" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER आयकर अपील सं/ITA Nos.931,1194, 1195, 1196, 1197, 1198/KOL/2025 (निर्धारणवर्ा/AYrs:2019-20,2016-17,2017-18,2018-19,2020-21&2021-22) M/s Shakambhari Ispat & Power Limited, C/o M/s Salarpuria Jajodia& Co. 7, C.R.Avenue, 3rd Floor, Kolkata West Bengal-700072 Vs DCIT, Central Circle-3(3) Kolkata PAN No. :AADCM 1189 L AND आयकर अपील सं/ITA Nos.1436,1515,1541, 1591, 1560, 1561/KOL/2025 (निर्धारणवर्ा/AYrs:2016-17,2017-18,2018-19,2021-22,2019-20&2020-21) DCIT, Central Circle-3(1), Kolkata Vs M/s Shakambhari Ispat & Power Limited, C/o M/s Salarpuria Jajodia& Co 7, C.R. Avenue, 3rd Floor, Kolkata, West Bengal-700072 PAN No.: AADCM 1189 L (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररतीकीओरसे /Assessee by : Shri S. Jhajharia, FCA रधजस्वकीओरसे /Revenue by : Shri Sanat Kumar Raha, CIT-DR सुनवाई की तारीख / Date of Hearing : 29/10/2025 घोषणा की तारीख/Date of Pronouncement : 02/01/2026 आदेश / O R D E R Per Bench: These are the cross appeals filed by the assessee and revenue against the separate orders passed by the CIT(A), Kolkata-21, 28.02.2025 & 13.03.2025, for the assessment years2016-2017, 2017-2018, 2018- 2019, 2019-2020, 2020-2021, 2021-2022, respectively. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 2 2. First, we shall take the appeal of the assessee in ITA No.931/Kol/2025 for A.Y.2019-2020 as lead case and the grounds raised therein are extracted below:- 1. For that in view of the facts and in the circumstances, the Ld. CIT(A) was wholly unjustified in confirming the validity of the notice u/s 148 dt. 6.9.2022 and the proceedings and the consequent order passed u/s 147 and such action of the Ld. CIT(A) is no in accordance with the law and facts on record and in view of the facts and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the impugned notice u/s 148 dt. 6.9.2022 is vague and it does not confirm to the requirement of sec. 147 and 148 and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No. 1 & 2 above, Ld. CIT(A) erred in not appreciating the fact that the impugned notice u/s 148 dt. 6.9.2022 was not on the basis of any incriminating material and evidence during search u/s 132)(1) on 17.9.2021 at \"Agarwal Group' and as such the action of AO in such respect in issuing of such notice is bad in law and it may be held accordingly. 4. Without prejudice to Grounds No. 1 to 3 above, such notice u/s 148 was on the basis of searches conducted u/s 132(1) on 'Kasera' & 'Majee Group' on 30.11.2018 & 5.11.2020 respectively (searches were prior to 1.4.2021) and as such the amended law u/s 147 and sec. 148 with effect from 1.4.2021 could not have been applied for issue of notice u/s 148 in such respect and Ld. CIT(A) accordingly erred in not appreciating the same and it may be held accordingly. 5. Without prejudice to Grounds No. 1 to 4 above, the Ld. CIT(A) erred in not appreciating the fact that the addition could not have been made on issues other than issues on which proceedings u/s 147 has been initiated and accordingly the impugned notice u/s 148 and the consequent proceedings u/s 147 is bad in law and it may be held accordingly. 6. For that in view of the facts and in the circumstances, Ld. CIT(A) erred in not deleting the entire addition of alleged undisclosed purchase of Rs. 29,93,22,967/- and also erred in applying gross profit rate @ 8.01% and such action of AO in adding the gross profit percentage on such alleged Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 3 undisclosed purchase is bad in law and the action of Ld. CIT(A) is bad in law and it may be held accordingly. 7. Without prejudice to Ground No. 6 above, the Ld. CIT(A) erred in treating the alleged undisclosed cash purchases of Rs. 29,93,22,967/- with 3d party without there being any evidence of such alleged purchase and without there being any examination of such alleged transaction and or such third person by the AO and as such the Ld. CIT(A)'s action in such respect is bad in law and it may be held accordingly. 8. Without prejudice to Grounds No. 6 & 7 above, the Ld. CIT(A) erred in not appreciating the fact that the AO did not bring any material or evidence regarding the purchase or consumption of alleged undisclosed purchases and AO did not even dispute the production so achieved during the year and even AO did not reject books of accounts of appellant and as such AO's action in making such addition in such respect is merely on conjecture and surmises and Ld. CIT(A) erred in not appreciating the same and it may be held accordingly. 9 Without prejudice to Grounds No. 6 to 8 above, the Ld. CIT(A) erred in not appreciating the fact that Ld. AO had quantified the alleged undisclosed purchases merely on conjecture and surmises and as such the action of AO & CIT(A) is bad in law and it may be held accordingly. 10. Without prejudice to Grounds No. 6 to 9 above, AO didn't even issue notices to alleged transactions of such coal and Ld. CIT(A) erred in not appreciating the same and hence it may be held accordingly. 11. Without prejudice to Grounds No. 6 to 10 above, the entire addition made by AO in such respect is without allowing cross examination of the third party so involved and such action of AO & CIT(A) is bad in law and it may be held accordingly. 12. Without prejudice to Grounds No. 6 to 11 above, the rate of gross profit so considered by CIT(A) has no legal basis and such action of CIT(A) is bad in law and it may be held accordingly 13. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in not appreciating that alleged sum of Rs. 8,52,00,000/- was not at all related to / pertain to appellant and such addition was wrongly made by AO without any independent. examination of material or such 3rd party and Ld. CIT(A) was unjustified in treating such sum as part of Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 4 alleged undisclosed purchase although there was no such purchases as contended in Grounds No. 6 to 11 above and it may be held accordingly. 14. For that in view of the facts and in the circumstances, the Ld. AO was wholly unjustified in making addition of Rs., 1,20,95,958/- [treating the purchases made from Reeja Trading Private Ltd. as bogus purchase) merely based on the report of CGST Department without conducting any enquiry. /Verification of his own and in view of the facts and in the circumstances the addition so made is liable to be deleted and it may be held accordingly. 15. Without prejudice to Ground No. 14 above, the Ld/ CIT(A) erred in affirming the action of AO in not appreciating that the said vendor (i.e. Reeja Trading Private Ltd.) had duly filed its income tax return and ROC return nd had made other statutory compliances and merely based on the CGST Department the existence of the said vendor and the consequent purchases cannot be held as bogus and such action is bad in law and in view of the facts and in the circumstances the addition so made is liable to be deleted and it may be held accordingly. 16. Without prejudice to Grounds No. 14 & 15 above, the payment made to the said vendor (i.e. Reeja Trading Private Ltd.) were through banking channel and the CGST/SGST has been duly paid on such purchases and as such the existence of said party cannot be doubted and the necessary evidence in such respect were duly placed before the AO when AO failed to consider and in view of the facts and in the circumstances the addition affirmed by Ld. CIT(A) is liable to be deleted and it may be held accordingly 17. For that your petitioner craves the right to put additional grounds and/or to alter/ amend/modify the present grounds at the time of hearing. 3. Ground Nos.1 to 5 are against the order of the ld. CIT(A) in confirming the re-opening of reassessment u/s.147 of the Act based on invalid notice issued by the AO u/s.148 of the Act dated 06.09.2022 4. Facts in brief are that the assessee company filed its return of income u/s 139(1) of the Act for the assessment year under consideration Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 5 on 31.10.2019 declaring total income of Rs.17,25,39,330/- under normal provision and Rs. 51,82,85,619/- as per section 115JB of Income Tax Act, 1961. The return was processed u/s 143(1) of the Act on 03/06/2020. The assessee company was engaged in manufacturing of TMT Bar, Billets, Ingots, Sponge Iron, Ferro Alloy and generation of Captive Power Plant etc, and also engaged in trading activities of Iron Steel Products. A search & seizure operation u/s 132 of the Act, 1961 was conducted on Agarwal Group and its associates by the Directorate of Investigation, Kolkata on 17.09.2021 and on subsequent dates. Being one of the associate members of the above group, the assessee was also covered in search by executing a warrant. Pursuant to the search & seizure operation, the case of the assessee was re-opened u/s 147of the Act after taking approval from the competent authority and notice u/s 148 of the Act was issued and served upon the assessee on 06.09.2022 asking the assessee to file return of income within 30 days from the receipt of the notice. On 13.10.2022 the assessee has filed return u/s 148 of the Act declaring total income same as originally filed u/s 139(1) of the Act dated 31.10.2019. Thereafter, statutory notices u/s 143(2) of the Act dated 11.11.2022 and notice u/s 142(1) of the Act dated 12/01/2023alongwith a set of questionnaire were issued and duly served upon the assessee. Finally, the assessment was completed vide order dated 28.07.2023 u/s.143(3)/147 of the Act by making various additions. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 6 5. In first appeal, the ld. CIT(A) upheld the notice issued u/s.148 of the Act and the consequent proceedings and the assessment framed by the AO on the ground that notice was validly issued and there is no infirmity in the same. 6. Aggrieved with both the orders of the authorities below, the assessee is in further appeal before the Tribunal. 7. Ld. AR vehemently submitted that the re-opening of assessment was made invalidly without satisfying the conditions precedent to issue of notice u/s 148 of the Act. The ld AR submitted that during the course of search operation no incriminating materials/documents were found and seized. Therefore the re-opening of assessment is bvad in law and so is assessment framed. The ld AR made very elaborate and lengthy submissions which are extracted as under :- 1. Issue 1 regarding validity of impugned proceeding vide issue of order u/s 148 and subsequent completion of proceeding vide order u/s 147/143 was challenged by the appellant mainly on following grounds: - 1. i) AO failed to provide the copy of reasons recorded for the initiation of the impugned proceedings at the time of issue of notice u/s 148 or even subsequently. ii) The addition so made by the AO in the impugned order does not arise out of the search conducted u/s 132(1) on the appellant and rather the same relates to alleged search on Kesara Group (on whom the search was conducted on 30.11.2018) and Anup Majee Group (on 5.11.2020) and as such, such notice u/s 148 has itself become invalid. iii) The provisions of section 148 for search conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found with the assessee [during the search on 17.9.2021 u's 132(1) on appellant) and the impugned Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 7 assessment was \"unabated\" and hence there could not be any addition as made by the AO in absence of any incriminating material found on search u/s 132(1) on it. Attention is drawn to judgement of Co-ordinate Bench (Chandigarh) in Rosha Alloys (P) Ltd. v. DCIT, Central-2025(7) TMI 238 (Chd) dt. 28.5.2025 and the relevant part (at para 32) is reproduced hereunder: - \"32. Further we find that the PCIT has accorded the approval only as per the proviso (a) to Section 148A, without their being any positive finding about the escapement of income. We also find that there is no incriminating material seized during the course of search with regard to any purchases & sale outside the books of accounts. Therefore, we hold that, despite the deeming fiction applicable to searched persons, the issuance of notice under Section 148 still requires the Assessing Officer to demonstrate that the information unearthed during search leads to escapement of income in the specific assessment year. The mere fact of search, in itself, is not sufficient reason to issue a notice. Failure to establish this connection would render the issuance of notice without proper approval u/s 151 as bad in law and unsustainable.\" [Copy of such order is enclosed at Annexure-1] iv) The AO at best could have initiated the proceedings w/s 153C for the alleged searches and alleged material evidences/ documents pertaining/relating to conducted on \"Kesara Group\"[on 30.11.2018) and on Anup Majee Group[on 5.11.2020] which the AO failed to issue and such addition cannot be made u/s 148 pursuant to search u/s 132(1). v) AO could not have travelled to other issues when the AO did not have any material on the basis of which the impugned 148 was initiated. vi) Deemed escapement of income without enquiry u/s 148A applied only for preceding 3 years and for travelling beyond 3 years, AO must issue notice u/s 148A which AO failed to do in this case and hence consequential proceedings and order so passed u/s 147 has become bad in law vii) Before issuing notice u/s 148 (for A.Y 2019-20) the conditions as specified in sec. 149(1)(b) were required to be satisfied and Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 8 which is not satisfied in appellant's case. Such condition u/s 149(1)(b) are as follows:- a) AO is in possession books of accounts/other documents/evidence. b) Which reveal income chargeable to tax \"represented in form of asset\". AO didn't have any evidence / documents books and more so represented by \"asset\" out of impugned search on 1.4.2021 and as such issue of notice u/s 148 was void ab initio. 2. In the case of appellant, without prejudice, the AO has referred to only \"expenditure\" or \"entry in books of account\" of 3rd parties [ie. \"Anup Majee Group\" or \"Kasera Group\"] and such alleged \"information\" from such persons did not indicate any \"income chargeable to tax represented to the form of asset\" and hence such requirement of sec, 149(1)(b) (as it existed prior to amendment vide Finance Act, 2022 amendment effective from 1.4.2022 only) and hence it has to be considered accordingly. 3. Reliance is placed on the aforesaid contention following judicial precedents also may be relied as well, wherein Court has held that for searches conducted prior to 1.4.2014 proceedings u/s 153C can only be taken up and 148 proceedings based on searches conducted prior to 1.4.2021 is invalid. a) Tirupati Construction Company v. ITO [(2024) 165 taxmann.com 165 (Raj.)) b) Shiv Vegpro Pvt. Ltd. v. DCIT [(Rajasthan High Court) (D.B. Civil W.P. No. 15350/2022 dt.25.11.2024) c) Shyam Sundar Khandelwal v. ACIT [(Rajasthan High Court) D.B. Civil Petition No. 18363/2019 dt. 19.3.2024)] d) Jagjit Singh v. DCIT [164 taxmann.com 324 (Amritsar)] e) Koteshwar Rao v. DCIT [(2015) 64 taxmann.com 159 (Viz)] 8. Ld. CIT-DR, on the other hand, relied heavily on the orders of the authorities below and submitted that the case was validly reopened by the ld. AO by issuing notice u/s.148 of the Act under the new scheme of Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 9 taxation which mandatorily required the AO to issue notice u/s 148 of the Act for certain assessment years irrespective of whether any incriminating materials were found and seized or not.. Ld.CIT-DR submitted that under new regime of the search provisions , the old code as contained in section 153A to 153C has been discontinued and new scheme has been put in place which required the AO to re-open certain numbers of assessment years. The ld DR submitted the provisions of Section 148 of the Act after search are analogous to the provisions to the provision of Section 153A of the Act which was prevalent and applicable till now where the AO was required to issue notice u/s 153A of the Act for preceding six assessment years preceding the date of search irrespective of any incriminating materials. Therefore, the issue raised by the assessee has no merit and may kindly be dismissed. The written submissions filed by the learned DR Are extracted as under: In the instant case, Ld. assessee has raised two technical issues, which are discussed below: A) Challenged of re-opening of assessment: Explanation 2 to Sec148 is reproduced below: Explanation 2.-For the purpose of this section, where,- (0) \"a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1\" day of April, 2021, in the case of the assessee, or (ii) (iv) Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 10 The Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee where the search is initiated or books of account, other documents or any assets are requisitioned or....... This is a deeming provision. The A.O. has the power to reopen the case u/s. 148 of the IT Act, 1961 when search is initiated under section 132. In this regard, Ld. CIT(A), in the appellate order, for AY-2016-17, page no.101 (last para) has opined that \"The appellant has brought to my notice that their case was centralized on 20.12.2021. Pursuant to the search, the case of the appellant was reopened u/s.148 of the Act on 10.01.2023, with the prior approval of PCIT, Central-2, Kolkata. It is observed that the impugned notice was issued after the date of search and therefore, the explanation 2 to section 148 of the Act came into operation and hence, the AO had very much validly reopened the assessment, due to the deeming fiction set out therein, which stated that the AO shall be deemed to be in possession of information for issuance of notice under section 148 of the Act.\" So, the case pertains to the reopening of an assessment under Section 148 of the Income Tax Act, 1961, subsequent to a search initiated under Section 132. The Assessing Officer (AO) reopened the case based on Explanation 2 to Section 148, which deems the AO to have information suggesting that income chargeable to tax has escaped assessment when a search is initiated or books of account, other documents, or any assets are requisitioned. The appellant's case was reopened on 10.01.2023, after the date of search, and the CIT(A) upheld the AO'S decision to reopen the assessment due to the deeming fiction set out in Explanation 2 to sec. 148. In Pr. CIT vs. NRA Iron & Steel (P) Ltd., (2020) 11 SCC 312, the Supreme Court held that the Assessing Officer was justified in reopening the assessment subsequent to a search and seizure operation under Section 132. The court analyzed the scope of Explanation 2 to Section 148 and found that the AO had the power to reopen the case based on the deeming fiction set out in the provision. 9. After hearing the rival contentions and perusing the material on record, we find that the assessee has challenged the issue of notice u/s.148 of the Act and also the proceedings u/s.147/143(3) of the Act on Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 11 the ground that the AO has failed to provide copy of the reasons recorded in the proceedings u/s.148 of the Act and also the addition made by the AO are not arising out of the search conducted u/s.132 of the Act on the assessee, Rather the additions made were on the basis of material gathered during the course of searches on Kesara Group on 30.11.2018 and Anup Majee Group on 05.11.2020 and consequently the notice u/s.148 of the Act was itself invalid and may be quashed. We have perused the provisions under old scheme vis a vis under new scheme and find that under the new scheme of search, the AO has to issue notice u/s 148 of the Act for the number of assessment years as provided in the Act. In other words there need not be any incriminating materials and whether there is any materials warranting additions that has to be examined by the AO during proceedings u/s 147 of the Act. Therefore we do not find any merit in the contentions of the assessee that the provisions of Section 148 of the Act for search conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found with the assessee during the course of search u/s.132 of the Act and the impugned assessment was unabated and hence no addition can be made. We note that the plea of the assessee does not have force or merit as in this case the requirement of any incriminating material is not there for issuing notice u/s 148 and the assessment can be reopened because the provisions of Section 148 of the Act are analogous to Section 153A of the Act as applicable in the case of search pertaining to search Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 12 prior to 1.4.2021. In our opinion, the AO is under obligation to reopen such assessment years prior to the date of search even if there is no incriminating material and then frame the assessment accordingly. In other words the existence of incriminating materials has to be examined during the assessment proceedings and not at the stage of issuance of notice.Ld. AR also relied on the decision of the Chandigarh Bench of the Tribunal in the case of Rosha Alloys (P) Ltd., reported in 2025 (7) TMI 238 (Chd) dtd. 28.05.2025, however, with utmost humility and respectful disagree with the conclusion drawn by the coordinate bench of the Tribunal and, therefore, the ground Nos.1 to 5 raised by the assessee have no merit and accordingly the same are dismissed by upholding the appellate order on this issue. 10. In ground Nos.6 to 12 are relating to the order of the ld. CIT(A) in partly confirming the addition applying gross profit rate @8.01% as against the addition made by the AO of Rs.29,93,22,967/- on account of alleged undisclosed purchases 11. Facts in brief are that during the course of search and survey operation on Majee Group and others on 05.11.2020 by the Directorate of Investigation, Kolkata. Certain incriminating documents were found which reveals that Majee Group sold coal to the assessee company. Further the documents seized from the transporter Ratnesh Verma also revealed that coals and other goods have been sold in cash and transported by Ratnesh Verma on behalf of Anup Majee Group to the assessee company Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 13 over the years. After examination of the said documents, it is revealed that assessee company has purchased coal from Majee Group during the F.Y.2018-19 relevant to A.Y.2019-20. The documents seized from Majee Group have been marked as SMVD-01 to SMVD-18. The Assessing Officer discussed the issue from pages 2 to 32 and finally came to the conclusion that on the basis of the material/documents seized from the Majee Group during the search the assessee was found to have purchased 13919.25 Metric Ton of coal from Majee Group during the financial year 2018-19 relevant to assessment year 2019-20 and, therefore, the Assessing Officer applied market rate of coal @Rs.4000/- per MT thereby calculated the unexplained expenses at Rs.5,56,77,000/-. The Assessing Officer also noted from the said documents that loan repayments in cash was Rs.3,50,00,000/-. The Assessing Officer aggregated these amounts to Rs.9,06,77,000/- as undisclosed transactions. The also noted that the amount of cash payments to the said party as per the documents seized were Rs.29,93,22,967/-, which according to the Assessing Officer was not recorded in the books of accounts and attributable to out of books purchases of coal as the assessee company has not shown any transaction with Majee Group in its books of accounts. The Assessing Officer also mentioned that the details of transportation as found from the seized books may not be complete for the entire year whereas as evident from above the assessee had made cash payments of Rs.29,93,22,967/- to the Majee Group and accordingly Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 14 the said amount of payments being higher of the above two amounts, the Assessing Officer added the same in computing the total income of the assessee u/s.69C of the Act as unexplained expenses. 12. In the appellate proceedings, ld.CIT(A) partly allowed the appeal by directing the AO to apply GP rate @8.01% on the alleged unaccounted purchases. The ld.CIT(A) after taking into consideration the contention and reply of the assessee and after calling for remand report from the Assessing Officer and rejoinder filed by the assessee, partly allowed the appeal by observing and holding as under :- Having gone through the written submissions of the appellant, it is noted that the principlecontention of the appellant was that there was violation of principles of natural justice, as therelevant data had not been provided to it. Taking note of the same and to meet the end of justice, the matters were remanded to the AO and the appellant was also required to avail this opportunity of hearing. The AO in his remand report is noted to have clearly stated that the relevant seized documents and statements were received by his office and that, the relevant documents pertaining to the assessee and the entries found therein was the basis for making the impugned addition. The appellant in his rejoinder is noted to have again averred that the relevant data was not provided to them. Having considered the entire conspectus of facts, this particular argument of the appellant is found to be misleading. Reading of the assessment order clearly shows that the complete details of the transactions found in the seized material from the premises of Anup Majee Group had been confronted to the appellant and there only stand was denial. Even in the remand proceedings, it is observed that the appellant has not availed this opportunity given by this office. The AO is noted to have nowhere denied the appellant, access or the inspection of the seized material. Understandably, the relevant data found from the premises of the Anup Majee Group was mammoth in nature and most of them were electronic evidences maintained in excel sheets and computer systems. The said person was found to be involved in illegal coal mining and had been supplying coal outside the books of accounts to several steel manufacturers. The key person, Mr. Ratnesh Verma is noted to have recorded a detailed statement in which several explanation regarding the contents of the seized electronic evidence was given Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 15 by him, which inter alia implicated the appellant as well. It, therefore, cannot be possible that the AO provides the complete back up of the electronic evidence to the appellant, Rather, only the relevant data concerning the appellant is required to be provided to it, as the allegation also relates to the limited amount of data. The appellant rather than availing the opportunity to inspect the seized material and the statements from the office of the AO in the course ofremand proceedings, has deliberately avoided the same and is again in a complete denial mode. Such action of the appellant is deprecated and is held to be unjustified From the material available on record, it is observed that the appellant is a manufacturer of steel products in which coal was one of the major raw materials. It is also observed that the appellant had been regularly procuring coal for its production. Accordingly, the purchase of coal by the appellant cannot be ruled out. Further, the specific details contained in the seized material is noted to clearly suggest that the Anup Majee Group, who was found to be involved in illegal coal mining, was supplying coal to the appellant. The detailed notings found in the seized material could not be said to be stray or loose notings, as being contended by the appellant. It is observed that the seized material contained date-wise notings with truck nos, giving details of transportation. It also contained the specific locations from where the coal was procured and supplied to the specific location of the appellant's factory. It is also not in dispute that, the location of factory is incorrect or that the appellant was not using coal as a raw material in that premises. Further, having regard to the size and capacity of the said factories, the procurement of such quantity of coal is found to be commensurate. Overall therefore, the contents of the seized material remained uncontroverted. It is further noted that Mr. Ratnesh Verma had clearly confirmed the contents of the seized documents, and therefore, the supply of coal and/or cash payments between the appellant and the Anup Majee Group, in my considered view, is proved beyond doubt. On the aspect of cross examination, it is noted, that, the AD had indeed summoned Mr. Ratnesh Verma who did not appear before him. At the same time, it is noted that, even the appellant did not appear before the AO. Even if, for a moment, the statement of Mr. Ratnesh Verma is kept aside, the appellant ought to have explained the notings found regarding their transactions with Anup Majee Group. The appellant is also noted to have avoided appearance before, the AO and as noted by the AO earlier, the appellant was unable to controvert these notings with evidences, Coming back to the denial of cross examination, on the specific facts of this case, I find this particular argument to be not tenable due to the overwhelming evidences already available on record. In this context, the reliance placed by the AO on the following observations of the Hon'ble jurisdictional High Court in the Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 16 case of Swati Bajaj & Ors (288 Taxman 403) is found to be of relevance. 55. The first argument on behalf of the assessee is that the copy of the investigation report was not furnished to them despite specific written request made on behalf of the assesses to furnish the copy of the report, the statements recordedand provide those persons from whom statements were recorded to be cross examined on behalf of the assessee. There is no dispute to the fact that the copy of the statement said to have been recorded during the course of investigation has not been furnished to the assessees and the request made by some of them for cross examining of those persons was not considered. The question would be as to whether the non-compliance of the above would render the assessments bad in law. The argument of the revenue is that the assessments cannot be held to be illegal merely on the grounds that the copy of the report was not fumished as the respective assessing officers have clearly mentioned as to the nature ofinvestigation done by the department and as the report itself states that the Investigation commenced not from the assessees end but the individuals who dealt with these penny stocks who were targeted it is equally true invariably in all cases, the statement of the stock brokers, the entry operators or the Directors of the various penny stock companies does not directly implicate the assessee. If such being the situation, the assessee cannot be heard to say that the copy of the entire report should have been furnished to him, the person from whom the statements were recorded should have been produced for cross examination as admittedly there is nothing to implicate the assessee Smt. Swati Bajaj of insider trading or rigging of sham prices. But the allegation against the assessee is that the claim for LTCG/LTCL is bogus. As pointed out by Mr. Rai, learned senior standing counsel, the investigation report is general in nature not assessee specific. Therefore, we are required to see as to whether non-furnishing of the report which according to the revenue is available in the public domain would vitiate the proceedings on the ground that the assessee was put to prejudice. 56. In State Bank of Patiala v. S.K. Sharma AIR 1996 SC 1669, the Hon'ble Supreme Court pointed out that violation of any and every procedural provision cannot be said to automatically vitiate the domestic enquiry held against the delinquent employee or the order passed by the disciplinary authority except in cases falling under no notice, no opportunity and no hearing categories. Further it was held that if no prejudice is established to have resulted from such violation of procedural Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 17 provisions no interference is called for, against the ultimate orders. The test laid down was whether the person has received a fair hearing considering all things as the ultimate test is always the test of prejudice or the test of fair hearing as. Further the Hon'ble Supreme Court pointed out a distinction between a case of no opportunity and a case of no adequate opportunity and while examining the latter case, it was held that the violation has to be examined from the stand point of prejudice, in other words the Court or the tribunal has to see whether in the totality of the circumstances, the delinquent officer/employee did or did not have a fair hearing and the orders to be made shall depend upon the answers to the said query. Further it was held that there may be a situation where interest of the state or public interest may call for curtailing of rule of audi alteram partem and in such a situation the Court may have to balance public/state interest with the requirements of natural justice and arrive at an appropriate decision. 57. in a very recent decision of the Hon'ble Supreme Court in M.J. James (supra) after referring to a catena of decisions on the point the Hon'ble Supreme Court pointed out that natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more lead to the conclusion that prejudice is thereby caused. Where procedural and/or substantive provisions of law embodied the principles of natural justice, their infraction per-se does not lead to invalidity of the order passed. The prejudice must be caused to the litigant, except in the case of amandatory provision of law which is conceived not only in individual interest but also in public interest. Further by referring to the decision in State of Uttar Pradesh v. Sudhir Kumar Singh [2020] SCC Online SC 847, it was held that the \"prejudice\" exception must be more than a mere apprehension or even a reasonable suspicion of a litigant, it should exist as a matter of fact or to be cast upon a definite inference of likelihood of prejudice flowing from the non- observance of natural justice. 58. Therefore, the assessees have to specifically point out as to how they were prejudiced on account of non-furnishing of the investigation report in its entirety failure to produce the persons from whom the statements were recorded for being cross examined would cause prejudice to the assessee as nowhere in the report the names of the assessees feature. The investigation report states that the investigation has not commenced from the individuals but it has commenced who had dealt with the penny stocks, concept of working backwards. This is a very significant factor to be remembered. Therefore, Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 18 there has been absolute anonymity of the assessee in the process of investigation. The endeavour of the department is to examine the \"modus operandi\" adopted and in that process now seek to identify the assessees who have benefited on account of such \"modus operandi\". Therefore, considering the factual scenario, no prejudice has been established to the assessee by not furnishing the investigation report in its entirety nor making the persons available for cross examination as admitted by the department in substantial number of cases the assessees have not been specifically indicted by those persons from whom statements have been recorded. In view of the above, therefore, I am of the considered view that the Ld. AO had rightly held that the appellant was involved in undisclosed cash purchases of coal with Anup Majee Group to the tune of Rs.29,93,22.967/- Having held so above, I action of adding the entire value of undisclosed purchases as the income of the appellant. The fact that the assessee was having undisclosed purchases would suggest that there were corresponding undisclosed sales as well, suggesting that the assessee was running a parallel business outside the regular books of accounts. In such a scenario, in my considered view, it is the income derived from such out of books business which can be brought to tax. Accordingly, in relation to such undisclosed purchases, only the profit element embedded therein is to be taxed. My view finds support from the judgment of the jurisdictional Calcutta High Court in the case of PCIT vs. Subarna Rice Mill [2018] 96 taxmann.com 286 (Calcutta), involving similar facts as involved in the present case. In the decided case, the assessee owned and operated a rice mill. Survey operation under section 133A was conducted upon the appellant and on physical verification the Department had reported that excess stock was found physically in comparison to the stock appearing in the Books of Accounts/Stock Record. At the time of assessment, the AO assessed the entire value of excess stock found at the time of survey by way of undisclosed income of the appellant. On appeal, Hon'ble Tribunal observed that the entire quantity of excess stock discovered in the course of survey operation could not beregarded as unexplained income of the appellant and relying on the decision of the Hon'ble Gujrat High Court in the case of Vijay Trading Co. vs ITO (2016) 388 ITR 377 (Gujarat), it was held that only where any undisclosed purchases or undisclosed stock is discovered then it is only the profit element embedded in the transaction which can be added to the total income of the appellant. Having regard to the past history of G.P. Margin, the Hon'ble Tribunal accordingly held 10% could utmost be assessed by way of unexplained income out of the excess stock found in the course of survey. On appeal the Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 19 Hon'ble Calcutta High Court upheld the order of the Hon'ble Tribunal by observing as follows: \"The assessee's appeal before the Commissioner (Appeals) failed and by an order of August 25, 2014, the assessment order of March 28, 2013 was upheld. The Commissioner looked into the facts, the statements made by or on behalf of the assessee and the books of the assessee that had been looked into at the time of survey which the assessee subsequently claimed had been lost or destroyed and, in respect whereof, no complaint had been lodged by the assessee. On facts, the Commissioner (Appeals) found no grounds to interfere with the quantum of excess stocks discovered by the assessing officer in course of the survey. The Commissioner also agreed with the assessing officer as to the quantum of income which had escaped assessment There are two aspects to the order impugned dated June 30, 2015 passed by the Appellate Tribunal: the factual findings of the Commissioner (Appeals) as appear to have been interfered with by the Appellate Tribunal and, the direction given for taking sales of rice and bran into account before amiving at the additional income which could be said to have escaped assessment Before the Commissioner (Appeals), the assessee had relied on a document signed by an official of the Food Corporation of India that evidenced the stock figures at the relevant point of time. The Commissioner (Appeals) dealt with such aspect of the matter in great detail and by referring to the admitted statements of the representatives of the assessee, which were not sought to be controverted at any point of time on behalf of the assessee, concluded that it was the physical verification of the stocks undertaken by the Assessing Officer in course of the survey operation that was to be given primacy. Indeed, the Commissioner (Appeals) found that there was no evidence that the FCI official who had issued the certificate had undertaken any physical verification of the stock at the rice mill of the assessee and the document appeared to have been filled up by the assessee and merely signed by the FCI official, Such part of the order of the Commissioner (Appeals) was unexceptionable and could not have been interfered ITA No. 1704 & 1567/Kol/2011 & 1084/Kol/2014 Smt. MadhuChhandSirkar A. Y.2007-08 11 with by the Appellate Tribunal. Indeed, no reasons have been furnished by the Appellate Tribunal in disregarding the physical verification of the stocks carried out by the Assessing Officer, Further, the area of the godown as indicated in the FCI certificate was of no consequence since the Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 20 Assessing Officer found stocks piledoutside the godown at the time of the survey. Accordingly, to the extent that the Appellate Tribunal accepted the quantum of additional stocks on the basis of the certificate issued by the concerned FC! official, such order is unacceptable and is set aside. The order of the Commissioner (Appeals) in such regard is restored. The additional quantum as discovered during the course of the survey operation win fasten to the assessee. However, the other aspect of the matter was dealt with by the Appellate Tribunal on a point of principle and such matter does not call for any interference. According to the Appellate Tribunal the value of the entire quantity of additional stocks that were discovered in course of the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal which was a legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible sale of the paddy when converted. The assessee refers to a judgment of the Gujarat High Court reported at 388 ITR 377. The principle enunciated in such judgment is that when undisclosed purchases of such nature are discovered, it is only the profit embedded in the transaction which can be added to the total income. The Gujarat High Court relied on some of its previous judgments to hold that \"not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee. Having regard to the above binding judgment (supra), I hold that only the gross profit margin could be added to the total income of the appellant and not the entire value of undisclosed purchases. Upon taking note of the gross profit margins of the appellant and having regard to the industry standards and the fact that other allied costs may have been debited to the regular books of accounts, and the decision of PCIT Vs Batliboi Environmental Engineering Ltd (446 ITR 238), Thold that estimation of profit at 8.01% on the undisclosed purchases of Rs.29,93,22,967/- is reasonable (as the AO himself has applied Gross Profit rate 8.01 percent), which works out to Rs.2,39,75,770/-, Accordingly, the addition to the extent of Rs.2.39,75,770/-is retained and the balance sum of Rs.27,53,47,197/- is directed to be deleted. These grounds are, therefore, partly allowed. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 21 13. Ld. AR filed his written submission in regard to the above grounds which are extracted as under :- 11. Issues No. 2 & 3 in respect of alleged transaction of purchase of coal with Anup Majhee and addition made thereto for different assessment years as follows:- Assessment Year Amount (in Rs.) 2016-17 2,02,84,550/- 2017-18 3,70,00,000/- 2018-19 25,14,67,500/- 2019-20 29,93,22,967/ 2020-21 22,00,38,030/- 2021-22 5,25,04,900/- (Issue-2) and addition of Rs.8,52,00,000/- (Issue-3). AO's contention in such respect is reproduced hereunder: (i) Information was received from the Investigation Directorate, Kolkata that during the course of search and seizure operation conducted at the premises of Majee Group on 5.11.2020, books and documents were seized vide ID SMVD-01 to SMVD-18 and further, documents were seized from premises of transporter Ratnesh Verma which revealed that coals and other goods have been sold in cash and transported by Ratnesh Verma on behalf of Anup Majee Group to the assessee company during the F.Y 2018- 19 relevant to A.Y 2019-20. (ii) Copy of seized documents vide ID SMVD-01 to SMVD-18 and copy of Statements were received by this office along with the approval in this case. On perusal of the sized documents it was seen that \"Shakambari\" and \"SIPL Dipak\" was written on those documents which indicates that Shakambari Group had made cash transactions with Majee Group. The assessment in this case of the assessee was done on the basis of seized documents on record. The addition on this issue was done on the basis of entries recorded on seized documents found and seized from the premises of Majee Group. (iii) As regards enquiry done by the AO, notice was issued to M/s Shakambari Ispat& Power Ltd. to submit the details of transactions with Anup Majee Group. The assessee company denied the same but could not submit any corroborative documents. I. Issue No.2-Addition towards alleged undisclosed purchases: Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 22 A. It was submitted before the AO repeatedly that appellant did not have any transaction with said \"Anup Majee Group\" and it had no idea about the alleged documents so alleged to have been found with connected persons of \"Anup Majee Group and appellant also requested to provide such alleged statement/document/evidence which AO failed to provide. B. From a perusal of the relevant part of the AO's observation and unsubstantiated conclusion it can be seen that the entire addition on account of alleged purchase of coal from \"Anup Majee Group\" has been made merely on presumption and such biased presumption is on the basis of the alleged documents so found with the said person i.e. Anup Majee [so stated to have been foundwith alleged connected persons said Anup Majee i.e. Ratnesh Verma & Neeraj Singh] in course of search conduced on him (ie. Anup Majee) on 5.11.2020. From a perusal of the AO's order, it is seen that the AO has merely relied upon the alleged documents so stated to have been found with one \"Ratnesh Verma\" (allegedly of Anup Majee Group) and thus derived alleged quantity of coal so stated to have been transported to the appellant and thus the AO based on such alleged transport details computed the alleged quantity of coal transported at 13919.25 MT. Thereafter, AO only on the basis of some alleged documents so stated to have been seized from the Anup Majee Group [i.e. from one \"Neeraj Singh\" of Anup Majee Group) observed and concluded that cash were received from the appellant being towards alleged purchase of coal and thus the AO derived two amounts i.e. firstly by multiplying the average rate of coal of Rs.4000/- per MT with the alleged aggregate quantity stated to have been delivered at 13919.25 MT (say for A.Y 2019- 20) to compute the amount of Rs.5,56,77,000/- and the second amount was the aggregate of the cash so alleged to have been paid to \"Anup Majee Group\" and the AO considered the higher of the two amounts as alleged purchase of coal from Anup Majee Group. In the background of such allegation and such conclusion for addition so made it is submitted as under: - (a) The appellant during the course of hearing denied any knowledge of the said person i.e. Anup Majee Group and denied any transaction also with the saidgroup and/or connected persons i.e. Ratnesh Verma or Neeraj Singh and indeed appellant's denial of any knowledge of such person i.e. Anup Majee. However, despite such specific denial by the appellant company, the AO merely relied upon the alleged documents and statements so found and made by the employees and/or connected/related persons of Anup Majee Group and the alleged documents, statements etc. upon which reliance has been placed by AO i.e. the \"lone\" basis of impugned addition. On a perusal of reply filed before AO it can be seen that the appellant denied of such transaction and indeed Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 23 requested the AO to provide the relevant material and the alleged statements of said persons including said \"Anup Majee\" (so relied upon by the AO) which the AO failed to provide to the appellant. Indeed even during search u/s 132(1) on appellant not a single question regarding \"Anup Majee\" was ever raised nor did Ld. AO attempt any examination of \"Anup Majee\" or his connected persons after specific denial of any knowledge of such person by appellant during such 147 proceedings. (b) Without prejudice, it can be seen that the addition so made by AO in such respect is full of infirmity and indeed the addition is merely on surmises and conjectures without any examination and/or independent verification by the AO himself and/or providing the alleged material and statement upon which the appellant had placed its reliance and AO has derived it's own biased conclusion which is mainly on conjecture and surmises. Hence, it is submitted that - (i) The AO has merely relied upon the alleged statement made by some employees and allegedly connected persons of the Majee Group which the AO himself did not examine nor conducted any enquiry of such connected persons [i.e. Anup Majee or Ratnesh Verma or Neeraj singh). The AO also did not conduct any enquiry of Anup Majee upon whom the alleged search (on 5.11.2020) has been conducted and which is pivot for such huge addition. Hence in absence of any independent verification by the AO himself of such alleged connected / related persons [i.e. Ratnesh Verma & Neeeraj Singh] upon whom the entire addition has been made is missing and hence the entire addition of such alleged purchase of such a huge quantity of coal without any independent verification by AO is illegal and the addition so made in such respect is liable to be deleted. Indeed the AO doesn't refer to any statement of alleged person i.e. \"Anup Majee Group\" himself anywhere so obtained u/s 132(1) on such person. Hence no corroborative evidence is available with AO which is supplemented by absence of any independent enquiry/ verification by AO himself. (ii) Indeed AO has merely referred to some statements of some employees of said \"Anup Majee Group\" without even naming such employees and/or reproducing the relevant statement and/or providing copy of such statement to appellant which has made entire act of AO has wholly unreliable. (iii) The AO has merely referred to some alleged documents (being SMVD-06_RKV Mazarmamaetc.)and the alleged statement of one Mr. Ratnesh Verma from whose custody such alleged documents were obtained. AO further referred to alleged statement of Mr. Ratnesh Verma to corroborate his conclusion. But AO failed to Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 24 provide such documents and/or statement of said \"Ratnesh Verma\". Indeed the AO himself didn't make any examination of said \"Ratnesh Verma\" and/or the alleged documents and even there is no finding by AO as to payment of such freight by \"Anup Majee Group\" or by \"appellant\", merely on basis of such alleged data so obtained by Investigation Team during search at \"Anup Majee Group\". Indeed AO even failed to examine even any of alleged vehicle owners about whom AO has uploaded about 23 pages of data in assessment order. The AO also failed to corroborate such alleged statement of \"Ratnesh Verma\" with \"Anup Majee Group\" or the alleged \"employees of Anup Majee Group\". Absence of verification by AO is also supplemented by absence of the opportunity of cross-examination of said \"Ratnesh Verma\" which has never been granted by AO to appellant and which is gross violation of principle of natural justice. Hence it can be seen that entire addition is merely on assumption, conjecture and surmises and hence liable to be deleted. (iv) AO has also referredto some alleged documents ((Mark Id: SMVD-K-6 etc.) with \"Iniraj NS-LAPTOP-1 Disk Space-175 GB Tally 7.2 Data\"] which the AO stated that such data was found at one \"Neeraj Singh\" of \"Anup Majee Group\" and also reference to some alleged statement of persons/employees of \"Anup Majee Group\" was mentioned in notices sent to appellant and consequent impugned order to derive a self-serving conclusion that appellanthas made cash transaction with \"Anup Majee Group\" aggregating to Rs.29,93,22,967/-. Such assumption and conclusion of Ld AO is full of flaws and such allegation and conclusion is self- serving and is illegal. It is submitted that- aa) Appellant denied of any knowledge of \"Anup Majee\" and hence even toproceed in the matter without corroborating the same with \"Anup Majee\" and his \"connected person\" has made entire exercise void ab-initio. ab) Without prejudice, L.d. AO merely referred to such alleged documents and/or data found at some employees or alleged connected persons of \"Anup Majee Group\" although no evidence of any such transaction were found /discovered during search at appellant's search u/s 132(1) and hence no link of appellant is substantiated ito such alleged documents. ac) Ld. AO merely referred to such alleged statement of alleged employees or alleged connected persons of \"Anup Majee Group\" and the veracity and genuineness of such alleged documents itself is doubtful particularly for reason that: Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 25 i) AO didn't even name such employees in his notices or in the impugned orders and it is even doubted if AO is in possession of alleged statements of alleged employees or connected persons of \"Anup Majee Group\". It is even gravely doubted that even \"Anup Majee\" in his statement u/s 132(1) in his search even named appellant and conduct of any transaction with appellant (whether purchase of Coal or receipt of cash) and even AO also didn't bother to place any such finding. Even it is doubted that AO doesn't possess any such statement of \"Anup Majee\" or his connected persons. ad) AO himself didn't examine such \"Anup Majee\" to corroborate such alleged statement of alleged employeesor alleged connected persons. Indeed AO even failed to bring any material on record to the effect that “Anup Majee” has stated or agreed to such alleged sale by their group to appellant or even the statements made by alleged employees or alleged connected persons or even the receipt of script of cash from appellant and hence the veracity of such alleged statement /documents and the consequential alleged sale is not at all proved to have taken place. In such circumstances such exercise by AO and the addition so made isbaseless. Ae) AO didn’t provide the alleged material and/or the alleged statements of employeesor alleged connected persons of “Anup Majee Group” upon whom such strong reliance has been placed by AO which has resulted in absence of principle of natural justice and hence the entire exercise by AO is void ab-initio.. In such circumstances the allegation of “cash transactions” and or the alleged transportation of coal the consequential action of addition is void ab-initio. (v) AO has merely compared the “alleged transaction of coal”(based on alleged documents of Ratnesh Verma) and alleged cash transaction (based on alleged documents of Neeraj Singh) and such comparison itself shows that AO has made such addition on conjecture and surmises. Apart from the aforementioned grave anomalies the addition also suffers followinggrave infirmities and hence liable to be deleted:- i) For example say for A.Y 2019-20, AO has alleged that the impugned transportation documents [so referred as SMVD-06 at page 8/67 of the said order] during F.Y 2018-19 (A.Y 2019-20) to the tune of 13,919.25 MT and translated such value to Rs.5,56,77,000/- (by applying arbitrary rate of 4000/MT] Such value derived by AO himself is on an arbitrary basis for which an arbitrary rate i.e. 4000/ MT has been taken by AO without even appreciating that rate of coal varies from 2500/MT to 17000/MT depending upon Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 26 the Carbon Content, Ash Content and various other factors [indeed the average rate of appellant’s purchase is 6000/MT] which AO failed to consider in any manner and such action of AO in such respect is arbitrary. This allegation and conclusion has been repeated in every year and similar manner. ii) As mentioned earlier for A.Y 2019-20, AO merely considered the alleged quantity of coal at Rs.13,919.25 MT on basis of alleged data of transportation of coal so sated to have been found with “Ratnesh Verma”. In such a case action of AO in considering cash transaction of Rs.29,93,22,967/- (at the rate of 4000/ MT taken by AO himself) translates to 74,830 MT. AO has not made any exercise to place findings on such quantity of alleged coal purchased. Indeed AO didn’t find any documents nor give any finding on the issue that “whether any document/data of such alleged coal transport or cash paid to Anup Majee” was found at appellant’s search u/s 132(1). And being such a huge quantity of 74,830 MT the search team during investigation atappellant’s place didn’t find any documents nor did it find any variation in stock of coal. Similar allegation and conclusion is foroth”r years as well. (vi) As mentioned above, the AO has not even tried to verify as to whether quantity of coal purchased and as accounted for in the books of the appellant is commensurate with the production and sales of finished products. There is no allegation by AO in such respect implying thereby the production and sales have been accepted by AO. In such a case when production and sales of finished products is not under challenge by AO in any manner, purchase so accounted for in books of appellant cannot be held as doubtful in any manner. If AO’s version of purchase of coal from “Anup Majee Group” (whether based on alleged quantity transported based on “Ratnesh Verma” or based on alleged cash transaction based on “Neeraj Singh”] is accepted then consumption of coal per unit of finished goods should have been questioned by AO which AO failed to do. AO didn’t even question production/consumption of electricity and neither casted any doubt in such respect. AO in such a case AO should have questioned or brought on record “out of books” production of finished goods and/or “out of books” sales of such alleged “out of books production” as well and indeed no such material / evidence / finding is given by AO. AO has failed to address the same in any manner and absence of such findings by AO doesn’t permit AO to presume any coal purchase merely based on some alleged document / statement of any third party. It may also be appreciated that even during search u/s 132(1) on appellant no such quantity of coal which was allegedly “unaccounted” has been found by search team nor any finding on same is given by AO and which corroborates the fact that no such coal was even purchased / delivered to appellant. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 27 Indeed the act of AO clearly implies that AO didn’t reject books of account in any manner. (vii) AO vide notice u/s 142(1) had enquired about details of coal purchased, Raw material consumed, Finished goods produced, Electricity consumed etc. Appellant duly provided all such details. On a perusal of such details AO accepted such purchase of coal, production of finished goods and consumption of electricity which reflects that there is no doubt about all such data by AO and hence AO cannot allege any coal has been purchased out of books by appellant and hence additions is bad in law. (viii) It has to be appreciated that presumption u/s 292C applies to person on whom action u/s 132 or 133A has taken place. In such a case the presumptionof such alleged material/statement can be considered and invoked as per provisions of sec. 292C only upon “Anup Majee Group” and not to any other. It may be treated as “information” for purpose of reopening u/s 148 but the AO needs to bring corroborative incriminating evidence on record which AO failed to and hence reliance on such alleged material or alleged statement is bad in lawpar”icularly \"absence of any independent verific“tion\" by AO himself and “independent evidence” which is none in appellant’s case and hence such additionis liable to be deleted. Hence such addition of undisclosed purchase so affirmed by Ld. CIT(A) may kindly be deleted and for sake of convenience the salient features of contention in such respect is as follows:- (i) Absence of any corroborative evidence during appellant’s search u/s 132(1) which clearly shows allegation of AO is not corroborated at all. (ii) No independent verification of alleged 3rd party documents/ evidences by AO. (iii) No allegation/finding by AO as to any “out of books production/sale” and hence impliedly production and sales accepted by AO. Even consumption of coal so shown in books of account also not challenged by AO, Indeed electricity production/consumption also not doubted / challenged. AO has accepted result so shown in books and no defect pointed out by AO, Hence such addition may kindly be deleted accordingly. Without prejudice Ld. CIT(A) rightly considered only the gross profit on such undisclosed purchase. However, the gross profit percentage is arbitrary and very high. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 28 14. Ld. CIT-DR, on the other hand, submitted that the revenue has also challenged the deletion of part addition by the ld. CIT(A) by filing the cross appeal, therefore, strongly opposed the part allowing of the appeal by the ld. CIT(A) on this issue by directing the Assessing Officer to invoke GP rate @8.01% when the facts and information found on the basis of seized documents revealed otherwise. In other words, it was revealed that the assessee has purchased coal from the Majee Group which was not recorded in the books of accounts. The DR submitted that the AO estimated the quantities of coal purchased from Majee Group at 13919 M.T. and applied an estimate rate of Rs. 4,000/- Per MT and computed the unrecorded purchases. The DR further submitted that AO also found repayment of certain cash loans amounting to Rs.3,50,00,000/-. Thus aggregate of both these figures comes to Rs.9,06,77,000/-. It was further noted that there were evidences that the total payments of cash were much higher to the tune of Rs.29,93,22,967/-. The ld DR submiited that in absence of any explanation from the assessee’s side the higher of the two Rs. 29,93,22,967/- was rightly added towards unrecorded coal purchases from Majee Group. Ld.CIT-DR therefore prayed that the order of the ld.CIT(A) may kindly be reversed as the same is contrary to the facts on records and the conclusion is not based upon the documents seized during the course of search on the third party though the Assessing Officer has not carried out any further enquiry nor any opportunity of cross examination was allowed to the assessee on this issue. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 29 15. After hearing the rival contentions of the parties and perusing the material available on record, we find that the basis of the addition made by the Assessing Officer was the documents seized as SMVD-01 to SMVD-18 from the Majee Group during the course of search on the Majee Group on 05.11.2020 which revealed the cash payments made by the assessee to Majee Group. The Assessing Officer calculated the quantity of coal purchases at 13919.25 MT from Majee Group and after applying estimated rate of coal @Rs. 4000/- per MT computed the unexplained purchases at Rs.5,56,77,000/-. The Assessing Officer also noted that the assessee has repaid certain cash loans amounting to Rs.3,50,00,000/-. The AO aggregated both these amounts to Rs.9,06,77,000/- and noted that this may be the unrecorded purchases. However he further noted that since the cash payments revealed on the basis of seized materials were on higher side, therefore he took higher of the two amounts, and, accordingly added Rs.29,93,22,967/- u/s.69C of the Act as unreported purchases in the books of accounts. We note that Ld.CIT(A) partly allowed the appeal by directing the Assessing Officer to apply GP rate @8.01% on the said estimated purchases. Now the assessee filed appeal before the tribunal challenging the application of 8.01% of the GP on the alleged bogus purchases whereas the revenue has challenged the order of the ld. CIT(A) allowing part relief to the assessee. We note that in this case the assessee has been denying the transactions right from the search days till the appellate proceedings Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 30 before the ld.CIT(A) that it had not made any purchases from Majee Group. We note that the assessee also requested the Assessing Officer to provide the alleged documents/evidences/information, which were found during the course of search on the Majee Group and others. The Assessing Officer has hopelessly failed to confront the assessee with the same. We also note that the observations of the Assessing Officer is based on the documents seized in the course of search which was never confronted to the assessee and the assessee has been denying any transactions with the Majee Group and also with the transporter who was alleged to have transported the material to the assessee premises. We note that AO calculated the estimated purchase quantity of coal at 13919 MT and the unexplained purchaseswere calculated at Rs.5,56,77,000/- by applying average rate of Rs.4000/- per MT to the quantity delivered to the assessee of 13919.25, which is again based on presumption and surmises whereas the actual purchase cost of coal varies from Rs.2,500/MT to Rs.17,000/MT depending upon the Carbon Content, Ash content and various other factors. Therefore, the very basis of the Assessing Officer that the assessee has made bogus purchases has no legs to stand. Moreover we find that the coal manufacturing requirement of the plant are within the acceptable norms and parameters as has been prescribed by the government in the manufacturing process of steel. Even if we assume that there has been purchase of coal from the Majee Group , then the same might have used for manufacturing plant but no evidence to that Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 31 effect was brought on records. We note that as the accounts of the assessee have not been disturbed and the manufacturing calculation of the assessee as disclosed in the audit report had not been disturbed and doubted by the ld. AO.Obviously, it cannot be assumed that the assessee has made any unaccounted purchases from the Majee Group. Further, for the purposes of making any addition u/s 69C of the Act something should have been found to show that the assessee had incurred unaccounted expenditure by way of purchase of coal from Majee group. In the present case, what has been found is certain bills/ receipts in the search of the Majee Group. The assessee has categorically denied such coal purchases from the Majee group. The concerned person of Majhi Group was not examined by the AO nor the assessee was given cross-examination of the said person. We also note that the AO has also not conducted any enquiry on the basis of bills and documents found during searh on Majee group. The so-called bills and documents found in the course of search on Majee group are not supported with other corroborating evidences These documents which have been found in the hands of the Majee Group are only documents having no initials. It also does not contain the clear name of the assessee. This being so, we are compelled to hold that the so-called sales which has been done by Majee Group in the name of the assessee do not belong to assessee. Effect of the addition as made by the ld. AO would mean that such unaccounted purchases of coal have resulted in unaccounted manufacturing of steel. For this, there is no evidences the raw material for the manufacture of the steel . This would again result in unaccounted manufacture of steel and there were no evidences of any such manufacture much less Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 32 unaccounted sale of such unaccounted manufacture iron and steel. The further result of this addition is that the stock statement of the assessee in regard to so called unaccounted purchases of coal would have to be adjusted thereby distorting the entire manufacturing cost structure of the assessee. None of this have been found much less alleged. Obviously, such addition cannot be made. Insofar as the coal purchase from Majee group is concerned , the assessee has categorically denied the transactions by stating that it has never made purchases from Majee Group either earlier or later nor during the year. The person who is taken the assessee’s name has also not been put to assessee for cross-examination. In these circumstances, the addition made by the ld. AO and the estimation as made by the ld. CIT (A) cannot be sustained and would stand deleted. We further note that the statements recorded during the course of search of Shri Anup Majee and materials gathered during search on such third party , which was relied by the ld. AO without confronting the same to the assessee assessee or allowing any cross examination which is in violation of principle of natural justice as has been held in the case of Andaman Timber Industries Vs. CIT (2015) 10 TMI 442 (SC)&PCIT vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-2022]. 16. We have also perused the provisions of Section 142(2) and 142(3) of the Act and find that Section 142(2) of the Act deals with the obtaining full information in respect of income or loss of any person qua which the ld. AO wants enquire into as he considered necessary whereas the provisions of Section 142(3) of the Act provides that unless the assessment is made u/s 144 of the Act ,the assessee has to be given an Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 33 opportunity of hearing in respect of any material gathered on the basis of enquiry u/s 142(2) of the Act or any audit under sub section 2A of the Act, which are proposed to be relied for the purpose of assessment. However, in the present case, we note that the material gathered by the ld. AO during the course of enquiry were never confronted to the assessee thereby violating the mandate of provisions of Section 142(2) and 142(3) of the Act as the information gathered at the back of the assessee was used in framing the assessment against the assessee without providing any opportunity to the assessee. The case of the assessee find support from the decision of the co-ordinate Bench in case of M/s SPML Infra Ltd. Vs DCIT ITA No. 1228/KOL/2018, vide order dated 17.01.2020, wherein it has been held as under:- “\"14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement recorded by some other officer in some other proceedings more particularly having no bearing on the transaction with the assessee does not create any material evidence against the assessee. This is because section 142(2) mandates any such material adverse to the facts of assessee collected by AO u/s 142(1) has to be necessarily put to the assessee u/s 142(3) before utilizing the same for assessment so as to constitute as reliable material evidence through the process of assessment u/s 143(3) of the Act.\" 16. Similarly, in the case of ACIT Vs. Sur Buildcon Pvt. Ltd. ITA No. 6174/DEL/2013, vide order dated 15.07.2021 has held as under:- Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 34 “7.11 Applying the law to the case at hand, it is evident that the Inspector Reports, that had been relied upon by the A.O., have been reproduced in length for the first time in the Assessment Orders only. The A.O., by failing to confront the assessee with the evidence he had gathered u/s 142(2) Act, has, therefore, erroneously skipped the mandatory intermediary step prescribed u/s 142(3) of the Act. Thus, when the A.O. has directly gone on to pass the Assessment Orders u/s 147/143(3) of the Act to make the impugned additions u/s 68, the same is in direct violation of the procedure of enquiry prescribed in the Statute that inherently encompasses the Principle (s) of Natural Justice. We derive support to our line of reasoning from the decision of the coordinate Bench of the Hon'ble Kolkata Tribunal in M/s. SPML Infra Ltd. vs. DCIT, ITA No. 1228/Kol/2018 wherein it has been held as under: ……………………………………. It was further held that, 7.14 Since the results of the enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessees, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessees.” 17. Similarly, PCIT Vs. Best Infrastructure (India) Pvt. ltd. (2017) 397 ITR 0082 (Delhi) and others. It was held that statement recorded u/s 132(4) of the Act do not by these constitute incriminating material and copy of the statement together that opportunity to cross-examine the deponent has to be provided to the assessee. The Hon'ble court held that if the statement is retracted or if cross examination is not provided the statement has to be discarded, wherein it is held as under:- Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 35 \"Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assesses The onus is on the Revenue to ensure his presence” 18. Therefore, the addition made on the said materials/statement and without cross-examination is not sustainable in the eyes of law. Consequently, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the addition. The ground no. 6 to 12 are allowed. 19. The issue raised in Ground No.13 is against the order of the ld.CIT(A) in confirming the addition of Rs.8,52,00,000/- made by the Assessing Officer without appreciating the fact that the alleged sum of Rs.8,52,00,000/- was not related to the assessee and such addition made by the Assessing Officer without examining the materials of third party treating such sum as part of alleged undisclosed purchase although there was no such purchases as contended in Grounds No.6 to 12 above. 20. This ground is consequential to the grounds raised in Ground Nos.6 to 12 which we have decided in favour of the assessee. Accordingly, Ground No.13 is allowed. 21. Ground Nos.14 to 16 are against the order of the ld. CIT(A) in confirming the addition of Rs.1,20,95,958/- as made by the Assessing Officer in respect of alleged bogus purchase based on the report of CGST Department by applying rate of 8.01% to the total purchases of Rs.15,10,10,712/-, thereby confirming the addition of Rs.1,20,95,958/-. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 36 22. Facts in brief are that the Assessing Officer during the course of assessment proceedings observed that the department has information that M/s Reeja Trading Pvt. Ltd. has provided bogus bills amounting to Rs.15,10,10,712/- to the assessee during the financial year 2018-2019 relevant to the assessment year under consideration. Further the Commissioner of CGST & C.Ex. Howrah Commissionerate vide report No.5 dated 31.05.2019 reported that an investigation has been initiated in respect of M/s Reeja Trading Pvt. Ltd., however, no company in the name and style of M/s Reeja Trading Pvt. Ltd. could be found to be existing at the registered place of business. In view of the above, it was held that the said company is fake company having no physical existence. It was further noted in the report that on checking the GST portal it is found that the said supplier had not filed any GSTR-3B. Accordingly the AO issued notice to the assessee u/s.142(1) of the Act which was replied by the assessee by submitting the copy of ledger account maintained in its books, bank statement highlighting the transactions related with the aforesaid party and vouchers etc, however, the Assessing Officer on the basis of GST Commissioner report treated the said purchase as bogus and after following the decision of the Hon’ble Gujarat High Court in the case of Simit P. Sheth, reported in 356 ITR 451 (Gujarat) applied a profit rate @8.01% on the purchase amount of Rs.15,10,10,712/- and estimated the income at Rs.1,20,95,958/- and added the same to the total income of the assessee. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 37 23. In appeal, the ld. CIT(A) affirmed the order of the Assessing Officer on this issue by observing and holding as under :- Ground No.7 & Additional Ground Nos.9 to 11 These grounds are in relation to the disallowance of purchases made from Mis Reeja Trading Pvt Ltd of Rs.1,20,95,958/-, The facts as noted are that, the AO was in receipt of information from the GST Department that M/s Reeja Trading Pvt Ltd had provided bogus purchases bills to the appellant during FY 2018-19. The relevant report of the GST Department, which was confronted to the appellant, as well, is noted to be as under- \"An investigation has been Initiated from the Hoors. Anti Evasion Unit, Howrah CGST &C.Ex Commissionerate in respect of of M/s Reeja Trading Pvt.Ltd( located at 10/1, Dr. Abani Dutta Road Salkia, Howrah-711108. However no company in the name and style of Ms. Reeja Trading Pvt. Ltd could be found to be existing at the registered place of business In view of the above, it seems that Mis. Reeja Trading Pvt. Ltd is a fake company having no physical existence. On checking the GST portalit is seen that the said supplier had not filed any GSTR-3B. It is also noticed that M/s Reoja Trading Pvt. Ltd have no purchase transactions (ie. GSTR-2A) since inception. However GSTR-1 for the Period April 2018 to August 2018 could be found It is observed that M/s Reeja Trading Pvt Ltd was not carrying on any actual business but was providing fake accommodation bills to parties including the appellant. The said company was found to exist only on paper and that there was no manufacturing operations of the said entity. When confronted with the same, the appellant, in response, is noted to have submitted the relevant invoices, ledgers, bank statements etc. The AO however held these purchases to be bogus and added the profit element in the bogus purchases of Rs. 15,10,10,712/-, which was estimated at 8.01% being Rs.1.20,95,958 In the appellate proceedings, the appellant has objected to the action of estimation of profits as well. According to the appellant since the purchases were supported by evidences, it ought to have been accepted. It has also been contended that there were corresponding sales to these purchases, which had not been disputed and that, therefore, no addition was permissible. Having considered the submissions of the appellant, I find that the appellant has misunderstood the AO's action of estimating the Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 38 profits embedded in these bogus purchases. From the material available on record, it is noted that the fact that assessee had purchased these materials is not in dispute. The Ld. AR has rightly pointed out that, the quantitative details reported in the tax audit report, consumption of raw materials, corresponding sales and the book results have not been rejected by the AO. It is, therefore, a case where the purchases were indeed made, but the parties, who the assessee claims to have supplied these purchases, are not genuine. Accordingly, it has been held by several Courts that where purchases were made but where the suppliers were found to be bogus, then inflation of purchase accommodation bills cannot be ruled out and for such reason, the Courts have resorted to estimation of inflation/suppression of profits. In this regard, I gainfully refer to thedecision of the Hon'ble Gujarat High Court in the case of CIT Vs Bholanath Polyfab (P.) Ltd. (355 ITR 290) wherein similar issue was involved. In that case also, it is noted that the Hon'ble Tribunal was of the opinion that the purchases might have been made from bogus parties but the purchases themselves were not bogus. Considering such a situation, this Tribunal was of the opinion that not the entire amount of purchases but the profit margin embedded in such amount would be subjected to tax. On appeal by the Revenue, the Hon'ble High Court is noted to have upheld this finding of the Tribunal Similarly, I find that the Hon'ble Bombay High Court has also held that, only the profit element embedded in the purchases made from parties found to be bogus by Sales Tax GST Department has to be brought to tax and that the entire value of purchases cannot be disallowed, In the case of PCIT vs Mohommad Haji Adam & Co (103 taxmann.com 459). the Hon'ble High Court has held as under- \"8. In the present case, as noted above, the assessee was a trader of fabrics. The A. O found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader The Tribunal, therefore, correctly restricted the additions Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 39 limited to the extent of bringing the G on purchases at the same rate of other genuine purchases. Similar view has been held in the case of PCIT Central-4 vs Paramshakti Distributors Pvt Ltd (ITA No. 413 of 2017) wherein it was held as under. 2. The first question pertains to restricting the addition of Rs.23.16 Lakhs to Rs 2,21,600/- by the Tribunal. The Assessing Officer had made the said addition on the ground that the assessee's purchases were found to be bogus. The entire purchase amount was therefore, added to the assessee's income. The Tribunal, however, restricted to the said sum of Rs.2,21,600/-. The Tribunal recorded that the Assessing Officer has not rejected either the purchases or the sales made out of the said purchases. The Tribunal therefore, was of the opinion that the addition should be restricted to 10% of the total purchases. The Revenue strongly disputes this proposition. 3. Without elaboration, what the Tribunal by the impugned Judgment held is that the Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure.We do not find any error in the view of the Tribunal. No question of law arises.\" It is further observed that the AO had relied upon the decision of the Gujarat High Court in Simit P. Sheth (356 ITR 451) and took the view that entire purchases could not be added as bogus but what needed to be added to the total income of the assessee was the profit element embedded in such transaction. The AO noted the gross profit of the assessee to be 8.01% and estimated the profit accordingly. In my considered view, the AO's action of estimating the profit at 8.01% met the ends of justice and does not call for any interference. For these reasons, these grounds stands dismissed. 24. Ld.CIT-DR, on the other hand, submitted that the addition was made on the basis of credible information in the form of report of the GST Commissioner wherein it was stated that M/s Reeja Trading Pvt. Ltd. is not existing on the address given and is also not filing return of GSTR-3B. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 40 Therefore, the assessee has obtained bogus bills from the said party without actually purchasing the goods physically. Ld. CIT-DR also stated that the ld.CIT(A) has rightly upheld the order of the Assessing Officer. Thus, it was prayed by the ld. CIT-DR that the ground raised by the assessee may be dismissed.The written submission filed by the learned. DR are extracted as under:- A. Addition as per information received from CGST (AY-2019-20): In this case, assessment was completed u/s.147 for AYs 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21. Assessment for 2021-22 was completed u/s.143(3). In the AY 2019-20, addition was made on the basis of information received from the Commissioner of CGST & Central Excise, Howrah Commissionerate (para-11/Page 43 to 45 of the assessment order) and not on the basis of any seized material. It was reported that one M/s Reeja Trading Pvt. Ltd was a fake company having no business at all. It has not made any purchase during the year and also not filed GSTR. However, the assessee has shown purchase of Rs.15,10,10,712/-from the said bogus company. Treating the same as bogus purchase, Ld. A.O. has added 8% of bogus purchase shown as gross profit. 25. After hearing the rival contentions of the parties and perusing the material available on record, we find that the assessee was found to have made purchases from M/s Reeja trading Pvt. Ltd. and according to the Commissioner of CGST &CEx. Howrah the said company is not existing company. The transactions made by the said company was held to be sham transactions. The Assessing Officer found that the assessee has made purchases of Rs.15,10,10,712/- from the said company and in order to estimate the income, a rate of 8.01% was applied. We note that though the Assessing Officer has not conducted any enquiry on the issue and Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 41 directly relied on the report of the Commissionerate, however, on the other hand, we find that the assessee has made the purchases from the said party as evidenced by the bills and vouchers, cheques etc. produced before us. We note that the AO has not conducted any enquiry himself but relied solely on the report of Commissioner of CGST & C Ex. Howrah to treat the purchases as bogus.Thus the addition made on the basis of said report by the AO is wrong and can not be sustained. Therefore the order of ld CIT(A) directing the AO to apply a GP rate of 8.01% on the so called bogus purchases is set aside and we direct the Assessing Officer to delete the addition. The grounds no. 14 to 16 are allowed. Thus, the appeal of the assessee in ITA No.931/Kol/2025 is allowed. 26. In other connected appeals, i.e. ITA Nos.1194/Kol/2025 for AY 2016-2017, ITA No.1195/Kol/2025 for A.Y.2017-2018, ITA No.1196/Kol/2025 for A.Y.2018-2019, ITA No.1197/Kol/2025, for A.Y.2020-2021 & ITA No.1198/Kol/2025 for A.Y.2021-2022, the issues are similar except different in figures, therefore, all the other appeals of the assessee are partly allowed and the findings given by us in ITA No.931/Kol/2025 shall apply mutatis mutandis to the other appeals also. 27. Now, we shall take into consideration the appeals of the revenue, wherein similar issues have been raised by the revenue in the respective appeals for the respective assessment years under consideration. However, except ITA No.1541/Kol/2025 (AY:2018-2019), all the other appeals of the revenue have been filed belatedly by the following days :- Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 42 ITA No. Assessment Year No. of Delay 1436/Kol/25 2016-2017 02 days 1515/Kol/25 2017-2018 14 days 1560/Kol/25 2019-2020 47 days 1561/Kol/25 2020-2021 17 days 1591/Kol/25 2021-2022 18 days 28. Considering the submissions of the ld.CIT-DR and the facts and circumstances of the case, we condone the respective delays in filing the appeals by the revenue for respective assessment years under consideration and the appeals of the revenue are admitted for hearing along with other appeals. 29. First we shall decide appeal of the revenue in ITA No.1560/Kol/2025 for A.Y.2019-2020 and findings of the same shall be applied to the other appeals. The grounds raised by the revenue in the said appeal for A.Y.2019-2020 reads as under :- 1. Whether the Ld. CIT(A) erred in restricting the addition to the profit margin of 8.01% (Rs. 2,39,75,770/-) on undisclosed purchases of Rs. 29,93,22,967/- from Majee Group, ignoring that the assessee failed to explain the source of funds for such purchases, attracting Section 69C, and the entire amount represents unexplained expenditure out of undisclosed income, as per seized documents (Tally backups from Niraj Singh's premises). 2. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 8,52,00,000/- by misapplying the principle of telescoping, as the cash loan was separately evidenced by seized cash books (SMVD-01 to SMVD-18) and was distinct from coal purchase 2 transactions, and the assessee could not prove the source of funds for the loan, and the Ld. CIT(A) ignored that the alleged \"cash in hand\" from coal sales was unsubstantiated and speculative, and telescoping applies only to the same income stream, not distinct unexplained transactions. 3. Whether the Ld. CIT(A) erred in deleting additions of Rs. 48,85,00,000/- u/s 69D and Interest of Rs. 3,41,95,000/- despite incriminating evidence (seized diaries USK-01 to USK-31) Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 43 showing direct references to the assessee in Kasera's records 3 (e.g., letter head in USK-20, rukka transactions in USK-7), and Praveen Kasera's statement under Section 132(4) corroborating cash loan activities, and violation of Section 292C, which presumes seized documents as authentic unless rebutted (assessee failed to rebut). 4. Whether the Ld. CIT(A) ignored Section 69D's mandate by not treating unexplained cash loans (Rs. 20,000) as income, despite the assessee's failure to record transactions in books and provide evidence of legitimate sources. 5. Whether the Ld. CIT(A) wrongly dismissed the addition of Rs. 3,41,95,000/-(interest @7% on Rs. 48.85 Cr.) as \"consequential,\" ignoring that the interest expenditure was inherently linked to the unexplained cash loan and the assessee's failure to explain the expenditure warranted its disallowance under Section 69C. 6. Whether the Ld. CIT(A) erred in holding that no incriminating material was found in the assessee's search, disregarding the assessee's inclusion in a larger search operation (Agarwal/Majee/Kasera Groups), and third-party evidence (Kasera's records) directly implicating the assessee, as upheld in ACIT vs. Paramshakti Distributors (ITAT Kolkata). 7. Whether the Ld. CIT(A) violated the preponderance of probability principle (CIT vs. Durga Prasad More) by demanding \"strict proof\" instead of relying on Seized documents, Circumstantial evidence and the assessee's failure to rebut allegations. 8. The tax effect in this case (68,23,04,597/- including EC) is above the threshold prescribed in CBDT Circular No. 9/2024 dated 17/09/2024, justifying the filing of this appeal. 9. The department craves the right to add, alter, amend OR withdraw any ground of appeal before OR at the time of hearing. 30. Ground No.1 is against the order of the ld.CIT(A) restricting the addition to the profit margin of 8.01% on undisclosed purchases from Majee Group as against the addition of entire purchases by the AO. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 44 31. We have already decided the issue in favour of the assessee while deciding the appeal of the assessee in the ground Nos.6 to 12 in ITA No.931/Kol/2025 (supra), wherein we have held that the addition made by the Assessing Officer is not sustainable in the eyes of law. Therefore, this ground of revenue stands infructuous and the same is dismissed. 32. Ground No.2 is whether the Ld. CIT(A) erred in deleting the addition of Rs. 8,52,00,000/- by misapplying the principle of telescoping, as the cash loan was separately evidenced by seized cash books (SMVD-01 to SMVD-18) and was distinct from coal purchase transactions, and the assessee could not prove the source of funds for the loan, and the Ld. CIT(A) ignored that the alleged \"cash in hand\" from coal sales was unsubstantiated and speculative, and telescoping applies only to the same income stream, not distinct unexplained transactions. The ground no. 2 is consequential to the ground decided by us in assessee’s appeal in ITA No.931/Kol/2025 in Ground Nos.6 to 12. Thus, this ground needs no separate adjudication.The ground no. 2 is dismissed. 33. Ground No.3 is against the order of ld. CIT(A) in deleting the addition of Rs.48,85,00,000/- as made by the AO u/s.69D of the Act in respect of cash loans taken from Kasera group. 34. Facts in brief are that during the search and survey operations conducted in the case of Finance Brokers Kaseraon 30.11.2018 by the Investigation Directorate, Kolkata some incriminating documents Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 45 pertaining to cash loanswere seized from the residence of finance brokers Kasera. The seized documents inter alia include cash loan transactions. During the course of search, statement of Shri Praveen Kumar Kasera son of Shri Uma Shankar Kasera was recorded on oath u/s 132(4) on 2.12.2018. In the said statement, he has stated that he along with his father Sri Uma Shankar Kasera and his brothers used to arrange cash loans in lieu of commission. One Rukka issued by M/s Shakambari Ispat & Power Ltd. was seized vide USK 20 Page No. 24 from the premises of Kasera Group. There are several other entries recorded on seized documents found and seized from the premises of Kasera Group. The addition on this issue was done by the AO on the basis of entries recorded on seized documents found and seized from the premises of Kasera Group.The Assessing Officer noted that the rukka as seized from the premises of Sri Kasera is a form of hundi and the handwritten entries in books of Kasera are the details regarding transactions in cash through hundis. Hence the Assessing Officer noted that the same qualify for addition u/s.69D of the Act and treated the same as income of the assessee u/s.69D of the Act. The Assessing Officer also charged interest on the said amount at the rate of 7% on the loans and added Rs.3,41,95,000/- to the income of the assessee under the provisions of Section 69C of the Act. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 46 35. In appeal, the ld.CIT(A) deleted the additions after taking into account the contentions and submissions of the assessee by observing and holding as under :- Ground No. 7 & Additional Ground No. 12 to 24 These grounds relate to the addition of Rs.48,85,00,000/- made under section 69D of the Act and further addition of unexplained interest expenditure of Rs.3,41,95,000/-. The AO is noted to have observed that, there was a search action conducted upon one Mr. Uma Shankar Kasera and Mr. Praveen Kasera, whose statement was recorded on oath under section 132(4) of the Act dated 02.12.2018, wherein they had admitted that they were arranging cash loans in lieu of commission. It was observed that one promissory note on the letterhead of the assessee was also seized, which stated that, the appellant was in receipt of Rs.50,000/-from one Mr. Amit Agarwal. According to the AO, there was a two digit suppression and that the amount was Rs.50,00,000/- The AO further reproduced an image of a sheet from diary of Mr. Kasera to suggest that this promissory was found mentioned therein, which according to AO, showed that the transaction noted in seized documents pertained to the appellant. On the basis of this inference, the Ld. AO is noted to have tabulated several notings found in the seized diaries of Mr. Kasera wherein indiscriminate notings sounding similar to appellant's name was put together and it was deduced that all these notings related to the appellant. It was further interpreted that several symbols against these notings were code for the amount transacted. The AO is noted to have supposedly deciphered notings to the tune of Rs.48,85,00,000/-, Rejecting the objections raised by the appellant, the AO is noted to have held that the appellant was in receipt of cash loans of Rs.48,85,00,000/- through Mr. Kasera and for the reasons set out in Para 12.2 to 12.4 of his order, he added the impugned sum under section 89D of the Act. Further referring to the statement of Mr. Kasera, the Ld. AO also estimated interest of 7% which would have been paid by the appellant to Mr. Kasera and accordingly made addition of Rs.3,41,95,000/- by way of unexplained interest expenditure under section 69C of the Act. I have taken into consideration the submissions of the appellant, already extracted above and the findings of the AO as well as the material placed on record, It is noted that the impugned addition emanated from the information available with the Department, which was gathered during the course of search and seizure operation conducted under section 132 of the Act on 30.11.2018 upon finance broker, Mr. Praveen Kumar Kasera, basis which it has Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 47 been inferred that the appellant has undertaken cash loan transactions of Rs.48,85,00,000/-during the relevant year. The impugned addition is found to be based on certain notingsfound in diaries in the premises of Mr. Kasera, which according to the AO was found in his statement given under section 132(4) of the Act explaining the same. The Ld, AO, in the original proceedings, did not bring on record the statement of Mr. Kasera, which I find was provided only in the remand proceedings. Upon analysis of the notings found in the seized diaries, I find the same to be stray notings made in abbreviations, code names, symbols etc.. which on stand-alone basis is not comprehensible and that the inference drawn by the AO was solely based on the statement of Mr. Praveen Kasera, wherein, according to AO, he had explained the contents of these seized diaries. Since on stand-alone basis, these notings are found to be incomprehensible, I deem it fit to first examine the statement of Mr. Praveen Kasera. Reading of the statement of Praveen Kasera dated 30.11.2018 which was supplied in the remand proceedings, shows that the said statement lacks any evidence or material against or in relation to the appellant. I have carefully gone through the entire statement and it is gathered that there is no averment made against the assessee in which Mr. Praveen Kumar Kasera has either stated or admitted to have transacted cash loans with the appellant. My analysis of the statement of Mr. Praveen Kumar Kasera is as under Q.No. Content in brief Entities/Persons referred to Remarks Whether relates or pertains to the assessee 6 Praveen Kumar Kasera’s source of income NA He states that he earned commission income for the loans he arranged for various parties, both in cash and through banking transactions No, there is no mention or reference of the assessee in the question or the answer. 12. Praveen Kumar Kasera’s companies and their business NA He states that the companies belonging too the Kasera family were used to lend their own monies and that previously (5-6 years ago) his father Mr. Uma Shankar Kasera used to look after the business and that now he looks after the business of arranging loans. No, there is no mention or reference of the assessee in the question or the answer. 19. Certain loan transactions found in seized documents marked with ID:USK/1, USK/2, USK/3, USK/6, (i) Forum Retail & Victor Glass (ii) SRMB/SRMB Srijan Pvt. Ltd. (iii) Kisan Jalan & The question and answer pertains to different persons/entities. There is no mention of No, there is no mention or reference of the assessee in the question or the Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 48 USK/7 Steller (iv) Binay Poddar & Sunil Saraf the name of the assessee in the said question and therefore this particular statement is irrelevant answer. 21 Certain loan transactions found in seized documents marked with ID:USK/1(Pg.155 thereof) Loans arranged to following entities on behalf of Subash Kedia (i) Ganges Rope Company Ltd (ii) Padma Logistic &KhanijPvt. Ltd. (iii) Banka Enterprises Pvt. Ltd (iv) Fairdeal merchants Pvt. Ltd The question and answer pertains to different persons/entities viz., purportedly Subhash Kedia. . There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. 22& 23 Certain loan transactions found in seized documents marked with ID:USK/3(Pg.123&129 thereof) Loans arranged to various entities on behalf of SRMB &Rybesore The question and answer pertains to different persons/entities viz., purportedly SRMB &Tubesore. Moreover, L.N.Agarwal and S.N.Agarwal are not related persons. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. 24. Certain loan transactions found in seized documents marked with ID:USK/5 (i) Swift Tie UP Pvt. Ltd. (ii) KB Motors Pvt Ltd (iii) Tristar vinimayPvt. Ltd. (iv) GDA Foods Pvt. Ltd. (v) Satyam Telecom Pvt. Ltd. (vi) Linkup VintradePvt. Ltd The question and answer pertains to different persons/entities viz., purportedly entities under the control of the Kasera family. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. 28 Certain loan transactions found in seized documents marked with ID:USK/23 (Pg.1to16 thereof) (i) Raj Kumar Bamalwa-Sarswati Devi (ii) C Jhunjhunwala- HM Singhania (iii) MKGoyal-SM Singhania (iv) GGDalmia-H M Singhania (v) Sunil Bansal- Saraswati Devi (vi) Jalan-Saraswati devi (vii) Kisna Modi- The question and answer pertains to different persons/entities. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 49 Saraswati Devi (viii) Jayant Kumar Agarwal-Kishan Jalan (ix) CS Textiles Pvt. Ltd.-saraswati Devi (x) SRMB Srijan Pvt. Ltd.- HMSinghania (xi) Pawan Kumar Gupta-Saraswati Devi (xii) Sree Bishandas iron Works-HM Singhania (xiii) GPT Group- Manoj Dalmia 32 Certain loan transactions found in seized documents marked with ID:USK/28 (Pg.1to16 thereof) (i) Hemaraj Industries Pvt. Ltd (ii) Part IspatPvt. Ltd. The question and answer pertains to different persons/entities. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant No, there is no mention or reference of the assessee in the question or the answer. 69 Brokerage from certain entities (i) Century Polyboards India ltd (ii) Radhe Shyam Modi (iii) timer Software Pvt. Ltd (iv) Rose Valley Plaza pvt.Ltd. (v) Banka Enterprises Pvt. Ltd (vi) Girwar Impex & Holdings Pvt. Ltd. (vii) A.V.Ispatpvt. Ltd. (viii) Bhagwati Exim Pvt. Ltd. (ix) Lallachera Tea Co. Pvt. Ltd (x) S.Beriwalapvt. Ltd. (xi) Tirapati Vincom Pvt Ltd (xii) Ankit Commo Trade Pvt Ltd (xiii) Shyam Mathur & Company Pvt Ltd (xiv) Hi Tech Resource Management Ltd (xv) Sunlight Mercandise Pvt Ltd (xvi) Park Complex The question and answer pertains to different persons/entities. There is no mention of the name of the assessee in the said question and therefore this particular statement is irrelevant Further, it is categorically denied that the assessee has ever received commission for arranging cash loan trasnactions No, there is no mention or reference of the assessee in the question or the answer. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 50 Pvt Ltd (xvii) Sawada Properties Pvt Ltd (xviii) Ramanlal Madanlal Trading Pvt Ltd (xix) Follawel Engineering Ltd (xx) HarshreyaTradecom Pvt Ltd (xxxi) Hooghly Alloy & Steels Co. Pvt Ltd (xxii) Saptrishi Cement & Industries Ltd (xxiii) South City Projects Kolkata Ltd (xxiv) Harish Tie Up Pvt Ltd (xxv) Emami Capital Market Ltd (xxvi) SubhmangalVanijya Pvt Ltd (xxvii) Sri Rani Sati Abasan Pvt Ltd (xxviii) Jagdamba Niketan Pvt Ltd (xxix) Potential Distributors Pvt Ltd From the foregoing analysis of the statement of Mr. Kasera, none of the individuals or Dersons or entities as mentioned in the statement refer to the assessee and/or its promoters.It is observed that his statement was quite extensive wherein he has named the persons for whom he would raise cash loans and receive brokerage as well. According to Ld. AO, the appellant supposedly had transactions of Rs.48.85 crores. If that be so, the name of the appellant would have featured in the answers given by Mr. Kasera in his statement, which I find to be absent. I am, therefore, in agreement with the appellant that there was no rationale basis for the Ld. AO to hold that the appellant had entered into cash based transactions through Mr. Praveen Kumar Kasera I, therefore, find that his statement does not contain anything remotely adverse or incriminating in relation to the appellant Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 51 Apart from the above it is imperative to also take note of the lact that, pursuant to the directions issued by this office, the AO had made enquiries from Mr. Kasera in the remand proceedings and be is noted to have clearly denied Having any transactions with the appellant. Accordingly the above analysis of his statement coupled with the fact that Mr. Kasera had also specifically denied having transactions with the appellant, in my considered view, supports the appellant's case that his statement was not of any consequence in their case and that no adverse view could have been taken on the basis of the same. Now I come to the notings found in the seized diaries and one loose paper found on the letter-head of the appellant. It is noted that the AG has complied certain loose notings in the diaries seized from the premises of the searched person and used it against the appellant. It is noted that the term \"Shakhambari and its derivatives have been presumed to be relating to the appellant. It is found to have been presumed for the reason that there is no adverse statement of Mr. Kasera, the searched person stating so that these notings relate to the appellant. In fact, as noted above, he had denied the same. I, therefore, find force in the appellant's contention that the inference drawn by the AD was based on surmises and not any actual evidence. It was a case of suspicion, which was never taken to its logical conclusion. I agree with the appellant, that it was unjust on the AO's part to have drawn such a presumption, without any supporting evidence, and assumed that the assessee had availed of the cash based loan intermediation services provided by Mr. Kasera. It appears to be a case where an arbitrary exercise is being carried out by shooting arrows in the dark based on subjective notions drawn from the scribblings/notings found on loose papers/pages from diaries seized from the premises of the searched person, Le. Mr. Praveen Kumar Kasera, which in my view, is unsustainable. It is noted that the referred seized documents are nothing but loose sheets of paper/ extracts from diary having dumb notings, which do not in any way incriminate the assessee of having availed cash loans aggregating to Rs. 48,85,00,000/- during the relevant year. There is no basis provided for such grouping exercise, particularly when the statement dated 30.11.2018 of Mr. Praveen Kasera does not name the appellant. Had that been the fact then the same would have been found mentioned in the answers given by Mr. Praveen Kasera to the questions posed to him in his statement under section 132(4) of the Act, which is clearly not the case, as has already been discussed above, This lends complete credence that the non-mention of the name of the appellant in the statement of Mr. Kasera was not just by chance, but reflects the factual Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 52 position that the assessee had no transactions with Mr. Kasera in his personal capacity whatsoever. The Ld. AR for the appellant also showed that from the data available in public domain, which shows that there so many persons/entities in Kolkata, let alone India, which have the name Shakhambani, and thus when there can be several persons whose names can start with or contain the words \"Shakhambar the appellant cannot be singled out and said to be the sole person to have undertaken cash loan transactions appearing in these pages with the name \"Shakhamban being mentioned T'also find force in his alternate argument that, it may also be a case that all these notings in the words Shakhambari may pertain to someone else, being a codename used by the finance broker to note transactions of someone else in the hopes of not leading the authorities to the concerned actual person to whom such entries pertain, and even possibly mislead the relevant statutory authonties. The appellant has rightly explained that, if the AO's assumption that the notings found in the seized material pertains to them, is taken at its face value, particularly when the searched pension (Mr. Kasera) in his statement under section 132(4) of the Act has not incriminated the appellant, then any person for that matter can mention anyone's name in any loose paper/diary at their sweet will and that can be used to implicate such other person for no fault of the latter. All these contentions of the appellant are found to have sufficient merit and this could have been dispelled only upon independent enquiry. As noted earlier, the searched person in his cross examination has denied having any transactions with the appellant and therefore, the enquiry conducted in remand proceedings supports the appellant's case. I find that the appellant's case is also supported by several judgments of the Hon'ble Apex Court wherein it has been held that notings found on loose papers do not have evidentiary value. The presumption under section 132(4A) r.w.s. 292C is applicable to the third party in whose case seized material has been recovered and not in case of the appellant. I find that similar facts were involved in the decisions of the Hon'ble Supreme Court in the case of C.B.I. v. V.C. Shukla [1998] 3 SCC 410 and Common Cause (A Registered Society) Vs Union of India (394 ITR 220) Involving similar facts and circumstances as involved in thepresent case. The findings of the Hon'ble Supreme Court in the case of Common Cause (supra), at paragraphs 278 to 282 of the judgment, which is relevant to the present case, is as follows:- \"278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 53 had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of \"books of accounts\" and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of antries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent eviderice is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note bookipad but not loose sheets The following extract being relevant is quoted herein below: (SCC pp.42327, paras 14 and 20) \"14. In setting aside the order of the trial court the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words 70... an account presupposes the existence or persons such as a seller and a purchaser, creditor and debtor, Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in hecourse of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full, they have been shown in abreviated form. Only certain letters have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to.\" 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 54 account nor they were regularly kept in the course ofbusiness, he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glarice of the books would show that the entries were made therein long after the purported transactions took place in support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept\" 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus (SCC p.433 paru 37) 37. In Beni v. Bisan Dayal (A. R 1925 Nagpur 445] it was observed tat entries in books of account are not by themselves sufficient to charge any person with liablity, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entres relate an din absence of such evidence no relief can be given to the party who rallies upon such entries to support his claim against another In Hira Lalv, Ram Rakia (AIR 1953 Pepsu 113) the High Court while negativing a confention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that lentives in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not. therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 55 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court.\" 26. It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. Following the law declared by the Hon'ble Apex Court, we are of the view that the action taken by the respondent/Revenue against the Assessee based on the material contained in the diaries/loose sheets, are contrary to the law declared by the Hon'ble Apex Court. in that view of the matter, impugned notices issued under Section 1530 of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal\" I also find the decision rendered by the Hon'ble Delhi High Court in the case of CIT vs Sant Lal (118 taxmann.com 432) to be applicable to the present case. In the decided case also. the Court held that no addition can be made in the hands of an assessee on the basis of any diary seized during the course of search proceedings of a third party, since such diary was neither found at the assessee's premise and that the department had failed to provide any cogent material or gather any corroborative evidence to substantiate that it pertained to the assessee. The Court observed that the searched person could have written anyone's name on his own sweet will in his diary and therefore such noting on stand-alone basis along with the biased statement of the searched person cannot be used as a reliable evidence against the assessee. Now coming to the document ID USK-20 Page No. 24, I find again that the entire analysis of the AO was based on presumption. Undisputedly, the said document was found in third party's premises on 30.11.2018, however the name of searched person is not mentioned on this document. It is therefore not clear as to how could he have explained the contents of this document. The appellant has brought to notice that, there was no explanation given by Mr. Kasera in relation to this document in his statement recorded under section 132(4) of the Act. Accordingly, when the search was conducted upon the appellant on 22.09.2021, the Investigation team could have very well enquired from the appellant regarding Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 56 the contents of the same, which we find has not been done. Even when in assessment, the appellant denied its contents, the AO is found to have not made any further enquines but simply rejected the same. Likewise, the AO did not make any enquiries from Mr. Amit Agarwal mentioned in this document. It is also not clear as to why was this document in possession of Mr. Kasera, and not the appellant or Mr. Amit Agarwal, who by AO's logic ought to have been in possession of this supposed promissory note, it is indeed true that this document raises a suspicion against the appellant, but the AO in the original as well as remand proceedings did not take the matters to any logical conclusion. Rather than gathering evidence against the appellant, the AD acted only on surmises. Hence, for these reasons, even this document is found to be unreliable. For the above reasons, I, therefore, hold that the documents seized from the premises of Mr. Kasera in the form of loose papers etc, are inadmissible evidence in as much as the same does not contain anything whatsoever to suggest that the appellant had taken any cash loan, particularly when Mr. Kasera had never incriminated the appellant and had also denied having any transactions with the appellant in the remand proceedings. I, therefore, hold that the impugned addition of Rs.48,85,00,000/- made under section 69D and the consequential addition of Rs.3,41,95,000/- under section 69C of the Act was unsustainable both on facts and in law and is therefore directed to be deleted. These grounds are, therefore, allowed. 36. Aggrieved with the above order of the ld.CIT(A), the revenue is in appeal before the Tribunal. 37. The ld. CIT-DR vehemently supported the order of the ld.AO and submitted that the ld.CIT(A) grossly erred in deleting the addition made u/s.69D of the Act holding that the documents seized from the premises of Mr. Kasera in the form of loose papers etc, are inadmissible evidences in as much as the same does not contain anything whatsoever to suggest that the assessee had taken any cash loans, particularly when Mr. Kasera had never named the assessee and had also denied having any Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 57 transactions with the appellant in the remand proceedings. However, the AO has rightly noted that the rukka as seized from the premises of Sri Kasera is a form of hundi and the handwritten entries in books of Kasera are the details regarding transactions in cash through hundis and the Assessing Officer has rightly invoked the provisions of Section 69D of the Act and accordingly treated the same as income of the assessee. Thus, the ld.CIT-DR prayed the addition deleted by considering written submissions filed by the revenue. 39. Ld. AR has filed his written submission in regard to the above ground which reads as under :- IV. Issues No. 4 & 5 -Regarding addition of Rs.11,20,00,000/- (Α.Υ 2016-17), Rs.48,85,00,000/- (Α.Υ 2019-20) & regarding addition of Rs.3,41,95,000/-, Rs.78,40,000/-(towards interest), 1. Issue 4 Regarding addition u/s 69D of Rs.11,20,00,000/- (Α.Υ 2016-17) & Rs. 48,85,00,000/-(Α.Υ 2019-20) for alleged transaction with Anil Kumar Kasera. AO's contention is as follows: (i) Search and survey operations were conducted in the case of Finance Brokers on 30.11.2018 by the Investigation Directorate, Kolkata. Incriminating documents pertaining to cash loan have been seized from the residence of finance brokers Kasera. The seized documents inter alia include cash loan transactions. During the course of search, statement of Shri Praveen Kumar Kasera son of Shri Uma Shankar Kasera was recorded in oath u/s 132(4) on 2.12.2018, in the said statement, he has stated that he along with his father Sri Uma Shankar Kasera and his brothers used to arrange cash loans in lieu of commission. (ii) One Rukka issued by M/s Shakambari Ispat& Power Ltd. was seized vide USK 20 Page No. 24 from the premises of Kasera Group. There are several other entries recorded on seized documents found and seized from the premises of Kasera Group. The addition on this issue was done on the basis of entries Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 58 recorded on seized documents found and seized from the premises of Kasera Group. (iii) Copy of statement of Praveen Kumar Kasera is enclosed. B. As directed notice/letters for personal appearance have been issued in this remand proceeding to Anup Majee, Ratnesh Verma, Niraj Singh and Praveen Kumar Kasera for granting an opportunity of cross-examination and to affirm the statements made by them u/s 132(4) in respective search which has been utilized to make such addition in appellant's case. No reply was received from Anup Majee, Ratnesh Verma, Niraj Singh. A reply dt. 18.11.2024 was received from Praveen Kumar Kasera was received in which he has denied to have any transactions with the appellant company during the F.Y 2018-19. However, he had expressed his inability to appear before me due to health reasons. Our submission: AO in his remand report has merely reiterated the averments in assessment order and has also provided with a) Copy of statement of Anil Kumar Kasera. b) Letter of Anil Kumar Kasera in response to notice u/s 131 issued during remand proceeding. On perusal of documents at 'a' & 'b' it is clear that nowhere the name of appellant is mentioned and in letter by Anil Kumar Kasera it is categorically mentioned that he did not have anytransactionwith appellant. Apart from above we reiterate our submission made earlier as follows In respect of the allegation that appellant has taken cash loan amounting to Rs.11.20,00,000/-(A.Y 2016-17) & Rs.48,85,00,000/- (Λ.Υ 2019-20) from various parties (mentioned in such impugned order). On such allegation of alleged cash loan having been received by an arbitrary self-presumed interest 7% has been considered by AO which AO stated to have been expended by appellant and thus proposed to add a sum towards interest computed @ 7% on alleged loan u/s 69C of IT Act apart from AO's unjustified action of such alleged loan u/s 69D. It is submitted that (i) No cash loan has been received by appellant since such allegation is baseless and for which no evidence exists. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 59 (ii) No interest had been expended by appellant since no loan transaction as alleged was incurred and hence question of any interest does not arise (ii) Any attempt to invoke section 69 or 69D or 69C on such imaginary cash loan and interest thereto on part of AO arbitrary and illegal. Indeed AO arbitrarily invoked provisions of sec. 69D to alleged transaction when no loan trarisaction existed even. (b) Without prejudice attention is drawn to AO's notice containing alleged extract of alleged loan as well as the statement of those AKK, USK & PKK also the relevant part of impugned underlying order and it is submitted that: 1. It may be noted that as per some extract of analysis report it appears that on basis seized documents from such persons i.e., Uma Shankar Kasera, Anil Kumar Kasera, Praveen Kumar Kasera (referred to as USK, AKK and PKK respectively) it has been alleged that appellant had taken loan from different parties as mentioned in impugned order against which \"rukkas\" was issued to such lenders. It may be noted that the alleged documents (being USK or AKK so mentioned in impugned order) has not provided to appellant. Moreover, the alleged \"rukkas\" allegedly issued by appellant in favour of such alleged lender to substantiate your such allegation is also missing and a lone document alleged to be \"rukka\" (which is again \"san\" any examination by AO or cross-examination has denied to appellant) has been relied unjustifiably and hence entire biased conclusion is mere unsubstantiated allegation only. The photocopy of h sample Rukka provided to us nowhere mentions whether it is apart of the seized documents and if so, the relevant Identification Mark of the seized documents with actual page number The photocopy, which is claimed by vou as a document acceptable/admissible as an evidence under The Indian Evidence Act, 1872, show cash receipt of Rs.50,000/- only mentioned in terms of figure as well as in words. Accordingly, any baseless or bogus or fanciful assumption or presumption made by either Mr Kasera about the Rukka or his assumed statement merrily accepted by the Revenue that there is a double/ triple/quadruple quintuple digit suppression to unnecessarily and unethically put a person allegedly receiving such sum into mental and financial jeopardy has no sanctity and can never stand the taste of law, The actual amount mentioned in the document in Figures as well as in Words cannot be altered or modified or corrected merely on the basis of illusory assumption andpresumption even by means of a Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 60 Symbolic Representation appearing elsewhere in any unrelated /unconnected unsigned and undated loose / strav sheet of paper which does not partake the character of regular books of account or a Document which can be treated asan evidence under the Indian Evidence Act, 1872. Moreover, any unilateral acceptance of a higher figure by one of the parties to a transaction, higher than the amount written/ recorded in a Document, completely behind the knowledge, written consent and approval of the other party to the transaction has no legal validity sanctityand value under the laws of the land. The said photocopy of the Rukka which is completely a scribbled document allegedly signed illegibly by an unnamed Director in a casual and trifle manner is totally objected to and denied by our Company as a document admissible as evidence under The Indian Evidence Act, 1872 in Law. (ii) In respect of total cash loan transaction of Rs.97,00,00,000/- shown in the Tabular List prepared is without any touch of authenticity and genuineness in it, we are totally unable to furnish any Reply or make any document until and unless all the seized documents including the complete seized documents but USK-3, USK-5, USK-7, USK-25, USK-9, USK-2, USK-20, USK-18 & USK- 13 and the handwritten registers are provided to us for which we can express a genuine regret. Please note that our genuine inability to answer or make any comment regarding the cash loan transactions cannot be considered as a tool in your hands to take any adverse action in the assessment of our company for the A.Y 2019-20.\" [Emphasis supplied! AO did not conduct any proper enquiry of alleged AKK, USK, PKK and not even if alleged lenders and hence did not consider submission of appellant ad hence also addition is liable to be deleted. 3. Moreover, the alleged extract of statement of Shri Anil Kumar Kasera and Mr. Praveen Kumar Kasera nowhere mentions appellant's name and hence it is wholly wrong and unlawful to assume that appellant had availed cash loan from the parties mentioned in your impugned order. 4. Even otherwise the said data in the alleged documents (as reproduced in notices and impugned order) allegedly reflects some names which may suggest appellant's name but do no conductively lead anywhere and hence it is submitted that \"i. The data refers the group to be 'potential' lender, the word 'potential' itself suggests possibility of becoming something or Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 61 something happening therefore, the impugned notices issued during the proceedings and impugned order itself states that such data reflecting therein is not final; The data states 'possible financial transactions' to be 'potential cash lent to various borrowers' the words possible and potential only suggest of a possibility or a capability, therefore the words themselves putting a question mark on the existence of such event; iil Entities/individuals which could not be substantiated for direct/indirect relation with person concerned but are still clubbed and grouped under this group as they are written alongside the same name in annexures by the assesee are highlighted in green below. the data itself states that there are entities/ individuals which could not be substantiated for direct/ indirect relation with the person concerned; as such I fail to understand that how such entities/individuals are considered / alleged to be related to me. In any case, due to non-receipt of underlying documents in respect of which such comments are being made, appellant was not at all able to understand the relevance or otherwise of such comments. Probable unique names' have been contained in such analysis notice or impugned order, therefore there is no certainty even about the names which are contained therein. The probable unique names are Shak/Shakmb/Shankam etc. and there is no mention of appellant's name particularly along with such probable names. Hence, the same is not at all sufficient to treat it as \"information\" releting appellant. Indeed, appellant is surprised at such wild assumption to include appellant's name in the matter. Since, it's a mere wild assumption, it can't be held as \"information\" per se and on same addition is not at all warranted. The aforesaid clearly shows that entire action is based on conjecture & surmises only. 2. Appellant would once again like to reiterate that appellant does not have any transaction with the parties mentioned in the notices and the impugned order and further, until and unless details of such alleged information and the copy of the concerned evidence based on which alleged information has been considered by AO for such addition had been provided to appellant. 3. Without prejudice to validity of impugned allegation regarding \"cash rukka\" etc and without in any way accepting the validity of conclusion so derived on the basis of alleged statement of AKK, PKK or USK or the alleged seized documents copy of which seems is not even available with Ld. AO (since despite specific request Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 62 earlier not provided to appellant), it is being submitted alleged lenderwise (as mentioned in your aforesaid extract report) as follows: A. Pramod Kumar Agarwal/Harsh Polyfabric (P) Ltd.: Appellant doesn't have any transaction with such person/ company. F.Y S.N Annexure No. PDF Pg Different former of Lender Name Lender Group Different former of borrower Name Equivalent cash (incl.rukkas) Dte Narration 2018- 19 111 USK-7 84 Pramod Pramod Kumar Agarwal/ Harsh Polyfabric (P) Ltd Shakambari Steel 50,00,000 1.8.2017 New Loan Indeed when name of lender was available with AO, AO still did not issue any notice u/s 133(6) /131 or conduct any enquiry on such alleged lender. B. Similarly, Heera Ch. Jain/Heera Panna Collections (P) Ltd: Appellant does not have any transaction with such person/ company. From the said details if the lendesdetils were available with AO which is 'Company' and hence it is out of one's understanding as to reason for AO not calling for details u/s 133(6) o 131 from such alleged lenders: F.Y S.N Annexure No. PDF Pg Different former of Lender Name Lender Group Different former of borrower Name Equivalent cash (incl.rukkas) Dte Narrat ion 2018- 19 90 USK-7 47 Heera Ch Jain (Panna Herach) Hira panna Collections( P) Ltd./Hira Chand Dugar/Pann a Chand Dugar/Anan d Dugar Shakambari Steel 50,00,000 1.6.2017 New Loan C. Similarly AO had details of alleged lenders as evident from notice/order and failure on part of AO to conduct enquiry doesn't give any right to make such huge addition. D.(a) The AO had relied on the statement of Sri Praveen Kumar Kasera to draw an adverse inference of Cash Loan against appellant. In this regard, it is pertinent to mention herein that no document or evidence is placed on record wherein Sri Praveen Kumar Kasera has accepted to provide cash loan to appellant. Even if he had accepted it, the same cannot be used as evidence until and unless an opportunity of cross-examination is given to the assessee. Mere acceptance of any finance broker cannot be used as a weapon against the assessee to draw an adverse inference in any assessment or reassessment proceedings. (b) It is pertinent to mention herein that no statement has been provided to appellant in the support of allegation by the AO. Mere Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 63 proclamation that cash loans as alleged to have been received by appellant is insufficient to make n dditon in hands of appellant unless the AO had further information after examination into the matter. No efforts have been made to establish the connexion between these statements of the said person and the assessee In the absence of such valid statement, no adverse view may be drawn primarily on the basis of such statement, As stated in appellant's submissions during the course of impugned reassessment proceedings, it is reiterated here that it did not enter into any kind of alleged transaction of cash loans No transactions have remained undisclosed in regular books ofaccounts vis-à-vis return of income or that are liable to be treated as income escaping assessment Hence, the very basis of the allegation is without any application of mind and thus disputed, strictly deny and dispute having taken any cash loans during the financial year under consideration from the finance brokers Sri Praveen Kumar Kasera. All the income and expenditure were duly accounted for in the books of account as well as the return of income and there isno escapement of income. Hence, the allegation /addition of involvement in transactions of taking cash loans o the tune of Rs.48,85,00,000/- is totally out of place and based on surmises and conjectures. (d) On going through the relevant part of impugned order, it is observed that the AO has narrated the process of taking unaccounted cash loan in general or prevalent in market. Further, it is explained that there exist some double digit suppression of loan amount in Rukka transactions. In this regard it is stated that appellant doesn't have knowledge about the Rukka transactions. Appellant also have no idea wherefrom the above stated processes of Rukka transactions have been identified or traced. As stated during the course of reassessment proceedings, it is to state herein that I have not entered into any 'Rukka' transactions with any of the party/finance broker.It is to be noted herein that no additional or incriminating evidence have been brought on record during the course of reassessment proceedings that reveals or reflects my involvement in the alleged rukka transactions. However, under the instant case, the AO has taken a blanket approach by defining the general Rukka transactions in market. In the light of absence of any additional or specific incriminating evidence that relates to the assessee, any adverse inference in this regard would be a violation of the principle of natural justice. (e) While describing the process of rukka transactions in general, no corroborative evidence has been brought on record by AO. Surprisingly, no evidence on message or whatsapp text involving appellant has been brought on record but still the AO considered Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 64 appellant to be the alleged borrower of some rukka transactions. Such act itself reveals the predetermined mindset and inchoate enquiries as well as improper analysis of the facts and circumstances of the case. With the progression of the appealed assessment order, the AO had provided the details of beneficiaries in verbatim, \"....... The evidences collected during the search proceedings and past search investigation revealed that the finance brokers were engaged in unaccounted cash transactions on a large scale. The finance brokers have accepted that they were involved in arranging cash loans to the interested parties in lieu of commission. The statements of key persons of the finance brokers were recorded ws 132(4) of the Act. As per provisions of sec. 132(4) of the Income-tax Act, statement made under the said section may be used as evidence in any proceeding under the Income-tax Act. The beneficiaries of finance brokers were identified on the basis of analysis of rukkas, data available in public domain, market information, statements recorded and explanation provided by the broker. On going through the above stated lines it is observed that all the information in relation to the assessee are categorized under the nomenclature of potential lender / possible financial transactions/probable name etc. These nomenclatures itself reveal that the AO is not having the proper and complete information/evidences in relation to assessee's alleged involvement. In thelight of such incomplete information/ inappropriate evidences, any reassessment proceedings should be beyond four walls of imagination. (1) A table containing various information in relation to rukka transactions is drawn and has been reproduced at pages 49 to 63 of impugned assessment order. Such table contains the details of financial year, Premises, format of lender name, lender group, format of borrower name, and equivalent cash amount. In such table, the AO have stated the names of various tenders and borrowers. No other particulars like addresses, PAN etc. of such lenders and borrowers is provided to establish the occurrence of any Rukka transactions. In the absence of such information identification of such lender and borrower is not possible. The AO had attempted to provide the details of premises inthe table but no address of any lender or borrower is provided in any column of such table. It seems incompleteness in such respect. Non availability of basic information like address, PAN etc. about the lenders or borrowers seems the information in the above referred table to be irrational and incomplete and any averse inference on the basis of Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 65 such information any addition on such ground does not stand valid in the eye of law. (g) Further, multiple names are shown in the above referred table against the names of lender /borrower. This indicate that the AO had no compact information in relation to Rukka transactions. The above referred table | at pg 49 to 63 of assessment order | can at best be regarded as analysis only but not to draw an adverse inference in the instant case. Thus, no concrete evidentiary documents in relation to tabulated information is placed on record. Merely stating the names of lender or borrower in multiplies does not reflect the occurrence of Rukka transactions in the instant case and thereby any addition onthe basis of such information would be beyond any fragment of imagination. It was also requested to provide me the complete name with full address and other basic details of lender in order to identify a person and further to allow me for cross examination of such lenders so that acts of the case can be unearthed. Such facts were argued before the AO. However, no heed was paid to any of such submissions. (h) In this regard, the case of Kishan Chand Chellaram v. CIT (1980) 125 ITR 713 (SC) 720 is to be noted wherein it was held that evidence which is used against the assessee must be provided to the assessee and also an opportunity to confront the same should be given permitting cross examination. (1) Mere mentioning of names by a third party and that to general names without identification of proper persons with addresses has no meaning in legal world. It has also been upheld by Supreme Court in various cases that no adverse inference can be drawn in the hands of any person just on the basis of the name of such person having been mentioned in some documents of a third person, (j) All the documents sought during the course of reassessment proceedings and all evidentiary documents that can reasonably expected from appellant were provided and thus forms part of assessment record. All such evidences submitted clearly signify that the allegations are untrue and unacceptable No independent enquiries have been made to establish that the assssee is involved in any alleged transactions of such loans to the tune of Rs. 48,85,00,000/- escaping assessment and thus addition u/s 69D r. w. Sec. 115BBE is bad in law. E. Irrespective of the explanations and documents submitted by appellant, the AO had added the alleged sums of Rs.11,20,00,000 (A.Y 2016-17) & Rs.48,85,00,000/- (A.Y 2019-20) by considering the provisions enumerated in sec. 115BBE read with sec. 69D of Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 66 the Income Tax Act, 1961. For the sake of reference, Sec. 69D is reproduced below: a) (i) SEC. 69D: | Amount borrowed or repaid on hundi. [Inserted by Act 41 of 1975, Section 14 (w.e.f. 1.4.1976).J - Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be: Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation. For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.] (ii) Reference is also drawn to CBDT Circular No. 208 dt. 15.11.1976 in such respect. The term \"hundi\" has not been defined in the 1961 Act. In common commercial parlance, it denotes an indigenous instrument in vernacular language which can be used by the holder thereof to collect money due thereon without using the medium of currency. It may also be regarded as an indigenous form of bill of exchange expressed in vernacular language which has been in use in the mercantile community in India for the purpose of collecting dues. There are numerous varieties of hundis, for example, darshani hundi, muddati hundi, shahjog hundi, jokhmi hundi, namjog hundi, dhanijog hundi, jwabi hundi and zickri chit. The characteristics of hundis differ according to the varieties of the same. The following characteristics are found in most of the hundis: 1. A hundi is payable to a specified person or order or negotiable without endorsement by the payee. 2. A holder is entitled to sue on a hundi without an endorsement in his favour. 3. A hundi accepted by the drawee could be negotiated without endorsement. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 67 4. If a hundi is lost, the owner could claim a duplicate or a triplicate from the drawer and present it to the drawee for payment. Interest can be charged where usage is established. -Circular No. 208 [F. No. 208/7/76-IT(A-II)), dated 15-11-1976. From a conjoint reading of sec. 69D along with CBDT Circular No. 208 it can be ascertained that such addition in respect of sec. 69D can be made only when an amount has been borrowed on \"hundi\" and such \"hundi\" must specify the requirement as mentioned in CBDT Circular without which sec. 69D cannot be invoked. Since in appellant's case the alleged documents so found with AKK, PKK and USK doesn't satisfy the requirement of \"hundi\" and hence addition u's 69D cannot be made. Ld. CIT(A) rightly appreciated these facts and has rightly treated the same as dumb documents (A.Y 2019-20-Pg. 147-157). The observation and conclusion of CIT(A) are as follows:- 1. The analysis of statement of Praveen Kasera u/s 132(4) in his search on 30.11.2018 has been made and [from pages 148 to 152 of his order) Ld. CIT(A) held that such statement nowhere mentions appellant's name anywhere. Hence it can't be held in any manner that appellant was engaged in any transaction with assessee. 2. Mr. Kasera denied any transaction with appellant in remand proceeding as well and AO has failed to counter the same. (Pg. 153-1\" para) 3. As regards loose documents/diaries or alleged Rukka with name \"Shakambari\" and its derivatives have been presumed to be of appellant doesn't Mr. Kasera not having named appellant. (Pg. 153 last para) 4. Ld. CIT(A) relied on judgment of Hon'ble Supreme Court in CBI v. V. C. Shukla (1998) 3 SCC 410 and held that under similar circumstances Hon'ble Supreme Court held such alleged seized documents/diaries s bogus. 5. It was also held by CIT(A) that diary seized from 3rd party premises without any corroborative evidence hs o relevance. (Pg. 157-para 2) 6. As regards USK-20-Pg 24, entire analysis by AO was merely on presumption. AO didn't make any enquiry from any of the alleged lenders and without such corroboration entire action of AO is without any logic. (Pg. 157-para 2) Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 68 Hence Ld. CIT(A) rightly deleted the addition u/s 69C and also the interest so computed notionally by AO. 40. After hearing the rival contentions and perusing the material available on record, we find that during the course of search in the case of Finance Brokers Kasera certain incriminating materials/documents were found on the basis of which the Assessing Officer reached a conclusion that the assessee had taken cash loans for aggregating to a sum of Rs.48,85,00,000/- during the impugned financial year from Finance Broker on which interest @7% was also paid amounting to Rs.3,41,95,000/-. We note that ld. CIT(A) allowed the appeal of the assessee holding that in the statement Shri Praveen Kumar Kasera he admitted that they were charging interest ranging from 5 to 10 percent on the amount lent. Ld.CIT(A) has recorded a finding that the Assessing Officer has acted on presumption and surmises basis only. It was also observed by the ld. CIT(A) that when the search was conducted upon the appellant on 22.09.2021, the Investigation team could have very well enquired from the assessee regarding the contents of the same, which we find has not been done. Even when in assessment, the assessee denied its contents, the AO has not made any further enquiries but simply rejected the same. It is also not clear as to why was this document in possession of Mr. Kasera, and not the appellant or Mr. Deepak Agarwal, who by AO's logic ought to have been in possession of this supposed promissory note, it is indeed true that this document raises a suspicion Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 69 against the assessee, but the AO in the original as well as remand proceedings did not take the matters to any logical conclusion. Rather than gathering evidences against the appellant, the AO acted only on surmises. We note that the AO had not conducted any enquiry from the persons who received the stated sums/amounts from the assessee Therefore this document has no relevance. Hence, for these reasons, even this document is found to be unreliable. Accordingly, the ld. CIT(A) held that that the documents seized from the premises of Mr. Kasera in the form of loose papers etc, are inadmissible evidences in as much as the same do not contain anything whatsoever to suggest that the appellant had taken any cash loans, particularly when Mr. Kasera had never named the assessee and had also denied having any transactions with the assessee in the remand proceedings. In view of the above, we are of the view that the ld.CIT(A) has rightly held that the impugned addition of Rs.48,85,00,000/- made under section 69D of the Act and the consequential addition of Rs.3,41,95,000/- under section 69C of the Act was unsustainable both on facts and in law. Thus, we uphold the order of the ld. CIT(A) and dismiss the ground of revenue. 41. Ground Nos.4, 5, 6 & 7 are consequential to the ground No.3 decided above upholding the view taken by the ld.CIT(A) whereby the said ground has been dismissed by us. Thus, these grounds are become infructuous and same are dismissed. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 70 42. Thus, the appeal of the revenue in ITA No.1560/Kol/2025 is dismissed. 43. As the issues involved in the other appeals i.e. ITA No.1436/Kol/2025 for A.Y.2016-2017, ITA No.1515/Kol/2025 for A.Y.2017-2018, ITA No.1541/Kol/2025 for AY 2018-2019, ITA No.1591/Kol/2025 for A.Y.2021-2022 and ITA No.1561/Kol/2025 for A.Y.2020-2021, are identical and similar to the issues decided by us in revenue’s appeal in ITA No.1560/Kol/2025 for A.Y.2019-2020, therefore, the findings recorded by us in the said appeal shall be applied mutatis mutandis to the other appeals also. Accordingly, these appeals of the revenue are dismissed. 44. In the result, appeals of the assessee are partly allowed and appeals of the revenue are dismissed. Order pronounced in the open court on 02.01.2026. Sd/- (PRADIP KUMAR CHOUBEY) Sd/- (RAJESH KUMAR) न्यधनयकसदस्य / JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER कोलकाताKolkata; ददनाांक Dated 02.01.2026 Prakash Kumar Mishra, Sr.P.S. Printed from counselvise.com ITA Nos.931,1194-1198/KOL/2025 & ITA Nos.1436,1515,1541,1591,1560,1561 71 आदेशकीप्रनतललपपअग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी/ The Appellant- 2. प्रत्यर्थी/ The Respondent- 3. आयकरआयुक्त(अपील) / The CIT(A), 4. आयकरआयुक्त/ CIT 5. विभागीयप्रविविवि, आयकरअपीलीयअविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्डफाईल / Guard file. सत्यापपतप्रतत //True Copy// Printed from counselvise.com "