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Facts
For AY 2018-19, the AO made an addition of Rs. 21.27 crores under Section 69C for unexplained expenditure, alleging the assessee purchased unaccounted coal from the 'Majee Group' based on search findings; the CIT(A) partly deleted it, sustaining Rs. 1.07 crores (5.06%). For AY 2013-14, the AO added Rs. 2 crores under Section 68 as unexplained cash credit from alleged bogus unsecured loans from M/s OLEX (ILEX) Pvt. Ltd., which the CIT(A) fully deleted.
Held
For AY 2018-19, the Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, completely deleting the addition under Section 69C, finding no substantive evidence of unaccounted coal purchases from Majee Group. For AY 2013-14, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of the Section 68 addition, as the assessee provided full evidence, including repayment of the loan, disproving accommodation entries.
Key Issues
Whether additions under Section 69C for alleged unaccounted coal purchases and under Section 68 for unexplained cash credits/bogus loans were justified when the assessee provided supporting evidence and denied transactions from the alleged sources.
Sections Cited
69C, 147, 148, 148A(b), 148A(d), 132(4), 145(3), 68, 142(1), 133(6)
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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRISONJOY SARMA, JM
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
First of all we shall take the appeal of the Revenue in /KOL/2024& Cross Objection of the assessee in CO No: 46/KOL/2025 Assessment Years: 2018-19.
/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.
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.
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
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 “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."
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
In so far as ground No.1 raised by the Assessee in its cross objection is concerned, the Assessee respectfully submits that the AO did not do any independent enquiry as is contemplated in Sec.148A(a) of the Act and has held that the enquiry has already been done by the Investigation wing and flagged information in the portal of the department, there was no need for any separate enquiry before passing order u/s.148A(d) of the Act, This approach is erroneous. In this regard the Assessee would like to place reliance on a decision of the Hon'ble Delhi High Court, in the case of 'Divya Capital One (P.) Ltd. v. ACIT [W.P.(C) NO. 7406 of 2022 of dated 12-5- 2022].In this case, the assessing authority has contended that it was having information in its possession, as per the risk management strategy of CBDT, that income amounting to more than Rs. 1 lakh crore, has escaped assessment in the hands of the petitioner assessee. In the show cause notice u/s 148A(b) of the Act, a table was provided, which captured the list of transactions entered into by the petitioner such as purchase of shares, sale of futures, sale of shares, purchase of mutual funds, sale of options, etc. The total of such table was Rs.10,07,05,88,04,543.
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
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.
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
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
"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."
3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank
In the result, both the appeals of the Revenue are dismissed. CO of the assessee for A.Y. 3013-14 is dismissed while CO for A.Y 2018-19 is allowed.
Order pronounced in the open court on 21.11.2025.