PALAK ALLOYS PVT. LTD.,RAJGANJ V. DCIT, CIRCLE 3(1), SILIGURI

ITA 2104/KOL/2025

AI Insights

Palak Alloys Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, which upheld the additions made by the AO under sections 69C and 68 of the Income Tax Act for the Assessment Year 2019-20. The AO had treated purchases from M/s Ultra Trade Mart as unexplained expenditure and added unsecured loans as unexplained cash credit. The Tribunal examined the evidence provided by the assessee, including purchase bills, e-way bills, and bank statements, and found them sufficient to substantiate the transactions. Consequently, the Tribunal set aside the CIT (A)'s order and directed the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792616 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2019-2020
• Appeal Filed On: 15-09-2025
• Other Referred Cases: PCIT vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-2022]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: SIDDHARTH AGRAWAL; SUBMITTING
• Keywords: Set aside; Unexplained cash credit; Unexplained expenditure; Accommodation entries; Bogus
• Section: 147; 148; 68; 131; 133(6); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No. 2104/KOL/2025 (Assessment Year: 2019-20) Palak Alloys Pvt. ltd. C/o Subash Agarwal & Associates, Advocates, Siddha Gibson,1, Gibson Lane, Suite 213, 2nd floor, Kolkata-700069, West Bengal Vs. DCIT, Circle 3(1) Aayakar Bhawan, Matigara, Paribahan Nagar, Siliguri-734101, West Bengal (Appellant) (Respondent) PAN No. AAECP8679B Assessee by : Shri Siddharth Agrawal, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 18.11.2025 Date of pronouncement: 03.12.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.07.2025 for the AY 2019-20. 2. The ground no.1 is not pressed at the time of hearing, hence need no adjudication. 3. The issue raised in ground no.2 is against the order of learned CIT (A) upholding the addition of ₹26,07,801/- as made by the learned AO u/s 69C of the Act by treating the purchases from M/s Ultra Trade Mart as unexplained expenditure. Printed from counselvise.com Page | 2 ITA No. 2104/KOL/2025 Palak Alloys Pvt. ltd; A.Y. 2019-20. 4. The facts in brief are that the learned AO noted that the as per the information flagged on insight portal, the assessee is a beneficiary of accommodation entries from M/s Ultra Trade Mart. Accordingly, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 29.03.2023, after passing the order u/s 148A(d) of the Act. Thereafter, statutory notices along with questionnaire were issued and served upon the assessee. The learned AO noted that as per the information, the assessee was engaged in providing bogus GST Invoices for passing irregular input tax credit to other business entities and for doing this they have also availed and utilized input tax credit (ITC) against fake invoices issued by others. The learned AO noted that the investigation wing issued summon u/s 131 of the Act to M/s Ultra Trade Mart but the same was not complied with. Thereafter, the AO issued show cause notice to the assessee which were replied by the assessee by submitting that the assessee company has procured raw material MS Scrap which is used in the production of iron ingots and also furnished the purchased bills, along with transportation evidence. However, the same were rejected by the ld. AO and the amount was added as unexplained expenditure u/s 69c of the Act of ₹26,07,801/- to the income of the assessee. The ld. CIT (A) affirmed the order of the ld. AO on this issue on the ground that M/s Ultra Trade Mart was reported by CGST, Kolkata, South by indulged in issuance of fake GST invoices for passing wrong input tax credit to other business entities and for doing this they have also availed and utilized Input Tax Credit (ITC) against fake invoices and thus, the purchases were treated as non-genuine which was also confirmed by the ld. CIT (A). 5. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has purchased MS Printed from counselvise.com Page | 3 ITA No. 2104/KOL/2025 Palak Alloys Pvt. ltd; A.Y. 2019-20. Scrap from M/s Ultra Trade Mart, which according to the ld. AO is engaged in providing bogus accommodation entries whereas as a matter of fact the assessee has furnished the copy of purchase bills, e-way bills, consignment notes, ledger copy of M/s Ultra Trade Mart along with relevant portion of bank statement evidencing the payment through banking channels, which are available at page no.31 to 50 of the Paper Book. We note that these evidences were also available before the authorities below. Considering these evidences on record we find that the purchases made by the assessee were used in the manufacturing process and the ld. AO has not brought on record any other evidences other than the report of the CGST qua the assessee that it is engaged in the bogus/ fake purchases invoices. Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. The ground no. 2 is allowed. 6. The issue raised by the assessee in ground no. 3 is against the confirmation of addition of ₹2,21,00,000/- by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of unsecured loans. 7. The ld. AO during the course of assessment proceedings observed that the assessee has raised unsecured loans from 15 parties aggregating to ₹6,70,00,000/- details whereof is given by theAO in para 2.4 of assessment order. Accordingly, assessee was called upon to prove the identity and creditworthiness of the lenders and genuineness of the transactions. According to the ld. AO , the lenders were not filed of return. Thereafter, the assessee was issued show cause notice which was replied by the assessee vide letters dated 05.03.2024 and 11.03.2024. The assessee filed before us the copies of confirmations of loans, ITRs and bank accounts of the parties. According to the ld. AO, the assessee has not furnished the details in Printed from counselvise.com Page | 4 ITA No. 2104/KOL/2025 Palak Alloys Pvt. ltd; A.Y. 2019-20. respect of Budapest Traders, Emperor Marketing, Essence Dealmarks Pvt. Ltd., Megha Associates and VKS Jaiswal and accordingly, disallowed the unsecured loans from the said parties and added to the income of the assessee as unexplained cash credit u/s 68 of the Act. 8. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO by upholding that the assessee has failed to discharge its ouns to prove the creditworthiness and genuineness of the loan creditors and thus, justified the addition. 9. After hearing the rival contentions and perusing the materials available on record, we find that the assessee inter alia has raised unsecured loans from five parties namely Budapest Traders, Emperor Marketing, Essence Dealmarks Pvt. Ltd., Megha Associates and VKS Jaiswal, aggregating to ₹2,21,00,000/-. The assessee filed before the ld. AO as well as before the ld. CIT (A) copies of ITRs, confirmation of accounts, bank statements etc. the copies of which are available from page no.52 to 76 of the Paper Book. The assessee also submitted that it had filed the written submissions before the ld. CIT (A), a copies of which are attached at page no.102 to 110. The written submissions are dated 16.06.2025 and 23.06.2026. We note that the assessee has furnished before the ld. CIT (A), the ITRs, confirmations and bank statements, etc.in respect of these parties. However, authorities below have not pointed out any defect or deficiency in the same. The ld. CIT (A) has not pointed any defect or deficiency in the same. Therefore, the order passed by the ld. CIT (A) cannot be sustained on this issue. The case of the assessee find support from the decision in case of PCIT vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14- 07-2022], wherein it has been held as under:- Printed from counselvise.com Page | 5 ITA No. 2104/KOL/2025 Palak Alloys Pvt. ltd; A.Y. 2019-20. “‘In the absence of any such finding, it is held that the order passed by the Assessing Officer was utterly perverse and rightly interfered by the Commissioner (Appeals). The Tribunal re-appreciated the factual position and agreed with the Commissioner (Appeals). The Tribunal apart from taking into consideration, the legal effect of the statement of AKA also took note of the fact that the notices which were issued by the Assessing Officer under section 133(6) to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the Assessing Officer and there is no discussion on this aspect. Thus, the tribunal rightly dismissed the appeal filed by the revenue. [Para 5]” 9.1. Considering the facts and circumstances of the case and by relying on the above decision, we are inclined to set aside the order of learned CIT (A) and direct the AO to delete the addition. The ground no. of the appeal of the assessee is allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 03.12.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 03.12.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "