SUNSHINE TECHNOBUILD PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX , MUMBAI

Per: Smt. Beena Pillai, J.M.:

The present appeal filed by the assessee arises out of order dated
18/12/2024
passed by Ld.CIT(A)-52,
Mumbai for assessment year 2011-12 on following grounds of appeal :
“I INVALID NOTICE AND ASSESSMENT

2
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

The Ld. CIT(A) erred in law by validating the assessment made u/s 143(3) r.w.s. 147 of the Income Tax Act which deserves to be quashed as passed due to :
1. On the basis of an invalid and void ab initio notice issued u/s 148
of the Income Tax Act after taking an approval from Pr. CIT 8,
Mumbai which was only a technical approval without recording of satisfaction for reopening of assessment which is against the provisions of section 151 of the Act. any 2. On the basis of an invalid and void ab initio notice issued u/s 148
of the Act on 28.03.2018 as the notice issued u/s 148 of the Act is without application of mind by the assessing authority and merely in the basis of information received from the investigation wing.
3. On the basis of the reasons recorded which are vague, incorrect and are based on suspicion, surmises, presumptions and conjectures only.
4. On the basis of a borrowed satisfaction from the investigation wing and merely repeating the facts recorded by the investigation wing without establishing any direct link between the tangible material and the formation of reason to believe that the income of the assessee has escaped assessment.
5. Without disposing the objections raised by the assessee by a speaking order.
Thus, the impugned notice issued u/s 148 of the Act should be declared as illegal and the consequent assessment order u/s 147
of the Act should be quashed.
II
Without prejudice, the impugned reassessment order passed u/s 147 of the Act by initiating proceedings u/s 148 of the Act is void ab initio on account of:
(i) as the genesis of reopening was some incriminating information found in a search u/s 132 of the Act on 06.10.2017 on Sunshine
Group; on the basis statements recorded u/s 132(4) of the Act of Mr. Kashyap K Mehta, which was communicated to the AO of the assessee by the DDIT(Inv.) Unit 5(4), Mumbai; also on the basis of statement of Mr. Jagdish Purohit recorded U/s 132(4) of IT Act on 21.01.2015 providing bogus accommodation entry of unsecured loans

3
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

(ii) as the same could only be assessed u/s 153A of the Act by taking recourse to mandatory non obstante provisions of the section 153C of the Act;
(iii) thus, the impugned assessment order must be declared as void ab initio by following the judgment of the Hon'ble Apex Court in VikramSujitkumar Bhatia (2023) 149 taxmann.com 123 (SC) dated
06/04/2023 and Nilesh Bharani in ITA 612/Mum/2020 dated
28/03/2023 r/w S.S. Con Build Pvt Ltd 2023-TIOL-65-SC-IT dated
04/05.2023 r/w Kanwar Singh Saini vs Delhi High Court 2012 4
SCC 307. III ADDITION FOR UNSECURED LOAN
The Ld. CIT(A) erred both in law and on facts in upholding an addition of 25,16,500/- consisting of unsecured loan 25,00,000/- and interest paid 16,500/- on squared-up unsecured loan taken from M/s Jayanti Agency Pvt Ltd u/s 68 of the Act:
i. Without providing the copies of the documents, evidences, information collected at the back of the appellant and as in mentioned in the reasons recorded on the basis of which it has been alleged that the assessee company had taken unsecured loan from dubious entites.
ii. Without providing the copies of the statements recorded and allowing the assessee, the cross examination of Mr. Jagdish
Purohit as mentioned in the order and of other persons on the basis of whose statements, the said entity from which the assessee received unsecured loan considered as dubious entity or paper based company.
iii. Without allowing the company an opportunity of being heard.
iv. Without intimating the regarding non-compliance of the notice issued u/s 133(6) of the Act to the said lender for which the addition has been made.
V. Without considering the submissions of the assessee company in compliance to the notice issued u/s 142(1) and the show cause notices in the assessment proceedings vi. Without appreciating that the unsecured loan had been received by account payee cheque from an identifiable party which is duly substantiated and the loan was also repaid during the year itself.
Thus, the addition made of 25,16,500/- must be deleted.

4
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

IV ADDITION FOR UNSECURED LOAN
The Ld. CIT(A) erred both in law and on facts in confirming addition of 7,73,75,000/- u/s 68 of the Income Tax Act for unsecured loan taken from various lenders without considering the submissions made by the assessee in the assessment proceedings and without allowing the assessee an adequate opportunity of being heard. Thus, the addition must be deleted.
V ADDITION FOR UNSECURED LOAN
The Ld. CIT(A) erred in law and on facts in confirming the action of AO in making an addition of 7,73,75,000/- u/s 68 of the Act singularly on visible minor deficiencies in lenders confirmation of loan without considering the vital fact that out of the total sum of loan received, a substantial sum had already been repaid to the lenders in the same assessment year /subsequent year which itself dismiss the tag of non-genuine loan and prove genuineness but no enquiry was made by the AO from these lenders to rebut the evidence filed by the assessee particularly when the addresses and PAN were conspicuous on the confirmation filed. Thus, the addition made must be deleted.
VI UNEXPLAINED EXPENDITURE
The Ld. CIT (A) erred in law and on the facts in directing the AO to disallow interest paid Rs 39,43,783/- on alleged ungenuine unsecured loans u/s 37 of the Act instead of making an addition u/s 69C of the Act, disregarding the fact that interest was paid on bonafide loans taken and used for business purposes after proper tax compliance, duly reflected in audited books of account.. Thus, the addition so made should be deleted.
7 GENERAL GROUND
The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing.”
Brief facts of the case are as under:
2. The assessee is said to be engaged in the business of building construction. For the year under consideration the assessee filed its return of income on 24/09/2011 declaring total

5
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited income at a loss of Rs. 19,980/-. The return was processed u/s.
143(1) of the Act. Subsequently, search and seizure operation was conducted on Sunshine Group. It was notice that, the assessee obtained unsecured loans from dubies entity that is M/s. Jayanti Agency Pvt. Ltd., which was proved as bogus concern or a paper entity without having any business and was indulged in providing accommodation entries.
2.1 The assessment of the assessee was reopened by issuing notice u/s. 148 of the Act on 28/03/2018. In response to the same assessee filed return of income on 19/04/2018 declaring total loss of Rs. 19,980/- Subsequently, notice u/s. 143(2) and 142(1) was issued to the assessee. It is submission of the assessee that, it was not supplied with the reasons recorded and the same was provided to assessee just before the completion of the reassessment proceedings on 07/12/2018. It was also submitted before the Ld.AO that materials based on which the reopening was done, was also not provided to the assessee.
2.2 The assessee submitted that, the basis for the reasons to believe that income escaped assessment is as per the investigation wing and the statement recorded of one Mr.
Kashyap K. Mehta u/s. 132(4) of the Act and alleged entry operators. It was requested that the assessee may be granted opportunity to cross examine these parties based on whose statement, reopening was done in assessee’s case. It is submitted that, no cross examination was granted to the assessee, though assessee requested vide letters to the Ld.AO dated 26/11/2018
and 27/11/2018. The Ld.AO there after completed assessment by making following additions :

6
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

“a) Unexplained cash credit u/s 68 (para 5 & 6)
7,98,91,500/-
(25,16,500 + 7,73,75,000) b) Unexplained expenditure (Interest)

16,500/-
(Interest on loan of Rs 25,00,000/-) c) Unexplained expenditure (Interest)

39,27,283/-
(Interest on loan of Rs. 7,73,75,000/-)”
Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld.CIT(A).
3. The Ld.CIT(A) while upholding the observation of the Ld.AO and the addition made, held that the assessee failed to produce other evidence including loan agreement, terms and condition, collateral, correspondences and other particulars the Ld.CIT(A) was of the opinion that the evidences furnished by the assessee is insufficient to establish that the credit entries are genuine.
Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal.
4. Ground no.1 raised by the assessee is challenging the validity of assessment. The Ld.AR submitted that, the basis on which the assessment was reopened is in violation of principle of natural justice. It is submitted that, the assessee was not granted opportunity to cross examine the deponents whose statement was considered against the assessee to make addition.
4.1 The Ld.AR submitted that, the reopening of the assessment and the order passed in consequence to is bad in law.
A.
The Ld.AR placed reliance on decision of Hon’ble Supreme
Court in case of G. K. N. Driveshafts India Ltd. reported in (2002)
25 taxmann.963. The Ld.AR thus emphasised that, it is factually incorrect that the assessee was provided with the reasons

