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

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ITA 1691/KOL/2025Status: DisposedITAT Kolkata15 December 2025AY 2018-19Bench: 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,\nVs.\n(Appellant)\nPatna\n(Respondent)\nPAN No. AABCB7265J\nAssessee by\n:\nShri Manish Rastogi, AR\nRevenue by\n:15 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeals of the Revenue should be dismissed. For AY 2015-16, the Tribunal found that the assessee belonged to the Kanodia Group, and an identical issue had already been decided in favour of the assessee in previous appeals (ITA No. 1595/KOL/2025 & Ors). In those cases, the Tribunal had upheld the order of the Ld. CIT(A). The reasoning was that since both purchase and sale entries were arranged by the same operators and were intended to inflate turnover, and no profit was realized over and above what was shown in the books, the Ld. CIT(A)'s order was upheld. For AY 2016-17, the Tribunal noted that the facts were identical to the issue decided for AY 2015-16. The Tribunal also addressed the specific addition for AY 2016-17 concerning M/s Reyansh Re Roller Pvt Ltd., finding that the AO had made the addition based on a wrong appreciation of facts. The Ld. CIT(A) had correctly recognized that the assessee had no transactions with M/s Reyansh Re Roller Pvt Ltd. during AY 2016-17, and the amounts from M/s Tanishi Commotrade Private Limited were accounted for in the post-search assessment. Therefore, the Tribunal upheld the order of the Ld. CIT(A) in all these appeals, dismissing the Revenue's grounds.

What were the facts?

The Revenue filed appeals against the orders of the Commissioner of Income-tax (Appeals) for Assessment Years (AYs) 2015-16 to 2018-19. The assessee, Balajee Mini Steels & Rerolling Private Limited, is part of the Kanodia Group. A search under Section 132 of the Income Tax Act, 1961, was conducted on the group, covering the assessee. The Assessing Officer (AO) made additions on account of alleged bogus purchases intended to inflate turnover. The AO applied a profit rate of 4% on these purchases for AY 2015-16, amounting to ₹1,07,03,817/-. For AY 2016-17, the AO made an addition of ₹10,10,35,518/- related to alleged accommodation entries through M/s Reyansh Re Roller Pvt Ltd., and ₹19,19,708/- for bogus purchases from M/s Tanishi Commotrade Private Limited. The Ld. CIT(A) deleted these additions. The Tribunal consolidated these appeals.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the addition of ₹1,07,03,817/- made by the AO on account of suppression of income in respect of bogus purchases for AY 2015-16. Assessee's Contention: The Ld. CIT(A) rightly deleted the addition because the bogus purchases and sales were managed by the same brokers/commission agents, and since both were fully disclosed in the books of account to inflate turnover, no further addition was required. The assessee argued that disallowing a percentage of purchases would amount to double taxation as income from fictitious circular trading was already offered. Revenue's Contention: The Revenue contended that the AO correctly identified bogus purchases and made an ad-hoc estimation of income at 4% on these purchases. The Revenue relied on decisions of the ITAT in cases like DCIT, Central Circle-1(4), Kolkata v. Hindusthan Engineering & Industries Ltd and M/s Om Forging & Engineering Pvt. Ltd. v. PCIT-1, Kolkata. 2. Whether the Ld. CIT(A) erred in deleting the addition of ₹10,10,35,518/- made by the AO for AY 2016-17 on account of alleged accommodation entries through M/s Reyansh Re Roller Pvt Ltd. and ₹19,19,708/- for bogus purchases from M/s Tanishi Commotrade Private Limited. Assessee's Contention: The assessee contended that it had no transactions with M/s Reyansh Re Roller Pvt Ltd. during AY 2016-17, and the AO made the addition based on a wrong appreciation of facts. The Ld. CIT(A) noted that transactions with M/s Reyansh Re Roller Pvt Ltd. were in AY 2015-16, and the amount from M/s Tanishi Commotrade Private Limited was correctly accounted for in the post-search assessment order. Revenue's Contention: The Revenue's arguments are not explicitly detailed for this specific issue, but the appeals are filed against the deletion by the Ld. CIT(A).

Which sections of the Income-tax Act were involved?

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

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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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