M/S. ELOQUENT STEEL PVT. LTD.,,KOLKATA vs. DCIT, CENTRAL CIRCLE 3(1),, KOLKATA

आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A”BENCH KOLKATA Before Shri Rajesh Kumar, AccountantMember and Shri Pradip Kumar Choubey, JudicialMember ITA Nos.1414 & 1415/Kol/2025 Assessment Years: 2019-20 & 2020-21 M/s Eloquent Steel Pvt. Ltd..………...………..............................……….……Appellant C/o M/s SalarpuriaJajodia& Co., 7, C R Avenue, 3rd Floor, Kol-72. [PAN: AADCE1766F] vs. DCIT, Central Circle-3(1), Kolkata…….……………………...……...…..…..Respondent ITA Nos.1812 & 1813/Kol/2025 Assessment Years: 2019-20 & 2020-21 DCIT, Central Circle-3(1), Kolkata..………...…..............................……….……Appellant vs. M/s Eloquent Steel Pvt. Ltd ……………………………………...……...…..…..Respondent C/o M/s SalarpuriaJajodia& Co., 7, C R Avenue, 3rd Floor, Kol-72. [PAN: AADCE1766F] C.O Nos.95 & 96/ Kol/2025 (in ITA Nos.1812 & 1813/Kol/2025) Assessment Years: 2019-20 & 2020-21 M/s Eloquent Steel Pvt. Ltd..………...………..............................……….……Appellant C/o M/s SalarpuriaJajodia& Co., 7, C R Avenue, 3rd Floor, Kol-72. [PAN: AADCE1766F] vs. DCIT, Central Circle-3(1), Kolkata…….……………………...……...…..…..Respondent Appearances by: Shri Siddharth Jhajharia, FCA, appeared on behalf of the appellant. Shri Manoj Kumar Pati, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : April 16, 2026 Date of pronouncing the order : April 24,2026 ORDER Per Rajesh Kumar, Accountant Member: ITA Nos.1414 & 1415/Kol/2025 filed by the assessee and ITA Nos.1812 & 1813/Kol/2025 filed by the revenue are against the separate

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd orders passed by the CIT(A), Kolkata-21 all dated 21.04.2025 for the assessment years 2019-2020 & 2020-2021 respectively and the cross- objections filed by the assessee against the ITA Nos.1812 & 1813/Kol/2025 filed by the revenue.

First, we take the appeal of the assessee in ITA 2. No.1414/Kol/2025 for A.Y.2019-2020 as lead case and the grounds raised by the assessee are as follows:-

“1. For that in view of the facts and in the circumstances, the Ld. CIT(A) was wholly unjustified in confirming the validity of the notice u/s 148 dt. 6.9.2022 and the proceedings and the consequent order passed u/s 147 and such action of the Ld. CIT(A) is no in accordance with the law and facts on record and in view of the facts and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the impugned notice u/s 148 dt. 6.9.2022 is vague and it does not confirm to the requirement of sec. 147 and 148 and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No. 1 & 2 above, Ld. CIT(A) erred in not appreciating the fact that the impugned notice u/s 148 dt. 6.9.2022 was not on the basis of any incriminating material and evidence during search u/s 132(1) on 17.9.2021 at "Agarwal Group' and as such the action of AO in such respect in issuing of such notice is bad in law and it may be held accordingly. 4. Without prejudice to Grounds No. 1 to 3 above, such notice u/s 148 was on the basis of searches conducted u/s 132(1) on Majee Group' on 5.11.2020 (searches were prior to 1.4.2021) and as such the amended law u/s 147 and sec. 148 with effect from 1.4.2021 could not have been applied for issue of notice u/s 148 in such respect and Ld. CIT(A) accordingly erred in not appreciating the same and it may be held accordingly. Even otherwise and without prejudice the notice u/s 148 notbeing based on any material found during search u/s 132(1) does not confirm to requirement and approval u/s 148 & sec. 149 and hence it may be held accordingly. 5. Without prejudice to Grounds No. 1 to 4 above, the Ld. CIT(A) erred in not appreciating the fact that the addition could not have been made on issues other than issues on which proceedings u/s 147 has been initiated and accordingly the impugned notice u/s 148 and the consequent proceedings u/s 147 is bad in law and it may be held accordingly. 6. For that in view of the facts and in the circumstances, Ld. CIT(A) erred in not deleting the entire addition of alleged undisclosed purchase of Rs. 1,35,97,376/- and also erred in applying gross profit rate @ 8.01% and such

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd action of AO in adding the gross profit percentage on such allegedundisclosed purchase is bad in law and the action of Ld. CIT(A) is bad in law and it may be held accordingly. 7. Without prejudice to Ground No. 6 above, the Ld. CIT(A) erred in treating the alleged undisclosed cash purchases of Rs.1,35,97,376/- with 3d party without there being any evidence of such alleged purchase and without there being any examination of such alleged transaction and or such third person by the AO and as such the Ld. CIT(A)'s action in such respect is bad in law and it may be held accordingly. 8. Without prejudice to Grounds No. 6 & 7 above, the Ld. CIT(A) erred in not appreciating the fact that the AO did not bring any material or evidence regarding the purchase or consumption of alleged undisclosed purchases and AO did not even dispute the production so achieved during the year and even AO did not reject books of accounts of appellant and as such AO's action in making such addition in such respect is merely on conjecture and surmises and Ld. CIT(A) erred in not appreciating the same and it may be held accordingly. 9 Without prejudice to Grounds No. 6 to 8 above, the Ld. CIT(A) erred in not appreciating the fact that Ld. AO had quantified the alleged undisclosed purchases merely on conjecture and surmises and as such the action of AO & CIT(A) is bad in law and it may be held accordingly. 10. Without prejudice to Grounds No. 6 to 9 above, AO didn't even issue notices to alleged transactions of such coal and Ld. CIT(A) erred in not appreciating the same and hence it may be held accordingly. 11. Without prejudice to Grounds No. 6 to 10 above, the entire addition made by AO in such respect is without allowing cross examination of the third party so involved and such action of AO & CIT(A) is bad in law and it may be held accordingly. 12. Without prejudice to Grounds No. 6 to 11 above, the rate of gross profit so considered by CIT(A) has no legal basis and such action of CIT(A) is bad in law and it may be held accordingly. Even otherwise and without prejudice the rate of G.P is highly excessive and wholly unreasonable. 13. For that your petitioner craves the right to put additional grounds and/or to alter/ amend/modify the present grounds at the time of hearing.” 3. Ground Nos.1 to 5 are not pressed and accordingly dismissed as not pressed.

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd the AO of Rs.1,35,97,376/- on account of alleged undisclosed purchases

“15. After hearing the rival contentions of the parties and perusing the material available on record, we find that the basis of the addition made by the Assessing Officer was the documents seized as SMVD-01 to SMVD-18 from the Majee Group during the course of search on the Majee Group on 05.11.2020 which revealed the cash payments made by the assessee to Majee Group. The Assessing Officer 4

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd calculated the quantity of coal purchases at 13919.25 MT from Majee Group and after applying estimated rate of coal @Rs. 4000/- per MT computed the unexplained purchases at Rs.5,56,77,000/-. The Assessing Officer also noted that the assessee has repaid certain cash loans amounting to Rs.3,50,00,000/-. The AO aggregated both these amounts to Rs.9,06,77,000/- and noted that this may be the unrecorded purchases. However he further noted that since the cash payments revealed on the basis of seized materials were on higher side, therefore he took higher of the two amounts, and, accordingly added Rs.29,93,22,967/- u/s.69C of the Act as unreported purchases in the books of accounts. We note that Ld.CIT(A) partly allowed the appeal by directing the Assessing Officer to apply GP rate @8.01% on the said estimated purchases. Now the assessee filed appeal before the tribunal challenging the application of 8.01% of the GP on the alleged bogus purchases whereas the revenue has challenged the order of the ld. CIT(A) allowing part relief to the assessee. We note that in this case the assessee has been denying the transactions right from the search days till the appellate proceedingsbefore the ld.CIT(A) that it had not made any purchases from Majee Group. We note that the assessee also requested the Assessing Officer to provide the alleged documents/evidences/information, which were found during the course of search on the Majee Group and others. The Assessing Officer has hopelessly failed to confront the assessee with the same. We also note that the observations of the Assessing Officer is based on the documents seized in the course of search which was never confronted to the assessee and the assessee has been denying any transactions with the Majee Group and also with the transporter who was alleged to have transported the material to the assessee premises. We note that AO calculated the estimated purchase quantity of coal at 13919 MT and the unexplained purchaseswere calculated at Rs.5,56,77,000/- by applying average rate of Rs.4000/- per MT to the quantity delivered to the assessee of 13919.25, which is again based on presumption and surmises whereas the actual purchase cost of coal varies from Rs.2,500/MT to Rs.17,000/MT depending upon the Carbon Content, Ash content and various other factors. Therefore, the very basis of the Assessing Officer that the assessee has made bogus purchases has no legs to stand. Moreover we find that the coal manufacturing requirement of the plant are within the acceptable norms and parameters as has been prescribed by the government in the manufacturing process of steel. Even if we assume that there has been purchase of coal from the MajeeGroup , then the same might have used for manufacturing plant but no evidence to thateffect was brought on records. We note that as the accounts of the assessee have not been disturbed and the manufacturing calculation of the assessee as disclosed in the audit report had not been disturbed and doubted by the ld. AO.Obviously, it cannot be assumed that the assessee has made any unaccounted purchases from the Majee Group. Further, for the purposes of making any addition u/s 69C of the Act something should have been found to show that the assessee had incurred unaccounted expenditure by way of purchase of coal from Majee group. In the present case, what has been found is certain bills/ receipts in the search of the Majee Group. The assessee has categorically denied such coal purchases from the Majee group. The concerned person of Majhi Group was not examined by the AO nor the assessee was given cross-examination of the said person. We also note that the AO has also not conducted any enquiry on the basis of bills and documents found during searh on Majee group. The so-called bills and documents found in the course of search on Majee group are not supported with other corroborating evidences These documents which have been found in the hands of the Majee Group are only documents having no initials. It also does not contain the clear 5

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd name of the assessee. This being so, we are compelled to hold that the so-called sales which has been done by Majee Group in the name of the assessee do not belong to assessee. Effect of the addition as made by the ld. AO would mean that such unaccounted purchases of coal have resulted in unaccounted manufacturing of steel. For this, there is no evidences the raw material for the manufacture of the steel . This would again result in unaccounted manufacture of steel and there were no evidences of any such manufacture much lessunaccounted sale of such unaccounted manufacture iron and steel. The further result of this addition is that the stock statement of the assessee in regard to so called unaccounted purchases of coal would have to be adjusted thereby distorting the entire manufacturing cost structure of the assessee. None of this have been found much less alleged. Obviously, such addition cannot be made. Insofar as the coal purchase from Majee group is concerned , the assessee has categorically denied the transactions by stating that it has never made purchases from Majee Group either earlier or later nor during the year. The person who is taken the assessee’s name has also not been put to assessee for cross-examination. In these circumstances, the addition made by the ld. AO and the estimation as made by the ld. CIT (A) cannot be sustained and would stand deleted. We further note that the statements recorded during the course of search of Shri Anup Majee and materials gathered during search on such third party , which was relied by the ld. AO without confronting the same to the assessee assessee or allowing any cross examination which is in violation of principle of natural justice as has been held in the case of Andaman Timber Industries Vs. CIT (2015) 10 TMI 442 (SC)&PCIT vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-2022]. 16. We have also perused the provisions of Section 142(2) and 142(3) of the Act and find that Section 142(2) of the Act deals with the obtaining full information in respect of income or loss of any person qua which the ld. AO wants enquire into as he considered necessary whereas the provisions of Section 142(3) of the Act provides that unless the assessment is made u/s 144 of the Act ,the assessee has to be given anopportunity of hearing in respect of any material gathered on the basis of enquiry u/s 142(2) of the Act or any audit under sub section 2A of the Act, which are proposed to be relied for the purpose of assessment. However, in the present case, we note that the material gathered by the ld. AO during the course of enquiry were never confronted to the assessee thereby violating the mandate of provisions of Section 142(2) and 142(3) of the Act as the information gathered at the back of the assessee was used in framing the assessment against the assessee without providing any opportunity to the assessee. The case of the assessee find support from the decision of the co-ordinate Bench in case of M/s SPML Infra Ltd. Vs DCIT ITA No. 1228/KOL/2018, vide order dated 17.01.2020, wherein it has been held as under:- “"14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement recorded by some other officer in some other proceedings more particularly having no bearing on the transaction with the assessee does not create any material evidence against the assessee. This is because section 142(2) mandates any such material adverse to the 6

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd facts of assessee collected by AO u/s 142(1) has to be necessarily put to the assessee u/s 142(3) before utilizing the same for assessment so as to constitute as reliable material evidence through the process of assessment u/s 143(3) of the Act." 16. Similarly, in the case of ACIT Vs. Sur Buildcon Pvt. Ltd. ITA No. 6174/DEL/2013, vide order dated 15.07.2021 has held as under:- “7.11 Applying the law to the case at hand, it is evident that the Inspector Reports, that had been relied upon by the A.O., have been reproduced in length for the first time in the Assessment Orders only. The A.O., by failing to confront the assessee with the evidence he had gathered u/s 142(2) Act, has, therefore, erroneously skipped the mandatory intermediary step prescribed u/s 142(3) of the Act. Thus, when the A.O. has directly gone on to pass the Assessment Orders u/s 147/143(3) of the Act to make the impugned additions u/s 68, the same is in direct violation of the procedure of enquiry prescribed in the Statute that inherently encompasses the Principle (s) of Natural Justice. We derive support to our line of reasoning from the decision of the coordinate Bench of the Hon'ble Kolkata Tribunal in M/s. SPML Infra Ltd. vs. DCIT, ITA No. 1228/Kol/2018 wherein it has been held as under: ……………………………………. It was further held that, 7.14 Since the results of the enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessees, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessees.” 17. Similarly, PCIT Vs. Best Infrastructure (India) Pvt. ltd. (2017) 397 ITR 0082 (Delhi) and others. It was held that statement recorded u/s 132(4) of the Act do not by these constitute incriminating material and copy of the statement together that opportunity to cross-examine the deponent has to be provided to the assessee. The Hon'ble court held that if the statement is retracted or if cross examination is not provided the statement has to be discarded, wherein it is held as under:- "Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assesses The onus is on the Revenue to ensure his presence” 18. Therefore, the addition made on the said materials/statement and without cross-examination is not sustainable in the eyes of law. Consequently, we set

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd aside the order of ld. CIT(A) on this issue and direct the AO to delete the addition. The ground no. 6 to 12 are allowed.” 14. The facts being substantially similar , we, therefore, respectfully following the decision of the Coordinate Kolkata Bench of this Tribunal in the case of M/s Shakambhari Ispat & Power Ltd. vs. DCIT (supra), modify the appellate order and direct the Assessing Officer to delete the addition of Rs.1,35,97,376/-. Ground Nos.6 to 12 are allowed.

ITA No.1415/Kol/2025(Assessee), ITA Nos.1812 & 1813/Kol/2025(Revenue) & C.O Nos.95 & 96/ Kol/2025?(Assessee):

Kolkata, the 24th April, 2026. Sd/- Sd/- [Pradip Kumar Choubey] [Rajesh Kumar] Judicial Member Accountant Member Dated: 24.04.2026. RS

ITA Nos.1414 & 1415/Kol/2025, ITA Nos.1812 & 1813/Kol/2025 & C.O Nos.95 & 96/ Kol/2025 M/s Eloquent Steel Pvt. Ltd Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches