VIPUL MATHURADAS THAKKAR ,MUMBAI vs. ITO WARD 3(2), KALYAN
Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHANVipul Mathuradas Thakkar 402, Madhav Baug, Gaushala Road, Shivaji Path, Kalyan, Maharashtra- 421301 PAN: AAIPT0824B
PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order of Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 29.01.2025 for the A.Y. 2009-10, wherein Vipul Mathuradas Thakkar the Ld. CIT(A) has confirmed the order of AO in making addition of Rs. 60 lakhs u/s 68 of the Act on account of unsecured loans. 2. The brief facts of the case are that, the assessee is engaged in the business of trading in spices and due to the nature of the business, assessee was always in need for working capital requirement and therefore the assessee borrowed the money from Ahuja Properties & Associates during the year under consideration and in previous years assessee had borrowed money from Jagdish Ahuja in the nature of chargeable interest basis. The assessee has repaid the amount outstanding to Jagdish Ahuja out of the own source of funds. The funds as availed during the year from Ahuja Properties & Associates were deployed into business as working capital. The assessee filed his return of income for A.Y 2009-10 on 30.09.2009 declaring total income of Rs. 13,25,990/- which was processed u/s 143(1). Subsequently, an information has been received from DDIT(Inv.), Unit-5(4), Mumbai dated 22.03.2016 regarding a search action in case of Ahuja Group conducted on 25.06.2015. During the Search action, it was found that Ahuja Group has entered into cash transaction of receipts /payments from unaccounted money in the form of accommodation entry. Hence, Vipul Mathuradas Thakkar proceedings for escapement of assessment was initiated in assessee’s case for the relevant year because as per the information, the assessee has given cash of Rs. 1,10,00,000/- during the F.Y. 2008-09 on various dates which was received in the form of accommodation entry. Further an amount of Rs. 60,00,000/- in the form of cheques issued to Pioneer Spices and cash was given to M/s Ahuja Proprieties and Associates and Jagdish B Ahuja, Director in Ahuja Group. The source of the cash component of Rs. 60,00,000/-remains unexplained and is to be added back as unaccounted income in the case of assessee. 3. Accordingly, reassessment proceedings were initiated by issue of notice u/s 148 of the Act dated 30.03.2016 duly served to the assessee on 31.03.2016. Notices u/s 142(1) along with questionnaire dated 15.06.2016 were duly served upon the assessee, but no response was given by the assessee despite various opportunity provided. However, the authorized representative of the assessee requested that the return filed by the assessee for the A.Y.2009-10 be considered in response to the notice u/s 148 of the Act. Further, notices u/s 143(2) dated 29.08.2016 were duly served to the assessee which was attended and sought for adjournment. Further notice u/s 142(1) dated 04.11.2016 was Vipul Mathuradas Thakkar issued and various details were asked as mentioned in para 3.1 of assessment order. There was no response from the assessee and a final opportunity vide letter dated 15.11.2016 was issued with regard to transactions of the accommodation entries entered by assessee with M/s Ahuja Properties and Associates and Shri. Jagdish P. Ahuja during the F.Y.2008-09 amounting to Rs. 1,11,00,000/- and Rs.60,00,000/-. In response, the assessee has taken stand before the AO and submitted that assessee has borrowed the money from Ahuja Properties and Associates during the year under consideration as part of commercial business transactions for funding the working capital requirements and assessee has repaid the amount of outstanding to Jagdish Ahuja out of the own source of funds as Annexed B & C respectively. Assessee further submitted that he was not required to explain the source of the sources. Assessee has also furnished the confirmation from Jagdish Ahuja regarding the loans. The AO noticed that Jagdish Ahuja has not signed suh confirmation himself, hence the AR of the assessee was asked to produce Shri Jagdish Ahuja to confirm the transactions. Apart from that, summons u/s 131 of the Act was issued to Shri Jagdish Ahuja to appear on 05.12.2016, but neither Shri Jagdish Ahuja appeared nor did assessee Vipul Mathuradas Thakkar appear for any further hearing. Under these circumstances, the AO made the addition of Rs 60 lakhs u/s 68 of the Act. 4. Aggrieved by the order of AO, assessee preferred the appeal before Ld. CIT(A) and Ld. CIT(A) has dismissed the appeal of the assessee ex-parte and confirmed the addition made by AO. Hence, the assessee is in appeal before us and has raised the following grounds:- “GROUND I a) On the facts and circumstances of the case, and in Law, The CIT(A) erred in adjudicating the case and passed without giving proper opportunity to be heard, which is against the natural law of justice and is bad in law. b) On the facts and circumstances of the case and in law the CIT(A) and failed to appreciate that, the assesse was not effectively served any notice, since he has closed the business and migrated to Indonesia in the year 2010 and has been residing there ever since. c) The appellant therefore prays that the case may be sent back to the concerned CIT(A) for appropriate adjudication on the merits of the case. GROUND II a) On the facts and circumstances of the case, and in Law, the CIT(A) erred in making addition of Rs. 60,00,000/- u/s 68 of the Income Tax Act, as unexplained cash credit, without properly appreciating the evidence furnished by the asseessee to establish the identity, creditworthiness of the lender and the genuineness of the transaction. b) On the facts and circumstances of the case and in law the CIT (A) and failed to appreciate that: 1. The assessee was engaged in the business of trading spices which required significant working capital funding, and accordingly borrowed Rs.60,00,000/- from M/s Ahuja Properties and Associates. Vipul Mathuradas Thakkar ii. The said short term loan was repaid during the year, and the receipts and payments were made through proper banking channels. iii. The identity of the lender was duly established through PAN, confirmation letters and other documents submitted during the assessment proceedings. iv. The fact that summons issued to the lender were not complied with by the third party cannot be held against the assessee when sufficient documentary evidence supporting the transaction had already been provided. c) The appellant, therefore, prays that addition of Rs. 60,00,000/- u/s 68 of the Income Tax Act as unexplained cash credit may please be deleted. The appellant craves leave to add to, alter, and / or amend the above grounds of appeal.”
We have heard Ld. AR and Ld. DR. It was argued on behalf of the appellant/assessee that the AO has passed the assessment order without giving proper opportunity of hearing to the assessee and Ld. CIT(A) proceeded ex parte and decided the appeal on merit without giving effective opportunity of hearing to the assessee. Therefore, the impugned order suffers from illegality and liable to be set aside. The Ld. DR on the other hand supported the judgment of the Ld. CIT(A) stating that despite several opportunities given to the assessee, the assessee did not appear before the Ld. CIT(A), hence there is no merit in the appeal and same is liable to be dismissed. Vipul Mathuradas Thakkar 6. We have carefully examined the record and considered the rival submission of both the parties. It is evident from the observation of Ld. CIT(A) that Ld. CIT(A) has passed the ex-parte order on merit without giving effective opportunity of hearing to the assessee, as it is noted that the assessee has not submitted any additional evidence in support of its contention and has not brought any specific evidences with respect to the firm M/s Ahuja Properties & Associates, therefore confirmed the addition made by AO. The observation of Ld. CIT(A) in para no. 5.4 of its order are extracted below:- 5.4. Based on the facts and legal positions discussed above, despite being provided with multiple opportunities, the appellant has remained non- compliant and has failed to discharge its primary onus to substantiate his grounds of appeal raised in the present appeal. The AO noticed that the confirmation submitted by the Shri Jagdish Ahuja, prop. Of Ahuja Properties and Associates was not signed by Ahuja himself and therefore, the AO requested the appellant to produce Shri Jagdish Ahuja to confirm the transactions of RS. 60 lakhs. From the facts of the assessment order it is observed that a search action was conducted by the investigation wing of the department in the Ahuja Group on 25/06/2015 and in the Investigation Report it was mentioned that Shri Jagdish Ahuja was maintaining parallel books of accounts and it was stated in the report that "Accordingly, the transactions in respect of Pioneer Spices maintained in the unaccounted parallel books in tally accounting software /package maintained by Directors and Promoters of M/a. Ahuja Group reveals On-money/Cash transactions as under..." It is also noted in the assessment order that various entries are mentioned which clearly showed that cheque were given by the appellant and received back in cash. The AO has also noted that appellant had received cheque of Rs.60 lakh which was returned back to Ahuja Associates in cash as accommodation entry. From the data gathered during the search the appellant has taken accommodation entries of unsecured loans from the concerns used by the Ahuja Group to issue the bogus loans. The same information was passed on to the AO having juri iction over the appellant. The information passed by the Inv. Wing of the Department through their search operations and the contents of the Vipul Mathuradas Thakkar material found by them was authenticated duly sworn in statements of Shri Jagdish Ahuja. Therefore, AO had tangible material in his possession while reopening the case of the appellant. Therefore, AO has rightly reopened the case of the appellant and hence no adverse inference can be drawn on this count. The appellant before the AO had submitted copy of bank account numbers standing in the name of the appellant, details of the unsecured loans along with confirmation of a few parties and the details of sales and purchases, however, significant point in this aspect is the other party stated in their statements recorded under oath as bogus transactions and accommodation entries and not genuine transactions as claimed by the appellant. Once the other party denied the transaction as not genuine whatever the documents submitted by the appellant becomes meaningless and does not prove the genuineness of the transactions. The appellant has not brought any specific evidences with respect to the firm M/s. Ahuja Properties & Associates that it has genuinely extended loan to it. Even in Form no.35, appellant claimed to submit additional evidence in terms of Rule 46A. However, appellant has not submitted any additional evidence to support its contention. Even the additional evidence in the form of original confirmation signed by Shri Jagdish Ahuja as claimed in Form 35 also not submitted during the appellate proceedings. In view of all these circumstances, there is no credible evidence supporting the case of the appellant, instead AO has passed a speaking order with contents of the statement and modus operandi of the group and concerns. In view of that the addition made by the AO of Rs.60,00,000/- U/s.68 of the IT Act in respect of unsecured loans from M/s. Ahuja Properties & Associates is confirmed. The ground of appeal of the appellant is dismissed. 7. On perusal of para 5 of the impugned order, it is evident that no effective opportunity of hearing has been given and there is no proof that the notice sent on various dates were duly served or brought to the notice of the appellant/assessee. 8. We have also considered Section 250 sub section 2(a) of "the Act" which provides as under: “Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: - Vipul Mathuradas Thakkar a. The appellant, either in person or by an authorised representative;” 9. It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. It is thus evident from the contents of the impugned order extracted above that no effective opportunity of hearing has been given to the assessee which is bad in law and the passing of impugned order resulted into miscarriage of justice and end of justice requires that assessee be given one more opportunity by the revenue to represent its case effectively. 10. For these reasons, we are of the considered opinion that the matter needs to be restored to the file of the Ld. CIT (A) for deciding afresh with a direction to give effective opportunity of hearing to the assessee who shall present its case before him within 90 days. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms. 11. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 27.10.2025. (OM PRAKASH KANT) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Vipul Mathuradas Thakkar Mumbai / Dated 27.10.2025 Dhananjay, Sr.PS Copy of the Order forwarded to:
The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //// BY ORDER
(Asstt.