ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(1), KOLKATA, KOLKATA vs. RAJSHRI IRON INDUSTRIES PRIVATE LIMITED, KOLKATA

Per Rajesh Kumar, AM:

These are appeals preferred by the Revenue and CO by the assessee against the orders of the Commissioner of Income-tax
(Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”]
dated 23.09.2024 &24.09.2024 for the AY 2013-14 &2018-19.Since
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

all these appeals relates to the same assessee , therefore are being decided by this consolidated order for the sake of convenience and brevity.
02. First of all we shall take the appeal of the Revenue in ITA Nos.2385
/KOL/2024& Cross Objection of the assessee in CO No: 46/KOL/2025
Assessment Years: 2018-19. A.Y. 2018-19
ITA No.2385 /KOL/2024 & CO No. 46/KOL/2025
03. The only issue raised by the revenue in the grounds of appeal is against the deletion of addition of Rs. 20,19,94,952 by the ld. CIT(A) as against the addition of Rs. 21,27,60,640/- made by the AO u/s 69C of the Act as unexplained expenditure. Whereas the assessee by way cross objection challenged the part sustenance of the addition to the tune of Rs. 1,07,65,668/- being 5.06% of the total alleged purchases.
04. The facts of the case are that the assessee filed the return of income on 31.10.2018 declaring total income of Rs. The assessee is engaged in the manufacturing sponge irone. Nil. Notice u/s 148A(b) was issued 14.03.2022 to the assessee which the assessee did not reply point wise. Thereafter notice u/s 148 of the Act was issued on 26.03.2022 after passing order u/s 148A(d) of the Act on 26.3.2022. The proceedings were initiated because of income of the assessee has escaped assessment as revealed in the documents seized during search on Majee group that assessee has made coal purchases from the said party which were not accounted for in the books of account.
05. The facts in the present case shows that a search was conducted on ‘Anup Majee Group’ on 05.11.2020.In the course of search on Anup
Majee Group, certain documents were found suggesting that the ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

assessee had purchased unaccounted coal from the said Majee Group.
On the basis of this information, the ld. AO initiated the reassessment proceedings and after obtaining the reply/explanation of the assessee made an addition of Rs. 21,27,60,640/-(by typo error mentioned as ₹22,27,60,640/-) as unexplained expenditure u/s 69C of the Act in the assessment framed u/s 147 of the Act dated 27.03.2023. 06. In the appellate proceedings ld. CIT(A) partly deleted the addition after taking into account the contentions and submissions of the assessee by observing and holding as under:
“6.2.1. I have perused the assessment order as well as the submission of the assessee. Onexamining the same, it is noticed that information was received by the AO in accordance withrisk management strategy that search and survey operations was conducted on Majee Group &Ors on 05.11.2020 and it was unearthed that the group was involved in illegal mining of coal inPurulia, Bankura, Birbhum, Paschim Bardhman&
adjoining areas. In page 13 of theassessment order an inference has been drawn that huge quantity of coal has been sold andtransported to the appellant company. It is also observed that during search and seizureoperation in the case of Majee Group of cases, certain excel sheets/documents (marked asRKV/1 to RKV/13) were found and seized at the residence cum office of Shri Ratnesh Verma(one of the key persons of this group who used to manage the transportation of illegal coal to thebeneficiary entities).
Screenshot of excel sheets, embedded with the assessment order, containsthe details of transportation of illegal coal to various factories including the assessee’s one.Suppression of date in these excel sheet has also been explained in the assessment order. It isalso noticed that list of vehicles used for the transportation of illegal coal also been found inthese excel sheet whose details were verified from public domain which in turn facilitated thedetermination of date of transportation of coal. It is also mentioned in the assessment order thatanalysis of documents seized from the premises of Ratnesh Verma revealed that total quantityof 32.84 Lakh MT of coal and other goods have been illegally sold and transported by ShriRatnesh Verma. It is also noticed that in the statement of Shri Anup Majee (recorded u/s 132(4)of the Act on 05.11/2020), he admitted that he earned a lot of unaccounted income over theyears via business activities of coal trading and various other businesses. It is also noticed thatSummary of cash purchases by M/s Rajshri Iron Industries Private Limited has been preparedon the basis of seized materials which further quantified the quantity to 42300.87 MT withestimated value of transaction to Rs.21,27,60,640/-. (In the entire assessment order, from firstpage to last page, the bone of contention was Rs.21,27,60,640/-. However, a typographical errorcrept into the amount and written as Rs.22,27,60,640/- instead of Rs.21,27,60,640/-). On theissue of cross examination of Anup Majee, it is mentioned in the assessment order thatInvestigation Wing has conducted detailed enquiries, made analysis of the seized documentsand also of beneficiaries for preparing the report. The report prepared contains details ofcomplete
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

