INCOME TAX OFFICER, NAGPUR vs. RAMSONS STEEL PVT LTD, NAGPUR

PER PAWAN SINGH, JUDICIAL MEMBER:

directed against the order of Ld. CIT(A) dated 16.07.2023 for AY 2013-14. In ITA

No. 312/NAG/2023for AY 2013-14, the revenue has raised following grounds of

appeal;- i. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 2,35,50,000/- made by AO u/s. 68 of I.T. Act, 1961 even though the assessee failed to explain the credit entry in bank account of assessee made by M/s. Shubhbijay Properties Advisory Pvt. Ltd. ii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 192,67,37,950/- made by AO u/s. 68 of

I.T. Act, 1961 even though the assessee failed to establish the identity and the creditworthiness of the persons from whom loans/deposits were received. iii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC has erred in accepting the transaction with M/s. Shubhbijay Properties Advisory Pvt. Ltd. as genuine transaction inspite of the fact that the said company is a shell entity and transactions of shell entity have been held to be non-genuine transaction. Reliance is placed on the decision of ITAT, Mumbai Bench, Mumbai ITA No. 1313/Mum/20 in the case of DCIT, Circle 15(1)(2) Mumbai Vs. Leena Power Tech Engineer Pvt. Ltd. 2. On receipt of notice of appeal by revenue, the assessee has filed its cross objection (C.O.) by raising following grounds;-

i. Notice is issued u/s 148 of I.T. Act 1961 is illegal, invalid and bad in law. Consequent reassessment framed is liable to be cancelled. ii. The learned CIT(A) erred in holding that notice issued u/s 148 is in accordance with law. iii. The learned CIT(A) ought to have held on the facts and evidence on record that notice issued u/s 148 is bad in law and consequent reassessment framed is liable to be cancelled. iv. Reassessment framed without providing complete reasons recorded for issue of notice u/s 148 inspite of specific request made is bad in law and liable to be cancelled. v. Reason to believe for escapement of income on the basis of information received from Investigation Wing without making independent inquiry is no valid belief of escapement and consequent notice issued u/s 148 is bad in law. 3. Brief facts of the case are that the assessee is a company engaged in the

business of trading in Iron and Steel and investment in share and securities. The

assessee filed its return of income for AY 2013-14 declaring income of Rs.

1980/-. Initially, scrutiny assessment was completed under section 143(3) on

24.03.2015. Subsequently, the case of assessee was reopened under Section

147 on the basis of information that DDIT (Inv) Unit 4(2) Kolkata that they

conducted inquiry in respect of bank account of Raj Kumar Singh in IndusInd

Bank. As per information of DDIT (Inv) Unit 4(2) Kolkata, there was high value

of cash deposits in the bank account of RajKumarSingh, which were immediately

transferred or withdrawn. Credit entry mainly by cash deposits and were

transferred to several entity including to Shubhbijay Properties Advisory P

Limited. The assessee company is one of the beneficiaries of fund transferred

from the bank account of Raj Kumar Singh of Rs. 45.00 Lakhs during financial

year 2012-13 relevant to assessment year under consideration. On the basis of

such information, the Assessing Officer (in short ‘AO’) formed his opinion that

the income to the extent of Rs. 45.00 Lakhs had escaped assessment. Notice

under Section 148 dated 31.03.2021 was issued to assessee after obtaining prior

approval from competent authority. In response to notice under Section 148, the

assessee filed its return of income on 13.04.2021. The AO after serving reasons

recorded proceeded for reassessment. The AO asked the assessee to furnish

detail of statement of bank account, financial statement and audit report along

with all details of business activities. As per direction of assessee, the assessee

furnished complete details. The AO noted that there was credit entry in the bank

account of assessee from the account of Shubhbijay properties Advisory Pvt

Limited aggregating of Rs. 2.35 Crore. The AO recorded such detail in para 3.1

of the assessment order. The AO in para 5.1 to 5.4 recorded modus operandi of

entry provider and the role of Income Tax Authorities. The AO in para 6 of

assessment order recorded that the submission made by assessee is not in

conformity with facts available on record. Thus, the credit entry in the bank

account of assessee of Rs. 2.35 Crore was treated as unexplained credit under

Section 68. The AO further noted that there were other transactions in the

Lakshmi Vilas Bank account of assessee aggregating to Rs. 192.67 Crore from

various entities, details of which are recorded in para 7 of the assessment order.

The assessee was asked to furnish details about the genuineness of such

transaction. The AO in para 7.1 of his order recorded that to verify the

genuineness and creditworthiness of various loans and advances, notice under

Section 133(6) were issued to 15 such entities requiring certain details with

regard to nature of business, return of income and transaction with assessee

company during relevant financial year with ledger account with the assessee.

The AO noted that no compliance /response is received from all such parties.

Due to non-compliance, the AO took his view that it is not ascertainable whether

such entities are actually genuine or exist on paper. The assessee was asked to

submit his explanation regarding huge amount of credit and entries appearing in

such bank account. The assessee filed its reply on 09.03.2022. The part of

assesses reply are recorded on page 18 of assessment order. The assessee in

his reply stated that the transaction does not relate to any sale or purchases or

booking of services. The assessee company accepted intercorporate deposits

from various companies. Similarly, the assessee company advanced

intercorporate deposits to various other companies. The assessee accepted

intercorporate deposit from various companies aggregating to Rs. 122.37 Crore.

The assessee received Rs. 71.72 Crore out of intercorporate deposit from

various companies. This has resulted into credit in the bank account maintained

with Lakshmi Vilas Bank Ltd. aggregating to Rs. 195.16 Crore. The reply of

assessee was not accepted by AO on the ground that the assessee has shown

very nominal return of income. Loan and current investments are huge. The AO

further noted that the assessee has shown purchases of very less amount and

has shown business only on 07.03.2013. No steel trading is visible from the bank

account and other details furnished by assessee. No interest income is shown

from such intercorporate deposits nor any interest is paid. Thus, the source of

such huge amount credited in the bank account of the assessee throughout the

year remains unexplained. The amount credited in the account of assessee was

immediately transferred on the same day or on very next date to some other

entity. The AO presumed that probably the assessee is using its own fund for

layering of transaction and accommodation entry activities, cannot be ruled out.

The AO held that that confirmation of accounts or use of any banking channel

for any payment cannot provide legitimacy to such payment unless and until the

creditworthiness of the business to lend the money is proved. The AO treated

the credit entry aggregating of Rs. 192.67 Crore as unexplained credit while

passing the assessment order on 29.03.2022.

before Ld. CIT(A). Before ld CIT(A), the assessee in its detailed written

submissions submitted that addition made by A.O. at Rs.195.02 crores is

unjustified, unwarranted and bad in law. The submissions of the assessee is

summarized in the following ways.

(i) The additionsconsist of two sums being Rs.235.50 lacs as discussed in

para 6 of the assessment order and Rs. 192.67 crores discussed in para 7

of assessment order. The A.O. has concluded at para 6 that Rs.235.50 lacs

is accommodation entry received from Shubhbijay Properties Advisory Pvt.

Ltd. The A.O. in para 7 has also stated that on perusal of bank statement

of assessee credit entries appearing in Bank account, details of which

have been tabulated are at Rs. 192.67 crores. In fact, the total of

tabulated entries comes to Rs. 181.72 crores. Such mistake resulted in

excessive addition of Rs. 10.95 crores. In the tabulation prepared at para

7 aggregated amount of various credits appearing in the bank account is

incorrectly taken at Rs. 192.67 crores, which has been concluded to be

unexplained credit entries liable to be assessed under section 68 of the

Act. In tabulation it is noted that Rs. 115 lacs on 20-07-2012 on page

No.12 of the assessment order in the name of Gautam Iron & Steel

Trading Co. is taken again at the same at the end of page and in bank

statement no such entry is appearing on the date. Thus, assessment order

the figure of Rs. 115 lacs is taken twice. Further at page 12 on 24-05-

2012 Rs. 20.00 lacs is taken without mentioning any name of party. In

bank statement no such entry is appearing on the said date. Amount

taken in tabulation appears to be mistake resulting in taking aggregate

amount in excess by Rs. 20.00 lacs. Above mentioned mistakes resulted in

to excessive addition of Rs. 12.31 crores being (10.95+1.15+0.20 crores).

The assessee furnished a list indicating name of parties’ credits in respect

to which addition is made at the hands of assessee. The list show that

total numbers of parties are 26 and correct amount of credit entries of

such parties is Rs. 180.36 crores only.

(ii) It was contended that sum of Rs. 300 lack was amount receivable from

Shubhbijay Properties Advisory Pvt. Ltd. during AY 2012-13. The aforesaid

amount receivable by Assessee Company from the said corporate entity

was as per regular books of account of assessee. Amount receivable was

shown in the balance sheet of assessee for AY 2012-13. Regular

assessment has been completed in the case of assessee under section

143(3) of the Act, wherein books of account and documents have been

examined. The amount receivable shown in the balance sheet in respect

to Shubhbijay Properties Advisory Pvt. Ltd. has been accepted without

inviting any adverse observation in the regular assessment for AY 2012-

13.

(iii) The amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. in AY

2012-13 at Rs. 300 lacs have been received back through proper banking

channel during the AY 2013-14 and the part receipt of amount received at

Rs. 235.50 lacs which have been concluded by AO as accommodation

entry. It was submitted that refund of amount payable to assessee which

has been accepted by department in the case of assessee in past

assessment year in no manner of consideration can be construed as

accommodation entry. Thus, addition made by A.O is unjustified and

unsustainable.

(iv) The AO in para 3.2 has noted that Shubhbijay Properties Advisory Pvt.

Ltd. is not reflected in details of loan, advance & investment made during

the F.Y. 2012-13. The above finding is in consonance with claim of

assessee. It is refund of amount receivable by assessee on the opening

day of accounting year. Copy of account submitted by assessee in respect

to transaction of Shubhbijay Properties Advisory Pvt.Ltd. and noting of AO

at para 3.2 corroborates the submission of assessee that the amount has

been received as refund from such company. Thus, there remains nothing

and in fact there is no adverse evidence on record to conclude that any

amount received from such company is in the nature of accommodation

entry. It is not credit entry as envisaged under section 68. Addition made

by AO is unjustified and unsustainable.

(v) The assessee also filed confirmation of account of Shubhbijay Properties

Advisory Pvt. Ltd. indicating PAN and detailed address of the aforesaid

company. Confirmed copy of account clearly indicates amount received

from such company in respect of refund of amount receivable on opening

day of accounting year. Refund of amount receivable in no manner of

consideration can be termed as accommodation entry as has been

concluded by AO to make addition in the case of assessee. The AO has

accepted receipt of Rs. 10.00 lacs on 30-01-2013 and Rs. 54.50 lacs on

07-02-2013 from very same company without inviting any adverse

observation. Thus, there is no justification / basis to make addition at Rs.

235.50 lacs by holding it as accommodation entry. Addition made by AO is

clearly unjustified.The AO at para 4 of the assessment order has observed

that it is established that Shubhbijay Properties Advisory Pvt. Ltd. is

company used by Raj Kumar Singh for layering of funds. The aforesaid

observation in the assessment order is not based on any evidence on

record. It is specifically asserted that no such evidence demonstrating the

noting as made at para 4 has been confronted to assessee before taking

any adverse view in the case of assessee. It is settled position of law that

evidence collected behind back of assessee cannot be used against the

assessee. In absence having been confronted to assessee and also not

allowing opportunity of cross examination for evidence relied upon while

making addition is not justified. To support such view relied on law laid

down by Hon'ble Apex Court in the case of CCE Vs Andaman Timber

Industries reported viz; (2016) 281 CTR 241(SC).

(vi) It was submitted that at para 5, the AO has merely discussed the

provisions of Act and modus operandi which is of general nature and is

not based on any evidence on record in the case of assessee. Modus

operandi discussed is not in respect to any transaction of assessee. Thus,

there is nothing adverse which can be drawn from the general modus

operandi discussed, which has no relation to any transaction of the

assessee for the year under consideration. The assessee prayed that

noting at para 5 of assessment order deserve no consideration.

parties and amount in respect to each individual party aggregate of which is

Rs.180.36 crores and explained the mistakes committed by AO. It was stated

that the assessee in the course of assessment proceedings had filed complete

evidence to explain various credit entries appearing in the bank account. The AO

at para 7.1 has noted that notice under section 133(6) was issued to various

parties giving name wise list for credit entries found in the bank account. The AO

at para 7.1 on page 18 has observed that no compliance has been received in

response to any of above parties’ names of which are indicated at para 7.1 of the

assessment order. The assessee contended that finding of the AO that no

compliance received from any of above parties is factually incorrect. In fact,

many parties have submitted response to notice issued under section 133(6) of

the Act. The assesseefiled various acknowledgement of responses submitted in

response to notice issued under section 133(6) by six parties to demonstrate that

observation of AO in the assessment order at page-18 is factually incorrect. The

names of parties who have submitted response to notice under section 133(6)

were furnished. The assessee submitted that persons namely (i) Baba Ramdeo

Commercials Private Limited, (ii) Tanushree Impex Private Limited,(iii)

Sandhyalaxmi Trading Private Limited, (iv) Vedika Trading & Consultancy Private

Limited, (v) Bhakti Sales & Services Private Limited and (vi) Sri Abhishek Steel &

Power Limited filed their responses.

which addition has been made by AO in the assessment order showing correct

amount of credit / debit entries at Rs. 180.36 crores which is as per the list

below:

Sr. Particulars As per A.O. Remarks (Rs.) 1 Vaidhi Fiscal Private Limited 15,00,00,000 2 Bhakti Investment Pvt. Ltd. 46,93,000 3 Feline Financial Services Pvt.Ltd. 5,00,000 4 Silver Crest Investors & Builder Pvt. Ltd. 27,35,00,000 5 Suraburdi Infrastructures Pvt.Ltd. 47,00,000 6 Surendra Fiscal Services Pvt.Ltd. 31,00,000 7 Raheja Exports Pvt. Ltd. 8,90,87,000 8 Blossom Constructions Pvt. Ltd. 13,05,73,000 9 Gautam Iron & Steel Trading Co. 4,45,00,000 (1,15,00,000) Double entry 10 Nine Star Plastic Packaging Services 2,00,00,000 Pvt.Ltd. 11 Tanushree Impex Pvt.Ltd. 2,44,33,000 12 Deify Infrastructure Limited 71,50,00,000 13 Bhakti Sales& Services Pvt.Ltd. 12,20,000 14 AnjaniputraInfraconPvt.Ltd. 15,00,000 15 Baba Ramdeo Commercials Pvt.Ltd. 51,03,000 16 Shree Girivar Enterprises Pvt. Ltd. 15,00,000 17 Sandhya Laxmi Trading Pvt. Ltd. 1,82,00,000 18 Bestvision Traders Pvt.Ltd. 5,62,00,000 19 Efficient Structure Pvt.Ltd. 4,00,00,000 20 Costal Multitrading Pvt. Ltd. 6,00,00,000 21 Rajvardhan Trade Zone Pvt. Ltd. 5,00,00,000 22 LingrajCommotrade Pvt. Ltd. 26,00,000 23 Mohan Infra Reality Pvt. Ltd. 11,50,000 24 ShivanganTracom Pvt. Ltd. 71,00,000 25 Vedika Trading & Consultancy Pvt. Ltd. 9,50,00,000 26 Vena Agritech Pvt. Ltd. 1,55,03,876

27 Particulars of party not mentioned 20,00,000 (20,00,000)Amount not received by assessee

Total before deductions 1,81,71,62,876 Less: Double entry (Sr. no. 11) (1,15,00,000) Less: Amount not received (Sr. no. 27) (20,00,000) Final Total 1,80,36,62,876

detailed explanation with supporting evidences. Such details are recorded by ld

CIT(A) at page No. 27 to 49 in his order.

(1) With respect to transaction with Vaidehi Fiscal Private Limited shown at Serial

(Sr) No. 1 in the above list, the assessee stated that Rs. 15.00 crore was

receivable as on 01.04.2012 from the said company. This fact was accepted in

the regular assessment completed under section 143(3) dated 24.03.2015.

This said sum of Rs. 15.00 crore is refund of amount receivable by assessee-

company on the opening day of accounting year. Complete financial

statement, ITR of said company was furnished during the assessment

proceeding, thus, assessee has discharged its primary onus as per decision of

Hon’ble Apex Court in CIT vs Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC).

The amount receivable from such company through banking channel is not

cash credit as envisaged under section 68. The assessee has discharged his

primary onus. The assessee cannot be called to prove source of source. The

assessee submitted that they have discharged its onus to establish identity,

genuineness and creditworthiness.

(2) For transaction with Bhakti Investment Pvt. Ltd., of Rs. 46,93,000/-, which is

shown at Sr. No. 2 of the above list, the assessee submitted that confirmation

of ledger account of this company shows that a sum of Rs. 14.45 crore was

receivable as on 01.04.2012 from the said company. The assessee received

only Rs. 46,93,000/- on account of existing transaction which has been

accepted in the regular assessment of assessee.

(3) For transaction with Feline Financial Services Pvt. Ltd. of Rs. 5,00,000/-,

which is shown at Sr. No. 3 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs.

40.37 crore was receivable as on 01.04.2012 from the said company. The

assessee received only Rs. 5,00,000/- on account of existing transaction

which has been accepted in the regular assessment of assessee.

(4) For transaction with Silver Crest Investors & Builder Pvt. Ltd.., of Rs. 27.35

crore which is shown at Sr. No. 4 of the above list, the assessee submitted

that confirmation of ledger account of this company shows that a sum of Rs.

42.85 crore was receivable as on 01.04.2012 from the said company. The

assessee received Rs. 28.14 crore, but the AO has taken credit of only Rs.

27.35 crore. The AO has accepted amount of Rs. 79.10 lacs received on

12.02.2013. The amount of Rs. 27.35 crore from the said company had

existing transaction. Rs. 27.35 crore is refund from the amount of 42.85 crore

receivable by assessee on the opening day of accounting year which cannot

be treated as cash credit.

(5) For transaction with Suraburdi Infrastructures Pvt. Ltd., of Rs. 47,00,000/-,

which is shown at Sr. No. 5 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs. 2.90

crore was receivable as on 01.04.2012 from the said company. The assessee

received only Rs. 47,00,000/- on account of part refund. Complete details of

said company were furnished.

(6) For transaction with Surendra Fiscal Services Pvt. Ltd., of Rs. 31,00,000/-,

which is shown at Sr. No. 6 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs.

50.00 lacs was receivable as on 01.04.2012 from the said company. The

assessee received only Rs. 31,00,000/- on account of existing transaction

which has been accepted in the regular assessment of assessee. The

assessee furnished complete details to discharge its onus.

