SHALIBHADRA EXPRORTS PVT LTD,MUMABI vs. DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-7(1), MUMBAI
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM& MS PADMAVATHY S, AM
Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)-49, Mumbai [In short 'CIT(A)] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 24.03.2022 for Assessment Year (AY)
2013-14. The Ld. AR submitted a letter dated 13.10.2025 stating that out of the 16
grounds raised the only following grounds of pressed:
“(1) The order of the Ld. CIT (A) is erroneous on the facts and in the law. On the facts and in the circumstances of the case he erred in reopening the case u/s 147 of the Income
Tax Act, 1961 beyond a period of 4 years an assessment already completed u/s 143(3) of 2
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the Act and without having reason to believe that the income has escaped assessment and therefore, the reopening is bad in law as there is no record or fact that there is failure on part of your assessee that he ought to have disclosed and failed to disclose.
(2) On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in completing the reassessment proceedings on the same grounds and facts and on the basis of same records and materials available during the detailed original scrutiny proceedings u/s 143(3) of the Act. In other words, the Ld. A.O. erred in completing the reassessment proceedings with a change of opinion.
(3) On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in reassessing the income of the appellant at Rs. 96,31,82,861/- as against returned income of Rs. 23,35,180/-. The appellant disputes wrongful additions and submits that returned income be accepted as correct.
(4) On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in making a high pitched reassessment and made an addition of the amount credited to the bank account of the assessee/ appellant to the tune of Rs. 96,08,47,680/- on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961 ignoring the fact that there are multiple transactions and without rejecting the books of accounts u/s 145(3) of the Act.
(5) On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in not disposing the objections filed by the appellant against the reopening of proceedings by passing a speaking order.
(6) On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in reopening the case on the basis of statements recorded on oath u/s 131 of the Act without providing an opportunity for Cross examination to the Appellant and did not communicate to the Appellant that a statement on oath has been recorded.
(7) The reassessment is made in gross violation of principles of natural justice and hence bad in law and void and ought to be quashed.
(8) The appellant craves leave to add to, alter, amend, modify and /or delete any or all of the above said ground(s) of appeal. The appellant reserves its right to file further submissions in the appeal.”
The assessee is a company and filed the tune of income AY 2013-14 on 30.09.2013 declaring a total income of Rs.23,35,180/-. The assessment was completed u/s. 143(3) and vide order dated 18.03.2016 the income return by the assessee was accepted. Subsequently, the AO reopened the assessment based on 3
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the information received that there where large value of funds credited by transfer and RTGS and debit by cash, transfers and RTGS in the bank account of the assessee. The assessee vide letter dated 20.05.2019 filed the return in response to notice u/s. 148 stating that the return filed u/s. 139(1) may be treated as the return filed in response to notice u/s. 148. The assessee also requested to furnish the reason recorded for reopening the assessment vide the same letter. The AO furnished the reasons recorded in response to which the assessee file the objections. The AO disposed of the objections vide letter dated 25.11.2019 and also called on the assessee furnished various details. The AO did not accept to the submissions made by the assessee stating that the submissions does not explain the nature of transaction, source of funds, application and utilisation of funds. The AO also issued notice u/s. 133(6) to the branch manager of ICICI bank, Kalbadevi requiring to file copy of bank statement from 01.04.2012 to 31.03.2013. Based on the bank statement received the AO noticed credits to the tune of Rs.
96,08,47,680/- and treated the same as unexplained u/s. 68 to make an addition.
Aggrieved to the assessee file further appeal before the Ld. CIT(A). The Ld.
CIT(A) confirmed the addition made by the AO by holding that:
“7.3.25. I have also considered the arguments of the assessee that the Ld. AO has held that the assessee was only providing accommodation entries and in that case, only the profit on transactions was to be brought to tax. It is, however, found that the Ld. AO did not say that the assessee is in the business of providing accommodation entry, rather, it has been found that the assessee has shown receipts from the parties which have been found to be engaged in providing accommodation entry. Furthermore, primary claim of the assessee is that its transactions are genuine, hence, if it takes an alternate position that all the transactions are mere accommodation entries and only profit/commission is to be taxed out of its sales and purchases, it is incumbent on the assessee to provide necessary details to establish that all its transactions including sales and purchases are in the nature of accommodation entries. However, the assessee did not furnish any such details and, therefore, this argument of the assessee does not hold good. In the given facts of the case I am construed to form a belief that the 4
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details and submissions filed by the assessee during the course of impugned assessment proceedings and appeal are found to be insufficient in as much as discharging its onus as to genuineness of the transactions and the assessee has failed to file any details or submissions as to the findings of the Investigation Wing relied upon by the Id. AO, hence, I find no reason to reverse the findings of the Ld.
