ACIT, MUMBAI vs. KIRAN METAL CORPORATION, MUMBAI

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ITA 6911/MUM/2025Status: DisposedITAT Mumbai18 June 2026AY 2013-149 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were bad in law due to a divergence in the information used to initiate the proceedings and the subsequent findings. The Tribunal also noted that the loan transaction had already been accepted as genuine in the original assessment.

What were the facts?

The Revenue appealed against the deletion of an addition of Rs. 20,00,000 made under Section 68. The addition was related to a loan from M/s Sambhav Impex, which the Assessing Officer (AO) considered an accommodation entry. The assessee had previously accepted this loan in the original assessment.

What were the issues?

Whether reassessment proceedings were validly initiated when the basis for reassessment changed and the transaction was already accepted in the original assessment.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 144B,Section 148,Section 148A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN & HON’BLE SHRI GIRISH AGRAWAL

Hearing: 22.04.2026Pronounced: 18.06.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 6911/MUM/2025 Assessment Year: 2013-14 Assistant Commissioner of Kiran Metal Corporation Income Tax 229-A Kewal Industrial Room No 511, 5th Floor, Estate, Senapati Bapat Marg Vs. Piramal Chambers, Lower Parel(W), Lal Baug, Parel, Mumbai-400013 Mumbai-400012 (PAN : AADFK1887C) (Assessee) (Respondent) C.O. No. 144/MUM/2026 Assessment Year: 2013-14 Kiran Metal Corporation Assistant Commissioner of 229-A Kewal Industrial Income Tax Estate, Senapati Bapat Room No 511, 5th Floor, Vs. Marg Lower Parel(W), Piramal Chambers, Mumbai-400013 Lal Baug, Parel, Mumbai-400012 (PAN : AADFK1887C) (Assessee) (Respondent) Present for: Assessee : Shri Kiran Mehta, CA Revenue : Shri Himanshu Joshi, Sr. DR Date of Hearing : 22.04.2026 Date of Pronouncement : 18.06.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed is by the Revenue and cross objection by the assessee against the order of CIT(A)/National Faceless Appeal Centre

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 (NFAC), Delhi, vide order No. ITBA/NFAC/S/250/2025- 26/1079872307(1), dated 22.08.2025, passed against the assessment order by Assessment Unit, u/s. 147 r.w.s.144B of the Income-tax Act (hereinafter referred to as the “Act”), dated 27.05.2023, for Assessment Year 2013-14.

2.

Grounds taken by revenue are reproduced as under: 1. "Whether in facts and in law the Ld. CIT(A) erred in deleting the addition of Rs.20,00,000 made u/s 68 and the related interest disallowance, ignoring cogent material that the lender M/s Sambhav Impex is an accommodation-entry concern (meagre capital/fixed assets vis-à-vis high turnover, negligible profits, unsecured interest-free advances, circular credits, no real infrastructure) and its non- compliance to statutory notice u/s 133(6)." 2. "Whether in facts and in law the Ld. CIT(A) failed to apply the settled test of human probabilities and the principle of substance-over-form as laid down by the Hon'ble Supreme Court in CIT v. Durga Prasad More (82 ITR 540) and Sumati Dayal v. CIT (214 ITR 801), inasmuch as mere paper confirmations could not establish genuineness where surrounding circumstances negate it.." 3. "Whether in facts and in law the Ld. CIT(A) erred in holding that production of a loan confirmation is conclusive for the purpose of section 68, without appreciating that the assessee did not discharge the onus to prove identity, creditworthiness, and genuineness of the creditor, and the AO rightly treated the credit as unexplained in line with CIT v. P. Mohankala (291 ITR 278).." 4. "Whether in facts and in law the Ld. CIT(A) failed to appreciate that reassessment additions and consequential interest disallowance were based Investigation findings, non-response of the creditor, and commercial improbabilities, and that the AO's conclusion was reasonable and legally sustainable.". 5. "Whether in facts and in law, once an entity has been established as an accommodation entry provider, any of its purported transactions can be accepted as genuine. In particular, whether the Ld. CIT(A) was justified in treating the alleged loan from Sambhav Impex as genuine despite overwhelming material establishing it as a paper concern" 2.1. Grounds taken by assessee in its cross objection are reproduced as under: 1. In the facts and circumstances of the case and in law, the learned CIT (A) erred in not holding that the assessment in reference made u/s 147 of the Income tax Act, 1961 was bad in law. 2. In the facts of the case and in law the learned CIT (A) erred in not holding that the impugned assessment was time barred

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 3. Through the cross objection filed by the assessee, re-opening of the re-assessment proceedings and re-assessment order passed thereafter are contested as bad in law.

3.1. Registry has noted a delay of 110 days in filing the said cross objection by the assessee for which petition for condonation for delay along with affidavit is placed on record. The same has been perused and the reasons for the delay taken note of. Upon perusal of the same and hearing both sides, we deem it fit to condone the delay on the ground that there was sufficient cause for the said delay, to take up the matter for adjudication.

4.

Since the cross objection refers to the jurisdictional issue going to the root of the matter, we first take up the same for adjudication. Brief facts of the case as culled out from records are that assessee filed its return of income on 21.09.2013, reporting total income at Rs. 3,67,25,970/-. Scrutiny assessment u/s.143(3) was completed on 09.03.2016, determining total income at Rs.3,67,67,950/-. Later, information was received from the Insight portal that the bank account of the assessee was being used as transit point for fund transfer by M/s. Seven Star Jewels (Prop - Tarachand Paldecha). As per enquiry report in the case of M/s Seven Star Jewels, there was circular transaction of Rs. 55,00,000/- between the assessee and M/s Sambhav Impex, an associate concern of M/s Seven Star Jewels. Further, on perusal of the bank statements of the entities, beneficiaries were identified which formed the basis to initiate the proceedings for reassessment by considering the amount of Rs.60,02,666/- which had escaped assessment in the hands of the assessee for A.Y. 2013-14.

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 4.1. Notice u/s. 148 was issued on 06.04.2021. For this, the reasons to believe recorded by the ld. Assessing Officer, apart from mentioning the above stated details, tabulated certain details which is reproduced as under: Sr. Source PAN Source PAN A.Y. Information remarks No. Name value AAAHT3627A Seven Star 2013-14 5500000 As per enquiry Jewels Prop. report in the Tarachand case of M/s Paldecha Seven Star Jewels.

4.2. Based on the above information, ld. Assessing Officer had reason to believe that amount of Rs.55 lakh had escaped assessment. Subsequently, after complying with the procedure prescribed under section 148A, an order u/s. 148A(d), dated 23.07.2022 was passed. In this order in para-2, there is a divergence on the information which was initially recorded as claimed to be received by the ld. Assessing Officer in the reasons to believe as noted above. In para-2 of this order, ld. Assessing Officer records that “as per enquiry report in the case of M/s Seven Star Jewels, there was transaction of Rs. 55,00,000/- between the assessee and M/s Sambhav Impex, an associate concern of M/s Seven Star Jewels which was a huge circular transaction in the bank account and being used as transit point for fund transfer.” Thereafter, notice u/s.148 was issued. Thus, what was initially recorded by the ld. Assessing Officer in the reasons to believe mentioned about the source as M/s. Seven Star Jewels (Prop- Tarachand Paldecha), based on enquiry report in its case. However, in the order u/s. 148A(d), ld. Assessing Officer mentioned that there is a transaction of Rs.55 lakhs between the assessee and M/s. Sambhav Impex, which is an associate of M/s. Seven Star Jewels. Ld. Assessing Officer has tabulated the detail for which assessee has alleged to be

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 one of the beneficiaries of having transacted to obtain accommodation entry. The said detail as contained in para-2 of the order u/s. 148A(d) is extracted below: Sr. Source PAN Source PAN A.Y. Information value remarks No. Name 1. ACGFS5091R M/s. 2013-14 Rs. 55,00,000/ Amount Sambhav credited as Impex per Enquiry report in the case of M/s Seven Star Jewels 2. ACGFS5091R M/s. Rs. 5,02,666/- Interest paid Sambhav non-on Impex genuine unsecured loan as pernquiry report in the case of M/s Seven Star Jewels Total Rs.60,02,666/-

4.3. On the above factual matrix, it was submitted that basic information by which ld. Assessing Officer assumed jurisdiction u/s.148A was in respect of assessee alleged to have entered into transaction for Rs.55 lakhs with M/s. Seven Star Jewels. Though, later the stand was changed by which assessee is alleged to have transaction with M/s. Sambhav Impex which is an associate or a sister concern of M/s. Seven Star Jewels.

5.

Assessee strongly contended that it had no transaction with M/s. Seven Star Jewels or Tarachand Paldecha. The very assumption of jurisdiction is on an unfounded and wrong information, rendering the entire proceeding bad in law. So far as transaction with M/s. Sambhav Impex is concerned, assessee placed on record a loan confirmation statement from its books of account as on 31.03.2013 and as on

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14

31.03.2014, giving all the details of the transactions undertaken which is duly confirmed by M/s. Sambhav Impex. Both the confirmation statements are extracted for ready reference: DATE PARTICULARS DR. AMOUNT DATE PARTICULARS CR. AMOUNT 24-Dec-12 ICICI BANK LTD. 20,00,000.00 01 -Apr-1 2 OP. BALANCE 20,00,000,00 RTGS B/F.

26-Dec-12 ICICI BANK LTD. 15,00,000.00 01-0ct-12 ICICI BANK 15,00,000.00 RTGS LTD. RTGS 18-Mar-13 ICICI BANK LTD. 2,26,200.00 01-0ct-12 ICICI BANK 5,00,000.00 CHEQ. NO. 463877 LTD. RTGS 18-Mar-13 TDS@10% 25,133.00

31-Mar-13 BALANCE C/F. 5,00,000.00 18-Mar-13 INTEREST 2,51,333.00 CREDITED@ 12% TOTAL : 42,51,333.00 TOTAL : 42,51,333.00

DATE PARTICULARS DR. AMOUNT DATE PARTICULARS CR. AMOUNT 17-Q&-13 ICICI BANK LTD. OP. BALANCE 5,00,000.00 RTGS 5,30,000.00 01-Apr-13 B/F.

17-0ct-13 TDS@10% 3,333.00

31-Mar-14 BALANCE C/F. 17-Oct-13 INTEREST 33,333.00 CREDITED @ 12%

TOTAL : 5,33,333.00 TOTAL : 5,33,333.00

5.1. In respect of the above extracted loan confirmation statement of M/s. Sambhav Impex, assessee explained that it had obtained loan of Rs.20 lakhs in the preceding years and of Rs.15 lakhs and Rs.5 lakhs in the year under consideration on 01.10.2012. Out of the said amount, loan of Rs.15 lakhs was repaid on 26.12.2012.

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 5.2. Assessee strongly submitted that original assessment had already been completed u/s. 143(3) on 09.03.2016 wherein ld. Assessing Officer had called for details in respect of loan transaction which was duly complied with by the assessee to his satisfaction. The same was accepted and no adverse view was taken. Para – 3 of the order u/s. 143(3) mentions, “Various loan confirmations were also submitted which were verified with the ledger extracts and bank statements of the various confirming parties.”

5.3. Assessee thus, laid stress on the fact of acceptance of the impugned loan transaction by the ld. Assessing Officer as it had discharged the onus casted u/s.68. According to it, identity and credit worthiness of the lender and genuineness of the transaction is duly established by furnishing all the relevant documentary evidences. Assessee had paid interest on which due TDS was done. Nothing new and tangible has been brought on record to allege escapement of income when the same transaction has already been subjected to scrutiny proceedings u/s.143(3). Ld. Assessing Officer has approached merely on the basis of surrounding circumstances and preponderance of human probability, without bringing any cogent material to taint the assessee for the escapement of income.

6.

From the perusal of the first appellate order, we find that ld. CIT(A) elaborately considered the submissions made by the assessee, as well as all the documentary evidences. He observed that the amount which has already been accepted as genuine based on confirmation from the lender, in the course of original assessment proceedings cannot be brought to tax again u/s. 68 as unexplained credit in the impugned re-assessment proceedings. Ld. Assessing Officer ignored

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 the original assessment records where the same loan was accepted as genuine. He thus, deleted the additions so made.

7.

From the impugned order, we note that the basis recorded by the ld. Assessing Officer in para 3.4 for making the addition is on account of absence of confirmation and non-furnishing of details in respect of M/s. Sambhav Impex, so as to prove the credit worthiness and the genuineness of the transaction. He further, records in para-5, about his presumption that even though the evidences filed by the assessee points towards the probability that transaction undertaken is real but considering the surrounding circumstances, preponderance of human probabilities and ground realities, he concluded that the same lacks genuineness. He placed reliance on the investigation done by the Investigation Wing to make the addition.

7.1. We find that the very basis adopted by the ld. Assessing Officer is unfounded and lacks merits. Assessee had furnished confirmation letter giving all the details of the transaction undertaken by it with M/s. Sambhav Impex, which ld. Assessing Officer has failed to consider, forming part of the original assessment records wherein there is a categorical mention about submissions made by the assessee and its acceptance. Furthermore, initiation of re-assessment proceedings is based on alleging the assessee to have undertaken transaction with M/s. Seven Star Jewels (Proprietor Tarachand Paldecha). However, while completing the fitness test prescribed u/s.148A, in the order passed u/s. 148A(d), it is concluded that assessee has entered into transaction with M/s. Sambhav Impex, which is an associate/sister concern of M/s. Seven Star Jewels, (Proprietor Tarachand Paldecha), so as to issue notice u/s. 148. Such a divergence leads the entire re-assessment proceedings un-

ITA No. 6911/Mum/2025 and CO 144/Mum/2026 Kiran Metal Corporation Assessment Year 2013-14 sustainable under the provisions of the Act, making the impugned re- assessment order bad in law.

7.2. In the conspectus of the above narration elaborating upon various aspects of the re-assessment proceedings, vis-à-vis original assessment made u/s. 143(3), availability of required documentary evidences and divergence in the information for the initiation of the re- assessment proceedings, we hold that the impugned re-assessment proceeding, so initiated and re-assessment order passed thereafter is bad in law. The same is quashed. Accordingly, ground of cross objection raised by the assessee is allowed.

8.

Since the impugned re-assessment order itself has been quashed in terms of our above observations and findings, grounds raised by the Revenue are rendered infructuous.

9.

In the result, appeal filed by the Revenue is dismissed and cross objection filed by the assessee is allowed.

Order is pronounced in the open court on 18 June, 2026 Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member Dated: 18 June, 2026 MP, Sr.P.S. Copy to: 1 The Assessee 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai

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