TaxTMI 
TaxTMI 
2025 (12) TMI 919
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.... of Balmukund Lease Fin Private Limited and in support of this a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to obtaining the administrative approval from the competent authorities, which took quite a long time and accordingly, the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing. 3. Since these appeals relate to the related companies and issues involved are mostly common, therefore these are being decided by this common order for the sake of convenience and brevity. First of all, we shall take 1395/KOL/2025 (assessee's appeal) A.Y. 2015-16 in case of Balmukund Sponge and Iron Private Limited. In case of Balmukund Sponge and Iron Private Limited. A.Y. 2015-16 A. 5/KOL/2025 (Assessee's appeal) 4. The issue raised in ground no.1 is general in nature and therefore, needs no adjudication. 5. The issue raised in ground nos.2 and 3 is against the part confirmation of addition of Rs. 22,54,000/- by the ld. CIT (A) as against the total addition of Rs. 2,....
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....ccounted and undeclared sales and accordingly applied the Gross Profit rate of 7.84%, thereby, partly allowing the appeal of the assessee by sustaining the addition to the tune of Rs. 22,54,000/- and deleting the addition to the income of Rs. 2,64,96,000/- by observing and holding as under:- "M/s Balmukund Cement and Floorings Pvt. Ltd. under various heads during the FY 2014-15. The said jointings also contains details of some cash against various names. It is assertively submitted as a matter of fact that no such cash has been received by the petitioner Company. The AO is disagreed with the above contentions of the assessee. The AO had observed that examination of the said entries reveal that the said cash entries were Unaccounted cash receipts to Rs. 2,87,50,000/- (i.e. 2,04,50,000/- Rs. 83,00,000/-) for the subjected AY 2015-16 and those are not recorded in the books of account of the assessee for the said year. 6.2.2. However, the stand of the AO was also not accepted as when the assessee had himself admitted the fact that these purported cash entries were related to business transactions. The AO should have adopted the profitable on such cash receipts. Howeve....
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....r estimates therefrom unless and until there are cogent evidences /materials in support the same. The case of the assessee finds support from the decision of Hon'ble Gujrat High Court in Navjivan Oil Mills Vs CIT (2002)124Taxman392(Guj). The coordinate bench in the case of Premji Bhuralal Gala Vs NFAC (2024) taxmann.com 570(Mum Tri) has held that cash loans cannot be treated as income of the assessee. Therefore, we are not in agreement with the ld. CIT(A) on this issue and consequently set aside the order on this issue and direct the AO to delete the addition. The ground no. 2 and 3 of the appeal of the assessee are allowed. 6. In the result, the appeal of the assessee in ITA No.1395/KOL/2025 is allowed. A.Y. 2017-18 B. 1396/KOL/2025 (Assessee's appeal) 6.1. The issue raised in ground no.1 & 5 are general in nature and therefore, needs no adjudication. 6.2. The issue raised in ground nos. 2 to 4, by the assessee is against the part confirmation of addition by the ld. CIT (A) to the tune of Rs. 3,79,260/- as against the addition of Rs. 63,00,000/- made by the ld. AO u/s. 69A of the Act on account of alleged WhatsApp chats which is illegal, wrong and unjustified. 6.....
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....tions even in respect of such transaction as were contained in the loose paper which were found during the course of search. This was held by the Hon'ble Delhi High Court in case of PCIT Vs. Delco India (P.) ltd. reported in (2016) 67 taxmann.com 357 (Delhi). We note that in the present case the chats of Shri Pradeep Sahewal, who is one of the directors of the group companies and as such any adverse view should be taken in his hand and not in the hands of the assessee specially on the ground that there is nothing on record to substantiate the transactions belonged to the assessee. We also found that it is not mentioned in the WhatsApp Chat whether the amounts involved are receipt or payments. Accordingly, we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition as sustained by the ld. CIT (A). The grounds no. 2 to 4 are allowed. 7. In the result, the appeal of assessee in ITA No. 1396/KOL/2025 is allowed. A.Y. 2018-18 C. 1397/KOL/2025 (assessee's appeal) 8. The issue raised in ground no.1 & 5 are general in nature and therefore, needs no adjudication. 9. The issue raised in ground nos.2 to 4 of this appeal are similar to ....
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.... 15.1. The facts in brief are that the ld. AO on the basis of information gathered during the course of search and survey operation and Insight portal of ITBA in the case of the assessee noted that the assessee has grossly manipulated his purchases by obtaining fake bogus bills and accommodation entries. The AO has accepted that the assessee had undertaken trading in miscellaneous items which has nothing to do with the manufacturing activity of the assessee breakup whereof is given at para no.4.9.1 of page no.109 of the assessment order. The ld. AO noted that during the year, the assessee has made purchases of aggregating to Rs. 74,06,66,925/- from three parties namely M/s Tanishi Commotrade Pvt. Ltd. of Rs. 22,89,55,514/-, M/s Ranisati Coke Trading co. of Rs. 40,38,23,767/- and M/s Steel Centre of Rs. 10,78,87,644/-. The ld. AO discussed in detail the facts qua these parties and entry operators involved in providing accommodation entries. The ld. AO also noted that the entire purchases and sales were done through same commission agents and these were accommodation entries and these were only done in order to inflate the sales of the assessee. The ld. AO made adhoc estimation of ....
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....sh Coke group. Trading account in this regard has been produced by the assessee which is placed on page no. 74 of the submission of the assessee. Further, it can be observed from the assessment order that corresponding sale entin providers which was also recorded by the AO at running page no. 6 to 10 of the assessment order. Further, it is observed that in case the purchases are excluded from the trading account, the corresponding sales would also have to be excluded. Hence, this exercise would reduce the income returned by the assessee. Therefore, it can be inferred that percentage disallowance of the purchases would amount to double taxation as the assessee has already offered for taxation income from the fictitious circular trading done by them. It had been submitted by the assessee that all the case laws relied upon by the AO is distinguishable in the case of the assessee as the facts of all the case laws are entirely different from the facts of the assessee. 7.2.3. The assessee distinguished the Hon'ble ITAT Kolkata decisions relied by the AO as under. "It is in this regard respectfully submitted that none of the case laws relied upon by the assessing off....
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...., it was held by assessing officer that the purchases made during the financial year 2010-11 from these three parties amounting to Rs. 8,62,86,046/- is bogus therefore he made addition to the lume of Rs. 862.86.046 The additions made by the assessing offcer was confirmed in the first appeal Being aggrieved with the decsuon of the Commissioner (Appeals), the assessee fled appeal before the Hon'ble ITAT It was appreciated by the Hon ble Tinbunal that the proper documents were maintained by the assessee and the assessing officer merely relied upon the enquiry made by the excise department while making the addition which was also confirmed by the Commissioner (Appeals) It was held by the Hon'ble Tribunal that the sales cannot be made without purchases and the assessee purchases, manufactures and sells the finished goods. In view of the facts stated above Hon'ble Tribunal restricted the disallowance to 4% of the bogus purchases appreciating on the ground that profit element on the said fictitious purchases would be subjected to tax. Relevant portion of the order of the Hon'ble Tribunal in verbatim is reproduced as under "18 in sum and substance, we would li....
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....confirmation of accounts, purchase bills and the payments details being made by the banking channel in respect of the purchases made from the said bogus billers. The assessing officer after taking cognisance of all the details filed by the assessee made disallowance of 3% of the bogus purchases on the ground that these purchases were to cover the purchases made from the grey market which were purchased at a much lesser price than the purchases made from the open market. The CIT in exercise of his revisionary powers under section 263 of the Act held that the order of the assessing officer was erroneous and prejudicial to the interest of the revenue, in as much as the AO had not examined the addition to be made in the light of the provision of section 69C of the Act. Being aggrieved with the order of the CIT passed under section 263 of the Act the assessee preferred an appeal before the Hon'ble Tribunal. The order passed by the CIT under section 263 was quashed by the Hon'ble Tribunal While quashing the order of the CIT, Hon'ble Tribunal went into the merits of the case as what was the enquiry made by the AO while completing the assessments whic....
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....orresponding purchases also cannot be denied. The only possibility in the given circumstances was to proceed on the theory that the purchases were made by the assessee in the grey market at a lesser price and the bogus bills were obtained to show higher purchase price and reduce the profit margin as per the books of accounts. The AO adopted this course and estimated the possible suppression of Revenue. The course adopted by the AQ was therefore a possible view in law. 27. For the reasons given above, we hold that the orders of the AO were not erroneous and prejudicial to the interest of the revenue for failure to make enquiry on the applicability of Sec. 69C of the Act. We, therefore, quash the orders u/s. 263 of the Act and allow the appeals of the assessee. It would kindly be appreciated that this decision of the Hon'ble Tribunal is also not applicable in the facts and circumstances of the case as the in this case the sales were genuine and which were matched with the purchase and it was held that by these bogus purchases the assessee was covering the purchases made from the grey market which were purchased at lesser price. It would kindly be appreciated tha....
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....hus reduced the addition to 5.83% of the alleged bogus purchases by applying the GP ratio of the subsequent assessment year on the ground that the purchases shown from parties which are bogus/hot verifiable, the explanation given by the assessee that the hide supplied by these parties have been processed after more than 9 months from the date of purchase looks to be specious as hide can hardly be kept unused for a period of 9 months and in the A. Y. 2013-14 many discrepancies were found during survey proceedings OME TAX DEPP Being aggrieved with the decision of the Commissioner (Appeals), the department preferred an appeal before the Hon'ble Tribunal which was dismissed, relevant portion of the order of the Hon'ble Tribunal is reproduced as under "3. We have given our thoughtful consideration to the rival contentions. Mr. Robin Choudhury. Addi CIT/Ad DR/the Revenue vehemently emphasizes during the course of hearing that the Assessing Officer had rightly disallowed the assessee's purchases made from 4 parties namely, M/s. A.H Traders, M/s Shree Enterprises, M/s R.K Trading and M/s JK Traders, since the same could not be traced despite various notices is....
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....at the facts of the case in hand is totally different as no incriminating document was found during the case of search and seizure operation conducted by the department. The disallowance has been made on the basis of the information available in the insight portal and also that shared by the investigation wing which alleged that both the purchases and the sales were fictitious. In view of the foregoing, it is humbly prayed that no heed may kindly be paid to the decisions of the Hon'ble Tribunal referred to by the assessing officer." The assessee clearly brought out the facts of the above-mentioned Hon'ble ITAT Kolkata decisions relied on by the AO. The assessee distinguished the facts that in all these three cases, the sales are genuine and the purchases are from grey markets or without bills. The profit element in the purchases, because of its low cost compared to organised sellers, are brought to tax at 4% to 5%. However, in the present case, the purchases and sales are also bogus. The assessee has already offered a percentage of profit on the bogus sales made out of bogus purchases in its regular returns of income. 7.2.4. It is pertinent to men....
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....then the corresponding sales against these purchases would also have to be disallowed which would result into the lower of the profit than the returned income which is not permissible. The order passed by the Hon'ble Tribunal was accepted by the Hon'ble High Court, relevant portion of the decision in verbatim is reproduced as under, "15.9 If the revenue chooses to disallow bogus purchases, it would necessarily have to, in our view, ignore the corresponding sales recorded against the very same parties. 107. In view of the above discussion, we are of the opinion that the leamed assessing officer has incorrectly disallowed 25% of the purchases from the alleged bogus parties without finding any evidence and ignoring the sales paid by them to the assessee....... Further, the assessee also relied on the decision of the Hon'ble Bombay High Court delivered in the case of PCIT vs Nitin Ramdeoji Lohia, reported in, [2022] 145 taxmann.com 546 (Bombay), "wherein, no disallowance of the bogus purchases can be made on the basis of the information received from sales tax department that assessee was beneficiary of accommodation entries without disputing the ....
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.... ground No. 2 raised by the Revenue. 16. The issue raised in ground no.3 is against the deletion of addition of Rs. 50.00 lacs received by the assessee from M/s Sandesh Vanijya Pvt. ltd. by ld. CIT (A) as made by the ld. AO u/s. 68 of the Act in respect of unsecured loans. 16.1. The facts in brief are that the ld. AO during the course of assessment proceedings noted that the assessee company has taken unsecured loans of Rs. 50 lacs during the current assessment year from Sandesh Vanijya Pvt. Ltd. on which interest of Rs. 15,534/- was made in A.Y. 2016-17. The ld. AO noted that the said loan creditor was also struck off in ROC records. The assessee explained before the ld. AO by producing the evidences such as confirmation of accounts, acknowledgment of ITR, bank statement as well as sources of funds that the loan was genuine and is not covered u/s. 68 of the Act. However, the ld. AO treated the loan received by the assessee as unexplained cash credit and added to the income of the assessee u/s. 68 of the Act. 16.2. In the appellate proceedings, the ld. CIT (A) deleted the addition by observing and holding as under:- "8.2.13. In view of the various judicial pronoun....
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....worthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information." 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the afo....
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....ence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. " 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 16.4. Considering the facts of the case before us in the light of the above decisions, we are inclined to uphold the appellate order on this issue by dismissing ground no. 3 of the revenue appeal. 17. In the result, the appeal of the Revenue in ITA No. 1595/KOL/2025 is dismissed. A.Y. 2016-17 F. 1596/KOL/2025 (Revenue's appeal) 18. Issue raised in ground nos.1, is against the deletion of Rs. 1,79,51,667/- by the learned CIT(A) as made by the learned AO in respect of bogus purchases. 18.1. The issue raised in this ground is similar to one as decided by us (supra) in groundno.2 in ITA No. 1595/KOL/2025 of Revenue's appeal. Accordingly, our decision would, mutatis mutandis, apply to this ground. Hence, groundno.1 of Revenue's appeal is dismissed....
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....in ground no.1 of this appeal of Revenue is similar to one as decided by us in ground no. 2 of ITA No. 1595/KOL/2025 for A.Y. 2015-16 (supra). Accordingly, our decision would, mutatis mutandis, apply to ground no.1 of this appeal. Hence, ground no.1 is dismissed. 29. Ground no. 2 is against the deletion of addition of Rs. 2,30,00,000/- by the ld. CIT (A) as made by the ld. AO as unexplained cash credit u/s. 68 of the Act in respect of unsecured loans. 29.1. The issue raised in ground no.2 of this appeal of Revenue is similar to one as decided by us in ground no. 3 of ITA No. 1595/KOL/2025 for A.Y. 2015-16 (supra). Accordingly, our decision would, mutatis mutandis, apply to ground no.2 of this appeal. Hence, ground no.2 is dismissed. 30. The issue raised in ground no.3 is against the order of CIT (A) restricting the addition of Rs. 4,39,482/- as against the addition made by the AO of Rs. 50,63,154/- made on the basis of WhatsApp chats. 30.1. We have allowed the assessee's appeal on this issue in ground no. 2 to 4 n ITA 1396/KOL/2025 A.Y. 2017-18, wherein the part sustaining of addition by CIT(A) has been assailed. Therefore, in view of our decision in assessee's appeal t....
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....ed by us in ITA No. 1699/Kol/2025 A.Y. 2015-16 dismissing the appeal by the revenue on the ground that section 68 of the Act is not applicable to a case where unsecured loan has been repaid. Therefore, our decision in ground in ITA No. 1699Kol/2025 A.Y. 2015-16 would mutatis mutandis apply to this appeal as well. The ground no. 3 to 7 of the appeal of the revenue are dismissed. 37. In the result, the appeal of the Revenue is dismissed. A.Y. 2017-18 C. 1701/KOL/2025 (Revenue's appeal) 38. The issue raised in ground nos.1 to 3 in this appeal is general in nature. 38.1. The issue raised in ground nos.4 & 5 is against the order of ld. CIT(A) deleting the addition of Rs. 28,25,277/- as made by the AO on account of bogus purchases. 39. The issue raised in ground nos. 4 & 5 is similar to one as decided by us in ground no. 1 & 2 in ITA No. 1700/KOL/2025 A.Y. 2016-17, wherein we have dismissed the ground no. 1 & 2 of appeal of the revenue by upholding the order of ld. CIT(A). Therefore, our decision in ITA No. 1700/KOL/2025 A.Y. 2016-17 would, mutatis mutandis, apply to these ground nos. 4 & 5 of the revenue appeal as well. Consequently, the ground nos. 4 & 5 are dismissed....
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....Tribunal if tax effect by virtue of relief given by the ld. CIT(Appeals) is less than Rs. 60,00,000/-. Such order could only be challenged if it comes within exceptions provided in the Instruction. Therefore, these cases do not fall in any of the exceptions and, these appeals are not maintainable. On due consideration of the above facts and circumstances, we dismiss the appeal of the Revenue for want of tax effect. 47. In the result, the appeal of the Revenue dismissed. A.Y. 2023-24 F. 1704/KOL/2025 (Revenue's appeal) 48. The only issue raised in various grounds of appeal is against the restricting the addition to Rs. 46,44,110/- by CIT(A) as against the total addition of Rs. 2,75,12,500/- made by the learned AO by applying gross profit rate of 16.88% based on the WhatsApp Chats. 48.1. We have allowed the assessee's sister concern case of M/s Balmukund Sponge and Iron Pvt. Ltd., on this issue in ground no. 2 to 4 in ITA 1396/KOL/2025 for A.Y. 2017-18, wherein the part sustaining of addition by CIT(A) has been assailed under similar facts. Therefore, in view of our decision in that appeal, the issue raised in various grounds of Revenue's appeal is dismissed. 49. In....