7
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited recorded on 08/10/2018. It is submitted that, the assessee physically received the reasons recorded on 07/12/2018 and thereafter filed its objection dated 14/12/2018 which is not disposed off before assessment was completed. The Ld.AR submitted that, the assessee time and gain requested to Ld.AO to furnish the reasons recorded vide its letter dated 26/11/2018
and 27/11/2018. The assessee also made application under Right to Information Act 2005 on 26/11/2018 seeking the reasons recorded and materials based on which the reopening was made.
B.
The Ld.AR submitted that, the only objection disposed off by the revenue was regarding order passed u/s.127 of the Act, and plea of the assessee that no reasons were furnished. He submitted that, to which the Ld.AO noted that the reasons were served to the assessee on 10/10/2018. The Ld.AR submitted that, the date mentioned in the order disposing of the objection dated 20/11/2018, and the date referred by the Ld.AO in the assessment order do not match with each other. He thus submitted that, there is factual inconsistency.
C.
The Ld.AR thus submitted that, the objection raised by the assessee to the reasons received on 14/12/2018 is not disposed off by the Ld.AO before passing of the assessment order.
D.
The Ld.AR further submits that while the reopening was made in the case of assessee based on alleged loans u/s.68 of the Act, no show cause notice was issued to the assessee to disallow interest on the loan claimed by the assessee as expenditure before the passing of the assessment order.

8
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

For the above reasons the Ld.AR submitted that, reopening of the assessment in case of the assessee is bad in law as it is in violation of the principle of natural justice.
4.2 On the contrary, the Ld.DR submitted that, difference in the date issues of reasons recorded assessee in the assessment year vis a vis order disposing on 20/11/2018 could be mere typographic mistake. He submitted that, the objections raised by the assessee originally were disposed off and therefore there is no violation principle of natural justice as submitted by the assessee.
We have perused the submissions advance by both sides in the light of record placed before us.
4.3 The primary objection by the Ld.AR is that the reasons recorded were not furnished to the assessee on 10/10/2018 and is contrary to the fact that assessee received the reasons recorded on 14/12/2018. The Ld.DR was thus required to verify the records and to submit in respect of the same for which some time was granted. On subsequent hearing, nothing could be produced by revenue to prove that the reasons recorded were issued to the assessee as on 08 or 10/10/2018. In the paper book filed by the assessee, there are letters filed with office the Ld.AO bearing acknowledgement, wherein the assessee is seeking reasons recorded along with the materials that formed basis of reopening.
It is noted that, assessee also sought for cross objection of the persons whose statements formed the basis for addition in the hands of the assessee for the year under consideration.
Admittedly the assessing officer as well as the Ld.CIT(A) denied

9
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited the cross objection which is in violation of Principle of natural justice as observed by Hon’ble Supreme Court in case of Andaman
Timber Industries vs. CCE reported in (2015) 62 taxmann.com 3. 4.4 It is noted that there are blatant errors in the reassessment proceeding for the year under consideration in the case of the assessee by not providing opportunity to cross examine the persons whose statement formed bases for the addition to be made in the hands of the assessee amount to gross violation of principles of natural justice. Hon’ble Supreme Court in case of Andman Timbers (supra) observed as under :
“6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.”
4.5 From the assessment order it is noted that, the assessing officer did not carry out any independent verification regarding the assessee or recorded any response to a specific query against

10
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited the assessee in the statement recorded of the persons who were administer u/s.132(4) of the Act. The Ld.AR at the time of argument also submitted that, the loans taken by the assessee treated as bogus, has been paid during the year under consideration and therefore the decision relied by the Ld.DR cannot come into assistance in the present facts of the case.
There is not even any circumstantial evidence against the assessee which could lead to addition in its hands. We therefore are of the opinion that the reassessment proceedings in these circumstances get vitiated. We therefore hold the assessment order dated 30/12/2018 passed by the Ld.AO without following principle of natural justice is bad in law and deserves to be quashed.
Accordingly ground no. 1 raised by the assessee stands allowed.
As we have already held that the assessment order is bad in law the additions made there in automatically gets deleted. We therefore do not find it necessary to decide the issues of merits as they become academic at this stage.
Accordingly the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 20/08/2025 (OMKARESHWAR CHIDARA)
Judicial Member
Mumbai:
Dated: 20/08/2025
Poonam Mirashi,
Stenographer
Copy of the order forwarded to:

11
ITA No. 592/Mum/2025; A.Y. 2011-12
Sunshine Technobuild Private Limited

(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.By order

(Asstt.