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Facts
The Revenue appealed against the CIT(A)'s order deleting an addition of ₹4,16,27,400/-. The addition was made by the AO for amounts received by the assessee from M/s Mahalaxmi Steel, considering them sham transactions. The assessee claimed the amount was for the sale of Manganese Ore, supported by bank statements, tax invoices, and road permits.
Held
The Tribunal held that the AO failed to provide evidence of collusive or sham transactions and did not allow cross-examination of parties whose statements were relied upon. The CIT(A) had appreciated the evidence submitted by the assessee and correctly concluded that the payment received could not be treated as unexplained cash credit.
Key Issues
Whether the amount received by the assessee from M/s Mahalaxmi Steel was a genuine sale consideration or an unexplained cash credit treated as sham transactions. Whether the AO erred in making the addition without providing the assessee an opportunity for cross-examination.
Sections Cited
147, 148, 143(2), 142(1), 143(3), 68, 69A, 133(6)
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Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals)-I, Patna (hereinafter referred to as the “Ld. CIT(A)”] dated 12.09.2019 for the AY 2013-14.
The only issue raised by the Revenue is against the order of learned CIT (A) deleting the addition of ₹4,16,27,400/- as made by the learned Assessing Officer in respect of amount received from M/s Mahalaxmi Steel under the guise of sham transactions.
2.1. The facts in brief are that the assessee is engaged in the business of manufacturing of Ferro Alloys. The assessee filed the 2.2. In the appellate proceedings, the learned CIT (A) allowed the appeal of the assessee by observing and holding as under:-
“I have carefully considered the findings of the AO in the assessment order, submission of the appellant, Remand report of the AO and the comments of the appellant on the remand report. The undisputed fact is that the appellant is a Private Limited Company and engaged in the business of manufacturing of Ferro Alloys. The appellant filed its regular of income for the A.Y.2013-14 on 30.09.2013 declaring total income of Rs.18,41,971/-. Subsequently, the Assessing Officer (AO) was in receipt of information from Director of Income tax (I&CI), Bhopal that the appellant company had received bogus entries of cash credit from hawala operators. Accordingly, the AO after recording the reasons issued notice u/s 148 of the Act on 04.11.2015 callingfor Return of Income. In response to notice u/s 148, the appellant filed a letter requesting the AO to treat the regular return filed u/s.139 as compliance to the notice u/s.
Further, as requested by the appellant the reasons for issuance of notice u/s.148 was conveyed to the appellant. Thereafter, the AO after issue of notice u/s.143(2) and 142(1) passed order u/s.143(3) r.w.s.147 on 30.12.2016 determining total income at Rs.4,34,69,370/-. As stated earlier the AO was in receipt of information from the Director of Income-tax (I&CI), Bhopal. In this report, ITO (I&Cl) investigated huge cash deposits made in name of Anand Agrawal, Ashish Agrawal and Amit Purohit. These persons had made huge deposits in cash in their saving bank accounts without quoting PAN. On verification and through local enquiries conducted by the ITO (I&CI), it was revealed that all the three persons are fictitious/bogus as the query letters issued to them were returned un-served with the remarks "not known". On further perusal of the transaction in the bank accounts of the above persons it was noted that huge cash deposits were made and then on the very same day or on the next day, the cash was transferred to the current account of M/s Mahalaxmi Steels, Prop: Shri Shriram Naththu Kale, S/o Shri Naththuji Laharuji Kale, Balaghat. The report concluded that M/s Shri Mahalaxmi Steels is a bogus concern and never had any business activity at the address brought on record. The said bogus entity opened a current account bearing no. 9120200296338954 with the Axis Bank Limited, Chankhuri branch on 04- 06-2012 and during the period from 08-06-2012 to 15-01-2013 a total of Rs.7,20,46,000/- was deposited in cash. Further deposits through RTGS /Cheques were also made by various bogus persons / entities as named in the assessment order. Hence the total amount of credit in the said current account was stood at Rs.34,13,13,634/ which is inclusive of cash deposits of Rs,7,20,46,000/-. These amounts were transferred to various ultimate beneficiaries through RTGS/Cheque and “2.3 After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has made purchases from the seven parties aggregating ₹4,98,11,922/- which according to the AO have not filed their returns of income and also have not replied to the notices under section 133(6) of the Act. We note that the assessee has filed all the evidences qua the purchases including the invoices, payment details and other bills and vouchers. The Learned AO has only made addition on the ground that the suppliers were non-filers of the returns of income and the purchases were not confirmed. We note that even the Learned CIT (A) in the appellate proceeding has called for remand report from the AO. The AO did not file any remand report despite the CIT (A) specifically asking the AO to submit the remand report. 2.4 We note that the assessee upon direction of the CIT (A) have furnished all the evidences before the AO and the Learned CIT (A) after examination and appreciation of the same allowed the appeal of the assessee by relying on the series of decisions as have been noted above. Therefore, we do not find any infirmity in the order of the Learned CIT (A). We also note that the assessee has also produced GST returns filed by the suppliers which are auto-populated from the website. Therefore, we do not find any reason to interfere in the order of the ld. CIT (A) who has passed a very reasoned and speaking order. Accordingly. We uphold the order of the Learned CIT (A) by dismissing the appeal of the revenue.” 2.4. Considering the same and the facts and circumstances of the case in question , we find no infirmity in the order of learned CIT (A)
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 09.12.2025.