SANJAY AGARWAL INDUSTRIES PVT.LTD,PUNE vs. ITO WARD 6(1), PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 2587/PUN/2025 Assessment Year : 2019-20 Sanjay Agarwal Industries Pvt ITO, Ward-6(1), Ltd. Company, Pune GUT No. 459, Adinath Nagar, vs. Opp. Atlas Copco Company, Pune – Nagar Road, Pune-412216. PAN : AASCS1619J (Appellant) (Respondent) Assessee by : CA Alefiya Patanwala Department by : Ms. Bhavya I.V. Jt.CIT Date of Hearing : 25-06-2026 Date of Pronouncement : 09-09-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 03-09-2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2019-20.

2 ITA No. 2587/PUN/2025 issued to the assessee on 24-03-2023, in response to which the assessee filed its return of income admitting a total income of Rs.15,40,740/-. Accordingly, statutory notices u/s.143(2) and 142(1) of the Act along with questionnaire were issued and duly served upon the assessee, followed by the show cause notice proposing an addition on account of alleged bogus purchases from Raja Cement. After considering the submissions made by the assessee, the Ld. Assessing Officer (“AO”) estimated the profit @12.5% on the alleged bogus purchases of Rs. 6,57,50,956/- from Raja Cement and made an addition of Rs. 82,18,870/- determining the total income of the assessee for AY. 2019-20 at Rs.97,59,610/-, vide his order dt.21-03- 2024 passed u/s. 147 r.w.s. 144B of the Act.

“Grounds of Appeal: The Grounds of appeal, the facts and circumstances of the case and the submissions of the assessee have been carefully considered. These are being adjudicated as under.- Ground Nos. 1 and 2 The grounds of appeal are directed against an addition of Rs. 82,18,870/- made by the Ld. AO u/s 69C of the Act on account of bogus purchases being 12.5% of the bogus purchases made by the assessee. During the course of assessment proceedings, the Ld. AO on the basis of information received from the Investigation Wing that the assessee had made bogus purchases to the tune of Rs. 6,57,50,956/- from M/s Raja Cement House made the impugned addition by adding 12.5% of the purchase cost and making an addition of Rs. 82,18,870/- thereof. During the course of appellate proceedings, the appellant has made various submissions. It has been stated that the said transactions were genuine in nature. However, it has been seen that the case of the assessee was reopened based on specific information that the assessee had received accommodation entries from M/s Raja Cement House (Prop. Raja Ashok Agarwal) and he had admitted to running bogus concerns indulging in providing accommodation entries. No evidence of carrying out of any business activity was found thereof. The following concerns

3 ITA No. 2587/PUN/2025 provided accommodation entries of bogus purchases to the appellant as under: - Sr. Name of the Concerns Bill amount No. 1. M/s Raja Cement House 6,57,50,956/- Since, the purchases were bogus in nature, only the profit margin embedded in such transaction needs to be taxed. As such the action of the Ld. AO to add 12.5% of the purchase cost to the income of the appellant is quite fair. The same is upheld. The grounds of appeal nos. 1 and 2 are Dismissed.”