modus operandi, transportation of coal which is done through fake permit, list ofconduit companies and other relevant supporting documents which mentions the name of theassessee company and therefore, requirement of cross-examine is not needed since thestatement of Mr. Anup Majee is not the sole basis to conclude that M/s
Rajshri Iron IndustriesPvt Ltd. has purchased a substantial portion of its coal from Majee Group. It is also observed that the assessee had categorically denied any transaction with the alleged Majee Group butadmitted purchases of coal from other local parties such as Adani Enterprises Limited and otherlocal purchases of coal aggregating to Rs.97,16,777/- only.
6.2.2. Further, materials & documents seized (RKV/1 to RKV/13) in thecourse of searchoperation of Majee Group comprises, the list of several numbers of sponge iron manufacturingcompany including the assessee, who had been supplied huge quantity of coal by thecompanies of Shri Anup Majee was unearthed. As far as mode of transaction adopted by thesecompanies is concerned, Shri Anup Majee himself has admitted in his statement that he hasearned a lot of unaccounted income over the years via his business activities of coal trading andgenerated heavy unaccounted cash.
Further, it is also noticed that assessment order wasframed by the AO in consideration of all the available information & data unearthed in the courseof search & seizure operation and post search investigations and samples of documentsproduced in the assessment order are exact replicate of relevant part of these seized materials.The AO has also covered the matter of cross examination as raised by the assessee in theterms of grounds of appeal. At this point of juncture, it cannot be ruled out that the assesseeRajshri Iron Industries Private Limited had not purchased the alleged quantity of coal (42300.87MT) at estimated amount of Rs.21,27,60,640/-.
6.2.3. Further, it is not out of place to mention that in the instant case, no search was conductedin the name of the appellant company and there is no statement was recorded from theappellant company during / post search investigation of Majee
Group. The basis of drawingadverse inference was seized records which contain the name of “RAJSHREE” or “RAJOSREE”as appearing under the column “Factory”. The AO had opined that since the appellant companymanufacturing unit was located at Jamuria
Industrial Complex, Jamuria, West Bengal, drawingan inference that such quantity of coal must have been sold to the appellant company. Theappellant has maintained quantitative details of stock as evident from the audited accounts andTax Audit Report.
From the documents produced before me, it is evident that the appellant hascomplied with notice issued by the AO from time to time and has produced the required detailsand documents.
6.2.4. The AO has drawn an inference that there could be situation that the assessee companyhas obtained bogus bills from accommodation entry provider. There could be situation that theassessee company has obtained bogus bills from accommodation entry provider. In thisconnection, it may be relevant to mention the submissions filed by the appellant at theassessment hearing stage, wherein the details of purchases of coal was submitted. It is evidentfrom the details that the appellant had mostly imported goods or made interstate purchases fromknown corporate parties. Thus, without finding any specific instance of bogus invoice, theinference that the appellant company had taken accommodation entry cannot be accepted.
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

