ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, VAPI vs. GUJARAT POLYSOL CHEMICALS LIMITED, VAPI

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT Before: Shri T. R. Senthil Kumar, Judicial Member & Shri Ratnesh Nandan Sahay, Accountant Member

ITA No: 701/SRT/2025 Assessment Year: 2020-21

A.C.I.T., Vs Gujarat Polysol Chemicals Central Circle, Limited, Vapi Plot No. 1734, 3rd Phase, GIDC, Vapi-396195 (Gujarat) PAN: AAACG 8908 Q (Appellant) (Respondent)

Assessee Represented by : Shri P.M. Jagasheth , C.A. Revenue Represented by : Shri Mukesh Jain, CIT-DR Date of hearing : 04/05/2026 Date of pronouncement : 21/07/2026 आदेश/ORDER PER: RATNESH NANDAN SAHAY, AM: 1. This is an appeal filed by the revenue against the order of the Learned Commissioner of Income Tax (Appeals)-4, Surat [In short, ‘the ld. CIT(A)’] dated 15/04/2025 for the assessment year (AY) 2020-21 wherein the revenue has raised following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), in contravention to the provision of section 292C of the I.T Act, 1961, has erred in restricting the addition, to Rs. 50,00,000/- as against the addition of Rs. 12,68,77,766/ made by the Assessing

2 ITA No. 701/Srt/2025 ACIT Vs Gujarat Polysol Chemicals Ltd. Officer on account of bogus purchases, without appreciating that the addition was based on incriminating details/documents recovered during the course of the search proceedings. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), in contravention to the provision of section 292C of the I.T Act, 1961, has erred in restricting the addition to Rs. 50,00,000/- as against the addition of Rs. 12,68,77,766/ made by the Assessing Officer on account of GP on bogus purchases, without appreciating the fact that GST tax rate on the purchase of raw materials made from the disputed transactions is usually at the rate of 18% and the assessee had availed the benefit of such GST tax. Further, the assessee must have benefitted in various ways like low prices in grey market, less transportation and labour charges, etc. Thus it is justifiable & reasonable to believe that assessee in all must have gained a benefit of about 25% of total bogus purchases detected for the year under consideration, over and above the GP disclosed in the ITR by the Assessee. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the statement accepting about bogus purchases backed by seized corroborative evidences and taking into cognizance of the retraction not backed by any corroborative documentary evidence 4. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred restricting the addition to Rs. 50,00,000/- as against the addition of Rs. 12,68,77,766/- made by Assessing Officer on account of GP @ 25% of bogus purchase of Rs. 50,75,11,064/- ignoring the fact that addition has been made following the decision of Hon'ble Gujarat High Court in the case of Vijay Protein vs. Commissioner of income tax, PCIT-2, Vadodara vs. Synbiotics as well as decision of the Hon'ble Apex Court in the case of NK Protein Ltd. vs. DCIT. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), in contravention of the provisions of section 292C of the Income Tax Act, 1961, has erred in deleting the addition of Rs.59,100/- made by the Assessing Officer on account of unaccounted income, without appreciating that the addition was based on incriminating details/documents recovered during the course of the search proceedings. 6. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made."

3 ITA No. 701/Srt/2025 ACIT Vs Gujarat Polysol Chemicals Ltd. 2. Facts of the case, in brief, are that the assessee company is engaged in chemical manufacturing. The products manufactured by the assessee and its group concern are Infra-Tech (construction) Chemicals, Leather Chemicals, Agro Chemicals, Oil Field Chemicals and Dispersing Agents for dyeing and textile chemicals. A search and seizure proceedings under Section 132 of the Income Tax Act, 1961 (in short, the Act) was conducted in Polysol Group on 18/11/2021 and various documents and digital data was found and seized as marked as Annexure A-1 to A-17 by the Investigation Wing, Vapi. During the course of search and seizure proceedings, various incriminating details relating to the issue of bogus purchases were gathered, the modus operandi of the assessee has been given, in detail, in the body of the assessment order. The Assessing Officer, after going through all incriminating details, the statements recorded at the time of search under Section 132(4) of the Act and after analysing the incriminating documents, finally, made addition on account of "unaccounted cash sales amounting to ₹ 59,100/-" and on account of "GP on bogus purchases amounting to ₹ 12,68,77,766/-".

4 ITA No. 701/Srt/2025 ACIT Vs Gujarat Polysol Chemicals Ltd. 3. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A), who vide the impugned order dated 15/04/2025 deleted the addition of ₹ 59,100/- on account of unaccounted cash sales. The ld. CIT(A) further reduced the addition to 50.00 lacs out of the total addition of ₹ ₹ 12,68,77,766/- on the ground that the addition was made only on the basis of data retrieved from a digital device/personal computer of an employee. However, no corroborative evidence was brought on record establishing involvement of appellant in the alleged purchases and sales. Even the persons whose statements were recorded and enquiries were made under Section 131 and under Section 133(6) of the Act respectively have not confirmed that the purchases made by the appellant were bogus or cash was returned back to the appellant. The ld. CIT(A) then held that, still, the fact remains that the documents were found from the possession and control of an employee of the appellant. It was further held by the ld. CIT(A) that even the employee of the assessee who had earlier given his statement that sales and purchases were suppressed has also subsequently, retracted. 4. Aggrieved by the order of the ld. CIT(A), the revenue is in appeal before this Tribunal.

5 ITA No. 701/Srt/2025 ACIT Vs Gujarat Polysol Chemicals Ltd. 5. During the course of hearing, the ld. CIT-DR vehemently supported the order of the Assessing Officer. 6. On the other hand, the ld. AR of the assessee produced various evidence in support of its claim that the purchase and sales were genuine. The ld. AR of the assessee has also placed reliance on the orders of this Tribunal in assessee's own case for the A.Y. 2018-19, 2019-20, 2021-22 and A.Y. 2022-23 respectively. 7. We have carefully considered the facts of the case and the material available on record and also considered the submissions made by both the parties. We also considered the decisions of the Coordinate Bench of this Tribunal in assessee's own case for the A.Y. 2018-19, 2019-20, 2021-22 and A.Y. 2022-23 wherein the Hon'ble Coordinate Benches have decided the identical issue involved in this appeal and restricted the GP addition to 9% of the total purchases in ITA No. 513 & 595/Srt/2023 and ITA No. 595/Srt/2023 order dated 28/12/2023 which was subsequently followed by the another Coordinate Bench of this Tribunal in ITA No. 64 to 66/Srt/2025 order dated 26/11/2025. 8. Since this issue has already been considered and settled by the orders of the Coordinate Bench of this tribunal in all the assessment years except the impugned assessment year, we find

6 ITA No. 701/Srt/2025 ACIT Vs Gujarat Polysol Chemicals Ltd. no reason to differ from the decisions of the Coordinate Benches and to abide by judicial discipline, we also follow the same in this assessment year also. Accordingly, we also follow the GP addition @ 9% of the total purchases made by the Coordinate Bench of this Tribunal for the first time in the A.Y. 2018-19. The Assessing Officer is directed to apply GP @ 9% of the total purchases made in this year. 9. In the result, this appeal of the revenue stands dismissed. Order is pronounced under the provisions of Rule 34 of IT(AT) Rules, 1963 on 21/07/2026.

Sd/- Sd/- (T. R. SENTHIL KUMAR) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Dated 21/07/2026 *Ranjan आदेश�ȧĤǓ�ͧ �ͪ �\ Ē ȯͪ��/ Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT 6. Guard file. By order/आदेशसे,

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