DCIT, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA vs. BALAJEE MINI STEELS & REROLLING PRIVATE LIMITED , PATNA

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ITA 1690/KOL/2025Status: DisposedITAT Kolkata15 December 2025AY 2017-18Bench: SHRI RAJESH KUMAR, AM\nAND\nSHRIPRADIP KUMAR CHOUBEY, JM\nITA Nos.1688 to 1691/KOL/2025\n(Assessment Years: 2015-16 to 2018-19)\nITA No. 1725/KOL/2025\n(Assessment Year: 2016-17)\nDCIT, Central circle 4(3)\nBalajee Mini Steels & Rerolling\nAaykar Bhawan Poorva, 110,\nPrivate Limited\nShantipally, Kolkata-700107,\n603, Shantikunj Apartment,\nKolkata\nPhulwanipatna, G.P.O.800001,\n(Appellant)\nVs.\nPatna\n(Respondent)\nPAN No. AABCB7265J\nAssessee by : Shri Manish Rastogi, AR\nRevenue by : S/15 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the orders of the CIT(A) were not infirm and upheld them, thereby dismissing the Revenue's appeals. The reasoning was that the assessee belonged to the Kanodia Group, and an identical issue had been decided by the Tribunal in ITA No. 1595/KOL/2025 & Ors. for AY 2015-16 & Ors., where the CIT(A)'s order was upheld. The Tribunal found merit in the assessee's contention that since both purchase and sale entries were arranged by the same operators and were meant to inflate turnover, and no profit was realized over and above what was shown in the books, no further addition was required. The CIT(A) had relied on a series of decisions to this effect. For AY 2016-17, the Tribunal noted that the AO had made additions under a wrong appreciation of facts, which was correctly recognized by the appellate authority. The CIT(A) had found that the assessee had no transactions with M/s Reyansh Re-Roller Pvt Ltd. for AY 2016-17, and the transactions with M/s Tanishi Commotrade Private Limited were not related to AY 2016-17. Therefore, the addition was deleted. The Tribunal followed its earlier decision and dismissed the Revenue's appeals.

What were the facts?

The Revenue has filed appeals against the orders of the CIT(A) for Assessment Years (AYs) 2015-16 to 2018-19. The assessee, Balajee Mini Steels & Rerolling Private Limited, was covered in a search operation on the Kanodia Group. The Assessing Officer (AO) made additions on account of alleged bogus purchases, applying a profit rate of 4% in some instances and treating entire purchases as income in others. The AO's additions were based on findings of manipulated purchases and accommodation entries intended to inflate turnover. The CIT(A) deleted these additions, holding that since both purchases and sales were disclosed and managed by the same brokers, no further addition was warranted as no profit was realized beyond what was already in the books. The Tribunal is deciding these appeals based on identical facts and issues.

What were the issues?

1. Whether the deletion of additions made by the AO on account of alleged bogus purchases, amounting to ₹1,07,03,817/- (for AY 2015-16) and other amounts for subsequent AYs, by the CIT(A) is valid, turning on the interpretation of Section 147/143(3) of the Income Tax Act, 1961. Assessee's Contentions: - The bogus purchases and sales were managed by the same brokers/commission agents. - Both purchases and sales were fully disclosed in the books of account. - The intention was to inflate turnover, not to earn additional profit. - Excluding purchases would necessitate excluding corresponding sales, leading to double taxation as income from fictitious circular trading was already offered. - Case laws relied upon by the AO are distinguishable due to different facts. Revenue's Contentions: - The AO made additions on account of suppression of income in respect of bogus purchases (for AY 2015-16). - The AO applied a profit rate of 4% on bogus purchases (for AY 2015-16). - For AY 2016-17, the AO made an addition of the entire bogus purchases on the ground of unaccounted transactions through an intermediary, M/s Reyansh Reroller Pvt Ltd., despite the assessee denying transactions with this party for that specific AY.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 132,Section 147,Section 143(3),Section 144B

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Manish Rastogi, AR
For Respondent: Shri Praveen Kishore &
Hearing: 01.12.2025Pronounced: 15.12.2025
1.

Theseare appeals preferred by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 13.04.2025 for the AYs 2015-16 to 2018-19.

2.

As the facts and issues in all the appeals of Revenue are exactly identical, hence, for the sake of brevity, we take for A.Y. 2015-16 and decide the issue accordingly.

A.Y. 2015-16 3.1. The facts in brief are that the assessee filed the return of income u/s 139(1) of the Act on 31.03.2016, showing total income of ₹3,88,16,830/- under the normal provision and ₹3,23,00,903/- under the 115JB of the Act. A search u/s 132 of the Act was conducted on 30.11.2022 and on the subsequent dates in the case of Kanodia Group of cases and assessee was also covered under the said search. The ld. AO found during the course of assessment proceedings that assessee was involved in transactions of bogus sale and purchase of material which was intended to increase the turnover of the assessee and accordingly, applied a profit rate of 4% on the said bogus purchases in assessment framed dated 31.03.2024, passed u/s 147/143(3) of the Act.

3.2. In the appellate proceedings, the ld. CIT (A) deleted the addition by holding that the bogus purchases and sales are only managed by the same brokers/ commission agents and since both the purchases as well as the sales are fully disclosed in the books of account and were intended to inflate the turnover, therefore, no further addition is required to be made.

3.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is belonging to Kanodia Group of cases and we have already decided the identical issue in & Ors for A.Y. 2015-16 & Ors, wherein we uphold the order of ld. CIT (A). The operative part is as under:-

It would kindly be appreciated that the facts of the case in hand is totally different as no incriminating document was found during the case of search and seizure operation conducted by the department. The disallowance has been made on the basis of the information available in the insight portal and also The facts in this appeal are also identical as in involved as discussed above in A.Y. 2015-16. The only difference is that in stead of apply profit rate 4%, the ld. AO made the entire addition of bogus purchases to the income of the assessee on the ground that unaccounted transactions through intermediary M/S Reyansh Reroller Pvt Ltd. despite the assessee stating before the AO that the assessee has no transactions with the said party. Ld. Commissioner of Income- tax (Appeals) delete the addition by recording a finding of facts that there was no transaction with the said party and in fact noted in the appellate order that the assessee had done transactions with the sai d party in A.Y. 2015-16. We note that the ld. AO has made addition under wrong appreciation of facts which correctly recognized by the appellate authority in the appellate proceedings. The operative part is as under:-

“6.2. Discussion and decision:- 6.2.1. I have perused the assessment order u/s 147 r.w.s 144B of the Act dated 26.03.2022, post search assessment order u/s 147/143(3) of the Act dated 31.03.2024 and submission of the assessee.

On going through the above tabulated finding, it is quite evident that the assessee has not made any fake purchases or received any amount from the alleged entity M/s Reyansh ReRoller Private Limited during the period of AY 2016-17. Indeed, the A.Ys 2016-17 to 2018-19 1690 & 1691 /KOL/2025 4. The issue raised in these appeals are similar to one as decided by us in A.Y. 2015-16. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in & 1691/KOL/2025. Hence, the appeals of Revenue are dismissed.

5.

In the result, the appeals of the Revenue are dismissed.

Order pronounced in the open court on 15.12.2025.

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