INCOME TAX OFFICER 41(2)(1), MUMBAI, MUMBAI vs. BHAVANA PARAS SAHITA, MUMBAI

The Department has raised the following grounds of appeal:

All the grounds raised by the Revenue relates to challenging the order of the Ld. CIT(A) in deleting the additions made by the AO under Section 68 of the Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

The Ld. DR, appearing on behalf of the Department, relied on the order passed by the AO and submitted that the Ld. CIT(A) erred in overlooking the explicit findings of the AO that the assessee failed to submit confirmation from the entities, namely M/s. Germanium Trading Pvt. Ltd. and M/s. Jash Dealmark Ltd. It was also submitted that the assessee failed to satisfactorily explain the credit entries received from these two concerns and failed to justify the genuineness of these transactions. It was further submitted that the amount of Rs. 1,19,53,923/- was undisclosed business receipts of the assessee and that there was no response to the third-party notices issued under Section 133(6) of the Act. Thus, it was requested to restore the order of the AO.

On the other hand, the Ld. AR, appearing on behalf of the assessee, while relying upon the order of the Ld. CIT(A), reiterated the same arguments as were raised before the Revenue Authorities.

We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we noticed that the additions in this case were made by the AO on the basis of information available on the Insight Portal, to the effect that the assessee had taken accommodation entries in the form of purchases/sales from Advance Computers & Mobiles Pvt. Ltd. and M/s. Jash Dealmark Ltd. However, during the course of assessment, the assessee submitted that there had been no transaction with Advance Computers & Mobiles Pvt. Ltd. It was, however, found by the AO that the assessee had received credit entries from two concerns, namely M/s. Germanium Trading Pvt. Ltd. and M/s. Jash Dealmark Ltd., totaling Rs. 1,19,53,923/-. Therefore, the same was treated as unexplained credit and added under Section 68 of the Act.

In order to substantiate that the said transactions were genuine, there is substantial evidence on record showing that the 3 assessee is a proprietor carrying on business under the name and style of Paras Beauty Shop and is engaged in the wholesale and retail business of beauty and cosmetic products. It was submitted that the entire amount received in the bank was inclusive of GST, and the same was explained as under:

From the above, we noticed that the assessee had duly complied with the GST rules framed under the GST Act, and the above assertion of the assessee was also accepted under GST. Further, the assessee also placed on record relevant documents, which are as follows:

Sample sale and purchase bills 2. Stock Summary 3. Ledger Confirmation from above mentioned entities 4. Bank statement highlighting payments received from them 9. After considering the documents placed on record, we find that the payments were received in the bank account of the assessee through B2B transactions along with GST paid thereon. Thus, the transactions cannot be termed as non-genuine. The bank entries in the assessee’s statement of account are self- explanatory, and merely because third parties did not respond to notices issued under Section 133(6) of the Act cannot, in our 4 view, be the sole ground for making additions—particularly when no fault was found in the documents placed on record by the assessee.

No new facts, circumstances, or documents have been placed on record by the Ld. DR to controvert or rebut the lawful findings recorded by the Ld. CIT(A). Therefore, we see no reason to interfere with or deviate from the findings so recorded by the Ld. CIT(A). Accordingly, we dismiss the grounds raised by the Revenue and uphold the order of the Ld. CIT(A) deleting the additions.

In the result appeal filed by the Department stands dismissed.