DCIT, CENTRAL CIRCLE -3, THANE, THANE vs. DODHIA SYNTHETICS LIMITED, BHIWANDI
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI
BEFORE: SHRI SANDEEP GOSAIN, JUDICIAL MEMBER &
SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
ITA (SS) No.
AY
Assessee/
Assessee
Respondent
795/Mum/2025 2013-14 Dodhia Filaments Pvt
Ltd.,
69/100, New Mavji compound, Narpoli
Behind Ratan Talkies
Bhiwandi.
DCIT, CC -3
Room No. 12, A wing, 6th Floor,
Ashar IT Park,
Thane (W)
796/Mum/2025 2014-15
797/Mum/2025 2015-16
798/Mum/2025 2016-17
799/Mum/2025 2017-18
2189/Mum/2025 2013-14 Dodhia Synthetics Ltd.,
House No. 98/2,
Dodhia House, Behind
Ratan Talkies, narpoli
New Mavji compound
DCIT, CC -3
Room No. 12, A wing, 6th Floor,
Ashar IT Park,
Thane (W)
2190/Mum/2025 2013-14
2200/Mum/2025 2019-20
2201/Mum/2025 2014-15
2202/Mum/2025 2016-17
2203/Mum/2025 2017-18
2204/Mum/2025 2020-21
2205/Mum/2025 2018-19
2206/Mum/2025 2015-16
2105/Mum/2025 2014-15
DCIT, CC -3
Room No. 12, A wing,
6th Floor, Ashar IT Park, Thane (W)
Dodhia Synthetics
Ltd.,
House No. 98/2,
Dodhia House,
Behind Ratan
Talkies, narpoli
New Mavji compound
2106/Mum/2025 2015-16
2227/Mum/2025 2016-17 Ritesh Mansukhlal
Dodhia
104, New Mavji
Vompad, Dodhia
House, Narpoli
DCIT – CC-3
Room No. 12, A Wing, 6th Floor,
Ashar IT Park,
Thane(W)
Assessee by Ms. Simran Dhawan
Revenue by Shri Umashankar Prasad,
CIT DR
Date of Hearing
22/07/2025 & 05.08.2025
Date of Pronouncement
17/09/2025
आदेश / O R D E R
PER BENCH:
The present appeals have been filed by the assessee as well as revenue challenging the different impugned orders passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the A.Ys 2013-14 to 2019-20. 2. Since all the issues involved in these appeals are belongs to one group, therefore, they have been clubbed, heard together and a consolidated order is being passed for the sake of convenience and brevity.
3. We shall take up the appeals filed by the assessee i.e
Dodhia Synthetics Ltd In which 09 appeals have been preferred by the assessee and two appeals have been preferred by the revenue, against the common order of Ld.
CIT(A) dated 30.01.2025 and one separate order for pre search assessment for A.Y 2013-14 dated 29.01.2025. 4. Since the major issues and material relied upon being common, therefore all these grounds are being adjudicated together. For the sake of discussion and arguments, the A.Y. 2013-14 has been taken as the lead year. The assessee has raised the following grounds of appeal for A.Y. 2013-14:
5. “On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax
(Appeals) erred in not treating the re-opening of assessment as bad-in-law being entirely based on borrowed satisfaction from Investigation Wing to which the assessee in particular was not a insinuated/indicted or confronted party and the Ld. Assessing Officer without
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application of mind, without providing copies of signed reasons and approval as they existed on record, without conducting any independent enquiries and without demonstrating as to how there was failure on the part of assessee to make disclosure of material facts, given that the case was earlier assessed u/s 143(3) and therefore reopening is impermissible under proviso to section 147 of the Act .
1. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax
(Appeals) erred in not quashing the assessment order and deleting the addition of Rs 1,50,00,000/- made, even when the Ld. Assessing Officer causing prejudice by not following the basic principles of natural justice by:
a) supplying the assessee with materials collected at its back , b) supplying copies of all relevant statements of third parties, c) supplying copies of reports of Investigation and d) affording opportunity to cross examine the third parties whose generic statements was relied upon to draw inference against the assessee in particular, despite specific request made by the assessee in response to show cause notice.
2. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax
(Appeals) erred in upholding the addition of Rs
1,50,00,000/- u/s 68 of the Act made by the Ld. Assessing
Officer in the impugned assessment order on account of share application money received by the assessee from M/s
Agomoni Commercial P Ltd, M/s Bagdevi Suppliers P Ltd,
M/s Prayagpour Vyapar P Ltd and M/s Value Added
Merchants P Ltd, that was treated as unexplained cash credits, though the assessee had duly discharged its onus under section 68, by submitting all the relevant documentary evidences to prove identity and creditworthiness of the share applicant companies and genuineness of the transactions.
3. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax
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(Appeals) erred in upholding the addition u/s 68 of share application money of Rs 1,50,00,000/-:
a) by holding share application money as accommodation entries, without there being any evidence of cash paid at the time of receipt of alleged non-genuine share application money from the above four companies either directly or through any perceived and unknown entry providers.
b) by holding the shareholder companies as paper
/shell/non-genuine entity, even though these companies were MCA Active and ITR filers at the time of receipt of share application money and amounts were received through banking channels duly confirmed.
c) in absence of any incriminating material whatsoever found during the course of search & seizure action, pertaining to the assessee and the year under consideration.
d) by justifying undue insistence on assessee placed by Assessing Officer to produce directors of shareholders, where as the primary onus on assessee stood discharged and ignoring the fact the Assessing Officer did not conduct any independent enquiries specifically as regards assessee to shift the onus back on to the assessee even as per case laws quoted in para 23 of the impugned order.
On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in making addition of Rs 2,76,73,383/- on account of alleged undisclosed cash receipts u/s 69A and Rs 27,15,548/- u/s 69C of the Act being the peak of negative cash balance, by deleting the protective additions in the hands of Shri Mansukhlal Dodhia (who claimed vague and partial ownership of the seized material as belonging to Dodhia Group and not to assessee company in particular) and adding substantively in the hands of the assessee company, without the material seized from a third party explicitly indicating that the assessee company was a party to the transactions therein. 5. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the invocation of provisions of section 69A of the Act for AY 2013-14, despite the fact that the assessee was not ‘found to be the owner’ of any 5 unaccounted money, bullion, jewellery or any other valuable article during the search or during the year under consideration as alleged assets remained non-existent. 6. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the recomputed addition of Rs 2,76,73,383/- and Rs 27,15,548/- on account of alleged unaccounted cash receipts and peak of negative cash balance respectively, by relying on ‘dumb documents’ as the nature of transactions whether capital or revenue was not clear and without any explicit involvement of assessee company as a party to transactions and thereafter erred in arbitrarily adopting ‘transaction-wise selective approaches’ i.e. applying the peak theory on some transactions and denying on the others, applying an arbitrary net profit rate on some transactions and denying on others and taxing entire receipts regarding rest of the transactions, against the concept of taxability of real income and accounting principles, even as none of the referred material and transactions pertained to or belonged to assessee company. 7. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in ignoring the fact that the Assessing Officer had sent a 'deviation report' to Investigation Wing seeking their approval to make addition at a much lesser figure than mentioned in Investigation Report, that reflected a bonafide opinion of the Assessing Officer, that albeit could not translate into Assessment order in the absence of reply from the Wing and therefore applying the ratio of the decision of Hon’ble High Court of Delhi in the case of PCIT vs. Agson Global Pvt. Ltd. (2022) 134 taxmann.com 256 (Delhi), the assessment order should have been be held as void. 8. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the levy of interest u/s 234A, 234B and 234C of the Income Tax Act, 1961. 9. On the facts and in the circumstances of the assessee’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the initiation of penalty u/s 271(1)(c) of the Income Tax Act, 1961.” 6. Now we would deal with specific facts of the case pertaining to A.Y 2013-14. As per the background of the 6 present case, the original return of income was filed u/s 139(1) on 26/09/2013 declaring total income at Rs. 4,58,58,270/-. Subsequently the case was selected for scrutiny and assessment order u/s 143(3) was passed on 14.03.2016 by accepting the returned income. Thereafter, on the basis of an information received from DDIT (Inv.), Unit-2(1), Kolkata, the case was reopened for the first time and a notice u/s. 148 of the Act was issued on 27.09.2018. The assessment u/s. 143(3) r.w.s. 147 was completed on 27.12.2019, wherein, an addition of Rs. 1,25,00,000/- was made on account of bogus share application money raised by the assessee. 7. A Search and seizure operations u/s 132 were carried out on the business as well as residential premises of the Dodhia Group of cases, including the assessee on 27.11.2019. The Assessing Officer, after receipt of seized material and other documents from the Investigation wing, issued another notice u/s 148 of the Act on 27.03.2021. The assessee vide letter dated 09.02.2022 filed objections regarding reopening of case. These objections were disposed by the AO vide order dated 07.03.2022. 8. The assessment u/s. 147 r.w.s. 144 of the Act was completed by making following additions to totalling to Rs. 1,58,96,000/-: i. Addition of Rs.1,50,00,000/- u/s. 68 of the Act on account of accommodation entries obtained in the form of share application money. ii. Addition of Rs.8,00,000/- u/s. 69D on account of Hundi loans taken by the assessee.
