The tribunal noted that there was no corroborative evidence to support the claim of unaccounted sales

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) stated that torn papers alone were not sufficient to prove the same papers represents the unreported sales in the books of accounts. The tribunal ordered Assessing Officer to conduct a fresh adjudication. Rathi Special Steels Ltd, the appellant-assessee, was involved in manufacturing and trading iron and steel. A search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted on 20.01.2015 at various premises of the Rathi Group, including the assessee company. Get a Copy of Income Tax Refunds (Law & Procedure), Click here During the search, incriminating documents were seized, and the case was centralized with the DCIT. The statement of Amit Gupta, COO of M/s. Hari Iron India Ltd, a distributor of the assessee, was recorded, where he claimed unaccounted sales transactions of 30% with the assessee. The assessee contested these claims, arguing that there was no corroborative evidence and that they had not been given a chance for cross-examination. Nevertheless, the AO relied on Amit Gupta’s statement and made an addition of Rs. 1,29,283/- based on alleged unaccounted income. The CIT(A) initially instructed the AO to delete this addition but later erroneously confirmed it. The tribunal remanded the issue to the AO for a fresh review, considering the assessee’s submissions. The assessee also challenged the addition of Rs. 2,05,689/- made by the AO on account of Rs. 42,23,594/- of alleged unrecorded turnover. During the search, some torn papers were found in Anurag Rathi’s room showing sales from 14.01.2015 to 15.01.2015. Most of these sales were already recorded in the books, except for cases where goods weren’t delivered or payments weren’t received. There was no evidence of any unrecorded sales. Statements from A. K. Bansal and Anurag Rathi didn’t provide clarity, and Kamlesh Rathi denied any off-the-books sales. The assessee explained that these papers were related to sales made through brokers. Get a Copy of Income Tax Refunds (Law & Procedure), Click here The Income tax assessing officer added Rs. 2,05,689/- to the assessment based on Rs. 42,23,594/- of unrecorded sales, using a third-party statement not available for rebuttal. This addition lacked corroborative evidence, and all responsible persons denied off-book sales. The tribunal noted that this issue was similar to a previously adjudicated matter involving an addition based on unrecorded turnover. That issue was sent back to the AO for a fresh review based on law and available submissions. The two member bench comprising Saktijit Dey(Vice President) and M.Balaganesh(Accountant Member) allowed the  appeal, remanding it for a fresh review