RAJSHREE BIHANI,KOLKATA vs. I.T.O., WARD - 37(1), KOLKATA

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ITA 2002/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2014-20156 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the order of the CIT(Appeals) and remitted the matter back to the Assessing Officer. The AO is directed to re-verify the Memorandum of Understanding (MoU) and other related documents to ascertain the genuineness of the transactions.

What were the facts?

The assessee received a credit of Rs. 40,00,056/- in their bank account from a company identified as a potential shell company. The assessee failed to adequately explain this transaction to the Assessing Officer and the CIT(Appeals).

What were the issues?

Whether the credit received in the bank account constituted unexplained credit under Section 68, and if the assessee provided sufficient evidence to prove the genuineness of the transaction.

Which sections of the Income-tax Act were involved?

Section 68,Section 142(1),Section 147,Section 144B,Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Shri Duvvuru RL Reddy, Vice-(KZ)

The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 07.08.2025 passed for Assessment Year 2014-2015.

ITA No. 2002/KOL/2025 (A.Y. 2014-2015) Rajshree Bihani 2. Brief facts of the case are that the assessee is an individual, who filed his return of income for the assessment year 2014-15 in ITR-3 on 29.07.2014 declaring total income of Rs.4,37,560/-. The return was processed under section 143(1) on 24.11.2014. In the return of income, the assessee had shown income from salary amounting to Rs.2,86,440/- and income from other sources amounting to Rs.4,04,916/-. One credible information was received from DDIT(Inv.), Unit-1(2), Kolkata, wherein it was noticed that the assessee received huge credit of Rs.40,00,056/- in his Bank account maintained with Union Bank of India during FY 2013-14 from M/s. Prozen Merchants Pvt. Ltd. (amalgamated into M/s. Kirti Vinimay Pvt. Ltd.). Notices under section 142(1) were sent to the assessee on 22.12.2021 to explain credit transaction of Rs.40,00,056/- with M/s. Prozen Merchants Pvt. Ltd., but the assessee failed to explain. It is crystal clear that this company is a paper/shell company formed to provide bogus accommodation entries. Thus, the entire amount of huge credit of Rs.40,00,056/- received in assessee’s bank account maintained with Union Bank of India from M/s. Prozen Merchants Pvt. Ltd. was treated as unexplained credit under section 68 of the Act. Finally, ld. Assessing Officer determined the total income of the assessee at Rs.44,37,616/-.

3.

Not being satisfied with the order of ld. Assessing Officer, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee by saying that merely submitting a Memorandum of Understanding (MoU) or showing the name of the payer in the audited accounts is not

ITA No. 2002/KOL/2025 (A.Y. 2014-2015) Rajshree Bihani conclusive evidence of the genuineness of the transaction. As the assessee failed to furnish confirmation from the director or authorized signatory of M/s. Kirti Vinimay Pvt. Ltd. and no documentary evidence of any subsequent sale deed or progress towards execution of sale of land and failed to prove the source of funds in the hands of the payer company that does not appear to be engaged in land acquisition or real estate development, based on its financials. Ld. CIT(Appeals) was of the opinion that mere routing of funds through banking channels is not sufficient to establish the genuineness of a transaction and the claim that the payer was an NBFC does not automatically establish its creditworthiness or the genuineness of the advance unless corroborated with financial details specific to the transaction and no such detailed explanation or evidence has been brought on record by the assessee and the AO has recorded satisfaction after applying independent mind and conducted proceedings under section 147 read with section 144B in accordance with law and reopening is valid and assessment completed after affording the assessee sufficient opportunity. With regard to the amount of Rs.4,00,518/- taken twice erroneously by the Assessing Officer as claimed by the assessee, the ld. CIT(Appeals) dismissed this ground as no cogent evidence or working has been provided during appellate proceedings to establish such duplication nor any rectification application has been filed before Assessing Officer under section 154.

4.

On being aggrieved, the assessee preferred an appeal before the ITAT. It was the submission of the ld. Counsel for the assessee

ITA No. 2002/KOL/2025 (A.Y. 2014-2015) Rajshree Bihani that in response to the statutory notice from the ld. Assessing Officer, to execute the deal of sale proceedings, Memorandum of Understanding (MoU) was executed and for this, an amount of advance was credited against sale of land and routing of funds were made through banking channel, which prove to establish the genuineness of transaction. But unfortunately, the ld. CIT(Appeals) did not consider the MoU and dismissed the appeal of the assessee. He therefore, pleaded to set aside the order of ld. CIT(Appeals).

5.

On the other hand, at the time of hearing, ld. Departmental Representative pleaded that as the assessee did not furnish any material relating to merit and in support of grounds of appeal as well as statement of facts. the CIT(Appeals) dismissed the appeal of the assessee as no detailed explanation or evidence has been brought on record by the assessee. He prayed before the Bench to uphold the order of ld. CIT(A).

6.

I have heard both the sides and perused the material available on record. A perusal of the impugned order clearly shows that the assessee filed MoU, which shows that the amount was credited against sale of land and routing of funds were made through banking channel. From the record, I find that notices under section 142(1) were sent to the assessee on 22.12.2021 to explain credit transaction of Rs.40,00,056/- with M/s. Prozen Merchants Pvt. Ltd. (amalgamated with M/s. Kirti Vinimay Pvt. Ltd.), and in response the assessee submitted copy of bank statement, documents related with company Kirti Vinimay Pvt.

ITA No. 2002/KOL/2025 (A.Y. 2014-2015) Rajshree Bihani Ltd. balance sheet and profit & loss account for the impugned assessment year. By considering the totality of the facts and circumstances, I am inclined to set aside the order passed by the ld. CIT(Appeals) and in order to meet the principle of natural justice, remit the matter back to the file of the ld. Assessing Officer to verify Memorandum of Understanding (MoU) afresh as filed by the assessee to prove the genuineness of transactions as well as computation of income as made and other related documents afresh with a direction to provide one more opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. Assessing Officer failing which the ld. Assessing Officer shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are partly allowed for statistical purposes.

7.

In the result, appeal of the assessee stands partly allowed for statistical purposes. Order pronounced in the open Court on 28/04/2026.

Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of April, 2026

Copies to :(1) Rajshree Bihani, Manikala, 156C, Maniktala Main Road, Flat-19C, Kolkata-700054, West Bengal 5

ITA No. 2002/KOL/2025 (A.Y. 2014-2015) Rajshree Bihani

(2) Income Tax Officer, Ward-37(1), Kolkata, 3, Government Place, Kolkata-700001 (3) CIT(A), NFAC, Delhi; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha

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