D.R. ELECTRICALS,KOLKATA vs. I.T.O., WARD - 31(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA Before ShriRajesh Kumar, Accountant Member and ShriPradip Kumar Choubey, Judicial Member ITA No. 391& 409 /KOL/2026 Assessment Year: 2013-14 &2014-15 DR Electricals ,...................................................................................................Appellant 158, Lenin Sarani, Kolkata, West Bengal- 700013 [PAN No. AABFD9542P] Vs. ITO, Ward 31(1)..…………..…………………....…………….….Respondent Aayakar Bhawan, Dakshin 2, Gariahat Road, Kolkata- Appearances by: Shri Siddarth Agarwal, Advocate., appeared on behalf of the Appellant. Shri Manas Mondal, Sr. DR ,appeared on behalf of the Respondent. Date of concluding the hearing : July 07, 2026 Date of pronouncing the order : August 14 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: These are the appeals filed by the assessee is directed against the order dated 10. 10. 2025 &11.11.2025 of the National Faceless Appeal Centre (NFAC) passed under Section 143 (3) of the Assessment Year 2013-14 &2014-15 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

ITA No. 391/2025

Assessment Year 2013-14, it filed its return of income declaring a total income of 1,67,650/-. The return was initially processed under section 143(1) of the Income- tax Act, 1961. Subsequently, the assessment was reopened under sections 147/148 and completed under section 143(3) read with section 147. The Learned Assessing Officer made an aggregate addition of Rs. 52,47,149/-, comprising (i) Rs. 32,00,000/- by treating the payment of Rs. 24,00,000/-made to M/s. S.R. Trading and the refund of advance of Rs.8,00,000/- received from M/s Agarwal Traders as accommodation entries, and (ii) 20,47,149/- by treating the closing balances standing in the names of the said parties as bogus liabilities.

Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been dismissed.

Being aggrieved by and dissatisfied, the assessee preferred appeal before us.

during the year under appeal rather the purchases made from both parties in the immediately preceding financial year and were duly recorded in books of accounts. The Ld. AR submits that a complete documentary evidences in support of the transaction such as copies of the purchase invoices, delivery challan, ledger accounts, bank statements, stock register, VAT returns and audited books of accounts were produced before the Assessing Officers, but that has not been considered by the AO nor by the CIT(A). The ld. AR further submits that books of account of the assessee were duly maintained in the regular course of business and audited u/s 44AB of the Act. The Ld. AR further submits that Ld. AO did neither rejected the books of accounts nor pointed out a defect in the books. The Ld. AR submits that addition of Rs. 20,47,149/- alleged bogus liability as well misconceived as the amount of Rs. 19,63,389/- represented the balance advances recoverable from M/s Agarwal Traders after just immediate of the refund of Rs. 8,00,000/- received during the year, while Rs. 83,760/- represented the balance payable to M/s. S.R. Trading after making payment of Rs. 24,00,000/- during the year.

Contrary to that Ld. DR supports the impugned order

4.1. It is pertinent to mention here that in course of assessment proceedings, assessee has submitted the following documentary evidences: - (i) Copies of purchase invoices (ii) Delivery challans, ledger accounts, bank statement, stock register, VAT return and audited books of accounts. (iii) The delivery challans clearly evidenced the actual moment of goods showing transportation. The purchases were duly reflected in the VAT returns and the corresponding sales were also disclosed by the suppliers in their VAT records. The payments and refund were made entirely through normal banking channels by account payee cheques. The opening balances appearing in the accounts of M/s SR Trading and M/s Agarwal Traders had been duly carried forward from the earlier year and stood reflected in the audit balance-sheet. The Ld. AO merely on the basis of investigation report without disproving the documentary evidence maintained by the assessee passed an assessment order.As we have already discussed that the assessee had maintained complete quantitative records of purchases, stock and sales. The goods purchase from M/s SR Trading and Ms. Agarwal Traders has been entered in the stock register, subsequently sold to various customers and there is no discrepancy has been found by the AO in the

