THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD vs. AMBE TRADECORP PRIVATE LIMITED (FORMERLY KNOW AS J.P. FINCORP SERVICES PVT. LTD.)

TAXAP/318/2022HC GujaratGJHC24036530202211 July 2022Author: HONOURABLE MR. JUSTICE N.V.ANJARIA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA5 pages
AI SummaryDismissed

What were the facts?

The Revenue (Principal Commissioner of Income Tax) has appealed against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2010-2011. The appeal concerns an addition of Rs. 39,05,50,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, on account of alleged unexplained credit received from M/s. Rachna Finlease Pvt. Ltd. The assessee, Ambe Tradecorp Private Limited (formerly J.P. Fincorp Services Pvt. Ltd.), is part of the JP Iscon group. A search was conducted on the group and the assessee. The AO reopened the assessment under Section 147 based on information about credits from M/s. Rachna Finlease Pvt. Ltd. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal, holding that the addition was not legally tenable. The ITAT subsequently dismissed the Revenue's appeal.

What did the High Court hold?

The High Court held that no substantial question of law arose in the appeal. The Court noted that the assessee had submitted crucial documents like the PAN card, ledger confirmation, its bank statement, and the bank statement of M/s. Rachna Finlease Pvt. Ltd. to prove the transaction was through banking channels. Furthermore, the assessee had demonstrated that M/s. Rachna Finlease Pvt. Ltd. had received funds from Smt. Hansaben H. Patel and Shri Rameshbhai Thakore, which was corroborated by the creditor's bank statement. The Assessing Officer's finding that the identity and creditworthiness of M/s. Rachna Finlease Pvt. Ltd. were not proved was found to be devoid of basis, as the facts established by the assessee suggested otherwise. The Appellate Tribunal had correctly observed that M/s. Rachna Finlease Pvt. Ltd. had filed its income tax return and its assessment was completed, and that once the source of funds in the hands of the creditor was explained, the amount received by the assessee from that company could not be held as unexplained under Section 68 in the absence of contrary information. The Tribunal also rightly pointed out that there cannot be an addition of one item in the hands of two different persons. The Appellate Authority and the ITAT had concurrently reversed the AO's findings, and the High Court found no merit in the Revenue's appeal.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the decision of the Appellate Tribunal is ex-facie perverse because the Appellate Tribunal has erred in deleting the addition of Rs. 39,05,50,000/- made u/s 68 of the Act for the funds received from M/s. Rachna Finlease Pvt. Ltd. without appreciating the entire gamut of facts making it evident that the transaction was in the nature of accommodation entry? Assessee's Contention (as understood from the judgment): The assessee contended that it received share application money from M/s. Rachna Finlease Pvt. Ltd. during the financial year 2009-2010, which was recorded in its books and fully repaid in FY 2010-2011. The assessee provided the PAN card, ledger confirmation, its own bank statement, and the bank statement of M/s. Rachna Finlease Pvt. Ltd. to demonstrate the transaction was through banking channels. The assessee also established that M/s. Rachna Finlease Pvt. Ltd. received funds from Smt. Hansaben H. Patel and Shri Rameshbhai Thakore, evidenced by bank statements. The assessee argued that it had discharged its onus under Section 68 by establishing the identity and creditworthiness of the creditor and the genuineness of the transaction. Revenue's Contention: The Revenue argued that the transaction was in the nature of an accommodation entry and that the creditworthiness and genuineness of M/s. Rachna Finlease Pvt. Ltd. were not established. The Revenue also pointed out that M/s. Rachna Finlease Pvt. Ltd. was a non-filer assessee company when the amount was given towards share application money, raising suspicion.

Which sections of the Income-tax Act were involved?

Section 68,Section 132,Section 147,Section 271(1)(c),Section 274,Section 148,Section 143(3),Section 260-A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/318/2022 ORDER DATED: 11/07/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 318 of 2022 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD Versus AMBE TRADECORP PRIVATE LIMITED (FORMERLY KNOW AS J.P. FINCORP SERVICES PVT. LTD.) ========================================================== Appearance: MR. M.R.BHATT, SR. ADV. WITH MR. KARAN SANGHANI, ADV. FOR M R BHATT & CO.(5953) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 11/07/2022

ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned senior advocate Mr. M. R. Bhatt with learned advocate Mr. Karan Sanghani for M. R. Bhatt & Co. for the appellant.

2.

The present Tax Appeal filed under section 260-A of the Income Tax Act, 1961, is directed against judgment and order dated 7.2.2022 of the Income Tax Appellate Tribunal, “D” Bench, in ITA No. 1235 of 2019 in respect of the A

The order continues below.

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