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iii. Addition of Rs.96,000/- u/s. 69C for interest paid on Hundi loans.
9. From the records, we noticed that Ld. CIT(A) had passed two separate orders in respect of two separate appeals against these two re-assessment orders for A.Y. 2013-14, the first on 29.03.2025 and second on 30.03.2025(second being post search and common with remaining years) dismissing the appeal against both orders for A.Y. 2013-
14. Before the Ld. CIT(A), assessee has challenged the validity of impugned assessment order by contending that the AO did not provide the exact copy of reasons recorded, the copy of proposal sent to PCIT for seeking approval and without providing the copy of approval u/s. 151 of the Act granted by the PCIT. It has also been contended that the AO has not dealt with all the contentions raised by it in the objection letter filed by it. In support of these contentions, the assessee has relied on the decision of Hon’ble Delhi High Court in the case of Sabh Infrastructure
Ltd. 99 taxmann.com 409 (Delhi). The Ld. CIT(A), in para 13 to 18 of his order dated 30.03.2025, had dismissed these grounds and other contentions. Similarly grounds in respect of old assessment order dated 27.12.2019 were also dismissed in para 6 to 12 of appellate order dated
29.03.2025. 10. Now after analysing the entire order and facts of the case, we noticed that at para 44.1 of the appellate order, the Ld. CIT(A) has observed that during the search operation, bundle number 8 and 9 being dairies, were seized from the residence of Shri Divyesh Dhanani
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(premises MN-5). These diaries as per assessee allegedly contain day wise cash transactions undertaken by Dodhia
Group. On the basis of entries in these diaries, the AO made additions in the hands of the assessee on substantive basis in AY 2014-15 and AY 2015-16. Simultaneously, the AO made additions in the hands of Shri Mansukhlal Dodhia on protective basis as well.
11. Ld. CIT(A) further noticed that the findings of the AO had that there are certain cash transactions for A.Y. 2013-
14 in the said bundle number 8 and 9, however, no addition is made in the hands of the assessee. On the other hand, the AO made following additions on protective basis in the hands of Shri Mansukhlal Dodhia:
i. Addition of Rs 2,92,94,418/- u/s 69A of the Act being the total of cash receipts for the year under consideration.
ii. Addition of Rs 10,38,501/- u/s 69C of the Act being the excess of cash payments over the cash receipts for the year under consideration.
12. The Ld. CIT(A) in its order further held that the AO made protective addition in the hands of Shri Mansukhlal
Dodhia on this issue but mistakenly did not make any addition in the hands of the assessee while completing the assessment u/s 143(3) r.w.s. 147 of the Act for A.Y. 2013-
14. The Ld. CIT(A) further stated that since the appeal of the assessee company and that of Shri Mansukhlal Dodhia were adjudicated simultaneously. Thus the Ld. CIT(A) held that the undisclosed income as above is assessable in the hands of the assessee company (Dodhia Synthetics
Limited) therefore a notice u/s 251(1)(a) of the Act was 9
issued to the assessee on 24.01.2025 for enhancement of income on account of alleged cash receipts for AY 2013-14
and accordingly addition(enhancement) was made by the Ld.
CIT(A), substantively in the case of assessee corresponding to the protective addition in the hands of Shri Mansukhlal Dodhia, as under:
i.
Addition on account of undisclosed income of Rs 2,76,73,383/- u/s 69A of the Act on account of undisclosed cash receipts.
ii.
Addition on account of undisclosed income of Rs 27,15,548/- being peak of excess of cash payments over the cash receipts as per reply filed by Shri Mansukhlal Dodhia u/s 69C of the Act.
13. Ld. CIT(A), while adjudicating the assessee’s appeal for AY 2014-15 dicussed in detail the enhancement for A.Y
2013-14 and corresponding additions made for other years. Although according to assessee, the Ld. CIT(A) had adopted wrong approach purely based on presumptions and conjectures for different set of unclear entries on the said material and worked out the additions (although giving partial relief on quantum worked out by the AO) and rejecting various alternative methods submitted by the assessee.
14. We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities. From the records we noticed that regarding the additions made by the AO u/s. 68 of the Act are concerned, the Ld. CIT(A) has observed that various entities of Dodhia Group had taken accommodation entries in the form of unsecured loans/share capital from 10
various shell entities as per information received from Investigation Wing Kolkata.
15. During the assessment proceedings, the AO had issued the commission u/s. 131(1)(d) of the Act to Investigation
Wing, Kolkata. The DDIT, Investigation Unit- 2(4), Kolkata reported that the Inspector deputed to verify the existence of these companies, reported that the no such company was found at the given address. Similarly, the summons issued to the companies remained unserved. Therefore with the above background, the AO required the assessee to substantiate the genuineness of these loans taken during the year.
16. We noticed that the details of share application for AY
2013-14 (in the pre-search assessment u/s 147 of the Act) along with the documents submitted before the AO to prove the identity, genuineness and creditworthiness of loan taken is as under:
Applicant
Share
Application
(In Rs)
Documents submitted before
Assessing Officer
Pg No in Factual
PB
Total Own
Funds
(in Rs)
Index Tie
Up P
Limited
1,25,00,000
Copy of PAN card
55
16,21,31,082
MCA Active Compliant Status
56
Acknowledgement of Return of Income for AY 2013-14
57
Audited Balance Sheet for the year ended 31.03.2013 of the lender party.
58
Copy of ledger account of the assessee company in the books of the lender party.
59
Copy of account confirmation letter from the party duly signed by the assessee company
60
Copy of bank statement of lender party showing payments made to assessee company.
61 – 62
Copy of bank statement of assessee company showing receipts from the party.
63 – 67
11
Applicant
Share
Application
(In Rs)
Documents submitted before
Assessing Officer
Pg No in Factual
PB
Total Own
Funds
(in Rs)
Copy of ledger account of the party in the books of the assessee company.
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The Details of Share Application for AY 2013-14 (in the post-search assessment u/s 147 of the Act) along with the documents submitted before the AO to prove the identity, genuineness and creditworthiness of loans taken are as under: S No Applicant Share Application (in Rs) Documents submitted before Assessing Officer Pg Non Factual PB Total Own Funds (in Rs) 1 Agomoni Commercials P Limited 60,00,000 Copy of PAN 86
15,10,85,095
Certificate of Incorporation,
Memorandum of Association and Articles of Association
87-103
MCA Active Compliant status
104-105
Audited Financial Statements for the year ended on 31st March, 2013 of applicant party.
106-119
Copy of ledger account of applicant company in the books of the assessee company
120-124
Copy of bank statement showing the transaction of share application money received by the assessee
124A-
124C
2
BagDevi
Suppliers P
Limited
35,00,000
Copy of PAN
125
6,66,50,528
Certificate of Incorporation
126
MCA Active Compliant status
127-128
Audited Financial Statements for the year ended on 31st March, 2013
relevant to the assessment year
2013-14. 129-143
Copy of ledger account of applicant company in the books of the assessee company
144
3
Payagpour
Vyapaar P
Limted
50,00,000
Certificate of Incorporation,
Memorandum of Association and Articles of Association
145-163
9,70,68,194
Copy of ledger account of applicant company in the books of the assessee company
164
Copy of bank statement showing the transaction of share application money received by the assessee
164A
12
S
No Applicant
Share
Application
(in Rs)
Documents submitted before
Assessing Officer
Pg Non
Factual
PB
Total Own
Funds
(in Rs)
4
Value Added
Merchants P
Limited
5,00,000
Copy of PAN
165
10,91,83,286
Certificate of Incorporation,
Memorandum of Association and Articles of Association
166-
183
MCA Active Compliant Status
184-
185
Audited Financial Statements for the year ended on 31st
March, 2013 relevant to the assessment year 2013-14. 186-
200
Copy of ledger account of applicant company in the books of the assessee company
201
18. The details of share application and loan received for AY
2014-15 along with the documents submitted before the AO to prove the identity, genuineness and creditworthiness of loans taken are as under:
S
N o
Party Name
Share
Applicatio n (in Rs)
Loan
Amount
Date of Loan
Repayment
Documents submitted before
Assessing Officer
Pg No in Factual
PB
Total
Own
Fund s (in Rs)
1
Agomoni
Commercial
P Limited
60,00,000
1,00,00,000
27.03.2014
PAN, Certificate of Incorporation,
Memorandum of Association and Articles of Association
109-126
15,11
,48,9
33
27.07.2013
MCA
Active
Compliant status
127-128
Acknowledgement of Return of Income for AY
2014-15
129
Audited Financial
Statements for the year ended on 31st March, 2014
130-133
Copy of Form 2
filed with