AO on this account.
3.26. In the view of the discussion and considering the fact that the appellant has failed to adduce evidence as to the creditworthiness of the source and genuineness of the impugned transactions, respectfully following the decisions as referred to above, I find no reasons to interfere with the findings of the Assessing Officer in respect of the additions made. Addition of Rs.96,08,47,680/- made by the Id. AO as per provisions of section 68 of the Act is accordingly upheld. The ground No. 2 is accordingly DISMISSED.”
The Ld. AR at the outset submitted that, the AO has not disposed off the objections raised by the assessee and, therefore, the order passed without disposing of the objections is not valid. The Ld. AR further submitted that the assessee engaged in business of dealing in coal and bullion and that the assessee is bound to have large volume of transactions in the bank account considering the nature of business the assessee is engaged in. the Ld. AR also submitted that the turnover of the assessee for the year under consideration is Rs. 120,78,61,801/- which is much more than the credits which the AO has treated as unexplained. The Ld. AR argued that when the turnover which is accounted in the books is accepted then no addition can be made u/s. 68. The Ld. AR further argued that the assessee's case was selected for scrutiny and the AO has duly verified the various details submitted by the assessee during the course of original assessment and has accepted the income returned by the assessee. In this regard, Ld. AR drew our attention to the various details field by the assessee vide letters dated 22.09.2014, 26.11.2015, 28.12.2015 and 08.02.2016. The Ld. AR also argued that during the course reassessment proceeding the assessee vide letter dated 09.12.2019 has submitted various details such as purchase invoices, sale invoices, cash book,
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audited financial statements, Form ITR 6, tax audit report, bank statements and bank book etc. The Ld. AR argued that the AO has not examined any of the details furnished by the assessee, but has simply rejected the submissions stating that the assessee has not furnished the relevant details. The Ld. AR further argued that the AO has merely on the basis of information receipt from investigation wing initiated the reassessment proceedings without conducting any independent enquiry. The Ld. AR also raised the contention that the assessee was not provided a reasonable opportunity of being heard by the Ld. CIT(A) who has issued only two notices one of the notices being issued during Covid period. Accordingly, the Ld. AR argued that the order of the Ld. CIT(A) violation of principle of natural justice. The Ld. AR relied on various judicial pronouncements with regard to the contentions raised herein above.
The Ld. DR on the other hand relied on the order of the lower authorities.
We heard the parties and perused the material on record. The assesses case was reopened for a reason that there where large amount of transactions in the bank account of the assessee. The AO in the reasons recorded has stated that the assessee is one of the parties involved in the chain of transactions involving various bogus entities who are accommodation entry providers as per the information received from the Investigation wing. It is relevant to mentioned here that in the reasons recorded the AO has acknowledge the fact that the turnover of the assessee is Rs. 120,78,61,801/- and that the assessee has filed copy of annual report audited financial statement along with the return of income. It is further noticed that, having mentioned the above fact the AO has recorded that the requisite full and to disclosure of all material facts necessary for assessment has 6
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not been made by the assessee. The relevant part of the reason recorded in this regard is extracted below:
“2.1. Details of M/s. Shalibhadra Exports Pvt. Ltd.. M/s. Keyman Advisory
Services Pvt. Ltd. M/s. S. Salva Construction, Mis. Kunal Builders and Developers along with Shri Shailesh Mulchand Savla have been verified from ITBA and the status of filing of returns of income by these entities persons and statements of bank account no.'s 642505050660, 64260505676, 642605500032, 642605500033
and 642605500050 has been obtained.
2. On verification of bank account statement of M/s. Shalibhadra Export Pvt. Ltd. it is seen that there are credits amounting to Rs. 43,93,61,211/- and Rs. 96,07,84,107/- respectively during A.Y. 2012-13 and A.Y. 2013-14 in ICICI Bank A/c.No. 642605050660 From ITBA it is seen that Assessment has been completed u's 143(3) for A Y. 2012-13 and A.Y. 2013-14 in this case.
Detailed examination of the assessment records by the undersigned revealed that the total turnover of the assessee is only Rs. 120,78,61,801/- therefore, above observation is prima facie correct It is true that the assessee had filed a copy of the annual report and audited P&L A/c and balance sheet along with the return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made. It is pertinent to mention here that even though the assessee has produced various evidences during the course of assessment proceedings, the requisite material facts as stated above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and would have required due diligence by the AO to extract this information. For afore- stated reasons, it is not a case of change of opinion by the AO.
Based on the discussion at para 2 above, it is seen that there is under/non assessment, therefore, the income chargeable to tax has escaped assessment which amounts to more than Rs. 1 Lakh for A.Y. 2013-14 by the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that Assessment Year during the scrutiny proceedings u/s 143(3) of the LT. Act. In this case, more than four years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 has been obtained separately from the Principal Commissioner of Income Tax as per provisions of section 151 of the Income Tax Act, 1961. 7
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In view of the above, I have reason to believe that an amount of Rs. 96,07,84,107/- has escaped assessment for A.Y. 2013-14 within the meaning of explanation 2 below sec. 147 of the I.T. Act.”
From the perusal of the assessment order we notice that the AO has relied on the statements recorded from third party to conclude that the assessee is one of the beneficiaries of alleged accommodation entry providers. The AO has also recorded that the assessee has not replied to the various cause show notices and has not explained the nature of transactions. However, during the course of hearing the Ld. AR submitted the acknowledgement of having filed the details on 28.11.2019 submitting details as mentioned in the earlier part of this order. Our attention was drawn to the notice issued u/s. 142(1) during the course of reassessment (page 33 to 36 of paper book) and on the perusal of the same we notice that the AO has called for various details which are generally nature with nothing specifically related to the alleged non-genuine transactions for which the assessment is reopened. We also noticed that the assessee has furnished various details vide letter dated 09.12.2019 (page 37 to 97 of paper book). The AO however, has recorded the finding that the assessee has not furnish any details pertaining to the any bank account and treated entire credit as unexplained u/s. 68 of the Act. From the perusal of the details of credits towards which the addition is made by the AO (refer table in page 46 of CIT order) we notice that the majority of the credit pertains to M/s. World Wide Online Services Private Limited and that the said company is alleged to be controlled by an entry provider Mr. Manoj Punamiya. However, the lower authorities have made the addition merely based on the fact that the assessee had transactions with the alleged bogus entity without examining the documentary evidences and other details furnished by the assessee. As already mentioned the AO while calling for details by issue of notice u/s. 142(1) had not raised any query with regard to the impugned transactions towards which the 8
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addition is made. During the course of hearing, the Ld. AR submitted that the assessee has furnished all the details as called for in the notice u/s. 142(1) and if the AO had called for any further details pertaining to the alleged bogus transactions the assessee would have submitted the necessary details to prove the genuineness. The Ld. AR drew our attention, to the sample invoices raised on M/s.
World Wide Online Services Private Limited to submit that the transactions are subject to add/ CST and that the assessee has accounted the transactions in the books of accounts. Further, it is noticed that the CIT(A) has also not called for any further details and has upheld the addition without recording anything adverse regarding the details submitted by the assessee such as purchase invoices, sale invoices, cash book, audited financial statements, Form ITR 6, tax audit report, bank statements and bank book etc. Accordingly, there is merit in the submission on the Ld. AR that the lower authorities have not considered the issue on merits, but as made the addition merely based on the statement recorded from other party.
It is also worth mentioning here that the AO has not rejected the books of accounts and has not rejected the sales declared by the assessee. In view of these discussions we are of the considered view we that the addition made u/s. 68 cannot be sustain since the source for the credit is from the sales as declared by the assessee in the books of the accounts which fact has not been disputed by the revenue. Accordingly, we directly AO deleted the addition made in this regard.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 27-10-2025. (AMIT SHUKLA) (PADMAVATHY S)
Judicial Member Accountant Member
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Divya R. Nandgaonkar
Stenographer
Copy of the Order forwarded to:
The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT
BY ORDER,
(Dy./Asstt.