K P TEXTILES PRIVATE LIMITED,MUMBAI vs. ACIT CIRCLE 4(2)(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 1170/MUM/2026 Assessment Year: 2012-13

K P Textiles Private Limited ACIT Circle 4(2)(2), Room No.K, 2nd Floor, Mumbai Swadeshi Market, Kalbadevi Vs. Road, Kalbadevi, Mumbai - 400002 (PAN: AACCK7656F) (Appellant) (Respondent)

Present for: Assessee : Shri Rajiv Khandelwal, CA Revenue : Shri Hemanshu Joshi, Sr. DR Date of Hearing : 22.04.2026 Date of Pronouncement : 20.07.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of ld. CIT (A), National Faceless Appeal Centre (NFAC), vide order No. ITBA/NFAC/S/250/2025-26/1083245774(1) dated 03.12.2025, passed against the assessment order by ACIT, CC-4(2)(2), Mumbai, u/s. 143(3)/147 of the Income-tax Act (hereinafter referred to as the “Act”), dated 04.12.2019, for Assessment Year 2012-13.

2 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13 Mumbai (hereinafter referred to as the Assessing Officer) in issuing notice under section 148 of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as the reasons recorded by Assessing Officer are vague, insufficient and without application of mind and hence, the said notice issued under section 148 is bad in law and therefore, the consequent assessment order needs to be quashed. 2. The specified authority under section 151 erred in not granting an appropriate approval as required under section 151 of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the approval granted by the authority under section 151 of the Act is mechanical and without application of mind, and therefore, the notice issued under section 148 by the Assessing Officer is bad in law and hence, the consequent assessment order needs to be quashed. 3. The CIT(A) erred in upholding the action of the Assessing Officer in making an addition of Rs 45,58,875 under section 68 of the Act, being sum received from Induja Traders Private Limited on the ground that the said sum represents accommodation entry. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as the appellants have not received any monies from Induja Traders Private Limited and hence, the said addition of Rs 45,58,875 is bad in law and needs to be deleted. The appellants further, contend that the Assessing Officer and the CIT(A) further, erred in not allowing cross examination in spite of the appellants request for the same and hence, the impugned addition of Rs 45,58,875 is against the principles of natural justice; thus, bad in law and needs to be deleted. 4. The CIT(A) erred in upholding the action of the Assessing Officer in making an addition of Rs 2,279, being commission paid @ 0.05% on the aforesaid alleged accommodation entry. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch no accommodation entry has been obtained by the appellants and hence, the said addition of Rs 2,279 is bad in law and needs to be deleted. 3. Case of the assessee was taken up for re-assessment proceedings by issuing notice u/s. 148 dated 29.03.2019. For this, reasons to believe recorded by the ld. Assessing Officer as supplied to the assessee and placed in the paper book at page-21 mentions that ld. Assessing Officer had received information about bank accounts maintained by

3 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13 one Mr. Jitendra Salecha wherein there are high value remittances immediately followed by similar debits by RTGS. Shri Jitendra Salecha was summoned and his statement was recorded wherein an admission was made about he providing accommodation entries. The list of beneficiaries was prepared based on the statement given by Shri Mr. Jitendra Salecha wherefrom ld. Assessing Officer noted that assessee is also one of the beneficiaries of the accommodation entries provided by him through his companies. Ld. Assessing Officer tabulated the details in this respect which is extracted below for ready reference:

Sr.no Name & PAN of Company/Concern Amount Name of the from where accommodation entry Debited Beneficiary provided (In Rs.) 1. M/s. Induja Traders Pvt. Ltd. (PAN - 45,58,875/- M/s KP Textiles AAACI8509D) Pvt Ltd (AAACG2267J)

3.1. Based on the above information, he recorded his reasons to believe that income chargeable to tax has escaped assessment for an amount of Rs.45,58,875/-. Assessee filed its objection against the initiation of re-opening proceedings vide letter dated 18.06.2019 wherein it has strongly objected that assessee had neither entered into any such transaction nor received any such amount from the concern M/s. Induja Traders Pvt. Ltd. as noted by the ld. Assessing Officer in the reasons to believe recorded by him. According to the assessee, Shri Jitendra Salecha is not known to it. Further, assessee required the ld. Assessing Officer to provide copies of statement recorded of the said person and supply all the relevant material and document for the reasons to believe so arrived at by him. Assessee further assertively submitted that it is a case of “mistaken identity” since PAN mentioned by the ld. Assessing Officer against the name, K P Textiles Pvt. Ltd. does not belong to the assessee but some other person. The PAN recorded by the ld. Assessing Officer in the reasons to believe is “AAACG2267J”

