RI-BHOI ISPAT & ROLLING MILLS,BYRNIHAT V. ITO, WARD- BYRNIHAT, BYRNIHAT

ITA 241/GTY/2024

AI Insights

The case involves RI-BHOI Ispat & Rolling Mills, which appealed against the order of the Commissioner of Income Tax (Appeals) that upheld the additions made by the Assessing Officer under section 69C of the Income Tax Act, 1961, for alleged bogus purchases. The Tribunal noted that the assessee is a manufacturing concern and had filed detailed production records showing varying yields and burning losses. The Tribunal found that the Assessing Officer and the Commissioner of Income Tax (Appeals) had not adequately considered these production records or the lack of adverse action from the GST Department against the suppliers. The Tribunal remitted the case for a fresh examination of these aspects.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717704 (ITAT-GUWAHATI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 20-11-2024
• Other Referred Cases: Commissioner of Income Tax Vs. Odeon Builders Pvt. Ltd., State of Karnataka Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Question of law; Corroborative evidences; Unexplained expenditure; Bogus purchase; Onus to prove; Principle of natural justice; Sham transactions; Accommodation entries; Bogus
• Section: 147; 148; 142(1); 131; 133(6); 69C; 139; 133A

Judgement Text

"आयकर अपीलीय अधिकरण गुवाहाटी पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH AT KOLKATA [वर्ुुअल कोटु] [Virtual Court] श्री मनमोहन दास, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI MANOMOHAN DAS, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills Vs. ACIT, Faceless Unit (Appellant) (Respondent) PAN: AALFR5078E Appearances: Assessee represented by : Devraj Sahu, Adv. Department represented by : Kausik Ray, JCIT Date of concluding the hearing : 14-May-2025 Date of pronouncing the order : 12-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 25.09.2024, Printed from counselvise.com Page | 2 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. which has been passed against the assessment order passed u/s 147 r.w.s 144B of the Act, dated 21.03.2023. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “(a) For that the Ld. CIT(A) has committed an error in interpreting the provisions of Sec.69C of the IT Act, 1961, holding the third-party statement collected by the investigating wing of the department as concrete evidence to treat the purchase as bogus and unexplainable. Referred Sec.69C-Unexplained Expenditure etc.\"-Wherein any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the assessing officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding contained in any other provision of this act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income.\" It is pertinent to mention here that the assessee has provided sufficient explanation along with documentary evidences before the AO as well as CIT(A) substantiating the genuineness of purchases made by them. Under the circumstances, the Ld. CIT(A) is not justified upholding the contentions of the AO as unexplained expenditure. The contentions of the Ld. CIT(A) are perverse and is liable to be set aside in the ends of justice. (b) For that the Ld. CIT(A) failed to appreciate the contentions of the assessee that inputs have been delivered at the factory premises of the appellant and transporters documents were submitted for verification and payment details were provided before the AO which mentioned in the face of the Assessment Order. Further, the assessee has shown the mode of payment made to the supplier of goods which are through banking channel. Under the circumstances, the assessee has proved the genuineness of the purchase and the Ld. CIT(A) has not considered the facts and documents available on records and simply uphold the observation and finding of the AO. The impugned Order-in-Appeal is perverse, not sustainable in law and is liable to be set aside in the ends of justice. (c) For that the department has not verified and confirmed the supply of goods directly from the concerned person rather, received incomplete Printed from counselvise.com Page | 3 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. information from third party which is not tenable in law. It is settled by the Hon'ble Apex Court, wherein it has been held in the case of Commissioner of Income Tax Vs. Odeon Builders Pvt. Ltd., reported in (2019) 418 ITR 315 (SC), which is squarely applicable in this present case in hand, wherein the Hon'ble Apex Court has held - Para-4 \"the case of the revenue was that during the course of the assessment proceedings, the Assessing officer observed that the assessee had entered into purchase transactions with PRPL. The assessing officer required the assessee to furnish the address of the said company. On the addresses furnished by the assessee-company, a survey was conducted u/s 133A of the Act. It is stated that on the given addresses, the said entity was found to be non-existent. Accordingly, the assessing officer concluded that the PRPL was only used as a conduit to inflate the expenditure of the assessee. On account of the bogus purchase, the aforementioned addition was made by the assessing officer. Para- 5. Aggrieved by the above order, the assessee went in appeal before the commissioner of income tax (Appeals). The above addition was deleted by the Commissioner of Income Tax (Appeals) by the order dated March, 29, 2012. After concluding that the entire disallowance is based on third party information gathered by the investigation wing of the department, which have not been independently subjected to further verification by the assessing officer.\" Para-7. Having perused the impugned orders of the commissioner of Income Tx (Appeals) and the Income tax appellate Tribunal, and having heard Id. counsel for the parties, the court is satisfied that an exhaustive and detailed factual enquiry has been undertaken, both, by the commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal to arrive at concurrent factual findings which have not been shown to be perverse. Para-8. No substantial question of law arises from the impugned order of the ITAT. The appeal is, accordingly, dismissed.\" From the above interpretation of law by the Hon'ble Apex Court the impugned Order-in-Appeal dated 25.09.2024 is perverse, and is liable to be set aside in the ends of justice. (d) For that the Ld. CIT(A) rejected the appeal on the grounds referring the Apex Court decision, in para 6.3 of the Order-in-Appeal, in the case of State of Karnataka Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd., vide civil Appeal No. 230 of 2023 decided on 13.03.2023, wherein the main issue before the Hon'ble Apex Court was -\"whether, in the facts and circumstances of the case, the second Appellate Authority as well as the High Court were justified in allowing the Input Tax Credit?\" [Ref. para-8.1] Printed from counselvise.com Page | 4 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. The Hon'ble Apex Court observed that for claiming for claiming ITC, genuineness of the transaction and actual physical movement of the 14 goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The purchasing dealers have to prove the actual physical movement of the goods, alleged to have been purchased from physical movement of the goods, alleged to have been purchased from the respective dealers. If the purchasing dealer/s fails/fail to establish and prove the said important aspect of physical movement of the goods alleged to have been purchased by it/them from the concerned dealers and on which the ITC have been claimed, the Assessing Officer is absolutely justified in rejecting such ITC claim. [Ref. para10] From the above reference of the Apex Court decision as decided in Civil Appeal No. 230/2023, in the case of State of Karnataka Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd., vide Civil Appeal No. 230 of 2023 decided on 13.03.2023, it is seen that the matter relates to availment of ITC under CGST Act, 2017 and not relating to unexplained expenditure under Sec.69C of the IT Act, 1961. Hence, this case has been misplaced by the Ld. CIT(A) and this citation of the Apex court is distinguishable in the preset case in hand. The Ld. CIT(A) has not gone through the facts of the case thoroughly and uphold the decision of the Ld. AO is not sustainable in law and the impugned Order- in-Appeal may be set aside in the ends of justice. (e) For that the Ld. CIT(A) has committed an error in interpreting the provisions of law discussing at para 6.5 of the impugned Order-in-Appeal and disallowed the purchase made by the appellant holding simply relying on bank payment and showing monthly stock statement and claiming purchase is genuine has not been proved. It is submitted that making payment through banking channel to the supplier of goods or services is concrete evidence as per the provisions of Sec. 4 of the Bankers' Book Evidence Act, 1891. Ref. Sec. 4-Mode of proof of entries in Bankers' Books - Subject to the provisions of this Act, a certified copy of any entry in a Bankers' Books shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts there recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise.\" Printed from counselvise.com Page | 5 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. From the above interpretation of Sec. 4 of the Bankers' Book Evidence Act, 1891, the interpretation of law by the CIT(A) is misconceived, not sustainable in law and the Order-in-Appeal is liable to be set aside in the ends of justice.” 3. Brief facts of the case are that the assessee had filed the return of income showing total income of ₹ ‘NIL’ after claiming deduction of ₹30,39,210/- u/s 80-IC and 80-IE under Chapter VIA of the Act. On the basis of information received from the Investigation Wing, Kolkata that the assessee had made fictious purchases from M/s. Aerocom Trade Exim, Proprietor, Haradhan Debnath amounting to ₹80,46,150/- and had also made fictious purchases from M/s. Eastern Sales India, Proprietor, Nagendra Jagrup of ₹85,15,289/-, the assessment was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act. The assessee filed the return of income in response to the notice showing total income of ₹ ‘NIL’ after claiming deduction of ₹30,39,210/- under Chapter VIA u/s 80-IC and 80-IE of the Act. The information received from the Investigation Wing related to accommodation entries of purchases of ₹1,65,61,439/- from the two parties who provided the sale bills to the assessee without actual supply of the goods. The assessee was required to furnish details including details of bank accounts, total purchases along with name, address, PAN, e-mail ID of the parties, complete stock records in respect of purchases and sales and in respect of purchases made from M/s. Aerocom Trade Exim and M/s. Eastern Sales India it was required to file copy of GST certificate, month-wise GSTR 2A, month-wise GSTR 2, month-wise GSTR 3B which reflected inward and outward supply (purchases and sales), ledger accounts of the two parties as appearing in its books of accounts, copy of contra account and confirmation from the above parties along with PAN, address and E-mail ID, copies of all the invoices (purchase bills) for Printed from counselvise.com Page | 6 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. purchases made from the two parties, bank statements highlighting transactions of payment made for purchases made during FY 2017-18, copies of all the Lorry Receipts with respect to transportation of goods purchased from these parties and other details. The allowability of the deduction claimed u/s 80-IC of the Act was also required to be justified. The assessee furnished the reply and relied upon several judicial pronouncements in support of the claim that the purchases made by the assessee cannot be stated as bogus. The assessee furnished details of several parties along with their PANs from whom purchases were made. The details furnished are mentioned in the assessment order from page 4 to 9. The Assessing Officer (hereinafter referred to as the Ld. 'AO') also issued notice u/s 133(6) of the Act to the proprietor of M/s. Eastern Sales India but no reply was received and the notice in the case of M/s. Aerocom Trade Exim could not be issued due to no digital footprint of the party. The reply of the assessee was examined and the enquiry conducted by the Investigation Wing was also examined. The Investigation Wing had reported that M/s. Aerocom Trade Exim was a non-filer of return of income and therefore, it could be construed that M/s. Aerocom Trade Exim was a paper entity with no financial worth and was used for providing accommodation entries in the guise of invoice issuance. The proprietor Shri Haradhan Debnath had accepted that he had no idea about the proprietorship firm M/s. Aerocom Trade Exim running in his name. He had further stated that one Nipu Roy had contacted him and had taken his signature on various papers. The investigation details are mentioned at page 10 of the assessment order and are as under: “M/s Aero Trade Exim Prop: Haradhan Debnath is a non filer of Income Tax Return, therefore it can be construed that M/s Aero Trade Exim Prop: Printed from counselvise.com Page | 7 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Haradhan Debnath is a paper entity with no financial worth, and is used for providing accommodation entries in the guise of invoice issuance. A summon was issued to Shri Haradhan Debnath and statement on oath has been recorded. In his statement Shri Haradhan Debnath has accepted that he has not any idea about the proprietorship firm namely M/s Aero Trade Exim running in his name. He further stated that one Nipu Roy had contacted him and taken signature on various papers for which he would pay Rs.3000/- to Shri Haradhan Debnath. He further stated that as he belongs to a poor family he signed the documents as asked by Shri Nipu Roy. He further stated that he has suspicion that Shri Nipu Roy has operated M/s Aerocom Trade Exim in his name and provided various bogus bills to the beneficiaries. In view of the above facts, it is established that transactions made by the entity were sham transactions and all the sales made by the entity are bogus sales and all the sales proceeds in the hand of the recipients are actually bogus purchases, by which profit of the recipients have been suppressed. Therefore, all the expenses. incurred by the recipients in the guise of purchases from M/s Aerocom Trade Exim may be disallowed while computing the total income of the respective recipients.” 4. The Ld. AO also examined the list of entities to whom the sales were made by M/s. Aerocom Trade Exim during the FYs 2017-18 and 2018-19 and the list of entities to whom sales were made was also sorted out from Insight portal. The purchases during the F.Y. 2017-18 were made from 3 individuals only. About 40 beneficiary entities including the assessee were identified and alert circular was also received from the office of the Commissioner, Kolkata South, CGST & CX Commissionerate dated 07.04.2019 and the statement of Haradhan Debnath, proprietor of M/s. Aerocom Trade Exim recorded by the DDIT(Inv.) U-2, Kolkata dated 22.07.2019 and received from the Investigation Wing was examined. In response to question no. 8, he had answered as under: “Sir, I am not aware of this fact that I am the proprietor of this Firm. The only explanation of this fact is that in the year 2017, my relative namely Nipu Roy, residing at Taldi south, Canning-1, South 24 Parganas WB-743376 Printed from counselvise.com Page | 8 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. (His mobile no is 9830707312) contacted with me and said that if I will submit our documents like PAN, Address proof and other documents then he will be provided me some money around 3,000/- on monthly basis. As my family's financial condition was very bad, I agreed to their offer and signed on certain papers given by them without knowing anything about those papers. I suspect that they took my signatures on certain papers in relation to M/s Aerocom Trade Exim. Neither do I know about this Firm nor am I involved in any day to day activities of this Firm.” 5. The results of the enquiry conducted in the case of M/s. Eastern Sales India as well as M/s. Aerocom Trade Exim are also mentioned in the assessment order. M/s. Eastern Sales India was a non-filer of income tax return although it had made business transactions. The entities to whom the sales were made were also noted and the modus operandi and other details are mentioned from page 23 to 28 of the assessment order. A show cause notice was issued to the assessee and the reply filed was considered but not found acceptable. The reasons for not accepting the reply are mentioned in the assessment order, which is extracted as under: “vi) Delivery of goods not proved -The assessee was asked to furnish complete stock records in respect of purchases and sales made by the assessee vide notice u/s 142(1) dated 21.10.2022 at Point No.5 but assessee furnished only monthly stock summary for the month of August 2017, January 2018 to March 2018 in reply dated 15.02.2023. Day to day stock register showing receipt of goods from these parties was not furnished. Further, the stock register for the whole year is not furnished. The assessee has not furnished supporting documentary evidences in respect of delivery of goods such as delivery challan showing receipts of goods in factory/godown, octroi/toll tax receipts, weighing slips, daily stock inward register to prove that goods mentioned in purchase bills was actually delivered to the assessee. Thus the assessee has failed to prove actual delivery of goods. (vii) Non-genuine suppliers M/s Aerocom Trade Exim Prop. Haradhan Devnath was found indulging in issuance of fraudulent/fake invoices of huge amounts to other entities without actual supply of goods. CGST department found that this entity has taken registration under GST regime Printed from counselvise.com Page | 9 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. is non-existent and fictitious. Physical verification was done by the CGST department and it was found that no such entity exist on the declared address. On receipt of information from CGST department inquiry was conducted by the Investigation Wing, Kolkatta. It was noticed that this entity is a non-filer of Income tax return and is a paper entity having no financial worth and is used for providing accommodation entries. Summons u/s 131 of the Act were issued by the Investigation Wing, Kolkata to Sh. Haradhan Devnath Prop. of this entity and he was asked to produce books of accounts along-with list of entities to whom goods were sold. This entity was asked to produce documentary evidence in support of genuineness and rationality of the transactions made with other entities. He appeared and his statement was recorded on oath. In his statement, he accepted that he has not any idea about the proprietorship concern namely M/s Aerocom Trade Exim running his name. He further stated that one Nipu Roy had contacted him and taken signature on various papers for which he paid a monthly amount to him. He further stated that he belongs to a poor family so he signed the documents as asked by Sh. Nipu Roy and he has suspicion that Sh. Nipu Roy has operated M/s Aerocom Trade Exim in his name and provided bogus bills to beneficiaries. Thus, it is established that the transaction made by this entity wore sham transactions and all the sales made by this entity are bogus sales. The assessee obtained bogus purchase bills from this party of Rs. 80,46,150/-. Similarly, the other party M/s Eastern Sales India Prop. Nagendra Jagrup Singh was found indulging in issuance of fraudulent/fake invoices of huge amounts to other entities without actual supply of goods. Inquiry was conducted by the Investigation Wing, Kolkata. It was noticed that this entity is a non-filer of Income tax return for A.Ys. 2017-18, 2018-19 and 2019-20 despite having made huge transactions during F.Y. 2017-18 as reflected in GST return, Thus, it is clear that it is a paper entity having no financial worth and is used for providing accommodation entries. Summons u/s 131 of the Act were issued on 30.08.2019 by the Investigation Wing, Kolkata to Sh. Nagendra Jagrup Singh Prop. of this entity and he was asked to produce books of accounts along-with list of entities to whom goods were sold. This entity was asked to produce documentary evidence in support of genuineness and rationality of the transactions made with other entities. No response was received. Fresh summon was issued on 25.08.2021 but no response was given. Thus, it is established that the transaction made by this entity were sham transactions and all the sales made by this entity are bogus sales. The assessee obtained bogus purchase bills from this party of Rs. 85,15,288/-, Printed from counselvise.com Page | 10 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. (viii) Issue of notice u/s 133(6) and physical verification done by Designated Verification Unit of the department Notice u/s 133(6) of the Act was issued to Sh. Nagendra Jagrup Singh Prop. M/s Eastern Sales India on 21.10.2022. No reply was received with in the time given in the notices. Therefore, reminder was issued on 05.01.2023 but no reply has been received till date. In the case of Aerocom Trade Exim, notice u/s 133(6) could not be issued due to no digital footprint of this party. Physical verification reference was made to Designated Verification Unit of the department in case of Sh. Nagendra Jagrup Singh Prop. M/s Eastern Sales India for verification of address of the party and genuineness of sale bills issued by it. Report was received from address D-36, Flat No. 205, Askhar Township, Near Intercity, Poona Kumbharia Road, Surat (Guj.) 395002 stating that \"address was found but details of the specified persons could not be ascertained\". On the address some other person Smt. Mamtaben Ashokbhai Talesara was living since 7 years and she told that she did not know any such person namely Sh. Nagendra Jagrup Singh. Report was received from other address 3 Kali Pada, Mukherji Road, Kolkatta (W.B.) 700008 station that \"The Inspector was not able to locate the office of the party at the address mentioned. The caretaker of the building, shopkeepers and the other people of the area including other office staff of the building could not recognize the said party. Even the Postman of the post office of the area was not able to recognize the said party. Hence, notice could not be served.\" Physical verification reference was made to Designated Verification Unit of the department in case of Sh. Haradhan Debnath Prop. M/s Aerocom Trade Exim for verification of address of the party and genuineness of sale bills issued by it. Report was received from address - 10/10, Banerjee Para Bye Lane, Kolkatta, West Bengal - 700061 stating that \"Inspector was deputed to conduct physically verification on the above issue and Inspector has submitted his report mentioning that this person could not be found at the address and despite local inquiry, his whereabouts could not be ascertained. \"Report was received from other address - Taldi South, Post- Taldi Canning, South 24 Paragnas, West Bengal - 743376 stating that \"on this address, mother of person was found who told that person was never engaged any kind of business activity and in that house never any kind of business was carried out.