INCOME TAX OFFICER, MUMBAI vs. SANGEETA JAIN, MUMBAI

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ITA 1972/MUM/2025Status: DisposedITAT Mumbai22 August 2025AY 2010-11Bench: SHRI OM PRAKASH KANT (Accountant Member), SHRI RAJ KUMAR CHAUHAN ( (Judicial Member)1 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) relied on fresh evidence without following Rule 46A of the Income-tax Rules, 1962, and without giving the AO an opportunity to examine it. Therefore, the matter was remanded.

What were the facts?

The Revenue appealed the deletion of an addition made under Section 68, concerning an alleged bogus loan. The assessee claimed the amount was a repayment of a loan advanced in an earlier year, providing bank statements to the CIT(A) but not the AO.

What were the issues?

Whether the CIT(A) erred in admitting fresh evidence without following due procedure and without giving the Assessing Officer an opportunity to examine it.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN

For Respondent: Mr. V.K. Chaturvedi, Sr. DR
Hearing: 14/08/2025

ORDER PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against order dated 02.01.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 2, Delhi [hereinafter shall be referred as ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds:

1. "On the facts and circumstances of the case and in law, the Ld. Addl. CIT(A) is erred in deleting the addition made in terms of section 68 of the I.T. Act, 1961 ignoring that the Assessing Officer has proved the alleged transaction of loan taken from M/s Rajan Gems, one of the entities in Gautam Jain Group, as nothing but an accommodation entry."

2. "On the facts and in the circumstances of the case, the 2. "On the facts and in the circumstances of the case, the 2. "On the facts and in the circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal, though the Hon'ble ITAT is requested to entertain this appeal, though the Hon'ble ITAT is requested to entertain this appeal, though the tax effect is below the monetary tax effect is below the monetary limit prescribed in the CBDT limit prescribed in the CBDT Circular No. 9/2024 Dt. 17.09.2024 but the case falls within Circular No. 9/2024 Dt. 17.09.2024 but the case falls within Circular No. 9/2024 Dt. 17.09.2024 but the case falls within the exceptions laid out in clause (h) of Para 3.1 of the Board's the exceptions laid out in clause (h) of Para 3.1 of the Board's the exceptions laid out in clause (h) of Para 3.1 of the Board's Circular No.5/2024 Dt. Circular No.5/2024 Dt. 15.03.2024."

2.

Briefly stated, the facts of the case are that the assessee Briefly stated, the facts of the case are that the assessee Briefly stated, the facts of the case are that the assessee originally filed her return of income on 31.03.2011 declaring a total iginally filed her return of income on 31.03.2011 declaring a total iginally filed her return of income on 31.03.2011 declaring a total income of ₹1,92,470/ 1,92,470/-. The said return was processed under . The said return was processed under section 143(1) of the Income section 143(1) of the Income-tax Act, 1961 (hereinafter referred to tax Act, 1961 (hereinafter referred to as ‘the Act’). Subsequently, information was received by the as ‘the Act’). Subsequently, information was received by the as ‘the Act’). Subsequently, information was received by the Assessing Officer that the assessee had obtained accommodation Assessing Officer that the assessee had obtained accommodation Assessing Officer that the assessee had obtained accommodation entry by way of a bogus loan transaction amounting to entry by way of a bogus loan transaction amounting to entry by way of a bogus loan transaction amounting to ₹11,50,000/- from M/s Rajan Gems, an entity allegedly controlled from M/s Rajan Gems, an entity allegedly controlled from M/s Rajan Gems, an entity allegedly controlled and operated by the ‘Shri Gautam Jain Group’, which had been and operated by the ‘Shri Gautam Jain Group’, which had been and operated by the ‘Shri Gautam Jain Group’, which had been subjected to search by the Investigation Wing of the Income search by the Investigation Wing of the Income search by the Investigation Wing of the Income-tax Department, Mumbai. On the basis of such information, the Department, Mumbai. On the basis of such information, the Department, Mumbai. On the basis of such information, the Assessing Officer recorded reasons to believe that income Assessing Officer recorded reasons to believe that income Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and accordingly issued chargeable to tax had escaped assessment and accordingly issued chargeable to tax had escaped assessment and accordingly issued notice under section 148 notice under section 148 of the Act on 29.03.2017.

2.1 In response thereto, the assessee submitted that the return of In response thereto, the assessee submitted that the return of In response thereto, the assessee submitted that the return of income originally filed may be treated as return filed in compliance income originally filed may be treated as return filed in compliance income originally filed may be treated as return filed in compliance with notice issued under section 148 of the Act. Thereafter, with notice issued under section 148 of the Act. Thereafter, with notice issued under section 148 of the Act. Thereafter, statutory notices were issued and served upon the assessee. In the statutory notices were issued and served upon the assessee. In statutory notices were issued and served upon the assessee. In course of proceedings, the assessee submitted that she had course of proceedings, the assessee submitted that she had course of proceedings, the assessee submitted that she had advanced certain sums to M/s Rajan Gems in the earlier year, advanced certain sums to M/s Rajan Gems in the earlier year, advanced certain sums to M/s Rajan Gems in the earlier year, which were repaid in the year under consideration. However, the which were repaid in the year under consideration. However, the which were repaid in the year under consideration. However, the Assessing Officer did not accept the explanation furnished by the Assessing Officer did not accept the explanation furnished by the Assessing Officer did not accept the explanation furnished by the assessee on the grounds that (i) the information received from the sessee on the grounds that (i) the information received from the sessee on the grounds that (i) the information received from the Investigation Wing established that M/s Rajan Gems was merely an Investigation Wing established that M/s Rajan Gems was merely an Investigation Wing established that M/s Rajan Gems was merely an accommodation entry provider, and (ii) the assessee had failed to accommodation entry provider, and (ii) the assessee had failed to accommodation entry provider, and (ii) the assessee had failed to adduce any cogent evidence that the alleged loan had been adduce any cogent evidence that the alleged loan had been adduce any cogent evidence that the alleged loan had been advanced in the preceding year and that the impugned transaction vanced in the preceding year and that the impugned transaction vanced in the preceding year and that the impugned transaction represented repayment thereof. Consequently, the Assessing Officer represented repayment thereof. Consequently, the Assessing Officer represented repayment thereof. Consequently, the Assessing Officer made an addition of ₹ ₹11,50,000/- as unexplained cash credit under as unexplained cash credit under section 68 of the Act. section 68 of the Act.

2.2 On further appeal however, the Ld On further appeal however, the Ld. CIT(A) deleted the addition . CIT(A) deleted the addition observing as under:

“6. Discussion and decision 6. Discussion and decision- The submissions made by The submissions made by appellant and the reason of addition as mentioned in the appellant and the reason of addition as mentioned in the appellant and the reason of addition as mentioned in the assessment order are carefully examined. The fact of case is assessment order are carefully examined. The fact of case is assessment order are carefully examined. The fact of case is that the notice u/s 148 was issued that the notice u/s 148 was issued on the basis of information on the basis of information that certain entities in the business of diamond trading are in that certain entities in the business of diamond trading are in that certain entities in the business of diamond trading are in facts engaged in bogus billing/ accommodation entries. The facts engaged in bogus billing/ accommodation entries. The facts engaged in bogus billing/ accommodation entries. The assessee has received unsecured loan of Rs. 11,50,000/ assessee has received unsecured loan of Rs. 11,50,000/ assessee has received unsecured loan of Rs. 11,50,000/- from one of such entity namely Rajan Gems (Propri one of such entity namely Rajan Gems (Proprietor Dharmendra etor Dharmendra Akshay Singh Babel) for Rs. 11,50,000/ Akshay Singh Babel) for Rs. 11,50,000/- during the period during the period under consideration. The assessee explained to AO that the under consideration. The assessee explained to AO that the under consideration. The assessee explained to AO that the amount was repayment of loan advanced in the preceding year. amount was repayment of loan advanced in the preceding year. amount was repayment of loan advanced in the preceding year. However, the AO did not accept the explanation in view of However, the AO did not accept the explanation in view of However, the AO did not accept the explanation in view of finding of investigation wing that M/s Rajan Gems was ing of investigation wing that M/s Rajan Gems was ing of investigation wing that M/s Rajan Gems was involved in providing accommodation entries. The amount of Rs. involved in providing accommodation entries. The amount of Rs. involved in providing accommodation entries. The amount of Rs. 11,50,000/- was added u/s 68 to the income of assessee. was added u/s 68 to the income of assessee. was added u/s 68 to the income of assessee. The appellant during the course of appeal proceeding submitted The appellant during the course of appeal proceeding submitted The appellant during the course of appeal proceeding submitted that the loan was advanc that the loan was advanced to M/s Rajan Gems in the FY 2009 ed to M/s Rajan Gems in the FY 2009- 10 and submitted bank statement of FY 2008 10 and submitted bank statement of FY 2008-09 as per which 09 as per which the loan was advance on 24.04.2008, Rs. 4,50,000/ the loan was advance on 24.04.2008, Rs. 4,50,000/ the loan was advance on 24.04.2008, Rs. 4,50,000/- and 29.04.2008, Rs. 7,00,000/ 29.04.2008, Rs. 7,00,000/-through banking channel. The said through banking channel. The said loan was received bank in the FY 2009 loan was received bank in the FY 2009-10 through banking gh banking channel and the evidence of same submitted. channel and the evidence of same submitted. The addition had been made by AO on account of unexplained The addition had been made by AO on account of unexplained The addition had been made by AO on account of unexplained credit without going into merit of explanation and evidence credit without going into merit of explanation and evidence credit without going into merit of explanation and evidence submitted by appellant on the basis of investigation report submitted by appellant on the basis of investigation report submitted by appellant on the basis of investigation report which is giving the ge which is giving the general observation and finding on the neral observation and finding on the business carried out by M/s Rajan Gems The AO has not business carried out by M/s Rajan Gems The AO has not business carried out by M/s Rajan Gems The AO has not brought anything on record to show that the earlier year loan brought anything on record to show that the earlier year loan brought anything on record to show that the earlier year loan given by appellant was not genuine. Therefore, the repayment given by appellant was not genuine. Therefore, the repayment given by appellant was not genuine. Therefore, the repayment of the same loan in the next year and whic of the same loan in the next year and which is also before the h is also before the date of search on M/s Rajan Gems group can not be upheld. date of search on M/s Rajan Gems group can not be upheld. date of search on M/s Rajan Gems group can not be upheld. The addition is therefore deleted. The main relief sought by The addition is therefore deleted. The main relief sought by The addition is therefore deleted. The main relief sought by appellant appellant appellant is is is allowed allowed allowed hence hence hence other other other grounds grounds grounds of of of appeal appeal appeal are not considered. considered.”

3.

When the matter was taken up before us, n When the matter was taken up before us, none appeared on one appeared on behalf of the assessee despite due service of notice. Neither was behalf of the assessee despite due service of notice. Neither was behalf of the assessee despite due service of notice. Neither was there any request for adjournment. Even on the earlier date of there any request for adjournment. Even on the earlier date of there any request for adjournment. Even on the earlier date of hearing, none had attended on behalf of the assessee. It therefore hearing, none had attended on behalf of the assessee. It therefore hearing, none had attended on behalf of the assessee. It therefore appeared that the assessee was not intereste appeared that the assessee was not interested in prosecuting the d in prosecuting the appeal. Accordingly, the matter was heard ex parte qua the appeal. Accordingly, the matter was heard ex parte qua the appeal. Accordingly, the matter was heard ex parte qua the assessee.

4.

We have heard the submissions of the learned Departmental We have heard the submissions of the learned Departmental We have heard the submissions of the learned Departmental Representative (DR) and perused the material available on record. Representative (DR) and perused the material available on record. Representative (DR) and perused the material available on record. We find that the learned CIT(A) has de We find that the learned CIT(A) has deleted the addition primarily leted the addition primarily on the basis that the assessee had advanced loan to M/s Rajan on the basis that the assessee had advanced loan to M/s Rajan on the basis that the assessee had advanced loan to M/s Rajan Gems in financial year 2008 Gems in financial year 2008-09 and had received its repayment in 09 and had received its repayment in the year under consideration, for which she furnished supporting the year under consideration, for which she furnished supporting the year under consideration, for which she furnished supporting bank statements before him. However bank statements before him. However, such evidences were , such evidences were admittedly not produced before the Assessing Officer. The learned admittedly not produced before the Assessing Officer. The learned admittedly not produced before the Assessing Officer. The learned CIT(A), while relying on such fresh evidence, has not followed the CIT(A), while relying on such fresh evidence, has not followed the CIT(A), while relying on such fresh evidence, has not followed the procedure prescribed under Rule 46A of the Income procedure prescribed under Rule 46A of the Income- -tax Rules, 1962 (‘the Rules’) and has not afforded (‘the Rules’) and has not afforded any opportunity to the Assessing any opportunity to the Assessing Officer to examine the authenticity and veracity of such documents. Officer to examine the authenticity and veracity of such documents. Officer to examine the authenticity and veracity of such documents.

4.1 In the circumstances, we deem it just and proper to restore In the circumstances, we deem it just and proper to restore In the circumstances, we deem it just and proper to restore the matter to the file of the learned CIT(A) with a direction to comply the matter to the file of the learned CIT(A) with a direction to comply the matter to the file of the learned CIT(A) with a direction to comply with the provisions of Rule 46A of the Rules, obtain remand report of Rule 46A of the Rules, obtain remand report of Rule 46A of the Rules, obtain remand report from the Assessing Officer, and thereafter adjudicate the issue from the Assessing Officer, and thereafter adjudicate the issue from the Assessing Officer, and thereafter adjudicate the issue afresh in accordance with law. afresh in accordance with law. The grounds raised by the Revenue The grounds raised by the Revenue are allowed for statistical purposes. are allowed for statistical purposes.

5.

In the result, the appeal of the Reven In the result, the appeal of the Revenue is allowed for ue is allowed for statistical purposes.

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