Rs. 302 Crore Income Tax Addition Quashed for Violation of Natural Justice Over Undisclosed CBEC Import Data: Bombay High Court

The Bombay High Court has set aside an income tax assessment order raising an addition of over Rs. 302 crore against JSW Minerals Trading Private Limited, holding that the tax department could not rely on aggregate import data allegedly received from customs authorities without disclosing complete details to the assessee and granting a fair opportunity to reconcile the figures. The bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla ruled that quashed the assessment order dated September 29, 2023, passed under Section 143(3) read with Section 144B of the Income Tax Act, along with the consequential demand notice remanded back the matter to the Assessing Officer for a fresh assessment after following due process. The dispute arose for Assessment Year 2020–21, during which the company had filed its return of income declaring a loss of over ₹37 crore. The case was selected for scrutiny under the faceless assessment regime. During the assessment, the department alleged a mismatch between the value of imports disclosed by the assessee in its return and the invoice value of imports reflected in data purportedly received from the Central Board of Excise and Customs (CBEC). Based on this alleged discrepancy, the Assessing Officer proposed an addition of ₹302.26 crore, treating the difference as unexplained money or investment under Sections 69/69A of the Act. The assessee consistently sought the detailed breakup of the CBEC data forming the basis of the proposed addition, contending that reconciliation was impossible without access to invoice-level details. The company argued that despite repeated requests, the tax department failed to provide the underlying import data relied upon for making the addition. It also pointed out that its international transactions, including import purchases, had already been examined in transfer pricing proceedings, where the Transfer Pricing Officer accepted the transactions to be at arm’s length. The assessee further highlighted that in a subsequent assessment year, when detailed CBEC data was furnished by the department, it was able to reconcile the figures and no addition was ultimately made. This, according to the petitioner, demonstrated that denial of data in the present case caused serious prejudice. The High Court observed that the show cause notices and the final assessment order merely referred to aggregate figures of imports without disclosing any invoice-wise or transaction-wise details. The Bench held that it was impossible for the assessee to explain or reconcile the alleged discrepancy in the absence of such crucial information. The Court noted that the Assessing Officer proceeded on the assumption that the CBEC data was accurate and conclusive, without sharing the material with the assessee or even referring to a detailed breakup in the assessment order. This approach, the Court held, amounted to a clear breach of natural justice. Significantly, the Court also took note of the fact that the proposed addition in the show cause notice was under Section 69A, whereas the final assessment order invoked Section 69, without adequately addressing the assessee’s objections or partial reconciliation submissions. Setting aside the assessment order and demand notice, the High Court remanded the matter back to the Assessing Officer with specific directions. The department has been instructed to issue a fresh show cause notice clearly indicating the statutory provisions proposed to be invoked, furnish complete details and breakup of the import data received from CBEC, and grant at least 15 working days to the assessee to respond. The Court also directed that a personal hearing must be granted before passing a fresh assessment order, which must be a reasoned and speaking order dealing with all submissions of the assessee. The fresh assessment is to be completed on or before March 31, 2026. While granting relief, the High Court clarified that it had not expressed any opinion on the merits of the proposed addition. All contentions of both parties have been kept open to be examined afresh during the reassessment proceedings. Case Details Case Title: Jsw Minerals Trading Private Limited Versus Assessment Unit Case No.: Writ Petition No. 3683 Of 2023 Date: 13/01/2026 Counsel For Petitioner: J. D. Mistri, Senior Advocate Counsel For Respondent: Ruju Thakker Click Here To Read Order Read More: Income Tax on Sale of Silver Utensils in India : 2026 Update

Rs. 302 Crore Income Tax Addition Quashed for Violation of Natural Justice Over Undisclosed CBEC Import Data: Bombay High Court

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Rs. 302 Crore Income Tax Addition Quashed for Violation of Natural Justice Over Undisclosed CBEC Import Data: Bombay High Court

Membership Required

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