\" Summon was issued to the party by the VU and his statement was recorded on oath on 16.03.2023, which is reproduced as under:- (the statement has been reproduced in the assessment order) …. Printed from counselvise.com Page | 11 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. In then above statement, the above party admitted that he was never engaged in any kind of business activity and he did not know M/s RI-Bhoi Ispat and Rolling Mills. He further stated that around 7-8 years ago, some person namely Mr. Surendra Sharma took copy of his personal documents such as Aadhar Card, PAN Card etc. and also made him sign in bank account opening form. Thus, it is proved from the statement of this entity that this entity never supplied any goods to the assessee. Above discussion proves that one party M/s Aerocom Trade Exim is not a real concern and its owner has denied to have entered any transactions through this concern in his name. The other party M/s Eastern Sales India did not appear before Investigation Wing, not replied to notice u/s 133(6) and was not found during physical verification. So, it is clear that both the parties are mere paper entity and has not done any real business. These entities have been used to provide accommodation entries. (ix) Recent Decision of Hon'ble Supreme Court In this connection, reliance is placed on the decision of Hon'ble Supreme Court given on 13.03.2023 in Civil Appeal No. 230 of 2023 in the case of State of Karnataka vs. M/s Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Though the case is related to allowability of Input Tax Credit (ITC) in VAT law but the ratio given by Hon'ble Court is squarely applicable to the facts and circumstances of the present case. In this case, Hon'ble Supreme Court allowed Revenue's appeal, set-aside Hon'ble Karnataka HC judgment allowing purchasing dealers to claim ITC while elucidating that \"The dealer claiming ITC has to prove beyond doubt the actual transaction\" and the \"actual physical movement of the goods\" which cannot be proved by producing tax invoices and payment by cheque; Pronouncing the orders of lower authority as well as Hon'ble HC as \"erroneous\", Hon'ble Supreme Court elaborates that, \"for claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc.\" Hon'ble Supreme Court clarifies that \"mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden as per section 70.\" Since tax invoice as per Rule 27 and Rule 29 \"cannot be said to be proving the actual physical movement of the good\"; However, Hon'ble Supreme Court adds that while the tax invoice and cheque can be said to be proving one of Printed from counselvise.com Page | 12 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. the documents, it is not sufficient to prove the genuineness of transaction and on this lines, Hon'ble Supreme Court categorically mentions that aforesaid information regarding actual physical movement of the goods would be in addition to tax invoices, particulars of payment etc. Thus, Hon'ble Apex Court has laid down the law that mere productions of bills for purchases and payment by bank is not sufficient and the assessee is required to prove genuineness of the transactions by proving actual physical movements/goods and other supporting evidences. In this case, the assessee has failed to prove genuineness of the purchases claimed from these parties and actual delivery of goods.” 6. Thus, an addition of ₹ 1,65,61,439/- on account of bogus purchases was made and another sum of ₹ 3,31,229/- on account of commission paid for the bogus purchases was added and the income was accordingly assessed at ₹1,68,92,668/-. 7. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who has given his findings as under after examining the assessment order and other details filed: “6.3 In view of the above detailed reasons AO rejected the appellant's claim and concluded the assessment after making the addition u/s.69C in the assessment order u/s. 147 r.w.s. 144B dated 21.03.2023. Thus, it is evident that not merely based on the investigation report alone rather Assessing Officer has carefully took into consideration the Investigation Report and has gone into the submissions of the appellant and has explicitly stated that appellant did not submit any details w.r.t. actual delivery of goods and therefore made the addition u/s 69C. Further Assessing Officer has also mentioned that the appellant, due to the special nature of the case, appellant ought to have produced the parties from whom it claims to have purchased the goods. In this connection Assessing Officer relied on the Apex Court judgement in the case of State of Karnataka Vs M/s. Ecom Gill Coffee Trading Pvt Ltd wherein it is held as follows: (the relevant para has been reproduced by the Ld. CIT(A)) 6.4 In fact during appellate proceedings also appellant made the same submission which is submitted during the assessment proceedings. The AO has thoroughly examined those submissions and has passed a very Printed from counselvise.com Page | 13 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. detailed reasoned order while placing reliance on Apex Court judgement in the case of State of Karnataka Vs M/s. Ecom Gill Coffee Trading Pvt Ltd. 6.5 Considering the fact, no material evidence has been submitted by the appellant for having received the supply of the material, simply relying on the bank payment and the copy of the monthly stock register and claiming that the purchases are genuine is not proved. Therefore, relying on the Hon'ble Supreme Court judgement in the case of State of Karnataka Vs Ecom Gill Coffee Trading Co Ltd, the assessment order is upheld, thereby confirming the addition made u/s.69C of the IT Act for purchases made Rs. 1,65,61,439 and for commission Rs.3,31,229/-. Thus, the ground 2 and 3 are dismissed. Further in view of the fact that the AO has strictly adhered to the provisions of the Act and followed the due procedure in the entire reassessment proceedings, the ground 1 of the appellant that the order passed u/s 147 is bad in law is duly dismissed. Accordingly, the ground 1 to 3 are dismissed. Ground 4: Claim of deduction u/s 80IE 6.5 The appellant has claimed the deduction u/s 80IE in the ROI. However AO has not discussed anything in this regard in the assessment order passed u/s 147 rws 144B which is in appeal now, but in the computation, the deduction u/s 80IE is not allowed. Further on perusal of the assessment order of AY 2016-17 in ITBA portal, it is noticed that the AO has allowed the deduction claimed U/S 80IE in the assessment order passed u/s 143(3). Considering the above facts, AO is directed to verify the details as per sec 80(IE) and if eligible to allow the deduction as per provisions of sec 80(IE), the same may be allowed. Thus, this ground is partly allowed. Ground 5: Being general in nature does not require any adjudication. 7. Accordingly the appeal stands partly allowed.” 8. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. Rival contentions were heard and the submissions made and the paper book filed have been examined. During the course of appeal before us, the Ld. AR submitted a paper book giving details of tax invoices for both the concerns, copy of GSTR, audit report in Form No. 3CD etc. and stated that on account of non- filing of the return by the supplier, the assessee should not be penalized. Printed from counselvise.com Page | 14 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. 9. The Ld. DR submitted on the other hand that the assessee had brought the books in the premises and the cases relied upon are not applicable. The Ld. AR stated that without the material received, no production can be carried out. It was stated that there was no evidence corroborating that the material was not received and the entire addition was made on the basis of presumptions and assumptions. The purchase details were submitted during the FY 2017-18 and the finished goods were sold in the market and no adverse action has been taken by the GST Department against the assessee. The assessee relied upon the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax-7, New Delhi vs. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64 (SC)/[2019] 266 Taxman 461 (SC)/[2019] 418 ITR 315 (SC)[21-08-2019] that solely on the third-party information not subjected to verification, the addition cannot be made. It was stated that the assessee had sold finished goods which are shown in the income tax return and there was no concrete evidence to disallow the same. 10. The Ld. DR submitted that the Investigation Wing is an integral part of the Department and the report was binding upon the Ld. AO as the investigation was carried out by a Unit of the Department. The Ld. AO has discussed elaborately the investigation report from page 9 in the assessment order and the Ld. AO had also made enquiries. On page 9 para 10 of the assessment order, the notices dated 21.02.2022 and 05.01.2023 issued to the assessee are mentioned and in para 17, the assessee’s reply has been considered. The Ld. AR countered by saying that under what circumstances the statement was given is not mentioned nor the parties were cross-examined. Printed from counselvise.com Page | 15 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. 11. The Ld. DR drew our attention from page 15 to 17 and stated that the proprietorship concern was fictious. In response to question no. 6, it was stated that the supplier was merely a hawker of fruits. When the query by the Bench whether the lorry receipts could be submitted by the assessee it was stated that the same are misplaced. Subsequently, the Ld. DR also submitted written synopsis of the arguments as under: “[i] Brief facts of the case is - On the basis of credible information in the form of elaborated investigation report from the Investigation Wing [ which is an integral & elite wing of the Income Tax Department] w.r.t. bogus purchases from M/s. Aerocom Trade Exim amounting to Rs.80,46,150/- and from M/s. Eastern Sales India of Rs.85,15,289/- totalling of Rs. 1,65,61,439/- obtained from the departmental \"Insight Portal\", after being satisfied and on prior approval of the appropriate authority, the case was re-opened u/s.147 of the I.T. Act,1961 by issuing notice u/s.148 of the I.T. Act, 1961 on 31.03.2022. In response, ITR for A.Y.2018-19 filed on 26.04.2022 declaring total income of Rs. NIL after claiming deduction u/s.80IE of the I.T. Act,1961 amounting to Rs.30,39,210/-. Accordingly, the case was selected for scrutiny and notice(s) u/s.143(2) and 142(1) of the I.T. Act,1961 were issued. During assessment proceedings, the AO after due examining all the details/ documents/ explanation filed by the assessee & records, being not satisfactory, has opined that documents produced were not sufficient to prove the genuineness of the purchases and as well as actual delivery of goods. Further, the AO in his order, vide page no.-9 onwards elaborately discussed about the Investigation report and vide page no.- 44 onwards also cited various judgements in favour of his opinion as drawn, supra. The AO also placed his reliance upon Hon'ble Apex Court's recent decision dated 13.03.2023 in Civil Appeal No. 230 of 2023 in the case of State of Karnataka vs M/s. Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Vide page no.-44 of AO's order, after due examination of information gathered/ details/ documents/ explanations available on record, the AO opined & stated that \"…….. In then above statement, the above party admitted that he was never engaged in any kind of business activity and he did not know M/s Ri-Bhoi Ispat and Rolling Mills. He further stated that around 7-8 years ago, some person namely Mr. Surendra Sharma took copy of his personal documents such as Aadhar Card, PAN Printed from counselvise.com Page | 16 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Card etc. and also made him sign in bank account opening form. Thus, it is proved from the statement of this entity that this entity never supplied any goods to the assessee. Above discussion proves that one party M/s Aerocom Trade Exim is not a real concern and its owner has denied to have entered any transactions through this concern in his name. The other party M/s Eastern Sales India did not appear before Investigation Wing, not replied to notice u/s. 133(6) and was not found during physical verification. So, it is dear that both the parties are mere paper entity and has not done any real business. These entities have been used to provide accommodation entries. (ix) Recent Decision of Hon'ble Supreme Court - In this connection, reliance is placed on the decision of Hon'ble Supreme Court given on 13.03.2023 in Civil Appeal No. 230 of2023 in the case of State of Karnataka vs. M/s Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Though the case is related to allowability of Input Tax Credit (ITC) in 144 T law but the ratio given by Hon'ble Court is squarely applicable to the facts and circumstances of the present case. In this case, Hon'ble Supreme Court allowed Revenue's appeal, set-aside Hon'ble Karnataka HC judgment allowing purchasing dealers to claim ITC while elucidating that \"The dealer claiming ITC has to prove beyond doubt the actual transaction \" and the \"actual physical movement of the goods\" which cannot be proved by producing tax invoices and payment by cheque; Pronouncing the orders of lower authority as well as Hon'ble HC as \"erroneous\", Hon'ble Supreme Court elaborates that, \"for claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc.\" Hon'ble Supreme Court clarifies that \"mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden as per section 70.\" Since tax invoice as per Rule 27 and Rule 29 \"cannot be said to be proving the actual physical movement of the good\"; However, Hon'ble Supreme Court adds that while the tax invoice and cheque can be said to be proving one of the documents, it is not sufficient to prove the genuineness of transaction and on this lines, Hon'ble Supreme Court categorically mentions that aforesaid information regarding actual physical movement of the goods would be in addition to tax invoices, particulars of payment etc. Printed from counselvise.com Page | 17 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Thus, Hon'ble Apex Court has laid down the law that mere productions of bills for purchases and payment by bank is not sufficient and the assessee is required to prove genuineness of the transactions by proving actual physical movements/goods and other supporting evidences. In this case, the assessee has failed to prove genuineness of the purchases claimed from these parties and actual delivery of goods……..\" After elaborated discussion, the AO opined that the claim of purchase by the assessee of Rs.1,65,61,439/- from above two parties has to be treated as bogus purchase since, the assessee has failed to substantiate the same as genuine and actual purchase with proper documentary evidence. By appreciating the facts & merit of the case, the AO added Rs. 1,65,61,439/- being bogus purchase and Rs.3,31,229/- being unexplained expenditure, which was actually in the shape of commission paid for obtaining bogus bill u/s.69C of the I.T. Act,1961 respectively. [ii] Gist of the Ld. CIT(A)'s order - Ld. CIT(A) upheld the addition(s) made by the AO by observing that no material evidence has been submitted by the appellant for having received the supply of the material. He opined that simply relying on the bank payment and the copy of the monthly stock register and claiming that the purchases are genuine is not proved. He also relying on the Hon'ble Apex Court's recent decision dated 13.03.2023 in Civil Appeal No. 230 of 2023 in the case of State of Karnataka vs M/s. Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Further, w.r.t. the issue of deduction claimed u/s.80IE, he stated that the AO has not discussed anything in regard to disallowance in computation of deduction u/s.80IE. He directed the AO to verify the details and if eligible, allow the deduction as allowable u/s.80IE of the I.T. Act, 1961. [iii] Grounds taken as per the 'Grounds of Appeal' filed by the appellant and departmental submission thereof - [a] Ld. CIT(A) has committed an error in interpreting the provisions of Sec.69C, holding the third-party statement collected by the investigating wing of the department as concrete evidence to treat the purchase as bogus and unexplainable. Referred Sec.69C-Unexplained Expenditure etc. - Wherein any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the assessing officer, satisfactory, the amount covered by such expenditure or part thereof, Printed from counselvise.com Page | 18 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding contained in any other provision of this act, such unexplained expenditure which is deemed to be income of the assessee shall not be allowed as a deduction under any head of income.\" It is pertinent to mention here that the assessee has provided sufficient explanation along with documentary evidences before the AO as well as CIT(A) substantiating the genuineness of purchases made by them. Under the circumstances, the Ld. CIT(A) is not justified upholding the contentions of the AO as unexplained expenditure. The contentions of the Ld. CIT(A) are perverse and is liable to be set aside in the ends of justice. Departmental Submission - After due discussion and consideration of all the explanation and documentary evidences, in its order, Ld. CIT(A) upheld the addition(s) made by the AO by observing that no material evidence has been submitted by the appellant for having received the supply of the material. He opined that simply relying on the bank payment and the copy of the monthly stock register and claiming that the purchases are genuine is not proved. He also relying on the Hon'ble Apex Court's recent decision dated 13.03.2023 in Civil Appeal No. 230 of 2023 in the case of State of Karnataka vs M/s. Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. [b] Ld. CIT(A) failed to appreciate the contentions of the assessee that inputs have been delivered at the factory premises of the appellant and transporters documents were submitted for verification and payment details were provided before the AO which mentioned in the face of the Assessment Order. Further, the assessee has shown the mode of payment made to the supplier of goods which are through banking channel. Under the circumstances, the assessee has proved the genuineness of the purchase and the Ld. CIT(A) has not considered the facts and documents available on records and simply uphold the observation and finding of the AO. The impugned Order-in-Appeal is perverse, not sustainable in law and is liable to be set aside in the ends of justice. Departmental Submission - Vide page no. 14 of the AO's order, it has been observed from the ALERT CIRCULAR issued by the Commissioner, Kolkata South, CGST & CX Commissionerate that \"…….. The company passed on huge amount of ITC of Rs.34,14,06,674/- to various recipients throughout India without physical supply of goods……” Further, it is evident that during Investigation by the Investigation Wing of Income Tax Department, statement of Shri Haradhan Printed from counselvise.com Page | 19 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Debnath, proprietor of M/s. Aerocom Trade Exim was recorded, vide page no. 16, from Q.4 onwards of the AO's order, in which he accepted that he is 8th pass, hawker of fruits, he was not aware of the fact that he is the proprietor of M/s. Aerocom Trade Exim, lastly he stated that he was not involved in any day to day activities of this firm. Hence, it is clear that the identity of M/s. Aerocom Trade Exim is not proved as genuine. Vide page-20 onwards of the AO's order, the findings of the Investigation Wing of Income Tax Department is very clear that there was no financial creditworthiness of M/s. Aerocom Trade Exim and it has made bogus purchase from several entities, which were well analyzed and described. Hence, all the sales shown by M/s. Aerocom Trade Exim were also bogus. Hence, the appellant have taken accommodation entries in the form of bogus billing in the form of bogus purchase from M/s. Aerocom Trade Exim. The onus to prove the identity, creditworthiness and genuineness of the so called purchase made is entirely lies with the appellant, which it failed before the AO as well as the Ld. CIT(A). [c] The department has not verified and confirmed the supply of goods directly from the concerned person rather, received incomplete information from third party which is not tenable in law. It is settled by the Hon'ble Apex Court, wherein it has been held in the case of Commissioner of Income Tax Vs. Odeon Builders Pvt. Ltd., reported in (2019) 418 ITR 315 (SC), which is squarely applicable in this present case in hand, wherein the Hon'ble Apex Court has held - Para-4 \"the case of the revenue was that during the course of the assessment proceedings, the Assessing officer observed that the assessee had entered into purchase transactions with PRPL The assessing officer required the assessee to furnish the address of the said company. On the addresses furnished by the assessee-company, a survey was conducted u/s.133A. It is stated that on the given addresses, the said entity was found to be non-existent. Accordingly, the assessing officer concluded that the PRPL was only used as a conduit to inflate the expenditure of the assessee. On account of the bogus purchase, the aforementioned addition was made by the AO. Para- 5. Aggrieved by the above order, the assessee went in appeal before the Ld. CIT(A). The above addition was deleted by Ld. CIT(A) by the order dated 29.03.2012. After concluding that the entire disallowance is base on third party information gathered by the investigation wing of the department, which have not been independently subjected to further verification by the assessing officer.\" Printed from counselvise.com Page | 20 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Para- 7. Having perused the impugned orders of the Ld. CIT(A) and the ITAT, and having heard Ld. counsel for the parties, the court is satisfied that an exhaustive and detailed factual enquiry has been undertaken, both, by the Ld. CIT(A) and the ITAT to arrive at concurrent factual findings which have not been shown to be perverse. Para 8. No substantial question of law arises from the impugned order of the ITAT. The appeal is, accordingly, dismissed.\" From the above interpretation of law by the Hon'ble Apex Court the impugned Order-in-Appeal dated 25.09.2024 is perverse, and is liable to be set aside in the ends of justice. Departmental Submission - First of all, it my humble submission that all information gathered from the investigation report by the AO are credible. The detailed/ exhaustive investigation report prepared on factual enquiry done by the Investigation Wing of Income Tax Department, which is an integral & elite wing of the Income Tax Department. On the basis of such detailed/ exhaustive investigation, Assessment wing of the Income Tax Department made assessment after providing due opportunities towards natural justice. Hence, there is no arises about \"…… The department has not verified and confirmed the supply of goods directly from the concerned person rather, received incomplete information from third party which is not tenable in law ……..” The findings of the Investigation Wing of Income Tax Department is very clear that there was no financial creditworthiness of M/s. Aerocom Trade Exim and it has made bogus purchase from several entities, which were well analyzed and described. In the assessment order made by the AO as well as the order passed by the Ld. CIT(A) has righty opined that since all the sales shown by M/s. Aerocom Trade Exim were bogus, hence, the appellant have taken accommodation entries in the form of bogus billing in the form of bogus purchase from M/s. Aerocom Trade Exim. [d] Ld. CIT(A) rejected the appeal on the grounds referring the Apex Court decision, in para 6.3 of the Order-in-Appeal, in the case of State of Karnataka Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd., vide civil Appeal No. 230 of 2023 decided on 13.03.2023, wherein the main issue before the Hon'ble Apex Court was-\"whether, in the facts and circumstances of the case, the second Appellate Authority as well as the High Court were justified in allowing the Input Tax Credit?\" [Ref para-8.1] Printed from counselvise.com Page | 21 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. The Hon'ble Apex Court observed that for claiming for claiming ITC, genuineness of the transaction and actual physical movement of the 14 goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. The purchasing dealers have to prove the actual physical movement of the goods, alleged to have been purchased from physical movement of the goods, alleged to have been purchased from the respective dealers. If the purchasing dealer/s fails/fail to establish and prove the said important aspect of physical movement of the goods alleged to have been purchased by it/them from the concerned dealers and on which the ITC have been claimed, the Assessing Officer is absolutely justified in rejecting such ITC claim. [Ref. para 10] From the above reference of the Apex Court decision as decided in Civil Appeal No. 230/2023, in the case of State of Karnataka Vs. M/s. Ecom Gill Coffee Trading Pvt. Ltd., vide Civil Appeal No. 230 of 2023 decided on 13.03.2023, it is seen that the matter relates to availment of ITC under CGST Act, 2017 and not relating to unexplained expenditure u/s.69C. Hence, this case has been misplaced by the Ld. CIT(A) and this citation of the Apex court is distinguishable in the preset case in hand. The Ld. CIT(A) has not gone through the facts of the case thoroughly and uphold the decision of the Ld. AO is not sustainable in law and the impugned Order-in-Appeal may be set aside in the ends of justice. Departmental Submission - During assessment proceedings, the AO after due examining all the details/ documents/ explanation filed by the assessee & records, being not satisfactory, has opined that documents produced were not sufficient to prove the genuineness of the purchases and as well as actual delivery of goods. Further, the AO also placed his reliance upon Hon'ble Apex Court's recent decision dated 13.03.2023 in Civil Appeal No. 230 of 2023 in the case of State of Karnataka vs M/s. Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Vide page no.-44 of AOs order, the AO opined 8t stated that \" In then above statement, the above party admitted that he was never engaged in any kind of business activity and he did not know M/s Ri-Bhoi /spat and Rolling Mills. He further stated that around 7-8 years ago, some person namely Mr. Surendra Sharma took copy of his persona! documents such as Aadhar Card, PAN Card etc. and also made him sign in bank account opening form. Thus, it is Printed from counselvise.com Page | 22 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. proved from the statement of this entity that this entity never supplied any goods to the assessee. Above discussion proves that one party M/s Aerocom Trade Exim is not a real concern and its owner has denied to have entered any transactions through this concern in his name. The other party M/s Eastern Sales India did not appear before Investigation Wing, not replied to notice u/s. 133(6) and was not found during physical verification. So, it is dear that both the parties are mere paper entity and has not done any real business. These entities have been used to provide accommodation entries. (ix) Recent Decision of Hon'ble Supreme Court - In this connection, reliance is placed on the decision of Hon 'ble Supreme Court given on 13.03.2023 in Civil Appeal No. 230 of2023 in the case of State of Karnataka vs. M/s Ecom Gill Coffee Trading Pvt. Ltd. and in group of appeals. Though the case is related to allowability of Input Tax Credit (ITC) in VAT law but the ratio given by Hon'ble Court is squarely applicable to the facts and circumstances of the present case. In this case, Hon'ble Supreme Court allowed Revenue's appeal, set-aside Hon'ble Karnataka HC judgment allowing purchasing dealers to claim ITC while elucidating that \"The dealer claiming ITC has to prove beyond doubt the actual transaction\" and the \"actual physical movement of the goods\" which cannot be proved by producing tax invoices and payment by cheque; Pronouncing the orders of lower authority as well as Hon'ble HC as \"erroneous\", Hon'ble Supreme Court elaborates that, \"for claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc.\" Hon ble Supreme Court clarifies that \"mere production of the invoices and/or payment by cheque is not sufficient and cannot be said to be proving the burden as per section 70.\" Since tax invoice as per Rule 27 and Rule 29 \"cannot be said to be proving the actual physical movement of the good\"; However, Hon'ble Supreme Court adds that while the tax invoice and cheque can be said to be proving one of the documents, it is not sufficient to prove the genuineness of transaction and on this lines, Hon'ble Supreme Court categorically mentions that aforesaid information regarding actual physical movement of the goods would be in addition to tax invoices, particulars of payment etc. Printed from counselvise.com Page | 23 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Thus, Hon'ble Apex Court has laid down the law that mere productions of bills for purchases and payment by bank is not sufficient and the assessee is required to prove genuineness of the transactions by proving actual physical movements/goods and other supporting evidences. In this case, the assessee has failed to prove genuineness of the purchases claimed from these parties and actual delivery of goods………\" Hence, after elaborated discussion, the AO opined that the claim of purchase by the assessee amounting to Rs.1,65,61,439/- from the above mentioned two parties has to be treated as bogus purchase, since, the assessee has failed to substantiate the same as genuine and actual purchase with proper documentary evidence. By appreciating the facts, merit & in law of the case, the AO has righty added Rs.1,65,61,439/- being bogus purchase and Rs.3,31,229/-, which was actually in the shape of commission paid for obtaining bogus bill u/s.69C of the I.T. Act,1961 respectively being unexplained expenditure. Further, Ld. CIT(A) also upheld the addition the addition(s) made by the AO by observing that no material evidence has been submitted by the appellant for having received the supply of the material. He opined that simply relying on the bank payment and the copy of the monthly stock register and claiming that the purchases are genuine is not proved. [e] Ld. CIT(A) has committed an error in interpreting the provisions of law discussing at para 6.5 of the impugned Order-in-Appeal and disallowed the purchase made by the appellant holding simply relying on bank payment and showing monthly stock statement and claiming purchase is genuine has not been proved. It is submitted that making payment through banking channel to the supplier of goods or services is concrete evidence as per the provisions of Sec. 4 of the Bankers' Book Evidence Act, 1891. Ref. Sec. 4- Mode of proof of entries in Bankers' Books - \" Subject to the provisions of this Act, a certified copy of any entry in a Bankers' Books shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts there recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise.\" From the above interpretation of Sec. 4 of the Bankers' Book Evidence Act, 1891, the interpretation of law by Ld. CIT(A) is misconceived, not sustainable in law and the Order-in-Appeal is liable to be set aside in the ends of justice. Printed from counselvise.com Page | 24 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Departmental Submission - Vide page no. 14 of the AO's order, it is evident that an ALERT CIRCULAR was issued by the Commissioner, Kolkata South, CGST & CX Commissionerate stating that \"…….. The company passed on huge amount of ITC of Rs.34,14,06,674/- to various recipients throughout India without physical supply of goods ……..” Further, it is also evident from statement of Shri Haradhan Debnath, proprietor of M/s. Aerocom Trade Exim recorded by the Investigation Wing of the Income Tax Department, vide page no. 16, from Q.4 onwards of the AO's order, in which he accepted that he is 8th pass, hawker of fruits, he was not aware of the fact that he is the proprietor of M/s. Aerocom Trade Exim, lastly he stated that he was not involved in any day to day activities of this firm. Hence, it is clear that the identity of M/s. Aerocom Trade Exim is not proved as genuine. Further, vide page-20 onwards of the AO's order, it is also evident that the findings of the Investigation Wing of Income Tax Department is very clear that there was no financial creditworthiness of M/s. Aerocom Trade Exim and it has made bogus purchase from several entities, which were well analyzed and described. Hence, all the sales shown by M/s. Aerocom Trade Exim were also bogus. During assessment proceedings, the AO also made enquiry by issuing notice(s) u/s.133(6) of the I.T. Act,1961 (vide page-9, para-10 of The AO's order) but no response was there from the alleged sellers i.e., M/s. Aerocom Trade Exim and M/s. Eastern Sales India. Hence, it has been established that the appellant have taken accommodation entries in the form of bogus billing in the form of bogus purchase from M/s. Aerocom Trade Exim and M/s. Eastern Sales India. There is no question arises about the issue “…….. interpretation of Sec. 4 of the Bankers' Book Evidence Act, 1891 and the interpretation of law by Ld. CIT(A) is misconceived, not sustainable in law and the Order-in-Appeal is liable to be set aside in the ends of justice ……..\" as stated by the Ld. AR of the appellant. Actually, the onus to prove the identity, creditworthiness and genuineness of the bogus purchase made from M/s. Aerocom Trade Exim amounting to Rs.80,46,150/- and from M/s. Eastern Sales India of Rs.85,15,289/- totalling of Rs.1,65,61,439/-, is entirely lies with the appellant, which it failed before the AO as well as the Ld. CIT(A). Considering the facts & circumstances, your honours, my reliance is placed upon the order of the AO as well as the Ld. CIT(A) and requesting your kindself to kindly consider the above explanation during adjudication and decide the case on facts, merit & in law and oblige.” Printed from counselvise.com Page | 25 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. 12. We have considered the submissions made. The fact remains that the assessee is a Firm having its income from the business of manufactured M.S Ingots. The assessee has its registered office in Byrnihat, in the state of Meghalaya. The assessee had filed its return of income u/s 139 of the Act on 01.10.2018 declaring total income of Rs 30,39,210.00 and the same was assessed u/s 143(1) and deduction u/s 80-IE of the Act was claimed and it had had consumed material for the manufacture and production of goods. In the course of the appeal before us, the month-wise quantitative details of consumption of scrap and other raw material have been filed and the production details are also mentioned. The yield of the assessee varies from 91.45% in the month of April to 95.37% in the month of March and the yield is varying from 89.78% for the month of August to 95.37% in the month of March and the corresponding burning loss is also varying from 10.22% to 4.66% which in other months it is varying from 8.38% to 9.21%. Therefore, there is apparently excess burning loss in the month of August and in some other months as well which apparently is abnormal. 13. The Ld. AO has added the bogus purchases on account of inquiries conducted. However, he did not examine the production record of the assessee, the details of which have been filed now. The assessee further contends that the GST Department has also not taken any adverse action against the suppliers. Since the contention of the assessee has been rejected by the Ld. AO without appreciation of the complete facts of the case as the assessee is not just a trader but is a manufacture and without the raw material, no production could have been carried out. The sales of the assessee have also not been disturbed. In case the purchase of a bogus, the same ought to have been Printed from counselvise.com Page | 26 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. disallowed, but the Ld. AO has made addition under section 69C of the Act which relates to unexplained expenditure. On similar issue, in the case of Pr. Commissioner of Income-tax-5 v. Kanak Impex (India) Ltd. [2025] 172 taxmann.com 283 (Bombay), Hon'ble Bombay High Court have upheld the addition made under section 69C on account of bogus purchases. However, the fact remains that no adverse action was taken against the supplies whether GST authorities. The facts are not known in this regard. Since the assessee is a manufacturing concern, the production record ought to have been examined, which has not been done in this case either by the Ld. AO or the Ld. CIT(A) and the matter needs to be remanded to the Ld. CIT(A) for fresh consideration as to whether unexplained purchases were made or bogus bills were raised. In case the bills were bogus, but the raw material was consumed, the purchases were likely to have been made out of the books of accounts and the matter needed addition on account of unexplained purchases. However, if the bogus bills were raised for reducing the profit by increasing the expenditure, the purchases were required to be disallowed. Enquiry also needs be made with the GST Department as to whether any adverse action has been taken against the suppliers since the information was received from the GST Department which culminated into enquiry by the Investigation Wing and on the basis of which the two entities are found to be providers of accommodation entries/bogus bills, or whether these transactions were found to be genuine and therefore, needed no adverse action subsequently. Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A) and the assessee shall also produce all evidences for physical receipt of the goods at its Printed from counselvise.com Page | 27 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. premises from the suppliers as in some of the lorry receipts sum details are missing or are partial. Hence, in order to be fair to both the assessee as well as the Revenue, the order of the Ld. CIT(A) is hereby set aside who shall consider the production record of the assessee and examine the burning loss in various months to arrive at the finding whether the purchases made had resulted into the production or merely the bills were raised so as to justify the higher burning loss in some other months. We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in accordance with law. For statistical purposes, the appeal of the assessee is allowed. 14. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 12th August, 2025 under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- [Manomohan Das] [Rakesh Mishra] Judicial Member Accountant Member Dated: 12.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 28 I.T.A. No.: 241/GTY/2024 Assessment Year: 2018-19 RI-BHOI Ispat & Rolling Mills. Copy of the order forwarded to: 1. RI-BHOI Ispat & Rolling Mills, 13th Mile, Tamulkuchi, Meghalaya, 793101. 2. ACIT, Faceless Unit. 3. CIT(A)- 4. CIT- 5. CIT(DR), Guwahati Benches, Guwahati. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "