Jammu Pigments Limited vs DCIT, Central Circle-30, New Delhi

PER SHRI AMITABH SHUKLA, AM

These two appeals filed by the assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, both dated 18.02.2026 and 11.02.2026 arising out of assessment orders both dated 22.12.2019 and 19.03.2025 passed under section u/s 147 r.w.s 143(3) and 147 r.w.s. 144B of the Income-tax Act for the Assessment Years 2012-13 and 2017-18. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

Since, both the appeals are of the same assessee therefore the same were heard together and for the purposes of convenience are being adjudicated by this common order.

The assessee has raised following grounds of appeal in ITA No.3906/Del/2026 for Assessment Year 2012-13:-

Brief factual matrix of the case is that order u/s 143(3) of the Act was passed on 27.03.2015 determining returned income of Rs.79,954/- as the assessed income. The assessee is engaged in the business of manufacturing and trading of lead ingots, zinc oxide and other non-ferrous metal products and transport business. The ld. Assessing Officer received information from the Investigation Wing that assessee had taken accommodation entries from one Misawa Impex Pvt. Ltd. for the AY 2012-13. Upon examination of assessment records, the ld. Assessing Officer noted that assessee had shown purchases of Rs.5,27,75,136/- from the said Misawa Impex Pvt. Ltd. in the AY 2012-13. It was further noted from the bank account of said Misawa Impex Pvt. Ltd. bearing no.911020025200169 that an amount of Rs.5,82,81,686/- was paid by the appellant assessee to Misawa Impex Pvt. Ltd. (in short ‘MIPL’) through RTGS. The ld. Assessing Officer concluded that the assessee had doctored its accounts to conceal full and true disclosure of material facts. Consequently, notice u/s 148 dated 31.03.2019 was issued to the assessee. During the assessment proceedings, the ld. Assessing Officer examined the matter and reproduced the reasons recorded, extract of report of Investigation Wing on pages -4 to 23 of his order. The ld. Assessing Officer conducted enquiries u/s 133(6), which remained initially un-complied. The ld. Assessing Officer issued a show-cause dated 18.12.2019 asking the assessee as to why alleged purchases of Rs.5,82,81,686/- from MIPL be not disallowed. The appellant filed a response dated 21.12.2019. The ld. Assessing Officer rejected the explanation of the assessee regarding the genuineness of the purchases, proceeded to add the same u/s 69C of the Act. Before the ld. Assessing Officer, the assessee had submitted that while making purchases from MIPL, assessee had paid VAT, CST and Toll taxes across the borders, goods were transported through Krishna Transport Company, payments were made using banking channels. The ld. Assessing Officer, however, considering the report of the Investigation Wing and non-compliance of MIPL, concluded that the assessee was indulging in accommodation entries. The ld. Assessing Officer also proceeded to disallow the assessee’s claim made u/s 80IB of the Act. The Ld. CIT(A) in para-9 of this order held that the burden was upon the assessee to prove its case and that has the same was not discharged, no blame can be attached to the conduct of the ld. Assessing Officer qua the addition of unexplained purchases treated as accommodation entry. He however restored the matter to Ld. Assessing Officer to examine the correctness of quantum of addition disputed by the assessee. Before the ld. CIT(A), it was contended that ld. Assessing Officer had adopted incorrect figures of purchases and which included some purchases pertaining to another party prior to amalgamation. On the issue of disallowance of deduction u/s 80IB, the ld. First Appellate Authority confirmed the disallowance of Assessing Officer observing that the assessee did not meet the primary requirement of engaged in a eligible business.

The ld. Counsel for the assessee vehemently argued against the action of the ld. Assessing Officer. In support of its contentions, a voluminous paper book was filed comprising documents, which were available before the ld. Assessing Officer and ld. CIT(A). It is the case of the ld. Counsel that the assessee has done genuine transactions and that the allegation of accommodation entry is purely based upon pre-conceived motions. The ld. Counsel submitted that the lower authorities have missed a critical point that the goods crossed through State of Jammu & Kashmir, where the movement of goods was meticulously recorded in the toll records evidenced by toll receipts issued by State Authority. In support of its contentions, the ld. Counsel invited our attention to detailed documents placed on page no.122 to 165 of its paper book for AY 2012-13. It was contended that in view thereof, no allegation of bogus purchases is tenable. It was submitted that in view thereof the conclusion of ld. CIT(A) in para-9 of his order that the assessee had failed to produce independent evidence of actual moment of goods is totally incorrect. The ld. Counsel also argued that the ld. Assessing Officer has not rejected the books of accounts. On the issue of disallowance u/s 80IB, the ld. Counsel reiterated the arguments taken before the ld. CIT(A). The ld. Counsel further place reliance upon decision of this Tribunal in assessee’s own case for AY 2018-19 in ITA No.6296/Del/2025 dated 08.07.2026, where, on nearly identical facts, relief was accorded to the assessee by deleting the addition made by the ld. Assessing Officer.

The ld. DR contested that the facts for AY 2018-19 are different and hence the reliance on the decision of this Tribunal is premature. The ld. DR also submitted that no original bills, toll receipts were produced and that there were discrepancies in the bills produced.

We have heard rival submissions in the light of material placed on records. We have noted that the case of the assessee is that the goods purchased were moved through J & K Border to its facilities located in J & K. The documents produced by the assessee through its paper book (supra), allude sufficient evidences supporting the case of the assessee qua genuineness of purchases. We have also noted that a co-ordinate Bench of this Tribunal in ITA No.6296(supra), had examined nearly identical facts where purchases were reportedly made from Shri Anant Rastogi and Shri Ramesh Bansal aggregating to Rs.1,35,13,965/-. It was clearly observed therein that the movement of goods through J & K toll entities clearly evidences that the goods had actually moved across the border. We have also noted that in spite of the documents comprising toll movement provided, the ld. CIT(A) concludes their non-production, we have also noted that the ld. Assessing Officer has also not given any consideration to the said documents. Accordingly, in consideration of documents placed by the assessee in pages 122 to 165 of its paper book for year under consideration as well as in respectful compliance to the order of the Tribunal in ITA No.6296(supra), we are of the considered view that no case of any addition is made out in the case of the assessee. We accordingly direct the ld. Assessing Officer to delete the addition of Rs.5,82,81,686/- made u/s 69C of the Act. The ground of appeal No.2 raised by the appellant on the issue are allowed.

As we have allowed ground of appeal no.2 deleting the addition of Rs.5,82,81,686/-made u/s 69C of the Act, grounds of appeal no.1 and 3 raised by the assessee have become academic and kept open.

In the result, the appeal of the assessee in Ita No.3906/Del/2026 for AY 2012-13 is allowed.

The assessee has raised following grounds of in ITA No.3907/Del/2026 for AY 2017-18

Rival parties concede that ground of appeal no.2 of this appeal is identical to ground of appeal no.2 in ITA No.3906/Del/2026. Accordingly applying the principles of mutatis mutandis, we direct the ld. Assessing Officer to delete the addition of Rs.6,00,07,130/- and allow the ground of appeal no.2.

Through ground of appeal no.3, the assessee has contested the decision of ld. Assessing Officer to add an amount of Rs.6,00,071/- as unexplained expenses u/s 69C of the Act by concluding that assessee might have paid a commission of 1% to obtain the entry of Rs.6,00,07,130/-. As we have held the impugned purchases to be genuine business purchases, the hypothesis raised by the ld. Assessing Officer fails. The ld. Assessing Officer is directed to delete the impugned addition of Rs.6,00,071/-. The assessee succeeds in ground of appeal no.3 as well.

As the assessee has succeeded in ground of appeal no.2 and 3 qua merits of the addition, the legal challenge raised through ground of appeal no.1 (supra) has become in fructuous and hence kept open.

In the result, the appeal in ITA No.3907/Del/2026 is allowed.

Finally, both the appeals of the assessee are allowed.