ACIT, CC, AGRA, AGRA V. M/S FEDERAL AGRO INDUSTRIES PVT. LTD., NEW DELHI

ITA 297/AGR/2025

AI Insights

The case involves the Income Tax Department's appeal against the order of the Commissioner of Income-tax (Appeals), Kanpur, which deleted the addition made by the Assessing Officer regarding alleged bogus purchases of 'Raw Boneless Meat' by the assessee, Federal Agro Industries Pvt. Ltd., for the Assessment Years 2020-21, 2022-23, and 2023-24. The Assessing Officer had initially treated these purchases as bogus based on supplier denials and alleged round-tripping of funds. However, the CIT(A) found that the purchases were actually made by HMA Agro Industries Ltd., which operated in the same premises as the assessee but were not recorded in the assessee's books. The Tribunal dismissed the revenue's appeal, agreeing with the CIT(A)'s findings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792274 (ITAT-AGRA)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2022-2023
• Appeal Filed On: 29-05-2025
• Other Referred Cases: HMA Agro Industries Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Bogus purchase; Bogus
• Section: 147; 143(3); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘DB’: AGRA BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No.296/AGR/2025 (Assessment Year: 2020-21) ITA No.297/AGR/2025 (Assessment Year: 2022-23) ITA No.298/AGR/2025 (Assessment Year: 2023-24) ACIT, CC, vs. M/s. Federal Agro Industries Pvt. Ltd., Agra. 903, 9th Floor, Akashdeep Building, Barakhambha Road, New Delhi – 110 001. (PAN : AACCF1933C) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Sudhir Sehgal, Advocate Shri Deependra Mohan, CA REVENUE BY : Shri Arun Kumar Yadav, CIT DR Date of Hearing : 13.10.2025 Date of Order : 04.12.2025 O R D E R PER S. RIFAUR RAHMAN,AM: 1. These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals), Kanpur – 4 dated 28.03.2025 for Assessment Years 2020-21, 2022-23 & 2023-24. 2. Since the issues are common and the appeals are connected, hence the same Printed from counselvise.com 2 ITA Nos.296 to 298/Agr/2025 are heard together and being disposed off by this common order. We take up Revenue’s appeal being ITA No.296/Agr/2025 for AY 2020-21 as lead case. 3. This is an appeal of the department wherein two grounds, the purchases of ‘Raw Boneless Meat’ amounting to Rs. 2,50,58,565/- has been deleted by the CIT(A). 4. The facts in brief are that the Assessing Officer has made the addition in reassessment completed u/s 147 read with section 143(3) in respect of purchases of ‘Raw Boneless Meat’, which has been treated as bogus. The assessee contended before the Assessing Officer that no purchases of ‘Raw Boneless Meat’ have been made and, in fact, certain purchases have been made by the “HMA Agro Industries Ltd.”, which is a separate assessee, but the Assessing Officer based on the inference drawn on the basis of fact that certain suppliers have denied having sold the “Raw Boneless Meat” without confronting those suppliers to the appellant concerned made an addition of Rs. 2,56,58,565/-. 5. The facts as per order of Assessing Officer on account of this addition have been discussed from para 7.1 of the order and at page 3 to Page 11, the Assessing Officer has relied upon the facts in the cases of “HMA Agro Industries Ltd” in respect of Purchases of “Raw Boneless Meat” and the Assessing Officer has also referred to the enquiries made u/s 133(6)_ along with replies received from some of the suppliers, and which issue was also Printed from counselvise.com 3 ITA Nos.296 to 298/Agr/2025 there in assessment of “HMA Agro” in the Asstt. Year 2019-20 and the replies of some of the suppliers have again been reproduced in the order passes by the Assessing Officer as in the case of “HMA Agro Industries Ltd.” for Asstt. Year 2019-20 and concluded that these were the bogus purchases of “Raw Boneless Meat” by the assessee. 6. Further, the Assessing Officer has also mentioned about round tripping of funds, which fact was also there in the case of “HMA Agro Industries Limited” wherein the Assessing Officer had alleged that the assessee had made payments through banking channels to its suppliers, who in turn, have made certain payments to their suppliers, through banking channels and the suppliers of the suppliers have withdrawn cash from their bank accounts and it was alleged that the cash as withdrawn by those parties have come back to the assessee. 7. The assessee in response to show cause notice vide reply, dated 09.03.2024, which has been reproduced in Assessment order, at pages 22 to 23, contended that these details as confronted are relevant to purchases of “Raw Boneless Meat”in the case of “HMA Agro Industries Ltd.” and not of the assessee company and further the “HMA Agro” was running the plant in the premises of “Federal Agro Industries Pvt. Ltd.” and such purchases have accordingly been booked in the books of HMA Agro Industries Ltd. in Punjab only and, thus, there was no basis of making the addition in the hands of the assessee. It Printed from counselvise.com 4 ITA Nos.296 to 298/Agr/2025 was also submitted that in the case of “HMA Agro Industries Ltd.”, all such details have been submitted by the suppliersand they have been filing their Income tax returns and modus operandi of “Raw Boneless Meat” have already been explained in “HMA Agro Industries” but the Assessing Officer at page 25, made the addition of Rs. 2,50,58,565/- without considering the above said facts and circumstances. 