BLUE BELL PROMOTERS P.LTD,INDORE vs. ACIT, CIRCLED-5(1), NEW DELHI

ITA 8201/DEL/2019Status: DisposedITAT Delhi29 September 2026AY 2011-128 pages
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What did the Tribunal hold?

The Tribunal upheld the validity of the reassessment proceedings initiated under Section 147. It reasoned that the AO received concrete information from the Investigation Wing regarding accommodation entries, which constituted tangible material. The AO conducted a preliminary verification and recorded satisfaction after due analysis, indicating an independent application of mind rather than borrowed satisfaction. The Tribunal relied on Supreme Court decisions in Phool Chand Bajrang Lal, ITO vs Lakhmani Mewal Das, and Raymond Woollen Mills Ltd. to establish that prima facie material is sufficient for reopening and its adequacy is not justiciable at this stage. Therefore, grounds related to reassessment were dismissed. Regarding the addition under Section 68, the Tribunal observed that the assessee had filed plausible evidence to prove the identity and genuineness of transactions and attempted to establish creditworthiness. However, it appeared these details were not examined properly by the AO, who made additions solely because lenders did not respond to Section 133(6) notices. Consequently, the issue of the addition of INR 6,95,50,000/- was set aside to the AO for re-examination of the evidence regarding the creditworthiness of the lenders. For the loan from Smt. Ritu Porwal, the AO was directed to examine the assessee's contention about her opting for the Vivad Se Vishwas Scheme and to refrain from making a separate addition if tax had already been paid on that sum. Grounds related to this addition were allowed for statistical purposes.

What were the facts?

The assessee, Blue Bell Promoters Pvt. Ltd., engaged in real estate development, filed its return for Assessment Year 2011-12 declaring a business loss. The Assessing Officer (AO) initiated reassessment proceedings under Section 147, alleging receipt of funds from Shri Sharad Darak and M/s Jayant Securities & Finance Ltd., identified as accommodation entry providers. The AO noted that the assessee received loans totaling INR 6,95,50,000/- from various entities, but failed to establish their creditworthiness, as notices under Section 133(6) remained unanswered. Consequently, the AO made an addition under Section 68 for unexplained credit. The assessee appealed to the CIT(A), challenging both the validity of reassessment and the merits of the addition. The CIT(A) partly allowed the appeal. The assessee is now before the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961, are valid, given the assessee's contention that the AO's satisfaction was borrowed and lacked independent application of mind. Assessee's Arguments: The reassessment proceedings were initiated based on the Investigation Wing's report without independent application of mind, making the satisfaction borrowed and the proceedings invalid. Reliance was placed on several judicial pronouncements, including Filco Trade Centre (P.) Ltd. v. Deputy Commissioner of Income-tax, Reena Jain v. Income-tax Officer, and various Delhi High Court and Tribunal decisions. Revenue's Arguments: The Revenue vehemently supported the lower authorities' orders, arguing that the AO had information about accommodation entries and rightly invoked Section 147. Confirmation of the reassessment was requested. 2. Whether the addition of INR 6,95,50,000/- made under Section 68 of the Act for unexplained credit is justified. Assessee's Arguments: The assessee provided confirmations, ITRs, and statements of affairs of lenders to prove identity and creditworthiness. Bank statements and loan repayments were submitted to establish genuineness. The assessee argued that the source of source is not required to be established as per the Finance Act, 2022. For loans from Smt. Ritu Porwal, it was argued that she opted for the Vivad Se Vishwas Scheme, making the addition a double addition. Revenue's Arguments: The Revenue supported the lower authorities' orders and requested their confirmation.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 250,Section 148,Section 133(6),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “A” BENCHES, NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

PER MANISH AGARWAL, A.M.: The present appeal is filed by assessee against the order dated 12.09.2019 passed by Ld. Commissioner of Income Tax (A)-2, New Delhi [“Ld. CIT(A)”] in Appeal No. 10262/18-19 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 19.12.2018 passed u/s 147 r.w.s. 143(3) of the Act pertaining to Assessment Year 2011-12. 2. Brief facts of the case are that assessee is a company engaged in the business of real estate

The order continues below.

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