(7) For transaction with Raheja Exports Pvt. Ltd., of Rs. 8.90 crore, which is

shown at Sr. No. 7 of the above list, the assessee submitted that confirmation

of ledger account of this company shows that a sum of Rs. 2.74 crore was

receivable as on 01.04.2012 from the said company. The assessee received

only Rs. 8.90 crore on account of existing transaction which has been

accepted in the regular assessment of assessee. The sum of Rs. 8.90 crore

includes refund of amount receivable by assessee of Rs. 2.45 crore on the

opening day of accounting year as well as Rs. 10.45 crore amount given to

said company during the year. At the close of accounting year, the assessee

had to receive Rs. 4.00 crore from the said company. The AO accepted

amount given to such company without inviting any adverse observation. The

assessee furnished complete details to discharge its onus.

(8) For transaction with Blossom Constructions Pvt. Ltd., of Rs. 13.05 crore,

which is shown at Sr. No. 8 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs.

51.40 lacs was receivable as on 01.04.2012 from the said company. The

assessee received only Rs. 17.37 crore on various dates. The amount of Rs.

13.05 crore is from the company with whom assessee had existing

transaction which has been accepted in the regular assessment of assessee.

Rs. 13.05 crore includes refund of amount receivable at Rs. 51.50 lacs on the

opening day of the accounting year as well as Rs. 17.37 crore given to the

assessee-company during the year. At close of the accounting year, the

assessee had to receive 4.82 crore from such company. The AO accepted

amount given to such company without any adverse observation. The

assessee furnished complete details to discharge their onus.

(9) For transaction with Gautam Iron & Steel Trading Co. of Rs. 4.45 crore, which

is shown at Sr. No. 9 of the above list, the assessee submitted that this

amount includes Rs. 1.15 crore taken twice as can be seen from page no. 12

of assessment order. Actual amount received is Rs. 3.30 crore. During the

year 4.97 crore was given to the said party. At the close of the accounting

year, the assessee had to receive 1.6 crore from the said party which is

reflected in the financial statement of assessee-company. The amount

received has in fact repaid before close of accounting year and no addition

was to be made under section 68. The assessee has given name, address,

PAN, ITR and other details of this company to discharge onus as per section

68.

(10) For transaction with Nine Star Plastic Packaging Services Pvt. Ltd. of Rs. 2.00

crore, which is shown at Sr. No. 10 of the above list, the assessee submitted

that confirmation of ledger account of this company shows that a sum of Rs.

1.21 crore was receivable as on 01.04.2012 from the said company. The

assessee received only Rs. 2.00 crore on account of existing transaction

which has been accepted in the regular assessment of assessee. Rs. 2.00

crore includes refund of amount receivable by assessee at Rs. 1.21 crore on

the opening day of accounting year as well as Rs. 26.00 crore given to the

said company during the year. At the end of accounting year, the assessee

had to receive Rs. 25.21 crore. The assessee furnished complete details in

discharge of its onus.

(11) For transaction with Tanushree Impex Pvt. Ltd., of Rs. 2.44 crore, which is

shown at Sr. No. 11 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs. 2.29

crore was receivable as on 01.04.2012 from the said company. The assessee

received only Rs. 2.44 crore on account of existing transaction which has

been accepted in the regular assessment of assessee. Rs. 2.49 crore includes

refund of amount receivable by assessee at Rs. 2.29 crore on the opening

date of accounting year as well as Rs. 15.00 lacs given to said company

during the year and at the end of the year, there was a credit balance of Rs.

5.10 lacs. Though the assessee has received total sum of Rs. 2.49 crore but

the AO considered Rs. 2.44 crore, thus, accepted Rs. 5.00 lacs as received

from 07.12.2012. The assessee furnished complete details to discharge its

onus under section 68.

(12) For transaction with Deify Infrastructure Limited of Rs. 71.50 crorewhich is

shown at Sr. No. 12 of the above list, the assessee submitted that actual

amount received by the assessee from said party is Rs. 82.00 crore. Thus, the

AO has accepted Rs. 10.50 crore from such party. The assessee furnished

complete details which include PAN, address, ITR as well as other financial

details. All such transactions were through banking channel. Thus, the

assessee discharged its onus under section 68.

(13) For transaction with Bhakti Sales & Services Pvt. Ltd. of Rs. 12.20 lacs which

is shown at Sr. No. 13 of the above list, the assessee submitted that

confirmation of ledger account of this company shows that a sum of Rs. 3.49

lacs was receivable as on 01.04.2012 from the said company. The assessee

received only Rs. 12.20 lacs on account of existing transaction which has

been accepted in the regular assessment of assessee. The said sum of Rs.

12.20 lacs include refund of amount receivable by assessee of Rs. 3.49 lacs

on the opening date. Complete details including confirmation of account and

other details were furnished. The said party filed its response in response to

notice under section 133(6). Thus, the assessee discharged its onus.

(14) For transaction with Anjainputra Infracon Pvt. Ltd. of Rs. 15.00 lacs which is

shown at Sr. No. 14, Rs. 51.00 lacs from Baba Ramdeo commercials Pvt. Ltd.,

at Sr. No. 15, Shree Grivar Enterprises Pvt. Ltd. at Sr. No. 16 of Rs. 15.00 lacs,

from Sandhya Laxmi Trading Pvt. Ltd. at Sr. No. 17 of Rs. 1.82 crore, the

assessee made similar submission and also furnished all required evidences to

discharge onus under section68.

(15) For transaction with Bestavision Traders Pvt. Ltd. shown at Sr. No. 18 of Rs.

5.62 crore, the assessee furnished confirmation of account, financial

statement of said company. The copy of confirmation of account shows Rs.

8.00 lacs as opening balance of said company. The assessee discharged its

onus. The assessee has paid closing balance at the year end at Rs. 5.70 crore

in subsequent assessment years. Rs. 3.00 crore was repaid in F.Y. 2013-14 &

Rs. 2.70 crore was repaid in F.Y. 2014-15. All such transactions were through

banking channel. Gujarat High Court in Ayachi Chandrashekhar Narsangji

reported at 221 Taxman 146 (Gujarat) held that where department has

accepted repayment of loan no additions can be made under section 68.

(16) For transaction with Efficient Structure Pvt. Ltd. of Rs. 4.00 crorewhich is

shown at Sr. No. 19 of the above list, for transaction with Costal Multitrading

Pvt. Ltd. of Rs. 6.00 crore shown at Sr. No. 20, with Rajvardhan Trade Zone

Pvt. Ltd. of Rs. 5.00 crore at Sl. No. 21, for Vedika Trading & Consultancy Pvt.

Ltd. of Rs. 9.50 crore shown at Sl. No. 25, the assessee submitted that

completed details, including confirmation of ledger account of those

companies and other financial details were furnished. The amounts were

repaid subsequently in January, 2014, which has been accepted by

department and, therefore, no addition can be made under section 68.

(17) For transaction with Lingraj Commotrade Pvt. Ltd. shown at Sr. No. 22 for Rs.

26.00 lacs, the assessee submitted that amount was received on 01.03.2013

by RTGS, the assessee was holding investment in Bajaj Polyblends Pvt. Ltd.

as on 31.03.2012 at Rs. 97.00 lacs. Part of the investment in shares held in

such company was liquidated at cost for sum of Rs. 26.00 lacs. Confirmation

of Bajaj Polyblends Pvt. Ltd. was furnished to substantiate the sale of shares

by assessee company. The amount of credit is sale of shares at cost and not

cash credit. The sale of investment is reflected in the financial statement.

Such amount cannot be added under section 68.

(18) For transaction with Mohan Infra Reality Pvt. Ltd. shown at Sr. No. 23 of Rs.

11.50 lacs, the accounts of said company indicates that such amount was

receivable from said company on 01.04.2022 which was received. The

assessee furnished complete details to discharge its onus under section 68.

(19) For transaction with Shivangan Tracom Pvt. Ltd. shown at Sr. No. 24 of list, of

Rs. 71.00 lacs, the assessee submitted that amount was received on

01.03.2013 by RTGS, the assessee was holding investment in Bajaj

Polyblends Pvt. Ltd. as on 31.03.2012 at Rs. 97.00 lacs. Part of the

investment in shares held in such company was liquidated at cost for sum of

Rs. 71.00 lacs. Confirmation of Bajaj Polyblends Pvt. Ltd. was furnished to

substantiate the sale of shares by assessee company. The amount of credit is

sale of shares at cost and not cash credit. The sale of investment is reflected

in the financial statement. Such amount cannot be added under section 68.

(20) For transaction with Vena Agritech Pvt. Ltd. shown at Sl. No. 26, the assessee

submitted that as per confirmation of account a sum of Rs. 1.55 crore was

receivable on 01.04.2012 from the said company. The amount was received

on account of existing transaction. The assessee furnished complete details to

prove identity, creditworthiness and genuineness of transaction and submitted

that they have discharged its onus.

(21) For transaction shown at Sl. No. 27 of the above list of Rs. 20.00 lacs, the

assessee submitted that AO has not mentioned the name of party. There is

no such entry in the bank statement. The AO was not justified in making such

addition.

discharged primary onus in furnishing complete details and relied upon the

decision of Hon’ble Apex Court in Orissa Corporation Pvt. Ltd. (supra) and

Jurisdictional High Court in Orient Trading Co. Ltd. vs CIT 49 ITR 723 (Bom),

Punjab & Haryana High Court in CIT vs Varinder Rawlley (363 ITR 232) (P&H).

CIT vs Orchid Industries (P) Ltd. 397 ITR 136 (Bom), Gaurav Triyugi Singh vs

ITO 423 ITR 531 (Bom), DCIT vs Rohini Builders 256 ITR 360 (Guj). The

assessee also relied upon the decision of Apex Court in Excel Industries Ltd. 358

ITR 295 (SC) wherein it was held that only real income for previous year can be

brought to tax at the hands of assessee.

therein also relied upon the decision of Bombay High Court Jet Airways (I) Ltd.

331 ITR 236 (Bom) by taking objection that assessment was reopened for

verification of Rs. 45.00 lacs which were allegedly transferred from the account

of Raj Kumar Singh, but no addition was made in respect of such reasons

recorded, therefore, other additions were impermissible, when no such addition

as per reasons recorded were made. The reopening is based on third party

information. No independent verification of facts was carried out by AO. The AO

has not brought any evidence on record that withdrawal of Rs. 45.00 Lakhs by

Raj Kumar Singh has any nexus with the assessee. The amount received from

Shubhbijay Properties was towards amount receivable by the assessee on the

opening day of the accounting year, which can never be concluded as

accommodation entry. Amount of Rs. 3.00 crore receivable by assessee is

verifiable from the ledger account of Shubhbijay Properties. The AO has not

examined the books of account during the course of assessment proceedings. It

is settled law that credit in the bank account is not credit entry in the books of

account to which provisions of section 68 could be invoked. To support such

view, the assessee relied on the decision of Bombay High Court in Bhaichand H.

Gandhi 141 ITR 67 (Bom). The AO totally ignored the various withdrawals out of

such deposits, otherwise all the deposits were explained. The assessee also

raised objection that in the investigation report as well as in reasons recorded no

date is mentioned with regard to assessee being beneficiary of Rs. 45.00 lacs

transferred from the account of Raj Kumar Singh. The entry of Rs. 45.00 lacs

received in the bank account of assessee is on 01/02/2013. Such amount is not

transferred from the account of Raj Kumar Singh. The assessee company has

small turnover and the same is recorded in the books of accounts various inter

corporate deposits are received and given to related parties and associates. All

transactions are through banking channel and all parties are assessed to tax. All

transactions are recorded in the books of accounts of all related parties and

associates. All deposits received are repaid in entirety during the year and in

subsequent years. The deposits and withdrawals are not unexplained

transactions and have no bearing on the taxable income at the hands of the

assessee considering the evidence on record.The assessee prayed to delete

entire additions.

assessment record deleted the both the additions. In para 8.3 of his order the ld

CIT(A) recorded that additions under section 68 consist of two additions, first

relates to addition of Rs. 2.35 Crore received from Shubhbijay Properties

Advisory Pvt Ltd and second of Rs. 192.67 Crore in respect of various credits.

While considering the addition of Rs. 2.35 crore pertaining to the entry of

Shubhbijay Properties Advisory Pvt. Ltd., the ld. CIT(A) noted that AO made

addition on the basis of information received from Investigation Unit, Kolkata in

regard to Raj Kumar Singh and his bank account. The AO while making addition

noted that cash deposit in the account of Raj Kumar Singh was transferred to

Shubhbijay Properties Advisory Pvt. Ltd. and other companies and ultimately

transferred to the account of beneficiaries. One of the beneficiaries was

assessee-company. On the basis of such observation, as recorded in para 2 of

assessment order that sum of Rs. 45.00 lacs were the basis of reasons recorded.

However, in the order, there is no reference of any date for transfer of Rs. 45. 00

lacs from the account of Raj Kumar Singh to Shubhbijay Properties Advisory Pvt.

Ltd. The assessee in its reply before AO, contents of which are reproduced at

page no. 2 to 4 in para 8, the assessee clearly stated that assessee- company

has not made any transaction with Raj Kumar Singh. The assessee also

requested for furnishing detail of transaction with them. No response was made

by AO before taking adverse view and make addition in respect of credit entries

in the account of Shubhbijay Properties Advisory Pvt. Ltd. No details or evidence

are available in the assessment record to indicate that Rs. 45,00,000/- was

transferred from the account of Raj Kumar Singh to Shubhbijay Properties

Advisory Pvt. Ltd. No evidence was brought on record to show that how alleged

cash deposit in the account of Raj Kumar Singh is connected with the assessee in

absence of any transaction with Raj Kumar Singh. There is no evidence on record

that how Rs. 2.35 crore received by Shubhbijay Properties Advisory Pvt. Ltd. can

be considered as accommodation entry or unexplained credit. As per report of

Investigation Wing, the cash and other deposits in the account of Raj Kumar

Singh is of Rs. 1.40 crore, whereas the value of beneficiaries is computed at Rs.

3.59 crore, which is inconceivable conclusion and thus, investigation report is not

credible evidence for making addition in the hand of assessee. Further, from the

bank account of Shubhbijay Properties Advisory Pvt. Ltd. that Rs. 45.00 lacs

alleged to be accommodation entry in the reasons recorded and the assessment

order are not flown from any such fund transferred from the account of Raj

Kumar Singh. Basic allegation as noted in the report of Investigation Wing and

the assessment order does not survive on the facts and evidence on

record.Nothing adverse material on record to make addition of Rs. 2.35 crore in

the hands of assessee. The ld. CIT(A) further noted that ledger account copy of

Shubhbijay Properties Advisory Pvt. Ltd. is on record, which shows that such

companies is assessed to tax. Further, name and PAN of such company is also on

record. From the ledger account of assessee-company and the amount receivable

from such company at Rs. 3.00 crore as on 01.04.2012. The aforesaid opening

balance has been accepted as amount receivable in case of assessee in A.Y.

2012-13 completed under section 143(3). Assessment was completed by ACIT,

Circle -1, Nagpur in accepting the return income in order dated 24.03.2015

passed under section 143(3). In the earlier year, Rs. 3.00 crore was received

from banking channel and were credit in the bank account of assessee. All

credits entry of Rs. 3.00 crore received from Shubhbijay Properties Advisory Pvt.

Ltd. are verifiable from bank account of assessee with Lakshmivilas Bank Nagpur.

The AO in assessment order noted credit entry of Rs. 2.35 crore on various dates

as recorded in para 3.1. But the AO has not disputed (accepted) the receipt of

Rs. 10.00 lacs from same company as on 30.01.2013 and Rs. 54.50 lacs on

07.02.2013. The amount received from such company is in respect of amount

receivable from such company, which has been accepted in the assessment

framed for A.Y. 2012-13. The ld. CIT(A) held that amount receivable is not in the

nature of loan or cash credit for which the assessee was liable to explain in term

of section 68. Hence, the amount given by assessee is beyond the scope of

consideration for the purpose of section 68. The sum of Rs. 2.35 crore received

by assessee is the amount receivable from Shubhbijay Properties Advisory Pvt.

Ltd. and cannot be treated as accommodation entry nor assessee can be

considered as beneficiary of accommodation entry. On the basis of such finding,

the ld. CIT(A) deleted the addition of Rs. 2.35 crore under section 68.

as per submissions of the assessee and in order to appreciate the facts all

transaction can be bifurcated in to four segments;

(A) Refund out of opening balances and amount given during the year;

Name of entities Amount in Rs. 000/- 1 Tanushree Impex Private Limited 2,44,33,000 2 Bhakti Investments Pvt. Ltd. 46,93,000 3 Blossom Construction Pvt. Ltd. 13,05,73,000 4 Feline Financial Services Pvt. Ltd. 5,00,000 5 Nine Star Plastics Packaging Services Pvt. Ltd. 2,00,00,000 6 Raheja Exports Pvt. Ltd. 8,90,87,000 7 Silver Crest Investors & Builders Pvt. Ltd. 27,35,00,000 8 Surendra Fiscal Services Pvt. Ltd. 31,00,000 9 Vaidehi Fiscal Pvt. Ltd. 15,00,00,000 10 Mohan Infra Reality PVt. Ltd. 11,50,000

11 Vena Agri-tech Pvt. Ltd. 1,55,03,876 12 Suraburdi Infrastructures Pvt. Ltd. 47,00,000 Total 71,72,39,876 (B) Opening payable / receivable with fresh credit;

1 Baba Ramdeo Commercials Pvt. Ltd. 51,03,000 2 Bestavision Traders Pvt. Ltd. 5,62,00,000 3 Bhakti Sales & Services Pvt. Ltd. 12,20,000 4 Shree Girivar Enterprises Pvt. Ltd. 15,00,000 5 Vedika Trading & Consultancy Pvt. Ltd. 9,50,00,000 Total 15,90,23,000 (C) Fresh advances received during the year;

1 Anjaniputra Infracon Pvt. Ltd. 15,00,000 2 Costal Multitrading Pvt. Ltd. 6,00,00,000 3 Deify Infrastructures Ltd. 71,50,00,000 4 Efficient Structure Pvt. Ltd. 4,00,00,000 5 Rajvardhan Trade Zone Pvt. Ltd. 5,00,00,000 6 Sandhya Laxmi Trading Pvt. Ltd. 1,82,00,000 7 Gautam Iron & Steel Trading Co. 3,30,00,000 total 91,77,00,000 (D) Proceeds of sale investments;

1 Lingraj Commotrade Pvt Ltd 26,00,000/- 2 ShivanganTracon Pvt Ltd 71,00,000/- total 97,00,000/- 12. The ld. CIT(A) noted that confirmation and ledger account of credit entry in bank

account, in respect of segment A (Table above) indicates that sum of Rs. 71.72

crore is received by assessee-company from various companies out of opening

balance or amount given the year under consideration. The aforesaid sums are

not credit entry as prescribed in section 68 of the Act. The assessee furnished

sufficient evidence in the form of confirmation, address and PAN of all parties

with ITR and balance sheets. So far as credit shown in segment B (table above)

it is seen that credit balance received in earlier financial year is accepted by AO

in assessment order passed under section 143(3). The amount received during

the year is from the parties, which were accepted as a genuine creditor in the

earlier assessment year. For amount shown in segment C (table above), the ld.

CIT(A) noted that assessee received fresh credit from the companies aggregating

Rs. 91.77 crore. The confirmations, PAN, address, ITRs and balance sheets are

filed in respect of all such parties. The amounts were received through banking

channel. Credit received in respect of two parties which is shown in segment D

(table above), are sale proceeds of investments which are evident from the

ledger accounts. The sale of investments is not disputed by AO in the

assessment order. The ld. CIT(A) at page no. 84 to 89 of his order recorded

accepted the filing of various documentary evidences in respect of each credit

entry which is available on record, e.g. confirmation of parties, balance sheets,

ITR, PAN and address along with the details whether it is refund out of opening

balance or part refund as the case may be.

reassessment proceeding was commenced on the basis of report of Investigation

Wing, Kolkata. Perusal of reasons recorded and discussion in the assessment

order does not indicate any independent enquiry carried out by AO with regard

to transactions recorded in the books of account of assessee. No evidence is

brought on record to show any nexus or connection with Raj Kumar Singh with

credit entry of corporate entities received in the bank account of assessee. There

is no allegation in the assessment order that credit entries in the bank account of

assessee with the bank account of Raj Kumar Singh. The assessee has placed

sufficient documentary evidence to explain the credit entry in their books of

account. The AO made addition with his flight of fantasies and the same is not

based on evidence on record. The ld. CIT(A) also referred and relied on the

decision of Gujarat High Court in CIT vs Ranchhod Jivabhai Nakhava 208

taxmann.com 35 (Guj) wherein it was held that once the assessee has

discharged primary onus, under section 68, the onus shifts on the AO to further

investigate the matter. The ld. CIT(A) also referred the decision of Gujarat High

Court in DCIT vs Rohini Builder (2002) 256 ITR 360 (Guj) and CIT vs Dharamdev

Finance Pvt. Ltd. 43 taxmann.com 395 (Guj) and CIT vs Orissa Corporation (P)

Ltd. 159 ITR 78 (SC).

source as has been held by Jurisdictional High Court in PCIT vs Veedhata Tower

Pvt. Ltd. (2018) 403 ITR 415 (Bom). The assessee satisfactorily discharged their

primary onus by proving identity, genuineness and creditworthiness of creditors.

The observation of AO in assessment order is not based on legal evidence on

record and deserves no consideration and deleted the remaining addition of Rs.

180.36 crore (it was wrongly treated as Rs. 192.67 crore). Aggrieved by the

order of ld. CIT(A), the Revenue has filed present appeal before Tribunal. The

assessee has filed its CO raising various grounds which we have recorded above.

Departmental Representative (CIT-DR) for the Revenue and the ld. Authorised

Representative (ld. AR) of the assessee. Both the parties have also filed their

written synopsis. The ld. CIT-DR for the Revenue submits that in case of

assessee information was received from Investigation Wing, Kolkata that Raj

Kumar Singh maintains Savings Bank Account with IndusInd Bank wherein cash

was deposited which was transferred to various other shell companies in a

layered transaction. On verification of fact it was found that assessee-company

received Rs. 2.35 crore in its bank account in Laxmi Vilas Bank, Nagpur. During

assessee, the assessee claimed that it was on account of loan/advances or

investment. No satisfactory explanation with documentary evidences were

furnished by assessee. On further perusal of bank account of assessee with

Laxmi Vilas Bank there were various credit entries aggregating to Rs. 192.67

crore. The assessee was asked to explain and substantiate such transaction. The

AO also issued notice under section 133(6) to 15 parties. No compliance was

received from any of the parties as recorded in the assessment order. Therefore,

identity, creditworthiness and genuineness of the transaction could not be

verified. Accordingly, the AO made addition of Rs. 192.67 crore under section 68.

It has been established by the department that Shubhbijay Properties Advisory

(P) Ltd. is a shell company used by Raj Kumar Singh for layering funds and

ultimately sending to various accounts to concerned beneficiary. The assessee

has shown its business activity in Iron &Steel and investment in shares. The

assessee has shown a small income. The ld. CIT(A) allowed relief to the assessee

on both the addition, despite the fact that assessee failed to prove identity,

creditworthiness and genuineness of the transaction. During assessment

sufficient opportunity was given to the assessee to discharge its onus but the

assessee failed to discharge its onus. To support his submissions, the ld. CIT-DR

relied upon the following decision:

(i) A Govindarajulu Mudaliar (1985) 34 ITR 807 (SC), (ii) Independent Media Pvt. Ltd. (2012) 25 taxmann.com 276 (Delhi), (iii) N.R. Portfolio (P) Ltd. (2014) 42 taxmann.com 339 (Delhi), (iv) Vinaylene Textile Industries (2018) ITA No. 3240/Mum/2017, (v) NRA Iron & Steel Pvt. Ltd. (2019) 103 taxmann.com 48 (SC), (vi) Pavankumar M Sanghvi vs ITO in ITA No. 2447/Ahd/2016, confirmed by Gujarat High Court, (vii) PCIT vs Mundhra Construction (P) Ltd. (2025) 173 taxmann.com 361 (Calcutta), (viii) ITO vs Sai Everest Building & Developers (2022) 142 taxmann.com 383 (Mumbai), (ix) Kale Khan Mohammad Hanif vs CIT (1963) 50 ITR 1 (SC), (x) CIT vs Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Delhi), 16. On the various grounds raised in C.O. by assessee, the ld. CIT-DR for the

revenue submits that AO reopened the case on the basis of information from

Investigation Wing regarding transfer of fund of Rs. 45.00 lac to the bank

account of assessee. On his satisfaction, the AO recorded reasons and found the

case fit for reopening. Proper approval under section 151 was obtained and

notice under section 148 was issued. During assessment, the assessee was given

full opportunity, the reopening is valid. The addition in the assessment order

clearly established the nexus of information which leads to reopening. Thus,

various grounds raised in CO are liable to be rejected. The ld. CIT-DR for the

Revenue submits that addition made by AO may be restored and the C.O. filed

by assessee may be dismissed.

CIT(A). Against ground No. 1, the ld AR of the assessee submits that the AO

made additions without any basis. There is no evidence on record to support

the additions made by AO. In fact, an amount of Rs.3.00 crore was

receivable from Shubhbijay Properties Advisory Pvt. Ltd. as on 31/03/2012

and was outstanding balance on the opening day of accounting year in books

of account, copy of which is filed at page No. 6 of [Vol. – II of paper book].

The aforesaid amount was received during the previous year under

consideration through proper banking channel and recorded in books of

account on day-to-day basis.The AO has concluded that sum of Rs.235.50

lacs out of Rs.300 lacs received as unexplained credit under section 68.

Receipt of amount through proper banking channel owned by assessee in no

manner of consideration can be held as unexplained credit under section 68.

The assessee has submitted confirmation of account indicating PAN and

address of Shubhbijay Properties Advisory Pvt. Ltd. The AO has accepted

receipt of Rs.10.00 lacs on 30/01/2013 and Rs.54.50 lacs on 07/02/2013

from very same company without inviting any adverse observation. On above

facts there is no justification/basis to make addition of Rs.2.35crore by

holding it as unexplained credit. Section 68 cannot be invoked on piece meal

basis.The assessee has money receivable from Shubhbijay Properties

Advisory Pvt. Ltd. on opening day of accounting year and same is received

through proper banking channel. It could not be regarded as shell company

as alleged in the assessment framed or it is company used by Rajkumar

Singh for layering as noted at para 4 of assessment order. No evidence on

record to indicate Rajkumar Singh as shareholder/director of such company.

The AO has made addition of above sum relying on report and information

received from Investigation Wing of Kolkata. Information/evidence referred

to in assessment order was collected behind the back of assessee and has

not been confronted before using the same for making addition in the case of

assessee. Addition made on the basis of such information/evidence collected

behind the back of assessee and not confronted to assessee and used

thereof, is in violation of principles of natural justice. The addition made is on

the basis of report of investigation wing, wherein assessee-company was alleged

to be beneficiary of cash deposit in account of Shri Raj Kumar Singh. Factual

findings on evidence on record by CIT(A) at page 74 to 78 of appellate order

clearly explain that report of investigation is no credible evidence to make any

addition at the hands of assessee. Regular assessment completed under section

143(3) for AY 2012-13 on 24/03/2015 by ACIT Circle-1, Nagpur, copy of which is

place on record. Amount receivable from Shubhbijay Properties Advisory Pvt.

Ltd. as on 31/03/2012 stood accepted in regular assessment. Receipt of own

money in no manner can be treated as accommodation entry. Receipt of own

money is beyond the scope of Sec.68 as it is not claimed as loan or cash credit.

To support his submissions, the ld AR of the assessee relied on decision of

Nagpur Tribunal in Data Meghe Institute of Medical Science vs DCIT in ITA No.

07/Nag/2007 dated16.03.2007, JCIT vs Radhe Developers (India) Ltd. in ITA No.

1226/Ahd/2018 with C.O. No. 96/Ahd/2019 dated 22.02.2021 and ACIT vs Andin

Sunder Deep Construction in ITA No. 380/Ind/2017 dated 25.03.2021.

Kumar Singh directly/indirectly. No money flown in to account of assessee

company, is out of cash deposit in account of Raj Kumar Singh as alleged in

reasons recorded. This fact is evident from bank account of Raj Kumar Singh

and Shubhbijay Properties Advisory Pvt. Ltd. on record. The evidence was

collected behind the back of assessee; it was never confronted and subject to

cross examination. Addition made is unsustainable. Reliance is made on the

decision of CCE Vs Andaman Timber Industries281 CTR 241 (SC). The AO on the

basis of report of Investigation Wing has inferred that Rs.45.00lacs out of

cash deposit are flown to Shubhbijay Properties Advisory Pvt. Ltd. and

onwards to assessee company. It is for these reasons other credits received

from such company are treated as unexplained. Rs.45.00 lacs given by

Shubhbijay Properties Advisory Pvt. Ltd. to assessee company has no nexus

with money received by such company from Rajkumar Singh. Thus, entire

adverse inference drawn by AO is on incorrect understanding of facts and

evidence on record. The basis of adverse inference is factually not correct,

consequent addition is arbitrary and unjustified. The AO made no inquiry or

investigation either before the reasons recorded or during assessment

proceedings before making addition. In fact, legal evidence placed on record

is ignored/brushed aside without indicating any valid justification. Addition

made is arbitrary and unjustified. The AO has not provided any details before

drawing adverse inference and making addition in respect to amount

received from Shubhbijay Properties Advisory Pvt. Ltd. on assumption and

surmises. Nothing adverse can be drawn as primary issue/facts

distinguishable and inapplicable to the facts in the case of assessee.

revenues appeal, the ld AR of the assessee submits that the AO at para-7 has

tabulated the entries in the bank account for aggregate sum of Rs.192.67

crores. At para 7.3 AO has noted that on preponderance of probability

assessee is using own fund for layering cannot be ruled out. Thus, the

conclusion drawn by AO is based on presumptions. No addition can be made

merely on such presumption. The assessee in his written submission to ld

CIT(A) pointed out factual mistake of totaling and duplication of entry is

explained to show that Rs.12.31 crores is excess addition. Correct amount for

credit entries recorded in assessment order is Rs.180.36 crores only.Confirmation

of all parties from whom deposit is received in bank account indicating address &

PAN and all other details were furnished. Factual mistake accepted by CIT(A) is

not specifically disputed in grounds of appeal of revenue. Confirmation indicating

PAN and address along with bank statement of all corporate entities is submitted

in assessment proceedings. The ldCIT(A) at page 84 to 89 has specifically

recorded about the documentary evidence on record to explain credits. Legal

evidence placed on record has not been found to be incorrect or false. Onus to

explain credit is satisfactorily discharged on placing legal evidence on record. The

AO has noted confirmation of accounts and receipt of money through proper

banking channel at para 7.4 of assessment order. Address, PAN of parties and

financial statements of lenders is matter of record. The AO has made addition

merely on the basis of modus operandi, without finding any fault with specific

credit entries in books of account, which stood explained by placing sufficient

evidence on record.No independent inquiry is made after assessee has

discharged its onus to explain credits in bank account. Onus to explain the credit

entries under section 68 stands discharged in terms of law laid down by Hon’ble

Apex Court in the case of Orissa Corporation Pvt. Ltd. reported at 159 ITR 78

(SC).

account from various corporate entities, which is refund of opening balance

receivable from such corporate entities as well as amount given during the year

and refunded to assessee-company. Such amount is not loan or cash credit as

envisaged under section 68. Thus, the addition made by AO in respect to such

sum under section 68 is not in accordance with law. Credit of Rs.79.10 lacs from

Silver Crest Investor & Builder Pvt. Ltd. accepted by AO while making addition of

Rs.27.35 crores. Amount received is out of amount receivable credit of Rs.10.50

crores from Deify Infrastructure Ltd. is accepted by AO while making addition of

Rs.71.50 crores. The addition made by AO in respect to various credit entries is

on suspicion and inference without there being any adverse legal evidence on

record. Nothing adverse is on record to hold credits in bank account of assessee

company to be in the nature of unexplained credit liable to be brought to tax

under section 68. The AO despite recording the facts that it is not the

responsibility of assessee to prove source of source, which is in line with law laid

down by Hon’ble Jurisdictional High Court in the Case of Gaurav Triyugi Singh vs

ITO reported at 423 ITR 531 (Bom.), still the additions were made. All fresh

credit entries received by assessee-company are partly repaid during the

previous year and in entirety in subsequent assessment years. Addition in

respect to such amount under section 68 is contrary to law laid down by Hon’ble

Gujarat High Court in the case of PCIT Vs Ambe Trade Corp. Pvt. Ltd. reported at

290 Taxman 471 (Guj.) Further, Rs.97.00 lacs is received from companies

towards sale of investment of share and is not cash credit as envisaged under

section 68. Investment in shares held in earlier years is undisputed fact on

record. Sale of such investment has not invited any adverse observation in

assessment order and has been accepted in assessment framed. Addition in

respect to such sum is unjustified. The assessment order indicates that

reassessment has been initiated on the basis of information received from

Investigation Wing, Kolkata as to assessee being beneficiary of cash deposits in

account of Raj Kumar Singh. It was explained that assessee company has no

transaction with Shri Raj Kumar Singh directly/indirectly. No amount of cash

deposit in account of Shri Raj Kumar Singh has flown to the account of assessee

is undisputed fact on record. Shri Raj Kumar Singh has no connection/nexus

with any of corporate entities from whom assessee is in receipt of money

through proper banking channel. In assessment order it is not even alleged that

Shri Raj Kumar Singh has any connection/nexus with various credits of corporate

entities in bank account of assessee-company. The assessee submitted

confirmation in respect to credit entries indicating address and PAN has

discharged its onus to explain the credit entries. AO has made no enquiry in

respect to legal evidence placed on record. Addition made by A.O. is contrary to

law laid down by Hon’ble Gujarat High Court in the case of CIT vs Ranchhod

Jivabhai Nakhava reported at 208 Taxman 35 (Guj.). Perusal of tabulation made

in assessment order at pages 11 to 17 indicate that in respect to various entries

name and date of credit entry is not available. Addition in respect to such

entries is not in compliance to statutory provisions of section 68.In assessment

order, the AO at para 7.1 noted the names of various companies to whom notice

under section 133(6) were issued. At page 18 it has been noted that no

compliance is received from any of above parties. Evidence on record indicates

that in respect to six companies’ response was submitted under section 133(6)

before the date of completion of assessment. In respect to two parties namely

NSSL Pvt. Ltd. and Bahubali Properties Ltd. there is no credit received during the

year under consideration. In respect to Path Breaking Project Pvt. Ltd. assessee

company has no transaction. The facts explained hereinabove indicate no proper

application of mind by AO before making addition. Various credit entries in bank

account given and taken are with related parties and its associates. The

transaction made with various corporate entities is through proper banking

channel and all the entities are assessed to tax. All the transactions are recorded

in books of account of assessee company as well as in the accounts of various

entities with whom transactions are made. PAN and address of corporate

entities is matter of record. All deposits received are repaid in entirety during the

year and in subsequent years. Documentary evidence placed on record

substantiates the bonafide and genuineness of transactions. To support his view

the ld AR of the assessee made reliance on the following decision,  CIT vs Ayachi Chandrasekhar Narsangji, 221 Taxman 146 (Guj.),  PCIT vs. Merigold Gems Pvt. Ltd.,164 taxmann.com 764 (Guj.),  DCIT vs. Vibrant Global Capital Ltd. in ITA No.229/Nag/2022. 21. It was argued by ld AR that draft assessment order is digitally signed on

26/03/2022 (Saturday) at 18.35 PM and assessee was asked to respond by

28/03/2022 up to 23.59 PM. 27/03/2022 was holiday on account of Sunday.

Reply was submitted on 28/03/2022 seeking video conferencing and granting

two days’ time to make further compliance. The AO without assigning any reason

noted at page 20 that reply of assessee is perused and not found tenable.