4 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13 whereas the PAN of the assessee is “AACCK7656F”. Thus, ld. Assessing Officer has initiated the re-opening proceedings on the assessee under a mistaken identity as the PAN referred is not of the assessee. According to it, the case has been re-opened by merely placing reliance on the report of the Investigation Wing, without making any independent enquiries and application of mind. Ld. Assessing Officer ought to have made proper verification of basic facts prior to recording of reasons to believe and issuing notice u/s. 148.

3.2. Ld. Assessing Officer disposed the objections filed by the assessee vide order dated 24.06.2019 by mentioning that it is a clerical error of quoting wrong PAN against the name of the assessee in the reasons to believe recorded by him. According to the ld. Assessing Officer, it is an apparent mistake and stands rectified for taking the proceedings further.

3.3. Thereafter, he issued a show cause notice dated 15.11.2019 requiring the assessee to explain the transaction as mentioned in the reasons to believe by corroborating by relevant documentary evidence. In the said show cause notice, in para-5, he re-produced the same table as contained in the reasons to believe by mentioning the PAN which did not belong to the assessee. Despite raising an objection and its disposal by the ld. Assessing Officer, he has reiterated the same incorrect fact which initially ld. Assessing Officer has treated it as clerical error and apparent mistake. He has repeated the same error in the show cause notice which supports the contention of the assessee that re-opening made is under a mistaken identity. The relevant para-5 from the said show cause notice is extracted below for ready reference:

5 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13

3.4. Against the said show cause notice, assessee made its submission vide letter dated 18.11.2019 reiterating that it has not entered into any transaction with M/s. Induja Traders Pvt. Ltd. as alleged by the ld. Assessing Officer in the reasons to believe recorded by him that assessee is a beneficiary. Assessee also repeated that it did not have any transaction with Shri Jitendra Salecha or with the said company.

3.5. Assessee went ahead to explore and to bring out on record, the correct entity to which the PAN belonged to, as mentioned in the reasons to believe and found out that it belongs to a company known as Gold Star Chemical Pvt. Ltd., for which it placed on record a screenshot of PAN verification from the income-tax website and TRACES. Assessee thus, factually demonstrated the incorrect PAN noted by the ld. Assessing Officer in the reasons to believe and the re-opening done under a mistaken identity. Assessee also submitted that there are other companies on the MCA portal of the Registrar of Companies (RoC) with similar names as that of the assessee. However, the PAN are unique to each person and therefore, it is a case where ld. Assessing Officer has initiated the re-opening proceedings without verification of correct fact, making independent enquiry and applying his own mind which is nothing but proceeding under a mistaken identity. The screenshot as

6 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13 placed on record by the assessee is re-produced below for ready reference:

3.6. Assessee reiterated its submission before the ld. Assessing Officer to provide to it all the necessary relevant documentary evidences relied upon as well as statements recorded of the persons and provide opportunities for cross examination. Assessee also placed on record an affidavit through its Director, dated 27.06.2023 whereby the averments affirmed that no such transaction was undertaken by the assessee as alleged by the ld. Assessing Officer.

7 ITA No. 1170/Mum/2026 K P Textiles Pvt. Ltd. AY 2012-13 taken by it with the party mentioned as alleged by the ld. Assessing Officer in the reasons to believe recorded by him. Assessee has also evidently demonstrated about the PAN belonging to some other company which has not been disproved. It is a case of mistaken identity and benefit of doubt cannot be given to the ld. Assessing Officer who has disposed of the objections of the assessee by merely stating that quoting of incorrect PAN is a clerical error and an apparent mistake. Improving upon the reasons to believe recorded by the ld. Assessing Officer, subsequently, is impermissible under the provisions of the Act as well as under the settled legal position. Further, assessee cannot be made to prove negative of it having not undertaken any transaction as alleged by the ld. Assessing Officer.

Order is pronounced in the open court on 20 July, 2026

Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member Dated: 20 July, 2026 MP, Sr. P.S.