it was stated that the appeal of the assessee was pending before the CESTAT. It is also pointed out that, as directed by the Tribunal, the Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 11– assessee had already filed copies of the OIO and grounds of appeal before CESTAT through letter dated 14.08.2024. 28. Even if we assume that, during the course of hearing, the pendency was loosely referred to as that of “third party” instead of “assessee”, such description has no impact on the ultimate adjudication contained in the order dated 31.01.2025. The Bench’s findings on the existence of unaccounted sales and on restricting the addition to 6 percent of turnover do not depend on whether the pending CESTAT appeal is that of the assessee or third party, or since which year it is pending. No such factual assumption has been carried into the written order. 29. Therefore, even on the assessee’s own showing, the alleged error is neither apparent from the record nor material to the decision. A non- material inaccuracy, if any, at the stage of hearing cannot furnish a ground for recalling the final order under section 254(2). II(f): Decision to hear appeals on 28.01.2025 “on wrong notion of fact” 30. The assessee finally submits that the Tribunal proceeded to hear the appeals on 28.01.2025 “on a wrong notion of fact in the face of several adjournment applications” and that the appeals deserve to be restored for fresh adjudication after receipt of the CESTAT order in the assessee’s case. Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 12– 31. This contention is, in substance, a grievance against the Bench’s refusal to grant further adjournment. As already observed, the power under section 254(2) does not extend to reconsidering the discretion exercised in the matter of adjournments or listing of cases. Once the Bench has, after hearing both sides, delivered a reasoned order on merits, it cannot be recalled merely because the assessee believes that the appeal should have been kept pending. No patent or obvious mistake in the order has been shown. 32. From the foregoing discussion, it is evident that: 1. All contentions regarding validity of reopening under section 147 were considered and adjudicated in the original order. The assessee seeks re-appreciation of those contentions with reference to certain letters, e-mails and case laws, which is outside the limited scope of section 254(2). 2. The grievances regarding adjournments and pendency of CESTAT appeal relate to procedural discretion and have no bearing on the substantive findings on unaccounted sales and estimation of income. No mistake apparent from the record has been demonstrated. 3. What is sought through the present Miscellaneous Application is a review of the entire order both on jurisdiction and on quantum. Printed from counselvise.com MA No. 88/Ahd/2025 (in ITA No. 1852/Ahd/2019) Shah Foils Ltd. vs. ITO Asst.Year –2011-12 - 13– Such review is not permissible under section 254(2), which is confined to rectifying obvious and patent mistakes. 33. In the result, the Miscellaneous Application filed by the assessee stands dismissed on merits. This Order pronounced in Open Court on 28/11/2025 Sd/- Sd/- (T. R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad; Dated 28/11/2025 Tanmay, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 28.11.2025(Dictated on dragon software by Hon’ble Member) 2. Date on which the typed draft is placed before the Dictating Member 28.11.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement .11.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 28.11.2025 7. Date on which the file goes to the Bench Clerk 28.11.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "