DEVASHREE ISPAT PVT. LTD.,,KOLKATA vs. DCIT, CIRCLE 1(1),, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM

ITA No.145/KOL/2026 (Assessment Year: 2013-14) Devashree Ispat Pvt. Ltd. DCIT, Circle 1(1) 11/B, Jatindra Mohan Avenue, Aaykar Bhawan, Beadon Steet, S.O. Kolkata P-7, Chowringhee Square, Vs. West Bengal 700006 Kolkata-700069, West Bengal (Respondent) (Appellant) PAN No. AACCD0753E Assessee by : Shri Anil Kochar, AR Revenue by : Shri Madanappa Raghuveer, DR Date of hearing: 08.04.206 Date of pronouncement: 21.05.2026

O R D E R Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 24.12.2025 for the AY 2013-14.

3.1. The facts in brief are that the assessee filed the return of income on 24.09.2013, declaring total income of

"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act.

3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions.

3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information."

3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that

"12. On a careful reading of section 106, we notice that what is the source from which an assessee has obtained the loan can be safely held to be a fact, which is actually within the special knowledge of the assessee; hence, it is the burden of the assessee to show the source(s) from which he has received the loans. Once the assessee discloses the source(s) from which he has received the loans, his burden under section 106 stands discharged and the onus, then, shifts to the Assessing Officer to show, if he wants to treat the loans as an income of the assessee from undisclosed source, that the transaction(s) between the assessee and the creditor is/are not genuine or that the creditor has no creditworthiness and/or that the money, which has been received by the assessee in the form of loans, actually belonged to the assessee himself. 10. The case of the assessee also finds supports from the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC). The relevant

"Sec. 68 of 1961 Act was introduced for the first time in the Act. There was no provision in 1922 Act corresponding to this section. The section only gives statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. The cash credit might be assessed either as business profits or as income from other sources." (Para 7) "It is not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income could be said to have been established; butwhere the circumstances of the rejection were such that the only proper inference was that the receipt must be treated as income in the hands of the assessee, there is no reason why the assessing authority should not drave such an inference. Such an inference is an inference of fact and not of law. "(Para 10) "The assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the allowed loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. It connot, therefore, be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the questions souglu for. "(Paras 13 & 15) 11. Similar ratio has been laid down by the Hon'ble Delhi High Court in the case of ITO v. Anant Shelters (P.) Ltd. [2012] 20 taxmann.com 153 wherein the Hon'ble High Court has held as under :-

"Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition under s.68 wax not sustainable."

15.1. In the appellate proceedings, the assessee submitted all the details and evidences of additions to plant and machinery and rolls along with audited accounts and tax audited report and accordingly, prayed the ld. CIT (A) to delete the addition. However, the ld. CIT (A) by ignoring the

15.2. After hearing the rival contentions and perusing the materials available on record, we find that that the assessee has claimed the depreciation on plant and machinery and rolls. The same has been certified by the auditors of the company and duly incorporated in the auditor balance sheet, a schedule of fixed assets is also available in the paper book. We note that all these information were available before the authorities below and they have failed to take cognition of the same. Accordingly, we find merit in the claim of the assessee and direct the ld. AO to delete the addition by setting aside the order of ld. CIT (A) on this issue. The ground no. 12 is allowed.

17.1. After hearing the rival contentions and perusing the materials available on record, we find that the expenses

18.1. During the assessment proceedings, the ld. AO noted that the assessee has claimed sale tax of ₹49,36,252/- and it was not clear whether the purchase and sale were inclusive of sales tax or not and how the said sale tax was claimed. Since, the show cause notice was not complied with the same was added to the income of the assessee.

18.3. After hearing the rival contentions and perusing the materials available on record, we find that the sales tax claimed was made in respect of consignment sales which was inclusive of sales tax. The assessee has been consistently claiming this expenditure as per account method of accounting followed over the years. Therefore, we do not find any error in the claim of the assessee. Accordingly, we set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition as CIT (A) has overlooked all the evidences filed before the ld. AO. The ground no. 14 is allowed.

20.1. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee on the ground that the assessee did not reply before the ld. AO by ignoring the fact that the cash was deposited out of the sales during the year which were ₹2.67 crores. The ld. CIT (A) also rejected the contention of the assessee that since the assessee was in the business of manufacturing of Billets and TMT bars, such cash sales were not in the ordinary course of business.

20.2. After hearing the rival contentions and perusing the materials available on record, we find that in this case the books of accounts were audited by the company auditor as well as the tax auditor and the cash was deposited in the regular course of business into the bank account of the assessee out of the books of account which was in turn out of cash sales. The assessee furnished before the ld. CIT (A) all the details and evidences including the tax audited report. However, the ld. CIT (A) dismissed the appeal of the assessee mainly on the ground that there was no compliance to the show cause notice before the ld. AO. After taking into account all the facts as furnished before us, we note that the cash was deposited into the State Bank of India out of the cash sales duly recorded in the books of account. Therefore the source of cash deposit is fully explained. In our opinion if the addition is sustained , it would result into double taxation of the same income which is not permissible under the Act. Firstly the assessee suo motto disclosed the sales in the books of accounts and offered to the tax the net profit as per the

Order pronounced on 21.05.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 21.05.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy// Asst. Registrar Income Tax Appellate Tribunal, Kolkata