DCIT,C.C-3(3), KOL, KOLKATA vs. M/S. SURYA ALLOY INDUSTRIES LTD. , KOLKATA

order : September 27, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the revenue against the order dated 03.02.2023 of the Commissioner of Income Tax (Appeals)-21, Kolkata (hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The revenue in this appeal has taken the following grounds of appeal: “(i) That, on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in appreciating the facts that the assessee failed to establish the identity, genuineness of the transaction and creditworthiness Assessment year: 2011-12 M/s Surya Alloy Industries Ltd of party regarding receipt of sum of Rs.2,53,00,000/- in original assessment proceedings and also in remand proceedings. (ii) That, on the facts and in the circumstances of the case and under law, the Ld.CIT(A) has erred in appreciating the facts that the assessee failed to file any details or documents as regard to substantiate the identity, creditworthiness and genuineness of the transaction in assessment proceedings. iii) That, the decision of Ld.CIT(A) is contrary to the facts and evidence of the case available on the record. (iv) The Ld.CIT(A) is not justified by allowing the appeal of the assessee without refuting the facts of the statements of the entry operators Shri Jagadish Purohit. (v) That the appellant craves the right to add, alter, amend or withdraw any ground or grounds of appeal before or at the time of hearing of the case.”

3. The brief facts of the case are that the Assessing Officer received information from the investigation wing that the assessee during the year had received an amount of Rs.2.53 crores from M/s Unisys Software & Holding Industries Ltd. The Assessing Officer further took note of the report of the investigation wing, wherein, it has been stated that the said company was operated by one Jagadish Purohit and his other family members. That the said Jagadish Purohit had made high value fund transfers through banking channels in the case of various inter- connected private limited companies, which were operated by Jagdish Purohit and his other family members and that the said companies including M/s Unisys Software & Holding Industries Ltd. were shell companies. The Assessing Officer further noted that the statement of Jagdish Purohit was also recorded u/s 132(4) of the Act by the director of investigation and he admitted that the companies in which he and/or his family members were directors were merely paper companies and were managed through dummy directors. The case of the assessee, Assessment year: 2011-12 M/s Surya Alloy Industries Ltd therefore, was reopened u/s 147 of the Act. During the assessment proceedings, the assessee was asked to explain about the genuineness of the transaction. Since, the assessee company could not explain the aforesaid transaction, therefore, the Assessing Officer treated the aforesaid receipt as undisclosed income of the assessee and made the additions on the same into the income of the assessee.

4. In appeal before the CIT(A), the assessee submitted that the assessee duly furnished the reply and explanations before the Assessing Officer, however, the Assessing Officer failed to take note of the same. It has been noted by the CIT(A) in the impugned order that the copy of the reply along with acknowledgement of receipt of the reply dated 29.11.2018 was also produced before the CIT(A). That the said reply consisted of relevant bank statement and ledger accounts in respect of M/s Unisys Software & Holding Industries Ltd. showing the transaction made by the assessee with such party. The ld. CIT(A) after going through the details of the transactions and bank statements observed that from the evidences filed by the assessee it was clear that during the F.Y 2010- 11, the assessee company had made advance to the tune of Rs.5.80 cores to M/s Unisys Software & Holding Industries Ltd. which were returned back to the assessee company in the F.Y 2010-11 only. The ld. CIT(A), therefore, held that the assessee had duly explained the transaction with M/s Unisys Software & Holding Industries Ltd. and that it was not a case of unexplained income. The amount of Rs.2,53 crores was returned by the said M/s Unisys Software & Holding Industries Ltd. out of the amount received by the said M/s Unisys Software & Holding Industries Ltd. of Rs.5.80 crores from the assessee in the same financial Assessment year: 2011-12 M/s Surya Alloy Industries Ltd year relevant to assessment year under consideration. The relevant part of the observation of the CIT(A) is reproduced as under: