ROHIT STEEL INDUSTRIES,MANDI GOBINDGARH V. INCOME TAX OFFICER, MANDI GOBINDGARH

ITA 629/CHANDI/2025

AI Insights

Rohit Steel Industries appealed against the order of the Commissioner of Income Tax (Appeals), which had confirmed the additions made by the AO regarding the genuineness of certain purchases. The AO had doubted the genuineness of purchases amounting to Rs.70,73,285 from 16 parties due to lack of payment proof and added an extra profit of Rs.8,84,160 to the assessee's income. The Tribunal noted that the assessee had declared substantial sales, implying that purchases were made, and questioned the complete addition without concrete evidence. The Tribunal decided to reduce the addition to Rs.4,00,000 to avoid further litigation costs, accepting this modification by the assessee's counsel.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772959 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Appeal Filed On: 29-04-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: GAURAV GUPTA
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 629/CHD/2025 Ǔनधा[रण वष[ / Assessment Year: 2021-22 Rohit Steel Industries, Near Amloh Road,Motia Khan, Sirhind, Fatehgarh Sahib. Vs The ITO, Mandi Gobindgarh. èथायी लेखा सं./PAN NO: AAHFR3693P अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Gaurav Gupta, CA Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr.DR Date of Hearing : 10.09.2025 Date of Pronouncement : 25.09.2025 HYBRID HEARING O R D E R PER RAJPAL YADAV, VP The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 18.02.2025 passed for assessment year 2021-22. 2. The assessee has taken two grounds of appeal wherein it has been pleaded that ld. CIT (Appeals) has dismissed the appeal Printed from counselvise.com ITA No.629/CHD/2025 A.Y.2021-22 2 without providing any fair opportunity of hearing and also erred in confirming the additions made by the AO. 3. The brief facts of the case are that assessee, at the relevant time was trading in metal scrap. It has filed its return of income on 09.03.2022 declaring taxable income at Rs.1,42,480/-. The assessee had made purchases of Rs.13,98,15,072/- and declared sales of Rs.14,18,64,488/-. The AO issued Show Cause Notice directing the assessee to demonstrate the genuineness of purchases made by it. The assessee has filed complete details, on test check basis, the AO has issued notice u/s 133(6) of the Act to some of the parties. He made a reference of 16 parties on page No. 6 and 7 of the assessment order. Most of the parties have responded to the notices except two, namely, Hare Krishna Steel Tubes and Prem Bindal. Purchases from these 16 parties have been made at Rs.12,20,33,888/-. The AO, thereafter, took details in tabular form of 61 parties from whom total purchases have been made. The AO has observed that assessee has produced the bills of purchase for all the parties. It has also produced transportation proof of the parties, but it could not produce the details of payments qua 16 parties out of 61. The total purchases from these Printed from counselvise.com ITA No.629/CHD/2025 A.Y.2021-22 3 16 parties were to the tune of Rs.70,73,285/-. The AO has doubted the genuineness of these purchases. Hence, he applied a profit rate of 12.5% on these purchases (12.5% of Rs.70,73,285/-). In this way, AO has worked out an extra profit alleged to have been earned by the assessee at Rs.8,84,160/-. Addition of this amount has been made to the total income of the assessee. 4. Appeal to the ld. CIT (Appeals) did not bring any relief to the assessee because assessee did not respond to the notices and CIT (Appeals) has dismissed the appeal ex-parte for want of prosecution. 5. With the assistance of the ld. Representative, we have gone through the record carefully. There is no dispute with regard to the fact that assessee has declared sale of Rs.14,18,64,488/-, thus AO has not doubted quantity details of the sales. It means assessee must have made purchases for achieving these sales. The only question could be that instead of showing the purchases from ‘A’, actually goods could have been purchased from ‘B’ because without purchases, sale figure could not be achieved. Thus, actually goods have been purchased. In that modus-operandi, assessee may have earned some extra profit. These observations Printed from counselvise.com ITA No.629/CHD/2025 A.Y.2021-22 4 are only hypothetical. There is no concrete evidence available on the record, nor the AO could unearth anything. The simple reason for disbelieving the purchases to this extent is that payment proof could not be given by the assessee for certain parties. We could have remanded this issue back to the AO for verifying the payment proof, but in our opinion, this would only enhance the multiplicity of litigation. It is pertinent to observe that whenever any profit is being estimated, then some guess work is always involved. The AO has worked out estimation at 12.5% without considering the profit margin declared by the assessee or some similarly situated assessees. He has not even find out what could be the possible profit margin to an assessee engaged in trading of scrap. Therefore, faced with the above situation, we put to the ld. counsel for the assessee that if the addition worked out by the AO is partially modified, then what would be the stand of the assessee. The ld. counsel for the assessee has agreed that if this addition is reduced to Rs.4 lacs as against Rs.8,84,160/-, then assessee would have no objection because there is no necessity to undergo various rounds of litigation whose cost must have been more than that. Th assessee has not filed any Paper Book before the Tribunal or sought any permission to lead additional evidence. Therefore, Printed from counselvise.com ITA No.629/CHD/2025 A.Y.2021-22 5 it is not practically possible for us to determine exact profit involved in these purchases. 6. Considering the above , we are of the view that ends of justice would meet if addition is reduced to Rs.4 lacs as against Rs.8,84,000/- made by the AO. Accordingly, appeal of the assessee is partly allowed. 7. In the result, appeal is partly allowed, Order pronounced on 25.09.2025. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "