DEPUTY COMMISSIONER OF INCOME TAX, KOLKATA vs. RAIC INTEGRATED SPONGE & POWER PRIVATE LIMITED, KOLKATA

Condonation of delay: It is pointed out by the Registry that both the appeals are filed belatedly by nineteen days. The Assessing Officer has filed separate prayers explaining the reasons for the delay in filing both these appeal, on account of related procedural movements of case records and slight delay in preparation of ASR. Since sufficient reasons for the delay has been shown, we consider the delay to be satisfactorily explained and such we admit both the appeals to be taken up for hearing on merits.

There was no representation by the assessee or his Ld. Authorized Representative on the date of hearing, nor any adjournment has been filed.

The Ld. Departmental Representative is present in Court and considering the materials available on record, we proceed to dispose off the departmental appeal after hearing the Ld. D.R.

The factual issues for both the years under appeal are identical and are interlinked and as such both the appeals are ITA Nos. 1879/KOL/2025 (A.Y. 2018-2019) & ITA Nos. 1880/KOL/2025 (A.Y. 2019-2020) RAIC Integrated Sponge & Power Private Limited 3

The grounds of appeal taken by the Revenue in the memorandum of appeal are as follows: (1) That on the facts and circumstances of this case, whether the ld. CIT(A) is correct in restricting the addition to Rs.37,95,233/- (3% of illegal coal purchases) on an est4imate basis based on assumption that the assessee is engaged in trading of coal, by ignoring the fact that the Assessing Officer has duly computed the profit generated @9.94% of undisclosed sales by the assessee.

Brief facts emerging from records are that the assessee company filed return u/s 139(1) of the Act, which was duly processed u/s 143(1) on a total income of Rs. 7.41 crores. On account of search and seizure and survey conducted on 28th January, 2019 on the ADUKIA group (the assessee company being one of the group concerns) proceedings were initiated against the assessee u/s 153A of the Act, on 24th October, 2021, culminating in an assessment u/s 153A of the Act, on 24/04/2021. ITA Nos. 1879/KOL/2025 (A.Y. 2018-2019) & ITA Nos. 1880/KOL/2025 (A.Y. 2019-2020) RAIC Integrated Sponge & Power Private Limited 4

Subsequently, on the basis of information contained in INSIGHT portal , notices were issued u/s 148A(b) of the Act on 22/03/2022, on the issue of alleged bogus purchase of coal made by the assessee from one “ Anup Majee Group” and after considering the replies filed by the assessee, orders passed u/s 148A(d) of the Act and notice issued u/s 148 dated 31/03/2022, in response to which return filed by assessee declaring a total income of Rs. 7,87,35,880/- on 29/04/2022. 9. Notices issued u/s 143(2) of the Act, followed by subsequent notices u/s 142(1), has been duly complied by the assessee through written submissions where the assessee has categorically denied having made any transactions of cash purchase from the said “Anup Majee group” other than whatever that is duly recorded in regular books of accounts, which has already formed a part of the TAR and duly reflected in GST returns and entire transactions are claimed to be fully recorded in regular course of business.

However, additions were made by the Assessing Officer on the basis of alleged incriminating documents seized from the transporter Sri Ratnesh Verma, in response to which copies of such seized documents and an opportunity of cross examination of such witness, was requested by the assessee but not granted.

Ultimately the assessment was completed by the Assessing Officer on a total income of Rs. 12.41 crores (with an estimated addition of Rs. 4.53 crores) alleged to have been generated from business activity relating to production of “sponge iron and silicate manganese”, which according to the Assessing Officer has been earned by the assessee, utilising the unaccounted purchase of Coal made from the said Anup Majee Group in CASH, amounting to Rs.12.65 crores (weighing 24,627.72 MT).

The total revenue alleged to have been generated by the assessee, by utilising the above unrecorded coal has been worked out on the concept that in regular financial results as declared, 90,513 MT of coal has been utilised to generate a revenue of Rs.167.85 crores, so the alleged unrecorded cash purchase of coal is expected to generate a revenue of Rs. 45.67 crores, and by applying a flat rate of 9.94% on such expected revenue to have been generated, the Assessing Officer has worked out GP at Rs.4.53 crores, which is the addition in this case.

The matter was carried in appeal and the Ld. CIT(Appeals) has allowed the appeal in part, by considering the alleged cash purchase of coal amounting to Rs. 12.65 crores from Majee Group, to have been made for the purpose of trading only, (in absence of any evidence relating to any manufacturing activity which may lead to unaccounted production of sponge iron) and as such has estimated the profits from trading of coal @ 3% of total

In the result, appeal of the assessee is partly allowed”.

Now the revenue is in appeal before the Tribunal on the grounds contained in the memo of appeal.

The Ld. Departmental Representative submitted that the fact that the assessee has purchased COAL in cash from Anup Majee group amounting to Rs.12.67 crores is evident from seized documents and are part of incriminating materials and the said

He further submitted that it is also evident from records that the assessee is engaged in the business of production and sale of sponge iron as his regular disclosed business and this unaccounted coal purchased has been utilised for the purpose of manufacturing of excess production of finished product of sponge iron , which has been sold in cash outside books resulting in additional profits of Rs.4.53 crores , which has been rightly brought to tax by the Assessing Officer ( as per observation in para 7.13 and 7.14 of the assessment order ) and the said addition may please be upheld.

We have heard the Ld. D.R. and consulted the materials on record and we are of the opinion that this particular goods sponge iron production is controlled by the GST authorities and regular sales are duly recorded and accepted by the state Government authorities. In order to make excess production of sponge iron , coal (non-cooking coal ) is simply one of the raw materials along with other raw materials such as high grade iron ores , limestone, dolomite , water and lastly electricity to run the machine, and production of sponge iron is physically not possible in absence of other raw materials specially the consumption of commercial

Moreover, there is no evidence of any excess stock of raw materials or finished goods or any other documentary evidence of excess production or sales of finished products or any such consumption of excess electricity has been found in course of search and there is no evidence to support the theory of excess production of sponge iron for sales which might generate the excess revenue as claimed by the Assessing Officer.

As such we are of the opinion that the Ld. CIT(Appeals) has considered all aspects of the matter and has arrived at a very logical conclusion that in all probability , the cash purchase of coal , has been utilised for outright trading activity by virtue of which there has been generation of business profits, on trading of coal , which has been ascertained by him @3% ( three percentage of gross value ), and we are also inclined to uphold the same .

As such we uphold the order of the Ld. CIT(Appeals) and we are of the opinion that the appeal of the revenue is devoid of merits and as such the same is dismissed.

ITA No:1880/KOL/2025 (A.Y. 2019-2020) The facts of this case and the grounds of appeal are identical, save the arithmetical figures contained therein. Our observation

As such both the appeals of the Revenue are dismissed being devoid of merits. Order pronounced in the open Court on 24/10/2025. (Rakesh Mishra) (Udayan Dasgupta) Accountant Member Judicial Member Kolkata, the 24th day of October, 2025