DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA vs. BALMUKUND SPONGE AND IRON PRIVATE LIMITED , PATNA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM 1596, 1597, 1598/KOL/2025 (Assessment Years: 2015-16, 2016-17, 2017-18, 2018-19) Balmukund Sponge and Iron DCIT Private Limited 110, Shantipally, LUV Kush Tower, Vs. Kolkata-700107, West Bengal Exhibition Road, Phulwari, Patna-800001, Bihar (Appellant) (Respondent) PAN No. AACCM4451E 1396, 1397, 1398/KOL/2025 (Assessment Year: 2015-16, 2017-18, 2018-19, 2023-24) Balmukund Sponge and Iron Private Limited DCIT LUV Kush Tower, 110, Shantipally, Vs. Exhibition Road, Phulwari, Kolkata-700107, West Bengal Patna-800001, Bihar (Appellant) (Respondent) PAN No. AACCM4451E 1700, 1701, 1702, 1703, 1704/KOL/2025 (Assessment Year: 2015-16, 2016-17, 2017-18, 2018-19, 2020-21, 2023-24) Balmukund Cement & Roofings DCIT, CC 4(3) Private Limited 110, Shantipally, 18 RN Mukherjee Road, Kolkata Vs. Kolkata-700107, West Bengal Dalhaosie-700001, West Bengal (Appellant) (Respondent) PAN No. AACCB9534B ITA No.1399/KOL/2025 (Assessment Year: 2023-24) Balmukund Cement & Roofings DCIT, CC 4(3) Vs. Private Limited 110, Shantipally, 18 RN Mukherjee Road, Kolkata Kolkata-700107, West Bengal

These are the appeals of Revenue and assessee of three different assessees’ against the orders of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] for the AY 2015-16 to 2018-19, 2020-21 & 2023-24.

In case of Balmukund Sponge and Iron Private Limited. A.Y. 2015-16 A. 1395/KOL/2025 (Assessee’s appeal) 4. The issue raised in ground no.1 is general in nature and therefore, needs no adjudication.

5.1. The facts in brief are that the assessee filed the return of income of 22.09.2015, showing total income of ₹2,85,95,540/- under the normal provisions and ₹2,50,47,422/- as book profit u/s 115JB of the Act. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 06.03.2020, and accordingly, the assessment was framed u/s 147/ 143(3) vide order dated 14.05.2020, accepting the returned income. A search action u/s 132 of the Act was “M/s Balmukund Cement and Floorings Pvt. Ltd. under various heads during the FY 2014-15. The said jointings also contains details of some cash against various names. It is assertively submitted as a matter of fact that no such cash has been received by the petitioner Company. The AO is disagreed with the above contentions of the assessee. The AO had observed that examination of the said entries reveal that the said cash entries were Unaccounted cash receipts to Rs.2,87,50,000/- (1.e. 2,04,50,000/- Rs.83,00,000/-) for the subjected AY 2015-16 and those are not recorded in the books of account of the assessee for the said year. 6.2.2. However, the stand of the AO was also not accepted as when the assessee had himself admitted the fact that these purported cash entries were related to business transactions. The AO should have adopted the profitable on such cash receipts. However, without doing the same, the AO had opined that these cash receipts are the unexplained money of the assessee as per section 69A of the Act as the assessee had failed to explain the nature & sources of such receipts. During the course of appellate proceedings, the assessee stated that it is a business transaction. The income on such business transaction the profit element is to be estimated. The relevant portion of the assessee's submission is as under: "Without prejudice to above it is submitted that it would kindly be appreciated that a rational view would be to treat them as transactions of the business and estimate income @5% of the total amount, the net profit percentage as returned by the assessee in the normal course of business and also tax it under the normal provisions of the Act." 6.2.3. In view of the above discussion the profit element is to be estimated on the unaccounted cash transactions. The assessee has declared the GP rate for the subjected AY at 7.84%. Hence, the profit element embedded in the undisclosed cash transactions Rs.2,87,50,000/- is estimated at 7.84% which comes to Rs.22,54,000/-. Hence, the addition of Rs.22,54,000/- is upheld and Rs.2,64,96,000/- (Rs.2,87,50,000/- less Rs.22,54,000/- -Rs.2,64,96,000/-) is deleted. Therefore, these grounds raised by the assessee are partly allowed.”

A.Y. 2017-18 B. 1396/KOL/2025 (Assessee’s appeal) 6.1. The issue raised in ground no.1 & 5 are general in nature and therefore, needs no adjudication.

6.2. The issue raised in ground nos. 2 to 4, by the assessee is against the part confirmation of addition by the ld. CIT (A) to the tune of ₹3,79,260/- as against the addition of ₹63,00,000/- made by the ld. AO u/s 69A of the Act on account of alleged WhatsApp chats which is illegal, wrong and unjustified.

6.3. The facts of the case have been discussed hereinabove in the other appeals as decided (supra). The ld. AO noted that during the course of search mobile handset of the directors and the employees were examined and data retrieved wherein several chats showing cash transactions were found. The mobile handset of Shri Shri Abhishek Kanodia and Shri Parshuram Tiwari, were examined. The ld. AO found that the unaccounted cash transactions in the mobile of Shri Abhishek Kanodia were aggregating to ₹63 lacs comprising ₹20 lacs, 34 lacs, 1 lacs and 8 lacs. Accordingly, the same was added to the income of the assessee as unexplained money u/s 69A of the Act.

6.4. In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee by treating the amount found in the Whatsapp Chats of ₹63 lacs as suppressed turnover/ unaccounted transaction and 6.5. After hearing the rival contentions and perusing the materials available on record, we find that the addition was made only on the basis of Whatsapp Chats between the director of Shri Abhishek Kanodia and employee of the company. We note that apart from the Whatsapp Chat there is no evidence on record nor any substantive evidences have been brought by the ld. AO or ld. CIT (A) on records. The ld. AO added the entire money as unexplained money u/S 69A of the Act, whereas as a matter of fact, there was no money which could be added u/s 69A of the act and therefore the Provisions of Section 69A are not applicable. The ld. CIT (A) has gone a step further by applying GP on the said WhatsApp Chats amount. Under these circumstances, we are of the view that unless there is a corroborative material found to support the transactions mentioned in the the WhatsApp Chats, no addition could be made in the hands of the assessee, even on account of profits as done by the ld. CIT (A). The assessee has also made without prejudice submission that Provisions of Section 292C of the Act, the presumption is to be drawn in respect of WhatsApp transactions in the hands of the person from whose possession or control the books of accounts/ documents, etc. are found. Even the presumption u/s 292C of the Act is rebuttable when the assessee proved that he has not done any such transactions even in respect of such transaction as were contained in the loose paper which were found during the course of search. This was held by the Hon'ble Delhi High Court in case of PCIT Vs. Delco India (P.) ltd. reported in (2016)

A.Y. 2018-18 C. 1397/KOL/2025 (assessee’s appeal) 8. The issue raised in ground no.1 & 5 are general in nature and therefore, needs no adjudication.

12.1. The issue raised in this appeal is similar to ground no.2 to 4 in for A.Y. 2017-18 as decided by us (supra). Accordingly, our decision would, mutatis mutandis, apply to this appeal of assessee. Hence, the ground nos.3 & 4 are allowed.

A.Y. 2015-16 E. 1595/KOL/2025 (Revenue’s appeal) 14. The issue raised by the Revenue in ground no.1 is against the restriction of addition to the tune of ₹22,54,000/- by the ld. CIT (A) as against the addition made by the ld. AO of ₹2,87,50,000/- on account of unexplained money u/s 69A of the Act.

14.1. Since, we have already decided the issue in ground no. 2 & 3 in for A.Y. 2015-16 in assessee’s appeal, wherein assessee has challenged the part sustaining of addition of ₹22,54,000/- by the ld. CIT (A) out of ₹2,87,50,000/- by AO u/s 69A of the Act by directing the AO to delete the addition by holding that the documents seized did not mention anything about assessee’s income and in fact

15.1. The facts in brief are that the ld. AO on the basis of information gathered during the course of search and survey operation and Insight portal of ITBA in the case of the assessee noted that the assessee has grossly manipulated his purchases by obtaining fake bogus bills and accommodation entries. The AO has accepted that the assessee had undertaken trading in miscellaneous items which has nothing to do with the manufacturing activity of the assessee breakup whereof is given at para no.4.9.1 of page no.109 of the assessment order. The ld. AO noted that during the year, the assessee has made purchases of aggregating to ₹74,06,66,925/- from three parties namely M/s Tanishi Commotrade Pvt. Ltd. of ₹22,89,55,514/-, M/s Ranisati Coke Trading co. of ₹40,38,23,767/- and M/s Steel Centre of ₹10,78,87,644/-. The ld. AO discussed in detail the facts qua these parties and entry operators involved in providing accommodation entries. The ld. AO also noted that the entire purchases and sales were done through same commission agents and these were accommodation entries and these

15.2. In the appellate proceedings, the ld. CIT (A) deleted the addition made by the ld. AO by observing and holding as under:-

“7.2.1. I have perused the assessment record as well as the submission of the assessee. On examining the same, it is found that the assessee is engaged in the business of manufacturing of TMT (Steel) bars. Apart from the manufacturing activity it is seen that the assessee has done trading of Misc. items which is distinct from their core business of manufacturing of TMT (Steel) bars. The assessee had filed its original return of income u/s 139(1) of the Act on 22.09.2015 declaring a total income at Rs.2,85,95,540/-. Later, a search and seizure operation u/s 132 of the Act was conducted on 30.11.2022 on the assessee as a part of 'Kanodia Group of cases'. Later, the AO had passed the order u/s 147/143(3) of the Act on 31.03.2024 determining the total income of the assessee at Rs.9,20,98,533/-, On perusal of the assessment order, it is observed that the AO had made addition on i.e. (a) Disallowance of Rs.2,97,52,993/- being 4% of the alleged bogus purchase. To support the disallowance made by the AO, he had relied upon the decision of Jurisdictional ITAT in the case of DCIT, Central Circle-1(4), Kolkata v. Hindusthan Engineering & Industries Ltd in & 1059/Kol/2018 order pronounced on 28.07.2020 wherein addition of "4% of such doubtful purchases" has been confirmed by the Hon'ble ITAT, 'A' bench, Kolkata and overruling disallowance of whole purchases [Para-18]. Similar decision is taken by the Hon'ble ITAT, 'B' Bench, Kolkata in the case of M/s Om Forging & Engineering Pvt. Ltd. v. PCIT-1, Kolkata in & 510/Kol/2017 order dated 13.12.2017. Identical view is taken by the Hon'ble ITAT, 'C' Bench, Kolkata in the case of DCIT, Circle-26(1), Kolkata v. M/s Chein Hsing Tannery in order dated 15.05.2019 wherein estimation of profit on bogus purchase has been confirmed by the Ld. CIT(A) and the ITAT [Para-3]. 7.2.2. Aggrieved by the assessment order, the assessee contested that the AO made estimation on bogus purchases at the rate of 4% on the alleged purchases made from alleged entry providers of Darsh Coke group. Trading account in this regard has been produced by the assessee which is placed on page no. 74 of the submission of the assessee. Further, it can be observed from the assessment order that corresponding sale entin providers which was also recorded by the AO at running page no. 6 to 10 of the assessment order. Further, it is observed that in case the purchases are excluded from the trading account, the corresponding sales would also have to be excluded. Hence, this exercise would reduce the income returned by the assessee. Therefore, it can be inferred that percentage disallowance of the purchases would amount to double

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 that shared by the investigation wing which alleged that both the purchases and the sales were fictitious. In view of the foregoing, it is humbly prayed that no heed may kindly be paid to the decisions of the Hon'ble Tribunal referred to by the assessing officer." The assessee clearly brought out the facts of the above-mentioned Hon'ble ITAT Kolkata decisions relied on by the AO. The assessee distinguished the facts that in all these three cases, the sales are genuine and the purchases are from grey markets or without bills. The profit element in the purchases, because of its low cost compared to organised sellers, are brought to tax at 4% to 5%. However, in the present case, the purchases and sales are also bogus. The assessee has already offered a percentage of profit on the bogus sales made out of bogus purchases in its regular returns of income. 7.2.4. It is pertinent to mention that the entry operators during the course of search & seizure operation in their own case admitted that it is a circular trading provided to inflate the gross turnovers of the beneficiaries/clients. The entry operator Sri Sanjay Kumar Agarwal has stated in his sworn statement by the Investigation wing during the course of search at his premises on 13.02.2022 is reproduced as under for ready reference: Q.13 Please explain the modus operandi of bogus billings used for M/s Balmukund Sponge & Iron Private Limited and M/s Balmukund Cement & Roofings Pvt. Ltd. By Tanishi Commotrade Pvt. Ltd.

16.1. The facts in brief are that the ld. AO during the course of assessment proceedings noted that the assessee company has taken unsecured loans of ₹50 lacs during the current assessment year from Sandesh Vanijya Pvt. Ltd. on which interest of ₹15,534/- was made in A.Y. 2016-17. The ld. AO noted that the said loan creditor was also struck off in ROC records. The assessee explained before the ld. AO by producing the evidences such as confirmation of accounts, acknowledgment of ITR, bank statement as well as sources of funds that the loan was genuine and is not covered u/s 68 of the Act. However, the ld. AO treated the loan received by the assessee as unexplained cash credit and added to the income of the assessee u/s 68 of the Act.

16.2. In the appellate proceedings, the ld. CIT (A) deleted the addition by observing and holding as under:-

“8.2.13. In view of the various judicial pronouncements cited by assessee together with various evidential documents submitted by the assessee, it can be inferred that since the assessee had taken loan in case of normal business and repaid the said loan through banking channel in the subsequent FY, the assessee cannot be said to be beneficial owner of the money without any cogent evidence brought by the AO on record and addition under section 68 by the AO cannot be sustained. Hence, the addition of Rs.50,00,000/- made by the AO u/s 68 of the Act is liable to be deleted. Therefore, these grounds raised by the assessee are allowed.” 16.3. We have heard the rival contentions and perused the materials as placed before us. We note that the assessee has filed all the 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 A.Y. 2016-17 F. 1596/KOL/2025 (Revenue’s appeal)

18. Issue raised in ground nos.1, is against the deletion of ₹1,79,51,667/- by the learned CIT(A) as made by the learned AO in respect of bogus purchases.

18.1. The issue raised in this ground is similar to one as decided by us (supra) in groundno.2 in Revenue’s appeal. Accordingly, our decision would, mutatis mutandis, apply to this ground. Hence, groundno.1 of Revenue’s appeal is dismissed.

20.1. This issue is consequential to ground no. 2 of this appeal, hence dismissed.

A.Y. 2017-18 G. 1597/KOL/2025 (Revenue’s appeal) 23. Issue raised in ground no.1 to 3 is general in nature and hence, require no adjudication.

A.Y. 2018-19 H. 1598/KOL/2025 (Revenue’s appeal) 28. Issue raised in ground no. 1 is against the deletion of addition of Rs. 37,59,130/- by CIT(A) as made by the AO in respect of bogus Purchases.

28.1. The issue raised in ground no.1 of this appeal of Revenue is similar to one as decided by us in ground no. 2 of A.Y. 2015-16 (supra). Accordingly, our decision would, mutatis mutandis, apply to ground no.1 of this appeal. Hence, ground no.1 is dismissed.

30.1. We have allowed the assessee’s appeal on this issue in ground no. 2 to 4 n ITA 1396/KOL/2025 A.Y. 2017-18, wherein the part sustaining of addition by CIT(A) has been assailed. Therefore, in view of our decision in assessee’s appeal the ground no. 3 raised by the revenue is dismissed.

In case of Balmukund Cement & Roofings Private Limited A.Y. 2015-16 A. 1699/KOL/2025 (Revenue’s appeal) 33. The issue raised in ground no.1 by the revenue is against the deletion of addition of ₹95,00,000/- as made by the AO u/s 68 as unexplained cash credit.

A.Y. 2016-17 B. 1700/KOL/2025 (Revenue’s appeal) 35. The issue raised in ground no.1 & 2 is against the order of ld. CIT(A) deleting the addition of Rs. 1,82,51,519/- as made by the AO on account of bogus purchases.

35.1. The issue raised in this appeal is similar to one as decided by us in ground no.2 in A.Y. 2015-16, wherein we have dismissed the appeal of the revenue by upholding the order of ld. CIT(A). Therefore, our decision in for A.Y. 2015-16 would mutatis mutandis apply to ground no. 1 & 2 of the revenue appeal as well. Consequently, the grounds no. 1 & 2 are dismissed.

36.1. The above addition has been made on account of unsecured loans received from M/S Almost Commodities Pvt Ltd. Rs. 50,00,000/-. We note that the assessee which has been repaid the unsecured loan even before the date of search. The said issue is similar to one as decided by us in A.Y. 2015-16 dismissing the appeal by the revenue on the ground that section 68 of the Act is not applicable to a case where unsecured loan has been repaid. Therefore, our decision in ground in A.Y. 2015-16 would mutatis mutandis apply to this appeal as well. The ground no. 3 to 7 of the appeal of the revenue are dismissed.

A.Y. 2017-18 C. 1701/KOL/2025 (Revenue’s appeal) 38. The issue raised in ground nos.1 to 3 in this appeal is general in nature.

38.1. The issue raised in ground nos.4 & 5 is against the order of ld. CIT(A) deleting the addition of Rs. 28,25,277/- as made by the AO on account of bogus purchases.

40.1. The above addition has been made on account of unsecured loan received from M/S Cheers Consultancy Pvt Ltd. of Rs. 40,00,000/-. We note that the assessee which has been repaid the unsecured loan even before the date of search. The said issue is similar to one as decided by us in A.Y. 2015-16 dismissing the appeal by the revenue on the ground that section 68 of the Act is not applicable to a case where unsecured loan has been repaid. Therefore, our decision in ground no.1 in A.Y. 2015-16 would mutatis mutandis apply to these ground nos. 6 to 8 of this appeal as well. The ground nos. 6 to 8 of the appeal of the revenue are dismissed.

A.Y. 2018-19 D. 1702/KOL/2025 (Revenue’s appeal) 42. The issue raised in ground nos.1, 2 & 3 of this appeal is against the order of ld. CIT(A) deleting the addition of ₹37,24,182/- as made by the AO on account of bogus purchases.

A.Y. 2020-21 1703/KOL/2025(Revenue’s appeal) E.

A.Y. 2023-24 F. 1704/KOL/2025 (Revenue’s appeal) 48. The only issue raised in various grounds of appeal is against the restricting the addition to Rs.46,44,110/- by CIT(A) as against the total addition of Rs.2,75,12,500/- made by the learned AO by applying gross profit rate of 16.88% based on the WhatsApp Chats.

48.1. We have allowed the assessee’s sister concern case of M/s Balmukund Sponge and Iron Pvt. Ltd., on this issue in ground no. 2 to 4 in ITA 1396/KOL/2025 for A.Y. 2017-18, wherein the part sustaining of addition by CIT(A) has been assailed under similar facts. Therefore, in view of our decision in that appeal, the issue raised in various grounds of Revenue’s appeal is dismissed.

A.Y. 2023-24 G. 1399/KOL/2025 (Assessee’s appeal) 50. The issue raised in ground nos. 1, 2 and 7 are general in nature.

52.1. The facts in brief are that the assessee has made internal transfer of money of ₹1,75,07,120/- as receipt and payment of ₹1,75,02,500/-, which was internal movement of cash in the chest account and these transactions were duly recorded in the books of account. However, the reply of the assessee rejected by the ld. AO and the same was added to the income of the assessee as unexplained.

52.2. In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee by restricting the addition to ₹29,54,422/- by applying a gross profit rate on the amount recorded in the seized documents.

52.3. After hearing the rival contentions and perusing the materials available on record, we find that the business of the assessee is scattered into three states i.e. Bihar, Jharkhand and West Bengal and the entire business of operation are conducted by the staff. The surplus cash is transferred to chest at Patna and Kolkata and therefore, these

In case of Balmukund Lease Fin Private Limited A.Y. 2020-21 A. 1759/KOL/2025 (Revenue’s appeal) 54. The issue raised in ground no.1 of this appeal by the Revenue is against the deletion of addition of Rs. 4,51,00,000/- as made by the AO u/s 68 as unexplained cash credit in respect of unsecured loans besides raising the issue of deletion of interest of Rs.19,25,497/- by the learned CIT(A) as made by the learned AO in respect of interest paid on bogus unsecured loan.

Order pronounced in the open court on 09.12.2025.