ITO, MUMBAI vs. PROGRESS PARTNERS BUSINESS ADVISORY LLP, MUMBAI

The present appeal preferred by the Revenueis directed against the order, dated 25/03/2025, passed by the National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had allowedthe appeal against the Assessment Order, dated 20/02/2024, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2018-2019. 2. The Revenue has raised following grounds of appeal :

Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) failed to appreciate that the AO in assessment order u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 dated 20.02.2024, after considering the material available on record including the submissions made by the assessee, has concluded that M/s. Advance Computers and Mobile India Pvt. Ltd. was involved in providing accommodation entries in any form not necessarily related to only purchases or sales and the assessee was one of the beneficiary of accommodation entries.

Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) failed to appreciate that the AO in assessment order u/s.147 r.w.s. 144B of the Income Tax Act, 1961 dated 20.02.2024, after considering the material available on record including the submissions made by the assessee, has concluded that the amount of Rs.17,59,526/- received by the assessee in lieu of audit fees from M/s. Advance Computers and Mobile India Pvt. Ltd. through banking channel was nothing but fake/bogus in nature which the assessee had brought in its books of account in circular transactions to show it as a legitimate transaction and treated the same as income of the assessee.”

The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2018-2019 offering to tax for internal audit fees of INR.17,59,526/- received from M/s. Advance Computers and Mobile India Pvt. Ltd. as reflected in the Form 26AS. The return filed by the Assessee was processed under Section 143(1) of the Act. Subsequently, on the basis of information received from INSIGHT portal uploaded by Deputy Director Income Tax (Inv.), Unit 5(2),the Assessing Officer observed that Assessee was beneficiary of the accommodation entry of INR.11,70,000/-, and on the basis of the aforesaid, the Assessing Officer formed belief that income had escaped assessment.Therefore, reassessment proceedings were initiated in the case of the Assessee under Section 147 of the Act. The aforesaid reassessment proceedings culminated into passing of Assessment Order, dated 20/02/2024, under Section 147 read with 3 Assessment Year 2018-2019

Being aggrieved, Assessee preferred appeal before the CIT(A), the CIT(A) deleted the addition and allowed the appeal preferred by the Assessee holding as under:

In the result, the appeal of the appellant is treated as ALLOWED.”

Being aggrieved, the Revenue has preferred the present appeal before the Tribunal.

We have heard both the sides and have perused the material on record.

On perusal of Form 26AS, copy of invoices raised and relevant extract of bank statements filed by the Assessee, it becomes evident that the Assessee had received the internal audit fees of INR.17,59,526/- (INR.15,60,000/- + services tax/GST) from M/s. Advance Computers and Mobile India Pvt. Ltd. during the relevant previous year. It is not disputed by the Revenue that the said income was offered to tax by the Assessee in the return of income.

We find that the Assessing Officer had taken note of the fact that as per information received from the Investigation Wing, M/s. Advance Computers and Mobile India Pvt. Ltd. was alleged to have raised fake/bogus invoices. We find that the Assessing Officer had made following observations while making the addition of INR.17,59,526/- in the hands of the Assessee.

Subject to the above remarks, total income of the assessee is computed as under:- SI No. Description Amount (in INR) 1. Return of Income Rs.3,67,030/- 2. Variation in respect of issue of unexplained cash credit u/s 68 r.w.s 115BBE of the Income Tax Act, 1961(as discuss in Para 4.4(i) above) Rs.17,59,526/- 3. Total Income/Loss determined as per the above proposal. Rs.21,26,556/-

On perusal of record, we are of the view that the findings returned by the Assessing Officer to the effect that M/s. Advance Computers and Mobiles India Pvt.was engaged in providing accommodation entries of sales is based upon conjuncture and surmises. The documents filed by the Assessee before the Assessing Officer included (i) Computation of income showing tax offered on INR.17,59,526/- (ii) Appointment letter as Internal Auditor and (iii) Bank statement highlighting receipt from M/s. Advance Computers and Mobiles India Pvt.The said documents support submission of the Assessee that the payments received were from M/s. Advance Computers and Mobile India Pvt. Ltd. for internal audit services provided by the Assessee and the same were duly disclosed in the books of accounts and offered to tax as income. Thus, in our view, the Assessee had discharge the onus cast upon the Assessee under Section 68 of the Act to disclose the nature and source of credit of INR.17,59,526/- in the books of accounts for the relevant previous year. On the other hand, we note that there is no material on record to show that M/s. Advance Computers and Mobile India Pvt. Ltd. was providing accommodation entries for bogus income/sales or were booking bogus expenses for services received. In view of the aforesaid, we hold that the finding returned by the 6 Assessment Year 2018-2019

In result, the present appeal preferred by the Revenue is dismissed.

अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent. 3. आयकरआयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीयŮितिनिध ,आयकरअपीलीयअिधकरण ,मुंबई/ DR, ITAT, Mumbai 6. गाडŊफाईल