quantitative records or stock register. It is pertinent to mention here that the transaction under consideration merely represent payment of earlier years liabilities, refund of earlier year advance and closing balances in carried forward in the books of accounts. In view of the discussion made above we find substance in the arguments of the AR, that addition made in the present year are wholly unsustainable. 5. Accordingly, the addition made by the AO confirmed by the CIT(A) are hereby deleted Inthe result, the appeal of the assessee is allowed. ITA No. 409/2025 6. The brief facts of the case of the assessee is that the appellant is a partnership firm engaged in the business of trading in electrical items. For the Assessment Year 2014-15, filled its return of income declaring a total income of ₹2,08,830/ The case was selected for scrutiny and the assessment was completed under section 143(3) of the Income-tax Act, 1961. During the course of the assessment proceedings, the Learned Assessing Officer doubted the purchases made by the appellant from M/s. Ganguly Enterprises and treated the entire purchase amount of ₹1,70,11,045/- as non-genuine. Consequently, the Learned Assessing Officer added the said amount of ₹1,70,11,045/- to the income of the

appellant as undisclosed income on the ground that the supplier could not be found at the given address and the transactions were not genuine. Aggrieved by the said order assessee preferred appeal before the CIT(a) wherein appeal of the assessee has been dismissed. Being aggrieved by and dissatisfied assessee preferred appeal before us. 7.The Ld. AR challenges the very impugned order thereby submitting that addition is wholly unsustainable as the Assessing Officers has accepted the sales declared by the assessee and once the sales has been accepted and genuine, corresponding purchases given rise to such sales cannot be treated as bogus one. The Ld. AR submits that assessee has submitted complete documentary evidences in support of the purchasessuch as ledger accounts, purchases invoice, payment made through account data check duly reflected in the bank statement, VAT records, stock register, delivery challans, etc. and it is surprising that why assessing officers did not consider the same and made an addition. Contrary to that Ld. DR supports the impugned order. 8. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that assessee is a partnership firm engaged in the business of trading in electrical items. The Ld. AO doubted the

purchases made by the assessee from M/s Ganga Enterprise and treated the entire purchase amount of Rs. 1,70,11,045/- non-genuine. The Ld. AR filed following documents before us:- 1.ITR Acknowledgement, Tax Audit Report and Audited Final Accounts. 2.Ledger Account of Ganguly enterprise. a. Upto Financial year 2016-17. b. Financial year 2016-17 3. Sample Copies of Challan raised by Ganguly enterprise 4. Copies of Stock Statement 5. Copies of sale Bills 6. Relevant portion of the Bank Statements 7. Acknowledgement receipt of the VAT Copy 8. A screen shot from the website of the Directorate of Commercial Taxes showing the status of Ganguly Enterprises. 8.1. It is pertinent to mention here that assessee has submitted the documentary evidences in support of the genuineness of the purchases and the documents furnished by the assessee are the ledger accounts, bank statement, VAT records, stock register, delivery balance and corresponding sell invoices, all of which clearly established the moment of goods and their utilization in the course

of business. The Learned Assessing Officer has neither rejected the books of account under section 145(3) of the Act nor pointed out any discrepancy in the quantitative records, stock register or trading results. The appellant disclosed a Gross Profit of ₹27,57,735/-, representing a Gross Profit Rate of 1.63% on a turnover of ₹16,91,77,641/- during the year under appeal. The Gross Profit Rate in the immediately preceding Assessment Year was 2.05%, while in Assessment Year 2012-13 it was 1.82%, demonstrating that the trading results have remained broadly consistent over the years. Had the purchases been fictitious, the Gross Profit Rate would have shown an abnormal increase, which is admittedly not the position in the present case. The accepted trading results, coupled with the complete documentary evidence and quantitative records, clearly establish that the purchases were genuine and were duly utilised in the appellant's business.

In the result, both the appeal of the assessee are allowed.

Kolkata, the 14th August , 2026.

Sd/- Sd/-

[Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated:. 14 .08.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order

Deputy Registrar, Kolkata Benches