8. Aggrieved, the assessee filed an appeal before Ld CIT(A) and the same dealt by the Ld. CIT (A) from para 6.1 of the order and also reply of the assessee to show cause notice issued by the Assessing Officer has been reproduced in the order of CIT(A) at pages 4 to 5 of his order and it was submitted that no purchases have been made by assessee of Raw Boneless Meat since the premises was taken on rent by “HMA Agro” and all purchases of “Raw Boneless Meat” have been booked by HMA Agro Industries Ltd. and not by Federal Agro Industries Pvt. Ltd., i.e. assessee 9. Further, the Ld CIT(A) has given his finding in para 6.3 and 6.4, page 6 & 7 of the order, it was held by him that, since no purchases have been booked in the books of accounts of the assessee, hence there is no question of “Raw Boneless Meat” purchases, for which the addition has been made by the Assessing Officer and rejecting the details submissions before him by the assessee i.e. Federal Agro Industries Pvt. Ltd. It is only receiving rent from HMA Agro Industries Ltd. for use of the premises and, as such, deleted the Printed from counselvise.com 5 ITA Nos.296 to 298/Agr/2025 addition. 10. Aggrieved with the above order, Revenue is in appeal before us raising following grounds of appeal :- “1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-IV, Kanpur has erred in deleting the addition of Rs, 2,50,58,565/- on account of bogus purchases of Raw Boneless Meat without appreciating the fact that some of the suppliers of raw boneless meat under verification u/s 133(6) of the Act, have denied to have supplied any raw boneless meat to the assessee & payments made against purchase of raw boneless meat have been routed through M/s S.M Agri Exports Pvt. Ltd. and M/s. Maharashtra Food Processing and Cold Storage and the assessee company has been the ultimate beneficiary of the same. 2. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-IV, Kanpur has erred in deleting the addition, without appreciating the facts that the Assessing Officer has passed the assessment order after thoroughly examining and analysing the seized material and proper appreciation of facts of bogus purchase of Raw Boneless Meat.” 11. At the time of hearing, ld. DR of the Revenue submitted the similar submissions made in the case of HMA Agro Industries Ltd, since both the cases are heard together. Therefore, he relied on the findings in the assessment order. 12. On the other hand, ld. AR of the assessee submitted as under :- “(i) This is an appeal filed by the department and the only effective ground of appeal is with regard to alleged purchases of ‘Raw Boneless Meat’ from some suppliers. The Assessing Officer has discussed this issue from page 2, para 7.1 of his order at page 3 of his order. In which it is stated that during financial year 2019-20, the assessee had purchased ‘Raw Printed from counselvise.com 6 ITA Nos.296 to 298/Agr/2025 Boneless Meat’ from some of the parties totaling to Rs. 2,50,58,,565/-. (ii) While making the above addition, the AO has mentioned that verification was made u/s 133(6) from some of the suppliers of ‘Raw Boneless Meat’ and those parties have denied having supplied any ‘Raw Boneless Meat’ to the assessee. Further, after analyzing the various facts and circumstances of the case, the Assessing Officer issued show cause notice, dated 12.03. 2024 and, to which, assessee had replied to the AO,the same reply has been reproduced by him at pages 22 to 25 of the assessment order. (iii) We had outrightly submitted that the company had not purchased any ‘raw boneless meat’ and, in fact, this ‘raw boneless meat’ was purchased by ‘HMA Agro Industries Ltd.’ and we had already explained that the said plant of M/s Federal Agro Industries Pvt. Ltd. was being run by HMA Agro Industries Limited and rent was being charged by the assessee to HMA Agro Industries Ltd. and, thus, there was no basis of making the addition in the hands of assessee and that was explained in detail with the ledger account of the same suppliers, in the books of ‘HMA Agro Industries Ltd.’, which proved that purchases have been made by HMA Agro Industries Ltd. only However, the Assessing Officer without considering the above reply has made the addition, without assigning any reason. PROCEEDINGS BEFORE THE CIT(A) iv. Before the CIT(A), the same contentions were raised that ‘HMA Agro Industries Ltd.’ had taken the plant of Federal Agro Indus. Pvt. Ltd. on rent and were running that plant in Punjab and that rent has been disclosed by the ‘Federal Agro Industries Pvt. Ltd.’ in their books of accounts. The Ld. CIT(A) has given his finding in para 6.3 & para 6.4 of his order. He has deleted the addition on the basis of the fact that the AO has wrongly used the data belonging to ‘HMA Agro Industries Ltd.’ in making the addition in the hands of assessee concerned. This is a factual finding and, thus, it is prayed that the addition as deleted by the CIT(A) in his order and prayed that the Printed from counselvise.com 7 ITA Nos.296 to 298/Agr/2025 department appeal be dismissed.” 13. Considered the rival submissions and material placed on record. We observed that the assessee had given their factory on rent to the HMA Agro Industries Ltd and the assessee had brought on record the relevant payment of rent and relevant ledger to demonstrate that the factory was leased to the HMA Agro Industries and assessee had not carried any activities in that facility. The AO had wrongly initiated the proceedings with the wrong facts/understanding of the operation of the assessee. The factual matrix was properly appreciated by the Ld CIT(A) and deleted the addition. Therefore, we do not see any reason to disturb the same. In the result, appeal filed by the revenue is dismissed. 14. Since the facts in the appeals preferred by the revenue in AY 2022-23 and 2023-24 are exactly similar, our findings in AY 2020-21 are applicable mutatis mutandis to the facts in AYs 2022-23 and 2023-24, therefore, appeal preferred by the revenue are accordingly dismissed. 15. In the result, all the appeals preferred by the revenue are dismissed. Order pronounced in the open court on this 4th day of December, 2025 Sd/- sd/- (SUNIL KUMAR SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 04.12.2025 TS Printed from counselvise.com 8 ITA Nos.296 to 298/Agr/2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "