आदेश/ORDER

PER S. R. RAGHUNATHA, AM:

The present appeal filed by the Revenue is directed against the order dated 17.10.2025 passed by the Learned Commissioner of Income Tax (Appeals)-19, Chennai [hereinafter referred to as “Ld.CIT(A)”], arising from the assessment order dated 30.03.2024 passed by the Deputy Commissioner of Income Tax, Central Circle-2, Madurai [hereinafter referred to as “the AO”] u/s.153A r.w.s 263 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Year 2018-19.

2. The Revenue has raised the following grounds of appeal:

1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts and in law.

2. The Ld.CIT(A) erred in giving relief to the assessee as the TPO made an upward adjustment of Rs.39,21,15,575/- to the value of inter-unit transfers and directed re-computation of the deduction u/s.10AA vide order u/s.92CA(3), instead of annulling the assessment order, the Ld.CIT(A) ought to have set aside the order directing the AO to make a fresh assessment after issue of draft order u/s.144C(1) to the assessee proposing the adjustments to be made.

3. The Ld.CIT(A) erred in deletion of the addition made without taking into consideration the recent directions of the Hon’ble High Court of Madras in (Suo Motu PIL) WP No.1592 of 2015 involving ‘Illegal Mining and Sale of ‘Beach Sand Minerals’ in which the present assessee is a respondent and against which serious observations of Illegal trade practices have been noted by the Hon’ble High Court, Madras in its order dated 17.02.2025, the issue of the total turnover & the Net profit thereon needs a revisitation accordingly.

4. For these grounds and any other ground including amendment of grounds that may be raised during the course of appeal proceedings, the Order of the Ld CIT(Appeals) may be set aside and that of the Assessing Officer may be restored.

3. The brief facts of the case as emanate from the records are that the assessee is a Private Limited Company engaged in the business of manufacture and processing of Garnet Abrasive of various grades and Ilmenite. The assessee operates two industrial undertakings in the State of Andhra Pradesh, namely, one unit situated at Visakhapatnam within a Special Economic Zone (SEZ Unit) and another functioning as a 100% Export Oriented Unit (EOU) at Srikakulam, both of which are engaged in the manufacture and export of Garnet.

4. A search and seizure action u/s.132 of the Act, was carried out in the case of the assessee and its group concerns on 25.10.2018.

5. For the impugned assessment year, the assessee filed its return of income u/s.139(4) of the Act on 29.03.2019, declaring a loss of Rs.17,32,18,221/- under the normal provisions of the Act and book profit of Rs.1,99,15,237/- u/s.115JB of the Act.

6. Subsequently, the case of the assessee was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) mechanism on account of Specified Domestic Transactions entered into by the assessee during the relevant previous year, the aggregate value whereof, as disclosed in Form No.3CEB, was Rs.21,77,30,625/-. Accordingly, notice u/s.143(2) of the Act came to be issued on 22.09.2019.

7. In consequence of the search proceedings, the pending scrutiny assessment stood abated by operation of law. Thereafter, the jurisdiction over the case was centralized with the Assistant Commissioner of Income Tax, Central Circle-2, Madurai, vide order dated 26.07.2019, and notice u/s.153A of the Act was issued on 27.02.2020. The assessment was thereafter completed u/s.153A r.w.s 143(3) of the Act vide order dated 06.05.2021 determining the total income at ‘Nil’.

8. Thereafter, the Principal Commissioner of Income Tax, Central Circle-2, Chennai, in exercise of revisionary jurisdiction u/s.263 of the Act, initiated proceedings on the premise that the assessment order passed u/s.153A r.w.s 143(3) of the Act was erroneous insofar as it was prejudicial to the interests of the Revenue. Vide order dat