STRANEX INDUSTRIES PRIVATE LIMITED,HYDERABAD vs. ITO, WARD-3(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad �ी �वजय पाल राव, उपा� य� एवं �ी मधुसूदन साव�डया, लेखा सद� य के सम� । Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.2091/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2023-24) Stranex Industries Private Vs. ITO Limited Ward 3(1) Hyderabad Hyderabad PAN: AARCS1428E (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Advocate T. Chaitanya Kumar राज� व �ारा/Revenue by: Shri B Sashi Kanth, Sr. AR सुनवाई की तारीख/Date of hearing: 06/05/2026 घोषणा की तारीख/Pronouncement: 13/05/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Stranex Industries Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 29.09.2025 for the A.Y.2023-24. 2. The assessee has raised the following grounds of appeal: “1. The order passed by the learned Hon'ble Commissioner of Income Tax (Appeals)/NFAC is erroneous both in law and on facts.

2 2. The learned Hon'ble Commissioner of Income Tax (Appeals)/NFAC has erred in law and on facts in confirming the addition made by the A.O on account of unexplained expenses as per the assessment order dated 21.03.2025. 3. Any other grounds that may be urged at the time of hearing is hereby kept open” 3. The brief facts of the case are that the assessee is a company engaged in the business of manufacture of explosives and site mixed emulsion. The assessee filed its return of income for Assessment Year 2023-24 on 31.10.2023 declaring total income of Rs.56,52,160/-. The case of the assessee was selected for complete scrutiny and accordingly notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) to the assessee on 19.06.2024. During the assessment proceedings, the Ld. AO observed that the assessee had claimed huge amount of sundry creditors and therefore, for verification of genuineness of creditors, notice under section 133(6) of the Act was issued to the creditors randomly. No reply was received by the Ld. AO from M/s Core India Corporation from whom the assessee had made purchases of Rs.68,47,010/-. The Ld. AO treated the said purchases as bogus and disallowed Rs.68,47,010/- under section 37(1) of the Act. Accordingly, the assessment was completed by the Ld. AO under section 143(3) read with section 144B of the Act vide order dated 21.03.2025 assessing the total income of the assessee at Rs.1,24,99,170/-. 4. Aggrieved with the order of the Ld. AO, the assessee filed appeal before the Ld. CIT(A). However, the Ld. CIT(A), after considering the submissions of the assessee, was not convinced with the explanation furnished by the assessee and upheld the addition made by the Ld. AO.

3 5. Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. Before us, the Learned Authorised Representative (“Ld. AR”) submitted that the solitary issue arising out of the grounds of appeal filed by the assessee is with regard to the addition of Rs.68,47,010/- made by the Ld. AO by disallowing the purchases under section 37(1) of the Act treating the same as bogus purchases. The Ld. AR submitted that the Ld. AO has treated the purchases made from M/s Core India Corporation as bogus merely on the ground that the said creditor did not respond to the notice issued under section 133(6) of the Act. The Ld. AR further submitted that the assessee had maintained proper books of account which were duly audited by the Chartered Accountant in accordance with the provisions of the Act. Inviting our attention to page no.5 of the assessment order, the Ld. AR submitted that the Ld. AO himself has recorded that the assessee had furnished copies of audited accounts, bank statements, cash flow statements, purchase details, invoices, raw material purchase details, stock valuation and ledger accounts during the course of assessment proceedings. He submitted that despite furnishing all these evidences, the Ld. AO has not pointed out any discrepancy therein. The Ld. AR further submitted that the gross value of purchases including taxes from M/s Core India Corporation was Rs.80,77,625/- during the year under consideration and all payments were made by the assessee through banking channels till 21.04.2023. He also invited our attention to the confirmation issued by M/s Core India Corporation placed at page no.28 of the paper book and submitted that the said concern has confirmed the opening balance, sales made during the year, amount received and closing balance. The Ld. AR further

4 submitted that the Ld. AO without bringing any contrary material on record, treated the purchases as bogus merely because the supplier failed to respond to the notice issued under section 133(6) of the Act. Accordingly, he submitted that the addition made by the Ld. AO is purely based on suspicion and surmises and therefore liable to be deleted. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities and submitted that the creditor did not comply with the notice issued under section 133(6) of the Act and therefore the genuineness of the purchases was not proved by the assessee. Accordingly, the Ld. DR submitted that there is no infirmity in the orders of the lower authorities in treating the purchases as bogus and disallowing the same under section 37(1) of the Act. 7. We have heard the rival submissions and perused the material available on record. We have gone through page no.5 of the order of the Ld. AO, which is to the following effect:

5 8. On perusal of the above, we find that the Ld. AO himself has recorded the fact that the assessee had submitted copies of audited accounts, bank statements, cash flow statements, purchase details, invoices, raw material purchase details, stock valuation and ledger accounts during the course of assessment proceedings. Accordingly, it is evident that all the primary documents in support of purchases were furnished by the assessee before the Ld. AO. We have also gone through the confirmation issued by M/s Core India Corporation placed at page no.28 of the paper book , which is to the following effect:

6 made through banking channels have come back to the assessee in any manner. We further find that the Ld. AO has not pointed out any deficiency or discrepancy in the books of account and documents furnished by the assessee. The Ld. AO has also not rejected the books of account of the assessee and has accepted the book results declared by the assessee. Once the books of account are accepted and sales are not doubted, corresponding purchases cannot be disallowed merely because the supplier failed to respond to notice issued under section 133(6) of the Act. Therefore, in our considered view, non- compliance by the creditor to the notice issued under section 133(6) of the Act, by itself, cannot be a sole basis to treat the purchases as bogus when the assessee has discharged its primary onus by furnishing invoices, ledger accounts, confirmations, audited financial statements and proof of payments through banking channels. Thus, considering the entirety of facts and circumstances of the case, we are of the considered opinion that the disallowance of purchases under section 37(1) of the Act treating the same as bogus purchases is merely based on suspicion and surmises without bringing any cogent adverse material on record. Accordingly, we direct the Ld. AO to delete the addition of Rs.68,47,010/- made on account of alleged bogus purchases. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 13th May, 2026. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad, dated 13th May, 2026. Vinodan/sps

Copy to: S.No Addresses 1 STRANEX INDUSTRIES PRIVATE LIMITED 3-47-7 PLOT NO 7 SRI PURI COLONY ,KHARKANA SECUNDERABAD 500015 Telangana 2 Income Tax Officer Ward-3(1) Signature Towers, Hyderabad 500084 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.05.13 RAO 13:55:45 +05'30'