DCIT, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA vs. BALMUKUND CONCAST PRIVATE LIMITED, PATNA

“6.2. Discussion and decision: 6.2.1. I have perused the assessment order as well as the submission of the appellant. Onperusal of the same, it is observed that a search & seizure operation u/s 132 of the Act wasconducted at assessee's various premises on 30.11.2022 and subsequent dates. Onexamination of assessee’s books of account during the search proceedings, it was found thatthe assessee company has recorded purchase of Rs.3,11,47,131/- from M/s. RajmataDealers Pvt. Ltd for the AY 2019-20. M/s. Rajmata Dealers Pvt. Ltd appears as a shellcompany in the shell company data maintained by the Directorate of Income-Tax(Investigation), Kolkata. From the financial analysis of M/s. Rajmata Dealers Pvt. Ltd., it wasobserved by the AO that till A.Y 2018-19, the only source of income of the company was fromInterest Income and it was only in AY 2019-20, that the company had suddenly reportedhuge sales turnover. However, the AO found that the company had neither acquired anyappropriate asset nor did it pay any rent. The AO therefore, concluded that M/s. RajmataDealers Pvt. Ltd. had acted as a shell company providing bogus bills without actualmovement of goods and therefore, it could be safely considered that the fake sale entrieswere provided by M/s. Rajmata Dealers Pvt. Ltd. to the assessee company i.e. M/s.Balmukund Concast Pvt. Ltd which was nothing but accommodation entries in between theparties and the assessee was the beneficiary of such accommodation entries of bookingbogus purchases. 6.2.2. On perusal of the submission of the assessee, it is noticed that the assessee hadpurchased MS Billet and sponge iron from M/s. Rajmata Dealers Pvt. Ltd and had ittransported to the assessee’s factory premises. The assessee company had also providedthe AO with copy of invoice, ewaybill and transporting documents which were also seizedduring the course of search. The assessee had also produced their books of accounts aswell as the confirmation of accounts from M/s. Rajmata Dealers Pvt. Ltd before the AO.

10. Upon careful consideration, we find that AO has made the addition on estimate basis. AO has himself stated that it cannot be said that assessee had not made purchases but, according to the AO, purchases were made from parties different than the parties entered in the books of account. On this account, AO has made addition for bogus purchases @ 25% of the purchases. This can only be said to be surmise. It is settled law that no addition is permissible on the basis of surmise and conjecture. When corresponding sales have been accepted, disallowance for bogus purchase is not sustainable. Further, ld. CIT (A) vide his elaborate order has dealt with all the issues raised by the AO in his assessment order and has come to the conclusion that the addition on account of bogus purchases is not sustainable. We do not find any infirmity in the well reasoned order of ld. CIT (A). We further note that ITAT in assessee's own case in AYs 2012-13 to 2017-18 vide order dated 11.07.2023 has deleted the addition on bogus purchases and expenses by concluding as under :-

10. Thus, once the CESTAT has held the purchases made by four Jammu bases entities to be genuine, the entire case of the Revenue based on the investigation carried out by Central Excise Department, Jammu would fall flat. It is further relevant to observe, while deciding the appeals filed by the Revenue in case of M/s. Jai Ambay Aromatics, one of the four Jammu based entities from whom the assessee had purchased raw materials, the Tribunal in and Ors., dated 15.07.2021 has upheld the decision of the first appellate authority in deleting the additions made by the Assessing Officer on account of bogus purchases. Thus, once, the CESTAT and the Tribunal have held the purchases made by the four Jammu based entities to be genuine, the corresponding sales effected by them to the assessee have to be accepted as genuine.

A.Y. 2023-24 4. The issue raised in ground nos. 1,2 and 5 are general in nature and does not require any specific adjudication.

5.1. The facts qua the search conducted on the assessee are already stated hereinabove. The assessee filed the return of income on 29.10.2023, declaring total income at ₹16,64,81,050/-, which was processed u/s 143(1) on 10.01.2024. The ld. AO on the basis of seized material mark as ‘BCPL/03’ is in the form of “Despatch detail/ Advice”, in which the agreed sales price per MT of TMT was recorded. The ld. AO noted that there were some discrepancies between the price recorded in this dispatch details vis a vis sales actually recorded by the assessee in the books of accounts. Accordingly, the assessee was called upon to explain the same. The assessee replied the same was made to the income of the assessee on account of suppression of sale by the assessee.

The ld. CIT (A) in the appellate proceedings dismissed the appeal of the assessee by holding that the suppression of sales were based upon the dispatch slips found during the course of search and the addition was rightly made by the ld. AO applying 12% of ₹3,99,45,500/- being suppressed sale thereby upholding the addition of ₹47,93,460/-.

5.2. After hearing the rival contentions and perusing the materials available on record, we find that there is time lag between the receiving of orders and actual dispatches. We note that when the orders are received which recorded in the slips and same are forwarded to the factory and dispatches are subject to availability of stock in the factory, arrangement of the transporters and receipt of payment/ payment terms being agreed upon with the customers. It was stated before us that the maximum price on the date of noting on the dispatch slip is mentioned and is inclusive of GST and were also subject to various deduction and discounts upon the final dispatches when the invoices are prepared which contained the details of selling price along items sold. Thus, we find merit in the contention of the ld. AR that there is bound to be some difference between the price mentioned in the dispatch slips and actual invoices issued. It was also stated before us that in some instances, the dispatch slips for which the dispatches did not materialize were also returned as non-fulfilled

6.1. At the outset, the ld. Counsel for the assessee submitted that the addition has been made on the basis of WhatsApp Chats between Shri Rajesh Dhandaria and Patna Tiwarji, which were found in the 6.2. In the appellate proceedings the ld. CIT (A) treated the said amount as mentioned in the WhatsApp Chats as suppressed sales and partly deleted the addition by applying the GP of 13.38%, thereby sustaining the addition to the tune of ₹20,47,140/- and deleting the remaining amount of ₹1,32,52,860/-.The assessee has challenged the order of ld. CIT (A) sustaining the said addition to the tune of ₹20,47,140/- and the Revenue has challenged the deletion of addition to the tune of ₹1,32,52,860/-.

6.3. After hearing the rival contentions and perusing the materials available on record, we find that the issue is squarely covered in favour of the assessee by the decision of the co-ordinate Bench in case of Balmukund Sponge and Iron Private Limited Vs. DCIT vide order dated 09.12.2025, 09.12.2025, wherein vide para 6.5, the co- ordinate bench has deleted the addition as sustained by the ld. CIT(A) by recording a finding that there was no corroborative material found to support the transactions mentioned in the WhatsApp Chats and therefore, no addition can be made. The operative part is as under:-

“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 7. This is the cross appeal of the revenue wherein the revenue has challenged the part deletion of addition by CIT(A) of ₹ 1,32,52,860/- by treating the amounts mentioned in the WhatsApp Chats as suppressed sales by applying a G.P. rate of 13.38%. Since we have already allowed the appeal filed by the assessee in (supra) by setting aside the order of ld. CIT(A) on this and directing the AO to delete the addition as there is no

Order pronounced on 15.04.2026.