Assessment order is passed on 28/03/2022 at 15.54 PM as per digital signature

at page 22 much before time granted in show cause notice. No video

conferencing is granted as requested. Order passed is in violation of principles of

natural justice and is nullity. Reliance is made on the following decisions,

 Kanwarjeet Singh Nanda in ITA No.361/Ind/2022 vide order dated 20/11/2023.  Orient Trading Co. Ltd. vs. CIT,49 ITR 723 (Bom.),  CIT vs. Varinder Rawlley366 ITR 0232 (P & H),  CIT vs. Orchid Industries Pvt. Ltd. 397 ITR 136 (Bom.),  PCIT vs. Ami Industries (India) P. Ltd.ITA No.1231 of 2017 dated 29/01/2020 (Mumbai HC),  DCIT vs. Rohini Builders 256 ITR 0360 (Guj.),  CIT vs. Excell Industries Ltd.358 ITR 295 (SC),  CIT vs. Metachem Industries 245 ITR 0160 (MP),  CIT vs. Dharamdev Finance (P) Ltd.43 taxmann.com 395 (Guj.),  CIT vs. Sanjay J. Thakkar in Tax appeal No.524 of 2004 (Guj.),  CIT vs. Jet Airways (I) Ltd. 331 ITR 0236 (Bom.),  CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.),  Ranbaxy Laboratories Ltd. vs. CIT, 336 ITR 136 (Del.) 22. No addition can be made for mere noncompliance of notice under section 133(6), reliance is made on,  Prabhat Gupta vs. ITOin ITA Nos.277/M/2017 and 797/M/2017,  Ashwin P. Bajaj vs. ITO in ITA No.4736/Mum/2014 23. In support of grounds raised in C.O., the ld. AR of the assessee submits that as per information from Investigation Wing, the assessee is beneficiary of Rs. 45.00 lacs received from the account of Raj Kumar Singh. The assessee has no transaction with Raj Kumar Singh. He is not director / shareholder in Shubhbijay Properties Advisory Private Limited. Further, investigation report dated 10.02.2020 indicates cash deposit of Rs. 1.25 crore and value of beneficiaries Rs. 3.49 crore. Thus, information noted indicates no proper application of mind and it losses credibility. Bare perusal of reasons recorded 39

indicates that no enquiries were conducted by AO before issuing notice under

section 148. The ld. CIT(A) in para 8.2 of his order has clearly recorded

inconsistency / factual mistake in the reasons recorded. The ld. CIT(A)

highlighted the factual mistake and concluded that reasons recorded are

perverse and untenable in the eyes of law. In absence of any evidence on

record about cash deposit in the account of Raj Kumar Singh is flown to

assessee-company case build by AO collapses. Thus, the reasons recorded

are not valid reasons. There is no live link or nexus between the belief and

escapement and material on record. Reassessment was initiated on the basis

of investigation report without recording independent satisfaction about

escapement of income which are not in accordance with law. The satisfaction

/ approval under section 151, copy of which was provided during hearing

before ld. CIT(A), discloses that proposal for approval was initiated by AO on

30.03.2021 and it was approved by PCIT – 1, Nagpur on the same date.

Remark on the approval does not show any valid application of mind as

required in terms of provision of section 151. To support his various

submissions, the ld. AR of the assessee relied upon the various following decision: Ganga Saran & Sons Pvt. Ltd. vs ITO (130 ITR 1 (SC), (i) ITO vs Lakhmani Mewaldas 103 ITR 437 (SC), (ii) PCIT vs V. Ramaiah 409 ITR 580 (Kar), (iii) CIT vs Shodiman Investments Pvt. Ltd. 422 ITR 337 (Bom), (iv) South Yarra Holdings vs ITO (2019) 104 taxmann.com 216 (Bom), (v) CIT vs Videsh Sanchar Nigam Ltd. 340 ITR 66 (Bom), (vi) 40

CIT vs Trend Electronics 379 ITR 456 (Bom), (vii) (viii) Saraswat Co-operative Bank Ltd. vs ACIT (2024) 166 taxmann.com 360 (Bom) 24. We have considered the rival submissions of both the parties and have gone

through the orders of lower authorities. We have also deliberated on various

documentary evidences filed on record in the form of various factual paper

books. We have also deliberated on various case laws referred and relied by

lower authorities as well as by both the parties before us. The basis of reasons

recorded for reopening and the addition made pursuant thereto by AO, has been

discussed by us in earlier paras of this order. The ld CIT(A) deleted both the

additions under section 68 and also held that the reopening was not valid. The

finding of ld CIT(A) is also discussed in earlier paras of this order. Therefore, the

finding of AO and ld CIT(A) is not repeated here for the sake of brevity.

various grounds of appeal raised by the revenue and the grounds raised in CO by

assessee. Firstly, we are considering various grounds of appeal raised by

revenue. First ground of appeal relates to deleting the addition of Rs. 2.35 Crore.

We find that during re-assessment the AO asked the assessee assessee to

furnish detail of statement of bank account, financial statement and audit report

along with all details of business activities. In response to the direction of AO,

the assessee furnished complete required details. From the details furnished by

assessee, the AO noted that there was credit entry in the bank account of

assessee from the account of Shubhbijay properties Advisory Pvt Limited

aggregating of Rs. 2.35 Crorein para 3.1 of the assessment order. The AO

instead of discussing the nature of entry in the bank account of assessee, in para

5.1 to 5.4 recorded modus operandi of entry provider and the role of Income Tax

Authorities. The AO straightway in para 6 of assessment order recorded that the

submission made by assessee is not in conformity with facts available on record.

No finding is given by the AO on various evidences furnished by assessee in

support of various credit entry vis-à-vis books of account. The credit entry in the

bank account alone cannot be the basis of additions, when such entry has been

explained with corroborative evidence. We find that before ld CIT(A) the

assessee again explained that a sum of Rs. 3.00 Crore was receivable from

Shubhbijay Properties Advisors Pvt Limited and that such sum receivable was

accepted in the balance sheet in regular assessment completed under section

143(3) in AY 2012-13. Thus, out of such sum receivable the assessee received

Rs. 2.35 Crore as a part payment. We find that the finding of AO in making

addition of Rs. 2.35 Crore is factually no tenable. On perusal of the ledger

account of assessee-company and from Shubhbijay Properties Advisory Pvt. Ltd,

we find that Rs. 3.00 crore was receivable as on 01.04.2012. The aforesaid

opening balance has been accepted as amount receivable in case of assessee in

A.Y. 2012-13 completed under section 143(3). Further, assessment for AY 2012-

13 was completed by ACIT, Circle -1, Nagpur in accepting the return income in

order dated 24.03.2015 passed under section 143(3). In the earlier year, Rs. 3.00

crore was received from banking channel and were credit in the bank account of

assessee. All credits entry of Rs. 3.00 crore received from Shubhbijay Properties

Advisory Pvt. Ltd. are verifiable from bank account of assessee with Lakshmivilas

Bank Nagpur. We also find that the AO in assessment order noted credit entry of

Rs. 2.35 crore on various dates as recorded in para 3.1. However, the AO has not

disputed the receipt of Rs. 10.00 lacs from same company as on 30.01.2013 and

Rs. 54.50 lacs on 07.02.2013. The amount received from such company is in

respect of amount receivable from such company, which has been accepted in

the assessment framed for A.Y. 2012-13. Thus, we are in agreement with the

finding of ld. CIT(A) held that amount receivable is not in the nature of loan or

cash credit for which the assessee required to explain in term of section 68.

Hence, the amount given by assessee is beyond the scope of consideration for

the purpose of section 68. The sum of Rs. 2.35 crore received by assessee is the

amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. and cannot be

treated as accommodation entry nor assessee can be considered as beneficiary

of accommodation entry.Hence, we affirm the order of ld CIT(A) with our

additional observation. In the result, the ground No 1 of the appeal is dismissed.

that during assessment the AO noted that there were huge transactions in the

Lakshmi Vilas Bank account of assessee aggregating to Rs. 192.67 Crore from

various entities. Notice under Section 133(6) were issued to 15 such entities

requiring nature of business, return of income and transaction with assessee

company during relevant financial year with ledger account with the assessee. It

was recorded by the AO noted that no compliance /response is received from all

such parties. Due to non-compliance, the AO took of the view that it is not

ascertainable whether such entities are actually genuine or exist on paper. And

that on show cause, the assessee in his reply stated that the transaction does

not relate to any sale or purchases or booking of services. It was explained by

assessee that they have accepted intercorporate deposits from various

companies. The assessee company also given advance on account of

intercorporate deposits to various companies aggregating to Rs. 122.37 Crore.

The assessee received Rs. 71.72 Crore out of intercorporate deposit from various

companies. This has resulted into credit in the bank account maintained with

Lakshmi Vilas Bank Ltd. aggregating to Rs. 195.16 Crore. The reply of assessee

was not accepted by AO by holding that the assessee has shown very nominal

return of income. Loan and current investments are huge. No interest income is

shown from such intercorporate deposits nor is any interest paid. The AO

specifically recorded that he presumed that probably the assessee is using its

own fund for layering of transaction for accommodation entry activities. The AO

finally held that that confirmation of accounts or use of any banking channel for

any payment cannot provide legitimacy to such payment unless and until the

creditworthiness of the business to lend the money is proved. The AO made

addition of credit entry aggregating of Rs. 192.67 Crore.

submissions, which we have recorded in para-5 of this order. The assessee in its

submissions explained all the transaction in detail and submitted that that correct

amount of credit entry in assesses bank account is of Rs. 180.36 crore. The

assessee also explained about all 27 credit entries, which we have recorded in

para-6 of this order. The assessee stated that they have discharged its primary

onus as per law declared by Higher Courts on the issue of section 68. We find

that the AO has not examined the books of account during the course of

assessment proceedings. It is settled law that credit in the bank account is not

credit entry in the books of account against which section 68 could be invoked.

Such view is supported by the decision of Bombay High Court in Bhaichand H.

Gandhi (supra). We also find that all transactions are recorded in the books of

accounts of all related parties and associates. All deposits received are repaid in

entirety during the year and in subsequent years. The deposits and withdrawals

are not unexplained transactions and have no bearing on the taxable income at

the hands of the assessee considering the evidence on record.

supported with the evidence held that in order to appreciate the facts all the

transaction can be bifurcated in four segments. Such bifurcation is recorded by

us in para-11 of this order. In first segment, we find that Rs. 71.72 Crore was

given by the assessee to various companies. As per second segment, the

assessee has opening payable / receivable credit of Rs. 15.90 crore. In third

segment the assessee received advances of Rs. 91.77 crore. And forth segment

relates to proceeds of sale investment. We find that the confirmation and ledger

account of credit entry in bank account, in respect of firs segment clearly indicate

that sum of Rs. 71.72 crore is received by assessee-company from various

companies out of opening balance or amount given the year under consideration.