was the claim of the assessee that there were no purchases by the assessee from the Majee Group. The assessee has also submitted that for the purpose of manufacturing 1 kg of Sponge Iron, the requisite coal requirements under Direct Reduced Iron (DRI) process varies between 0.65 to 1.10 tonnes. The assessee in its written submission along with annexure thereto which reads as under:-
“21. The Assessee respectfully submits that the provisions of Sec.69C of the Act reads thus:
"Unexplained expenditure, etc.
69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year:
Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income."
22. A plain reading of the Section shows that the provisions operate only when an expenditure is shown to have been incurred by an Assessee. In the present case, the revenue can take advantage of the deeming provisions of Sec.69C of the Act only when there is material on record which shows that the Assessee has incurred any expenditure. It is respectfully submitted that the material on record before the AO does not lead to any conclusion that the Assessee has incurred any expenditure. At the risk of repetition, it is respectfully submitted that the material before the AO was only the documents seized in the search of RKV i.e., RKV-1 to RKV 13. These were excel sheets and had entries regarding transportation of coal by RKV allegedly illegally mined by Majee Group. The excel sheet contained a column “Factory” and against that column the words “Rajshri” was found. Statement of Mr.AnupMajee was recorded and he admitted selling coal illegally mined by him in cash. None of the parties either RKV or Mr.AnupMajee named the Assessee Rajshri Iron Industries Pvt.Ltd. as the person representing the words “Rajshri” as found in the seized excel sheets. There is no other evidence brought on record by the AO to link the name “Rajshri” as found in the seized excel sheets with the Assessee. The Assessee has all along been denying any link with the Majee Group. The purchases as recorded by the Assessee in his books of accounts have all been proved by producing all the details of purchases (Page 219 to 227 of Assessee’s paper book 2). The AO or the CIT(A) have not given any adverse findings in so far as the purchases as recorded by the Assessee in its books of accounts. In fact the CIT(A) in Paragraph 6.2.3 & 6.2.4 of his order has given a clean chit to the Assessee by observing that a) No search was conducted in the case of the Assessee nor Assessee’s statement was recorded; b) The only basis on which the conclusions
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

were drawn by the AO was that seized document RKV-1 to RKV-13 contained the name
“Rajshri” against the column “Factory”. c) Because the Assessee had a manufacturing unit at Jamuria Industrial Estate, Jamuria, West Bengal and since Majee group operated in Jamuria, selling of illegally mined coal for cash, it was probable that the Assessee would also be a person who purchased coal by paying cash from Majee group. d) This was only an inference by the AO without any basis because the purchases as shown by the Assessee in his books of accounts have all been identified and all details furnished by the Assessee and the AO has not found any fault or defect in the claim by the Assessee. e) The theory of the Assessee having obtained bogus bills and having provided accommodation entry is without any basis as the purchases shown by the Assessee in its books have all been substantiated. f) It has also been observed by the CIT(A) that the statement of Mr.AnupMajee or Mr.Anjani Kumar referred to by the AO in the order of assessment does not incriminate the Assessee and therefore not affording right to cross examine these witnesses was not material because the only basis of the addition is seized document RKV-1 to RKV-13 which contains the name “Rajshri” without there being any other material tending to incriminate the Assessee.
23. It is respectfully submitted that addition made by the AO was without any basis as there was no evidence to show that the Assessee indulged in purchases that were not recorded in the books of Accounts. It is further respectfully submitted that suspicion however strong cannot take the place of proof. . For this proposition one may refer to decisions in Dhakeswari Cotton Mills Ltd. v. CIT 26 ITR 775 (SC), Lalchand Bhagat
Ambica Ram v. CIT 37 ITR 288 (SC), CIT v. East Coast Commercial Co. Ltd.63 ITR 449
(SC) and Anil Tibrewala v. ITO(2004) 1 SOT 90 (Mum); CIT v. Daulatram Rawatmull
53 ITR 574 (SC); Umacharan Shaw & Bros. v. CIT 37 ITR 271 (SC); Pr. CIT v. Ajay
Surendrabhai Patel(2016) 69 taxmann.com 309 (Guj.).
24. It is further submitted that the findings of the AO in the concluding portion of the order of assessment (Page-28) was as follows:
……there is no iota of evidence in assessee's submission that it has no nexus with the Majee group. lt should have been also considered that as the assessee. being a manufacturer of iron as a major consumer, had made the expenses in cash out of its regular books of accounr as said amount is not found to have been reflected in it’s cash book. The case of the assessee is not a sole case in this area for the steel manufacturers. In fact. the referred seized material in the case of Majee group bears many names of the steel manufacturer. As per business point of view, the assessee, being a coal consumer obviously opted for the coal supplied by Majee group at fairly below price than the prevalent rates
From the observations of the AO it is clear that he has placed the burden of proof of having incurred expenditure on the Assessee whereas the provisions of Sec.69C of the Act come into operation only when it is proved that an Assessee has proved to have incurred expenditure. The question of proving the source by the Assessee is only thereafter. In other words, the AO has wrong placed the burden of proof of source on the Assessee without first establishing that an expenditure was incurred by the Assessee. Secondly, the AO has drawn conlclusions only on the basis that several names of steel manufactures in the area figure in the seized material and coal
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

consumers in that area have obviously opted for purchase from Majee group because of the low price offered by them. In so far as the case of N.K. Industries Ltd. v . Dy.
CIT (2016) 72 taxmann.com 289 (Guj.) is concerned, the Hon'ble Gujarat High Court has observed that estimating a certain percentage of the bogus claim is against the principles of Sections 68 and 69 C of the Act, and if the purchases are bogus, then it is not incumbent upon the Tribunal to restrict the disallowance only to confirm certain percentage of such purchases. The Special Leave Petition against the said decision was dismissed by the Hon'ble Supreme Court in case of N. K. Protiens Ltd. v. Deputy
Commissioner of Income Tax (2017)84 taxmann.com195 (SC) . As already stated there is no sustainable finding of any bogus purchases and therefore the aforesaid decision of Hon’ble Supreme Court is not of any relevance to the present case. It is respectfully submitted that the action of the AO was rightly held by the CIT(A) to be unsustainable and therefore the order of the CIT(A) to this extent may kindly be upheld.
Submission on Assessee’s Cross Objection
Production of sponge iron against coal
Tax Audit Report as per extracts.
F.Y.
Sponge Iron produced (Mt)
Coal consumed
(Mt)
2017-18
49206
45748
2018-19
34003
24482
As per Industry norms, for making 1 kg of sponge iron under DRI (Direct Reduced Iron) process, coal requirement generally varies between 0.65 tones to 1.10 tonnes, depending on the quality of coal.
That the assessee has given details of total purchase for the A.Y. 2018-19 by letter dated 22.03.2023
along with details purchase of coal Rs.16,72,09,313/-.[ quantity 20412.74 mt]
Therefore, why the assessee will buy undisclosed coal from third party, moreover the sale & purchase of books have been accepted.

In response, the petitioner assessee has contended that the petitioner was a member of National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and these transactions were routine transactions carried out in the ordinary course of business of the petitioner considering the fact that the petitioner was carrying business of share brokers, depository participant and investment in securities and trade in derivatives.
Further, all these transactions were duly accounted for in the profit and loss account and return filed by the petitioner. Thus, in this case, this so-called information, in the possession of the assessing authority, as per the risk management strategy of CBDT, was actually pertaining to the gross turnover of the assessee, in securities and derivative market transactions, duly and fully, disclosed and accounted for by the assessee in its return of income, and was fully supported by the corresponding documentary evidences, and the disclosure and KYC requirements of the respective recognised stock exchange. The assessee further contended that in such kind of derivative transactions, what was taxable was the net profit on such gross turnover and which has already been accounted in full by the assessee in its return of income.
However, the assessing authority somehow, ignored and disregarded, all such factual submissions of the assessee and proceeded with issuing an order under section 148A(d) of the Act, followed by the corresponding Reassessment Notice u/s 148 of the Act, on exactly the same lines of escapement of income of Rs. 1 lakh crore, and thereby reducing the so-called 'adequate safeguard checks' in section 148A of the Act, to merely an empty formality and a ritual. It was at this juncture that the assessee has filed a writ petition before the hon'ble Delhi High Court, to prevent such kind of high- handed approach of the revenue authorities, and the hon'ble Delhi High Court, after comprehensively examining all the factual aspects of the case, has in clear, unambiguous and categorical manner, observed and held as under:
"8. This Court is further of the view that under the amended provisions, the term
"information" in Explanation 1 to Section 148 cannot be lightly resorted to so as to re- open assessment. This information cannot be a ground to give unbridled powers to the Revenue. Whether it is "information to suggest" under amended law or "reason to believe" under erstwhile law the benchmark of "escapement of income chargeable to tax" still remains the primary condition to be satisfied before invoking powers under Section 147 of the Act. Merely because the Revenue-respondent classifies a fact already on record as "information" may vest it with the power to issue a notice of re- assessment under Section 148A(b) but would certainly not vest it with the power to issue a re-assessment notice under Section 148 post an order under Section 148A(d).
……
16. This Court is of the opinion that significance of issuance of a show cause notice at a stage prior to issuance of a reassessment notice under Section 148 of the Act has been lost on the Respondents. This Court takes judicial notice that in a majority of reassessment cases post 1st April, 2021, the orders under Section 148A(d) of the Act use a template/general reason to reject the defence of the assessee on merits, namely, "found devoid of any merit because the assessee company has failed to produce the relevant documents in respect of transactions mentioned in show cause notice it is established that the assessee has no proper explanation……" Consequently, this Court is of the opinion that a progressive as well as futuristic scheme of re-
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

assessment whose intent is laudatory has in its implementation not only been rendered nugatory but has also had an unintended opposite result." [Emphasis Supplied].
Finally, the hon'ble Delhi High Court quashed the impugned Order u/s 148A(d) and the corresponding Reassessment Notice u/s 148 of the Act. In similar recent judgement in the case of Fena Pvt Ltd. v. ACIT [W.P.(C) No. 6553 of 2022] the hon'ble Delhi High
Court has quashed the preliminary order u/s 148A(d) on similar circumstances and facts.
26. The Assessee respectfully submits that the order u/s.148A(d) as well as the notice u/s.148 may be quashed resulting in the entire reassessment order being rendered a nullity and hence liable to be annulled.
27. In so far as Ground No.2 and 3 raised by the Assessee in its cross-objection is concerned, the Assessee respectfully submits that Ground No.3 is general and Ground
No.2 relates to the addition sustained by the CIT(A). It is submitted that the Ld.
C.I.T.(A) is wrong in sustaining the addition Rs. 1,07,65 ,6881- (5 .06% of Rs.21,27
60,640/-) , by concluding that the assessee has earned profit on cash purchases of coal on estimate and arbitrary basis. It is respectfully submitted that neither the AO nor the CIT(A) have rejected the books of accounts of the Assessee in a manner contemplated u/s.145(3) of the Act and therefore estimation of income of the Assessee is not possible. The addition has been made by the CIT(A) on the basis of the following observations in his order:
“6.2.5. Further, it is seen from the assessment order that the AO also stated there could be a chance for out of books purchases of coal by the appellant company which has not been disclosed. However, it is a common knowledge that if there are out of books purchases corresponding out of books sales is also a reality. Otherwise, the quantity of stock will not tally. lt has been held in various judicial pronouncements that where the appellant has maintained quantitative details of stock and no defects has been found in the books of accounts and books of accounts has not been rejected, then entire amount of undisclosed purchases cannot be added to the total income of the assessee, however, only profit embedded in such amounts of purchases could be considered to add to the total income of the assessee. Therefore, it is not fair to treat the entire out of books purchases as undisclosed income of the assessee.”
28. It is respectfully submitted that there is no evidence to show that the Assessee made purchases of coal outside the books of accounts. The CIT(A) has also given a finding in favour of the Assesee on this aspect while deleting the addition of entire purchases as bogus. Having given such a finding, the CIT(A) in paragrsph 6.2.5 has made an observation that there could be a change for out of books purchases of coal and sale thereof and therefore the possible addition that can be made is only profit embedeed in such unrecorded purchase and sale. In simple words, bogus purchase refers to a transaction in which the assessee claims to have made a purchase, but in reality, no actual goods or services were received. The assessees may enter into transactions of bogus purchase for several reasons, typically for the purpose of manipulating financial records or evading taxes. In a trading/manufacturing account, the entries of opening stock, purchases, manufacturing expenses, and gross profit are recorded on the debit side while the entries of sales and closing stock are recorded on the credit side. Hence, in order to reduce the gross profit, the assessee has either
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

inflated purchases and manufacturing expenses or underreported sales, or undervalued closing stock. To reduce gross profit through purchase, one method for the assessee to fabricate invoices or documentation to make it appear as if purchases were made when, in fact, no goods were purchased. This inflates the cost of goods sold, reducing the gross profit. This is known as bogus purchase, or no purchase. Another method is for the assessee to substitute purchases by making purchases from the grey market, using them in the manufacturing or in sales but obtaining documentation of purchases at higher rates from bill providers. This type of case is known as unproved purchases where goods/material is actually received by the assessee but the invoice for goods purchased is received from a different person other than from whom goods are purchased.
29. In the present case, the purchases as recorded by the Assessee have been found to be correct and the profit as declared by the Assessee has been accepted. The CIT(A) has proceeded only on surmises that the Assessee would have effected bogus purchases and sale of the coal and would have made profit on such purchase and sale and applied the gross profit rate as disclosed by the Assessee. There is absolutely no evidence of either bogus purchases or sales and in such circumstances the addition in question is without any basis. The addition sustained by the CIT(A) is therefore without any basis and on mere surmises and suspicion which is unsustainable in law. The Assessee in this regard would like to place reliance on the following decisions wherein it has been held that addition based on mere surmises and suspicion cannot be sustained.
(i) CIT Vs. Lakshmangarh Estate and Trading Co. Ltd. (2013) 40 Taxmann.com 438
(Cal)
(ii) CIT Vs. SandipkumarParsotambai Patel (2023) 150 Taxmann.com 192 (Guj)
(iii) Hon’ble Calcutta High Court in the case of M/s.Alpine Investments in ITA No.620 of 2008 order dated 26/08/2008. The Assessee therefore prays that this Hon’ble Tribunal may be pleased to allow the cross objection of the Assessee and delete the addition sustained by the CIT(A).
30. The Assessee prays that the appeal of the revenue may be dismissed and the cross objection by the Assessee may be allowed.”
08. The ld. DR on the other hand relied heavily on the order of AO by submitting that the documents found during the course of search on Majee group which revealed that the assessee purchased huge coal from the assessee and therefore the addition was rightly made by the AO on the basis of documents seized. The Ld. DR submitted that the ld. CIT(A) wrongly applied 5.06% on the purchases for estimation of income by holding that the entire purchases cannot be brought to tax
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

and it is only the profit thst the assessee made thereon has to be assessed. The ld. DR therefore prayed that the order of the ld CIT(A) may be reversed and that of AO may be restored.
09. We have heard the rival contentions and perused the materials on records including the written submissions filed by the assessee. We observe that the records clearly showed that the purchases done by the assessee tally with the manufacturing requirement of the manufacturing plant of the assessee as per the calculation provided and prescribed by the government in the manufacturing process of Sponge Iron. Now if we are to even assume that there is an unaccounted purchase of coal from Majee Group, then it would have to be assumed that this coal has been used for the manufacturing of the Sponge Iron. This admittedly had not been shown by the department nor any substantive evidences were not brought on record. As the accounts of the assessee have not been disturbed and the manufacturing calculation of the assessee as disclosed in the audit report had not been disturbed and doubted by the ld. AO. Obviously, it cannot be assumed that the assessee has made any unaccounted purchases from the Majee Group. Further, for the purposes of making any addition u/s 69C of the Act something should have been found to show that the assessee had incurred unaccounted expenditure by way of purchase of coal from Majee group. In the present case, what has been found is certain bills/ receipts in the search of the Majee Group.
The assessee has categorically denied such coal purchases from the Majee group. The concerned person of Majhi Group has also not been given to the assessee for cross-examination. The so-called bills and documents found in the course of search on Majee group are not supported with any transport documents. These documents which ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

have been found in the hands of the Majee Group are only documents having no initials. It also does not contain the clear name of the assessee. This being so, we are compelled to hold that the so-called sales which has been done by Majee Group in the name of the assessee do not belong to assessee. Affect of the addition as made by the ld. AO would mean that such unaccounted purchases of coal have resulted in unaccounted manufacturing of Sponge Irone. For this, there is no evidences of the raw material for the manufacture of the sponge iron . This would again resul in unaccounted manufacture of sponge iron and there were no evidences of any such manufacture much less unaccounted sale of such unaccounted manufacture of Sponge iron. The further result of this addition is that the stock statement of the assessee in regard to so called unaccounted purchases of coal would have to be adjusted thereby distorting the entire manufacturing cost structure of the assessee. None of this have been found much less alleged. Obviously, such addition cannot be made. Insofar as the coal purchase from Majee group is concerned , the assessee has categorically denied the transactions by stating that it has never made purchases from Majee Group either earlier or later nor during the year. The person who is taken the assessee’s name has also not been put to assessee for cross-examination. In these circumstances, the addition made by the ld. AO and the estimation as made by the ld. CIT (A) cannot be sustained and would stand deleted.
Consequently, the appeal of the Revenue is dismissed and cross objection of the assessee is allowed.
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

A.Y. 2013-14
ITA No.2388/KOL/2024 & CO No. 47/KOL/2025
010. The only issue raised in this appeal by the Revenue is against the order of ld. CIT (A) deleting the addition of ₹2.00 crores as made by the ld. AO u/s 68 of the Act as unexplained cash credit in respect of bogus unsecured loans.
011. The facts in brief are that during the course of assessment proceedings, the ld. AO noticed that assessee is a beneficiary of ₹2
crores from M/s OLEX (ILEX) Pvt. ltd. as revealed during the course of investigation by the investigation wing. The ld. AO thereafter reopened the case u/s 147of the Act by issuing notice u/s 148 of the Act on 15.01.2021, after recording the reasons to believe and after obtaining the permission from the competent authority. Notice u/s 142(1) of the Act along with questionnaire was issued and duly served upon the assessee. The ld. AO also issued notice u/s 133(6) of the Act to M/s OLEX (ILEX) Pvt. ltd. The assessee duly replied the questionnaire issued by the ld. AO, however, made the addition of ₹2
crores by relying on the investigation report that the assessee is beneficiary of bogus unsecured loan and added the same u/s 68 of the Act as unexplained cash credit to the income of the assessee.
012. In the appellate proceedings, the ld. CIT (A) deleted the addition. The ld. CIT (A) noted that the assessee has received advanced from M/s
OLEX (ILEX) Pvt. ltd. on 07.11.2012, of ₹2 crores. The ld. CIT (A) noted that the adverse interference against the assessee was drawn by the AO on the basis that the M/s Olex (ILEX) Pvt. Ltd. has transactions with M/s
Ganesh
Enterprises who is providing accommodation entries. The ld. CIT (A) further mentioned that the ld.
AO noted that the transactions of the said entity M/s Ganesh entities
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

with M/s Olex were without any economic rationale. The ld. CIT (A) also noted that in Para no.7.2.2 that the said advance was repaid in two instalments i.e. on 06.09.2016 ₹1 crores and on 08.09.2010
Rs. 1 crores as the business deal signed did not materialized. The ld
CIT(A) relied on the decisions of PCIT vs. Sreeleathers [2022] 143
taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-
2022] and Principal Commissioner of Income-tax vs. Ambe Tradecorp
(P.) Ltd. [2022] 145 taxmann.com 27 (Gujarat)/[2023] 290 Taxman
471 (Gujarat)[05-07-2022] and various other decisions while deleting the addition by holding that the assessee is not a beneficiary of accommodation entries as the advance taken was repaid and assessee during the course of assessment proceedings, as well as the appellate proceedings furnished all the details and evidences qua the money received.
013. After hearing the rival parties and perusing the material on records , we note that in the present case the assessee has filed all the evidences before the AO and ld. CIT(A) and established that the repayment of business advance taken. The advance was repaid in the subsequently as the deal did not materialize . We also note that the assessee has filed before the AO as well as ld. CIT(A) all the evidences qua the said money received. But the AO has doubted the transactions on the basis that the M/S OLEX (ILEX) Pvt. ltd. had transactions with M/S Ganesh Enterprises. In view of these facts, we are of the considered view that no addition can be made u/s.68 of the Act on the ground that the assessee has failed to meet the ingredients of Section 68 of the Act. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated
05.08.2025,
PCIT
Vs.
M/s
Narayan
Tradecom
Pvt.
ltd.
in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom
Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated
17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024,
GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong,
ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act.
Similarly, the case of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.)
Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :-
"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."

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 notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness.
3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine.
4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied.
5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied.
6. The Tribunal rightly recorded in para 29 of the judgment,
"Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. "
7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed.
014. We therefore respectfully following the above decisions, uphold the order of ld. CIT(A) by dismissing the appeal of the revenue.
ITA Nos.2385 & 2388/KOL/2024& CO Nos. 46 & 47/KOL/2025
Rajshri Iron Industries Private Limited; A.Ys. 2013-14 &2018-19

Kolkata, Dated: 21.11.2025
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to:

BY ORDER,//
Sr. Private Secretary/ Asst.