KARNIMATA COLD STORAGE LTD.,,PASCHIM MEDINIPUR vs. ACIT, CIRCLE 38,, MIDNAPUR

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated
08.07.2025
of the CIT(Appeal)
Addl/JCIT(A)-1,
Visakhapatnam
(hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income- tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2014–15. 2. Brief facts of the case are that the assessee-company is engaged in the business of cold storage and the assessee filed its return of income for the A.Y
2014-15
on 25.09.2014
declaring total loss of Rs.3,31,35,426/-. The Assessing Officer received information that the assessee has received bogus bills amounting to Rs. 19,92,301/- and Rs.
25,08,661/- totalling to Rs. 45,00,962/- during the F.Y 2013-14 from M/s. NKR Enterprises and M/s. Sourav Enterprises and a survey operation u/s 133A of the Act was conducted at the premises of Shri
Sanjay Dhanuka & Shri Sunil Dhanuka at Kolkata, in connection with Karnimata Cold Storage Ltd

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Search & Seizure operation of Anjali group. During the course of survey proceedings, a statement was recorded from Shri Sanjay Dhanuka wherein he admitted that his concern used to make payment through
RTGS/Cheques to different accommodation entry operators on account of bogus bill purchase, interest paid against bogus loan transfer for routing back to beneficiary companies after getting accommodation entries. Thereafter, the Assessing Officer reopened the assessment after recording reasons by issuing notice u/s 148 of the Act to the assessee.
Subsequently, the Assessing
Officer completed the assessment proceedings u/s.143(3) r.w.s 147 of the Act determining total loss of the assessee at Rs. 2,86,34,500/- on the made from M/s. NKR Enterprises and M/s. Sourav Enterprises amounting to Rs. 19,92,301/- and Rs.
25,08,661/- totalling to Rs. 45,00,962/- as bogus.
3. Being aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A), wherein also the appeal of the assessee has been dismissed on the ground that the assessee could not furnish ledger copy of payments to contractors, labours, mason etc. and proof of cash payment made to contractors.
4. Being aggrieved and dissatisfied by the order of the Ld. CIT(A), the assessee is in appeal before us. The ld. AR challenges the impugned order on legal as well as on merit of the case. The ld. AR submits that the assessee duly produced the copy of bill, challan, evidence of delivery of goods, payment through the bank account which was supported from bank statement, VAT numbers of the parties and details of consumption of the material for putting up the 3rd chamber and the construction of the third chamber was proved and also accepted by the Assessing
Officer, hence there was no justification to make the addition when all the evidences were filed. moreover, the AO has not disproved the said evidences. The ld. AR further submits that the Assessing Officer did not Karnimata Cold Storage Ltd

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consider the evidences filed by the assessee rather simply relied on the information of the aforesaid two parties who deposed that they issued bogus bills during the course of survey. The ld. AR also submits that the assessee purchased the material from the two parties and the said material was used for construction of 3rd chamber in the cold storage for which permission was taken from the Government. His submission is that the said amount was never claimed as deduction while computing the total income and the assessee submitted copy of the audited profit and loss account and balance sheet and also there is no such claim in the profit and loss account which shows that no revenue expenditure was claimed in the profit and loss account or in the return of income.
The ld. AR further submits that when there was no claim of expenditure, the very basis of reopening was not correct and the Assessing Officer rejected the explanations or documents which were filed by the assessee, hence the assessee discharged its onus to prove its purchases made and the Assessing Officer was wrong in making the said disallowance and the same may be deleted.
5. On the other hand, the ld. DR relied on the impugned order.
6. Upon hearing the submissions of the counsels of the respective parties and on perusal of the impugned order, it appears that the assessee is operating cold storage and during the year, the assessee constructed a 3rd unit of cold storage which was duly approved by Government of West Bengal and purchased steel and cement from two parties i.e. Rs.25,08,661/- TMT Bars from M/s Saurav Enterprises and Rs.19,92,901/- cement from M/s NKR Enterprises. We find that the case of the assessee was reopened u/s 148 of the Act on the basis of information received from the Investigation Wing and during the course of survey u/s 133A of the Act, a statement was recorded from Shri
Sanjay Dhanuka wherein he admitted that they were engaged in Karnimata Cold Storage Ltd