“The appellant respectfully submits that the order passed by the Learned Commissioner of income Tax (Appeals) [CIT(A)) and the assessment order passed by the Learned Assessing Officer (AO) are bad in law, contrary to facts, and violative of principles of natural justice and are therefore liable to be quashed. 1. Ground on Addition for Alleged Bogus Purchases The Learned CIT(A) erred in law and on facts in confirming the addition of ₹82.18.870/-being 12.5% of alleged bogus purchases of 26,57,50,956/- made from M/s Raja Cement House. Nagpur, without appreciating that the appellant had duly furnished complete evidences proving the genuineness of purchases. 2. Ground on Reliance on Departmental Information The Learned CIT(A) and the AO erred in relying solely on information available on the Department's Insight Portal under the High-Risk Transaction (CRIU/VRU) category. without conducting any independent verification or enquiry and without providing the appellant an opportunity to cross-examine or rebut such information. 3. Ground on Documentary Evidences Ignored The authorities below failed to appreciate that the purchases were supported by proper tax invoices, GST returns (GSTR-2A reconciliation), payments through banking channels, and quantitative stock records, all of which substantiate the genuineness of the transactions. 4. Ground on Acceptance of Sales The authorities erred in disregarding the fact that the corresponding sales have been accepted and that 93.14% of total stock plus purchases were sold during the year, which conclusively proves that goods were actually received and utilized in business. 5. Ground on Violation of Natural Justice The AO and CIT(A) erred in making/confirming the addition without confronting the appellant with any adverse material and without affording an opportunity of cross-examination, thereby violating the principles of natural justice as enshrined under section 142(3) of the Act. 6. Ground on Estimation of Profit Rate The Learned AO erred in arbitrarily estimating profit @12.5% of alleged bogus purchases without any basis or supporting evidence and without

4 ITA No. 2587/PUN/2025 considering that the appellant's books of account were neither rejected under section 145(3) nor any defects pointed out therein. 7. Alternative Ground Without prejudice to the above, even assuming (without admitting) that any disallowance is warranted, the addition made @12.5% is excessive and unjustified. At best, only the profit element, if any, embedded in the disputed purchases could be considered, as held in CIT v. Simit P. Sheth (356 ITR 451) and several other judicial precedents. 8. Prayer The appellant prays that the addition of ₹82,18,870/-confirmed by the CIT(A) may kindly be deleted in full and such other or further reliefs be granted as the Hon'ble Tribunal may deem fit and proper.”

5 ITA No. 2587/PUN/2025 the assessee. Further, Raja Cement is a registered entity under GST and from the declared HSN code of the supplier as per the GST records which pertains to „other bars and rods of iron-ore non-alloy steel‟, a direct co- relation/commercial linkage between the nature of goods purchased by the assessee [i.e. ferrous waste and scrap (MS scrap)] can be established with the supplier‟s declared line of business. The Ld.AR submitted that the aforesaid additional evidences could not be submitted before the Ld.CIT(A)/NFAC / Ld.AO due to circumstances beyond the control of the assessee and since these evidences goes to the root of the matter, in the interest of justice, the same should be admitted and therefore, requested that an opportunity may be granted to the assessee to substantiate its case before the lower authorities by filing the additional evidences in support of its claim. The Ld.DR, on the other hand, strongly supported the order of the Ld.CIT(A)/NFAC and the Ld.AO. We find that the assessee had submitted some documentary evidences before the lower authorities in support of its claim. Before us, it is the submission of the Ld.AR that the assessee is now in possession of certain additional evidences to further support its claim and hence, has requested for grant of an opportunity to substantiate its case by filing the requisite documentary evidence. Considering the totality of facts and in the circumstances of the case since these additional evidences in our opinion, go to root of the matter, we deem it fit, in the interest of justice, to set aside the impugned order of the Ld.CIT(A)/NFAC and restore the matter back to the file of the Ld.AO with a direction to consider the issue afresh in light of the additional evidence filed by the assessee, after due verification of the assessee‟s claim and decide the same as a result of such verification thereof and as per fact and law, after affording reasonable opportunity of hearing to the assessee. Needless to say, the assessee shall comply with the notices issued by the Ld.AO and make its submissions before him on the appointed date without

6 ITA No. 2587/PUN/2025 seeking any adjournment under any pretext, unless required for the sufficient cause, failing which the Ld.AO shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

Order pronounced in the open Court on 09-09-2026

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 09-09-2026 Tadepalli Naga Digitally signed by Tadepalli Naga Murali Mohan TNMM Murali Mohan Date: 2026.09.10 11:07:55 +05'30'

आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune ग र्ड फ ईि / Guard file. 5. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune