SRI VENKATESH IRON AND ALLOYS INDIA LTD.,KOLKATA vs. ITO. WARD -3(2), , KOLKATA

These are appeals preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 25.09.2025 for the AY 2013-14.

3.1. The facts in brief are that the assessee filed the return of income on 29.09.2013, declaring total income at ₹ nil. The return was processed u/s 143(1) of the Act. Thereafter the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 03.03.2016, after recording the reasons to believe that assessee was beneficiary of the cash deposited into the bank account of M/s Shri Mahalaxmi Steels to the tune of ₹1,83,00,000/- and hence , the same has escaped assessment. During the course of assessment proceedings, the assessee filed the return of income in compliance to notice u/s 148 of the Act. Thereafter, the ld. AO issued statutory notices along with questionnaire which were duly replied by the assessee. The ld. AO finally observed that it is seen from the ledger of M/s Shri Mahalaxmi Steels that assessee has received ₹1,88,31,703/-, during the F.Y. 2012-13 and since M/s Shri Mahalaxmi Steels is a bogus concern and had no means to purchase and make payment of ₹1,88,31,703/- to the assessee. Thus, the same was treated as unexplained cash credit in the books of account of the assessee and added to the income of the assessee. The said payment received by the assessee represented the receipt of consideration in lieu of sales made to the said party by way of steel scrap, coal scrap and manganese Ore etc. The assessee has sold iron ore to M/s Shri Mahalaxmi Steels, District Balaghat, MP. The assessee filed before the ld. AO tax invoices for sale with challans vide letter dated 24.11.2016, however, the ld. AO made the said addition by relying on the enquiry report addressed to the Pr. Commissioner of Income Tax, Kolkata by Directorate of Income Tax (I & CI), Bhopal, wherein it was stated that the assessee was 3.2. Aggrieved assessee preferred the appeal before the ld. CIT (A) which was dismissed by the ld. CIT (A) by noting that the assessee has failed to provide the details of corresponding purchases i.e. purchase parties, details of delivery of goods, lorry receipts, which were most important documents to establish the movement of goods from the purchase parties. The ld. AR in the rebuttal referred to page no.16, wherein in para no.2 , the ld. CIT (A) dealt with the submission of the assessee wherein it was noted that sales by the petitioner were ex-factory and therefore, the transporters documents were not available with the assessee. It was further stated that the assessee had handed over the challans which mentioned the vehicle numbers and sale invoices to the purchasers which were the evidences in possession of the appellant and clearly state the names of consignees and consigners and the destination where the goods were being transported. It was further stated that after completion of the sales, the assessee has received C form issued by commercial tax authority, MP from purchaser and copy of the said form is available at page no.440 of the Paper Book. The ld. AR stated that the ld. CIT (A) has not dealt with the submissions of the assessee while adjudicating the issue. The ld. AR also, submitted that the issue is squarely covered by the decision of the co-ordinate Bench in case of ACIT Vs. Shree Nanak Ferro Alloys Pvt. Ltd. in vide order dated 09.12.2025, wherein the similar issue has been decided by the co-ordinate Bench in favour of the assessee. The ld.

3.3. The ld. DR on the other hand relied heavily on the orders of the authorities below.

3.4. After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee was reopened by the ld. AO after information was received that the assessee was a beneficiary of unexplained payments from M/s Shri Mahalaxmi Steels. During the year the assessee filed before the ld. AO all the evidences as stated above to corroborate the sales made to M/s Shri Mahalaxmi Steels which was stated to be received in lieu of steel and iron ore fines. We have perused the decision of the co- ordinate Bench in which the case of the related entity was reopened on the basis of same information received from Director of Income Tax (I and CI) and the coordinate bench has decided the same in avour of the assessee. The operative part of the decisions is as under:-

“2.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is engaged in the business of manufacturing of Ferro Alloys as well as trading in goods. The case of the assessee was reopened by the AO under Section 147 of the Act by issuing notice under Section 148 of the Act on 04.11.2015, after the learned Assessing Officer received information from Director of Income Tax (I & CI) that appellant had received bogus entries of cash from hawala operators. The said notice was complied with by the assessee by stating that original return filed may kindly be treated as return in response to the said notice. It was submitted that assessee has sold Maganese Ore to M/s Mahalaxmi Steel during the financial year and received consideration of ₹4,16,27,400/- from banking channel in two installments of ₹2,41,29,400/- and ₹1,74,98,000/-. The assessee furnished before the learned Assessing Officer the copies of bank statement, ledger account of the said party, road permit issued by VAT authorities of Jharkhand government evidencing the goods sold by the assessee, sale invoices including the truck number, quantity rate GST and form C etc. The learned CIT (A) appreciated all these facts and noted that the assessee has proved beyond doubt that the goods were supplied by the assessee to 4.1. After hearing the rival contentions and perusing the materials available on record, we are of the considered view that the issue requires examination at the end of the ld. AO and accordingly, we restore this issue to the file of the ld. AO with a direction to examine the same and allow the benefit of brought forward losses and unabsorbed depreciation in accordance with the Provisions of the Act. The ground no.17 is allowed for statistical purposes.

7. The ground nos.1,3,4,5,6,11,12,13,14,15, are not pressed and accordingly, these are dismissed as not pressed.

8.2. In the appellate proceedings, the ld. CIT (A) confirmed the addition.

8.3. In our opinion, the addition made by the AO and as confirmed by the ld. CIT (A) are purely on surmises and conjunctures basis and in fact has no basis at all. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.

Order pronounced in the open court on 15.04.2026.