The aforesaid sums cannot be considered as credit for section 68 of the Act.

There is sufficient evidence in the form of confirmation, address and PAN of all

parties with ITR and balance sheets of all such parties. So far as credit shown in

second segment the credit balance received in earlier financial year is accepted

by AO in assessment order passed under section 143(3). The amount received

during the year is from the parties, which were accepted as a genuine creditor in

the earlier assessment year. For amount shown in third segment the assessee

received fresh credit from the companies aggregating Rs. 91.77 crore. The

confirmations, PAN, address, ITRs and balance sheets of all such parties are

filed. The amounts were received through banking channel. Credit received in

respect of two parties which is shown in for the segment, are sale proceeds of

investments which are evident from the ledger accounts. The sale of investments

is not disputed by AO in the assessment order. We also find that the ld. CIT(A)

while allowing relief to the assessee also accepted the filing of various

documentary evidences in respect of each credit entry which is available on

record, e.g. confirmation of parties, balance sheets, ITR, PAN and address along.

credits of parties;

Name of party Amount Documentary evidences Anjaniputra Infracon Pvt. Ltd. 15,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Baba Ramdeo Commercials Pvt. 51,00,000 PAN, Address, Confirmation, Balance Ltd. sheet & ITR, Besta Vision Traders Private 5,62,00,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Bhakti Investment Private Limited 46,93,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening balance receivable as on 01.04.2012 at Rs. 14,45,10,000/- Bhakti Sales And Services Private 12,20,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, It include part refund of opening receivable as at Rs. 3,49,000/- Blossom Constructions Private 13,05,73,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 51,40,000 and Rs. 125,43,30,000/- out of amount given during the year Costal Multitrading Private Limited 6,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Deify Infrastructure Limted 71,50,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Efficient Structure Private Limited 4,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Feline Financial Services Private 5,00,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 40,37,37,000/- Gautam Iron & Steel Trading Co. 3,30,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Nine Star Plastic Packaging 2,00,00,000 PAN, Address, Confirmation, Balance Services Pvt. Ltd. sheet & ITR, Refund out of opening receivable as on 01.04.2012 amount given during the year Raheja Exports Private Limited 8,90,87,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 2,45,77,000 and Rs. 6,45,10,000/- out of amount given during the year Rajvardhan Tradezone Private 5,00,00,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Sandhaya Laxmi Trading Privates 1,82,00,000 PAN, Address, Confirmation, Balance

Limited sheet & ITR, Silver Crest Investors & Builders 27,35,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 42,85,11,000/ Suraburdi Infrastructures Pvt. Ltd. 47,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of amount given during the year Surendra Fiscal Services Pvt. Ltd. 31,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 50,00,000/- Tanushree impex Pvt. Ltd. 2,44,33,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 2,29,23,000/- and at Rs. 15,00,000/- amount given during the year Vadehi Fiscal Pvt. Ltd. 15,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 15,00,00,000/- Vedika Trading & Consultancy Pvt. 9,50,00,000 PAN, Address, Confirmation, Balance Ltd. sheet & ITR, 30. We find that once the assessee furnished all aforesaid documentary evidence

and discharged its primary onus, the AO was required to investigate the matter

further. The AO has not investigated the matter further. The Hon’ble Apex Court

in CIT vs Orissa Corporation (P) Ltd. (supra) held that once the assessee has

given name and address of the alleged creditors. It was in the knowledge of the

revenue that the said creditors were income tax assessee. The revenue did not

pursue the matter nor examined the source of income of alleged creditors. And if

the Tribunal came to the conclusion that assessee has discharged burden on him,

then the conclusion drawn was not unreasonable which was based on evidence.

We find that the Hon’ble Gujarat High Court in CIT Vs. Amber Tradecorp (P) ltd. (2022)

145 taxmann.com 27 (Guj) held that where the assessee took loan from two parties and

assessee has furnished requisite material showing identity of loan givers and that

assessee was not beneficiary as loan was repaid in subsequent year, no addition under

Section 68 could be made on account of such loan. The Hon'ble Gujarat High Court in

the case of DCIT Vs Rohini Builders (supra) and in CIT Vs Ranchod Jivabhai Nakahava

(supra) also held that when the assessee has discharged initial onus by providing

identity of all creditors by giving their complete addresses, GIR numbers, PAN and copy

of assessment orders wherever readily available and proved the capacity of creditors

that amounts were paid through cheques, no addition is to be made. Similar view was

taken by Hon’ble Bombay High Court in Orient Trading Co. Ltd. vs CIT 49 ITR 723

(Bombay). Hon’ble Gujarat High Court in Hon’ble Gujarat High Court in case of CIT vs.

Ayachi Chandrasekhar Narsangji (2024) 41 taxmann.com 250 (Guj) held that when

repayment of loan in subsequent year has not been disputed by revenue authorities, the

addition of unsecured loan is not sustainable. Similar view was taken by Hon’ble

Jurisdictional High Court in PCIT vs Bhupendra Champaklal Dalal (2024) 160

taxmann.com 560 (Bombay) wherein it was held that where the assessee received loan

from its creditors and repaid the same and all transactions were routed through banking

system the additions is not justified.

Ltd. (2018) 403 ITR 415 also held that assessee is only required to explain the source of

credit and there is no requirement under law to explain the source of the source. Further

Hon’ble Supreme Court in CIT vs P.K. Noorjahan (supra) also concluded that provision of

section 69 confers discretion in the matter of treating the source of investment which

has not been satisfactory explaining to be income. The AO is not obliged to treat such

source of investment as income in every case where explanation offered by assessee is

found to be not satisfactory. The same principle was followed by Hon’ble Supreme Court

in CIT vs Mohanakala & Ors.(2007) 291 ITR 278 (SC) would be equally applicable to

interpret the provision of section 68. Thus, in view of aforesaid factual and legal

discussion, we do not find any infirmity in the order of ld. CIT(A) for our interference,

which we affirmed with our additional finding recorded above. The ratio of various

decisions relied by ld. CIT-DR for Revenue in his submissions are not applicable on the

peculiar facts of the case. In the present case, the assessee has explained all the credits

as well as debit entry in its books of account with documentary evidence. The

documentary evidence has not been rebutted by assessing officer. The assessee has

discharged its onus in substantiating all the transactions. In the result, various grounds of appeal raised by Revenue are dismissed.

recording reasons for reopening, the AO recorded that assessee is beneficiary of

Rs. 45.00 lacs from the account of Raj Kumar Singh. No date of such transaction

is recorded either in the reasons recorded or in assessment order. In fact, no

addition is made in respect of alleged entry of Rs. 45.00 lacs from the account of

Raj Kumar Singh. The AO made other additions which were not forming part of

reasons recorded. Thus, conclusion drawn by AO that assessee is beneficiary of

Rs. 45.00 lacs from the account of Raj Kumar Singh is factually incorrect. We also

find that ld. CIT(A) in para 8.2 on page no. 74 & 75 of his order also recorded in

consistency and factual mistake in the reasons recorded. Thus, reasons recorded

are not valid reasons being factually incorrect. There is no live link between the

belief of escapement of income, vis-à-vis material on record. The Hon’ble Apex

Court in Ganga Saran & Sons Pvt. Ltd. vs ITO (supra) held that if there is no

rational and intelligible nexus between the reasons and the belief, so that, on

such reasons, no one properly instructed on facts and law could reasonably

entertain the belief, the conclusion would be inescapable that the ITO could not

have reason to believe that any part of the income of the assessee had escaped

assessment and such escapement was by reason of the omission or failure on

the part of the assessee to disclose fully and truly all material facts and the

notice issued by him would be liable to be struck down as invalid. Further, the

Hon’ble Supreme Court in ITO vs Lakhmani Mewaldas (supra) also held that

reason to believe must have a material bearing on the question of escapement of

income the reason must be held in good faith. It cannot be merely pretence. We

find that no addition was made on the reasons recorded rather the assessing

officer made addition on the basis of various details furnished by assessee, which

were furnished in response to show cause notice for furnishing statement of

bank account, financial statement and audit report. The assessee furnished all

such required detail. All such required details were already available with AO

during original assessment. There is no satisfaction of assessing officer that any

income escaped from assessment due to failure on the part of assessee in not

disclosing fully and truly material necessary for assessment. The Hon’ble

Jurisdictional High Court Jet Airways 331 ITR 236 (Bombay) held that wherein it

was held that if after issuing notice under Section 148, the AO does not assess or

re-assess such income for which he had formed reason to believe that it had

escaped assessment, it is not open to him to independently assess or re-assess

any other income which came to his notice subsequently during the re-

assessment proceeding. Similar view was taken by Rajasthan High Court in CIT

Vs Shri Ram Singh (306 ITR 343 Raj), Delhi High Court in Ranbaxy Laboratory

Ltd Vs CIT (336 ITR 136 Delhi), and Mumbai Tribunal in Tata Communication

Transformation Services Ltd Vs ACIT (ITA No. 358/ Mum/2022. Hence, we

conclude the reasons recorded are not correct nor the additions made pursuant

to reasons recorded are justified when no addition qua the reasons recorded

were made. Hence, the assessee also succeeded in its C.O.In the result, various

grounds of appeal raised by assessee in its C.O. are allowed.

allowed.

Order was pronounced on 24/04/2026 as per Rule 34 of Income Tax

(Appellate Tribunal) Rule-1963

Sd/- Sd/- KHETTRA MOHAN ROY PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Nagpur: Dated: 24/04/2026 Biswajit

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By Order

Assistant Registrar, ITAT Nagpur