VISHAL BHUPENDRAKUMAR RAMANI,THANE vs. ITO 3(2), THANE

In the instant case, information was received through the Insight Portal from the DCIT, Central Circle-5(2), Mumbai, to the effect that certain persons were/are engaged in facilitating accommodation entries for the ARC Group and various other parties in the form of bogus sales, purchases and unsecured loans in lieu of cash. As per the said information, the Assessee was one of the beneficiaries and had obtained an unsecured loan of Rs.15,59,596/- from M/s Shree Riddhi Siddhi & Co.

On the basis of the aforesaid information, the Assessee’s case was reopened u/s 147 of the Act by issuing a notice dated 29.03.2024 u/s 148 of the Act. In response, the Assessee filed its return of income on 31.03.2024. Thereafter, various statutory notices were issued, in response to which the Assessee furnished replies along with the ledger account, bank statement, computation of income and details relating to the unsecured loan.

Though the Assessing Officer (in short, the “AO”) referred to the aforesaid submissions and documents in the assessment order, however, he relied upon the statements recorded u/s 132(4) of the Act of the persons connected with M/s R.K. Exports, M/s Arohi Creations LLP and M/s Shree Riddhi Siddhi & Co., allegedly controlled and managed by Shri Lokesh Kumar Khabya and engaged in providing bogus accommodation entries.

The AO further relied upon the modus operandi allegedly found during the search and seizure proceedings and certain abnormal features noticed in the returns and financial statements of the concerns controlled by Shri Lokesh Kumar Khabya, including high turnover, substantial sundry creditors, major assets comprising loans, advances, debtors and investments, nil advance tax and self-assessment tax despite substantial turnover and adjustment of almost the entire TDS deducted on interest income. Accordingly, the AO made an addition of Rs.15,59,596/- u/s 68 of the Act as unexplained cash credit.

Thus, the Assessee being aggrieved challenged the said addition by filing the first appeal before the Ld. Commissioner. Though the Ld. Commissioner reproduced the Assessee’s submission in the impugned order. However, the Ld. Commissioner subsequently observed that neither the Assessee nor its authorised representative filed any written submission or adjournment application during the appellate proceedings and, therefore, failed to substantiate the grounds of appeal with supporting documents.

Consequently, the Ld. Commissioner dismissed Assessee’s appeal for want of prosecution and affirmed the addition made by the AO. Thus, the Assessee being aggrieved has preferred the instant appeal.

We have heard the parties, perused the material available on record and considered the rival submissions.The Ld. Counsel for the Assessee submits that the Assessee furnished detailed submissions before the AO; however, the AO passed the assessment order u/s 147 r.w.s. 144 of the Act, substantially on an ex parte basis, without properly considering the material furnished by the Assessee. The Assessee further submits that Ld.

We have given thoughtful consideration to the peculiar facts and circumstances of the case. Though the written submissions and statement of facts form part of the impugned order, however it appears that the same were filed along with the appeal and not during the subsequent appellate proceedings. Further, the Assessee failed to furnish the relevant supporting documents before the Ld. Commissioner during the appellate proceedings, which resulted in non-adjudication of the issue(s) on merits.

Thus, considering the peculiar facts and circumstances in totality, we deem it appropriate to afford one last and final opportunity to the Assessee to substantiate its claim before the Ld. Commissioner by furnishing the relevant submissions and supporting documents, without any delay or default, as and when called upon to do so.

Accordingly, the case is remanded to the file of the Ld. Commissioner for decision afresh on merits in accordance with law, after affording a reasonable opportunity of being heard to the Assessee.

We clarify that in case of any further default, the Assessee shall not be entitled to any leniency.

In the result, Assessee’s appeal is allowed for statistical purposes.