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providing bogus purchase bills and Assessing Officer relying on the above information made the above addition. It is pertinent to note that the assessee constructed third storage chamber using materials which was procured from various suppliers, including purchases of TMT Bars from M/s.
Saurav
Enterprises worth of Rs.25,08,001/- and Rs.10,02,901/- of Cement from Mis. NKR Enterprises and the aforesaid purchases and other related materials used for construction which were duly capitalized in the books of accounts to the extent of Rs.3,77,76,749/-. We note that the expansion of the third unit of chamber was duly approved by the Director of Agricultural Marketing,
Government of West Bengal and in support of the purchases, the assessee produced relevant evidences including copies of tax invoices, road challans, and proof of payments made through banking channels, the VAT numbers of the parties and the consumption details of the material used for putting up the 3rd chamber. We further find that the Assessing Officer relied on the statement of Sanjay Kumar Dhanuka, which was retracted later on so the statement has no evidentiary value in law. It is pertinent to note here that the alleged amount of addition was never claimed as deduction while computing the total income and the assessee submitted copy of the audited profit and loss account and balance sheet and also there was no such claim in the profit and loss account which depicts that no revenue expenditure was claimed in the profit and loss account or in the return of income. We note that the assessee has duly discharged its onus of proving the genuineness of its purchases by producing sufficient documentary evidence such as tax invoices, road challans, proof of payment through banking channels, and affidavits from suppliers and the details submitted by the assessee were accepted by the Assessing Officer and the assessee has made bona fide purchases for business purposes through account payee cheques. We find support in the decision of Hon’ble High Court of Calcutta in the case
Karnimata Cold Storage Ltd

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of M/s. Diagnostics v. CIT in Income Tax Appeal No. 153 Of 2004 dated
04-03-2011, wherein the Hon’ble High Court has held as under:
“However, as regards the payments made to M/s. Selvas Photographics are concerned amounting to Rs.3,12,302/-, we find that those have been made by account payee cheques and those have been encashed through the bankers of M/s. Selvas Photographics. It appears that according to the appellant, at the time of assessment, the appellant had no business transaction with M/s. Selvas
Photographics and consequently, the said party did not co-operate with the Assessing Officer. However, the transaction having taken place through account payee cheques, we are unable to accept the contention of Mr. Agarwal, the learned advocate appearing for the Revenue that the transaction was a nonexistent one. If an assessee took care to purchase materials for his business by way of account payee cheques from a third party and subsequently, three years after the purchase, the said third party does not appear before the Assessing Officer pursuant to the notice or even has stopped business, the claim of the assessee on that account cannot be discarded as non-existent. In the case before us, the Revenue has not put forward any other ground, such as, it was not a genuine transaction for other reasons but has simply rejected the claim on the ground as if there was no such transaction. The transaction having taken place through payment by account payee cheques, such plea is not tenable and in such circumstances, the Tribunal below erred in law in reversing the finding arrived at by the Commissioner of Incometax (Appeal) accepting the said transaction as a genuine transaction. We, therefore, set aside the order of the Tribunal below only in respect of the deletion of the amount of Rs.3,12,302/- paid to M/s. Selvas
Photographics by account payee cheques and direct the Assessing Officer to deduct the said amount as business expenditure of the appellant. We, thus, answer the two questions in favour of assessee only in respect of Rs.3,12,302/- but affirm the order of the Tribunal in respect of other two payments allegedly made to M/s. Soma Enterprises and M/s. Imprints-N-Trade. The appeal is, thus, disposed of in terms of the aforesaid order. In the facts and circumstances, there will be, however, no order as to costs.”
7. Going over the above discussion and considering the judicial precedents, we find merit in the appeal of the assessee and accordingly the addition made by the Assessing Officer confirmed by the ld. CIT(A) is hereby deleted.
8. In the result, the appeal of the assessee is allowed.
Kolkata, the 10th December, 2025. [Rajesh Kumar]

[Pradip Kumar Choubey]
Accountant Member

Judicial Member
Karnimata Cold Storage Ltd

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Dated: 10.12.2025. RS

Copy of the order forwarded to:
1. Appellant -
2. Respondent -
3. CIT(A)-
4. CIT- ,

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By order