ITO, WARD- 13(1), KOLKATA vs. D B S FINVEST PVT LTD, KOLKATA

The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “(i) That in the facts and the circumstances of the case, the Ld. CIT(A), NFAC erred in law by deleting the addition of Rs. 1,00,00,000/- made as unexplained cash credit u/s 68 of the IT Act. (ii) That in the facts and the circumstances of the case, the Ld. CIT(A), NFAC failed to appreciate the fact that the said addition was made based on findings of detailed enquiry conducted by the Investigation Wing establishing entry of unaccounted cash to the assessee's regular books of account only to evade tax. (iii) That in the facts and the circumstances of the case, the Ld. CIT(A), NFAC failed to appreciate the fact that the banking transactions of concerns managed by entry operator which are non-existent were made to provide accommodation which was admitted by the entry operator Sri Pranab Kumar Modi, in his statement under oath. (iv) That in the facts and the circumstances of the case, the Ld. CIT(A), NFAC failed to appreciate that the assessee was not denied opportunity of being heard as it evident from the assessment order and also that the right to cross examine third parties is not absolute, as opined by various courts and in this case there is no evidence of assessee requesting AO for cross- examination.”

Brief facts of the case are that the assessee had filed the return of income for AY 2010-11 declaring the total income at ₹3,01,340/-. The ITA No(s). 1155/KOL/2026 Assessment Year(s) 2010-11 case was reopened for reassessment based on information from the Investigation Wing that the assessee was a beneficiary of accommodation entries amounting to ₹1,00,00,000/- routed through shell companies. The Assessing Officer [Ld. 'AO'] relied upon the Investigation Wing's findings that the assessee was in receipt of ₹1 Crore in the assessee's bank account from several concerns which were in the nature of accommodation entry and investigated and the accounts were found to be in ICICI bank. Our attention was drawn by the Ld. DR to pages 2 and 3 of the assessment order in which it is mentioned that three accounts were opened in the names of Shakambhri Tradex, Shri Sati Trade Centre, Maharaja Apparels and Mata Enterprise etc. in April 2009 through which transactions were carried out and the assessee is one of the beneficiaries of the sum amounting to ₹1 Crore. Accordingly, since the assessee did not produce any books of account or supporting evidence, the Ld. AO added back a sum of ₹1,00,00,000/- to the total income of the assessee u/s 68 of the Act as unexplained cash credit, and assessed the total income at ₹1,03,01,340/- u/s 147 r.w.s. 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who observed that the initiation of reassessment proceeding was based on a generalized report and that the denial of the opportunity to cross-examine key individuals constituted a serious violation of the principles of natural justice. Accordingly, the Ld. CIT(A) deleted the addition made by the Ld. AO and allowed the appeal of the assessee vide his findings as under:

Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the Ld. AO relied upon the Investigation Wing’s findings that the receipt of ₹ one crore was in the assessee’s account, which was received through several concerns and was in the nature of accommodation entries and investigated the accounts in ICICI Bank. He drew attention to pages 2 and 3 of the ITA No(s). 1155/KOL/2026 Assessment Year(s) 2010-11 assessment order and submitted that the cross-examination was not allowed. The Ld. DR submitted that there was no such request of cross examination made by the assessee and the assessee could not justify how the amount of ₹1 Crore was related to the assessee or that the amount was not received. The assessee had received share premium of only ₹2 Crores. The Ld. DR relied upon the assessment order of the Ld. AO and requested that the order of the Ld. CIT(A) may be set aside and that of the Ld. AO may be upheld.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Bench was of the view that both the orders of the Ld. AO as well as of the Ld. CIT(A) are non-speaking, erroneous and cryptic orders as even the basic facts have not been considered. In Jute Corporation of India Ltd. vs. Commissioner of Income-tax [1990] 53 Taxman 85 (SC)/[1991] 187 ITR 688 (SC)/[1990] 88 CTR 66 (SC)[04-09-1990], it has been held by the Hon'ble Supreme Court as under: “In the absence of any statutory provision, the general principle relating to the amplitude of appellate authority's power being co-terminus with that of the initial authority should normally be applicable. If the tax liability of the assessee is admitted and if the ITO is afforded opportunity of hearing by the appellate authority in allowing the assessee's claim for deduction on the settled view of law, there appears to be no good reason to curtail the powers of the appellate authority under section 251(1)(a). Even otherwise an appellate authority while hearing appeal against the order of subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appeared to be no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO.”

1 Thus, the Ld. CIT(A) was expected to pass a speaking order highlighting the facts instead of summarily allowing the appeal. Since the assessee was in receipt of money, it was incumbent upon the assessee to furnish the required evidence as it has not been specifically denied that no money was received. Therefore, in the interest of justice and fair play, the Bench was of the view that both the orders of the Ld. AO and the Ld. CIT(A) may be set aside and the issue be remanded to the Ld. AO. Therefore, we set aside the orders of both the Ld. CIT(A) as well as that of the Ld. AO and remand the assessment proceeding before the Ld. AO. The assessee shall furnish the details of transactions pertaining to the assessee and is further directed to furnish necessary evidence in support of the identity, the creditworthiness of the creditors/subscribers and the genuineness of the transactions and the Ld. AO is directed to reframe the assessment de novo as per law after granting adequate opportunity of being heard to the assessee. Hence, all the Grounds of appeal are partly allowed for statistical purpose.

In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. Order pronounced in the open Court on 16th October, 2026. [Yogesh Kumar US] [Rakesh Mishra] Judicial Member Accountant Member Dated: 16.10.2026 Bidhan (Sr. P.S.)