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Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These four appeals are filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi 24.05.20254 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year: 2010-11 to 2013-14.
The assessee has raised the following grounds in these appeals. (AY - 2013-14):
to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world “Ground no 1: Illegal assumption of jurisdiction. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO when the notice dated: 01.04.2015 issued under section 148 is wholly without jurisdiction and is null and void. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 01.04.2015 u/s 148 even though the fact that AO failed to mention the designation of appropriate authority from whom approval was obtained prior to the issuance of notice dated: 01.04.2015 u/s 148. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO when the order dated: 14.12.2016 is passed in complete defiance to the principle of natural justice and without affording adequate opportunity to the appellant to put his case making the impugned assessment order illegal, invalid and void ab initio. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO when the impugned order dated: 14.12.2016 is illegal, invalid and void-ab-initio in absence of the issue of notice u/s 143(2). (e) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO when the assessment has been made on the basis of alleged information collected at the back of the appellant and without providing copies thereof so as to allow opportunity to appellant to rebut the said information. Ground no 2: Proceedings vitiated in absence of approval of appropriate authority under section 151. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 01.04.2015 u/s 148 even though the fact that AO failed to obtain approval from appropriate authority as envisaged under section 151 of the Income Tax Act, 1961. Ground No 3: Serious Violation of Principle Of Natural Justice (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the crucial fact that the Appellant went through bad time in various civil and criminal proceedings in last 10 years which also let to forceful acquisition of possession of business premises, business stock and business asset lying at business premises by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were used to be kept and preserved. The Appellant along with their representative had been frequently informing the AO the unprecedented situation by submitting the details relating to litigation, copy of court documents and FIR filed with the Police department. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred to consider that the Appellant mentioned about this during the assessment proceedings for the year under consideration as well as for earlier to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world assessment years and went on to make additions without considering the situation of the Appellant. Ground no 4: Additions of estimation of total income of rs.22,63,48,010/-is not real income. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in estimating total income of Rs.22,63,48,010/- when the same is not the real income of the Appellant. Ground no 5: Addition of rs.2,11,24,992/- as net profit assessed at 8% of turnover are disallowed. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming estimation of income of Rs.2,11,24.992/- being 8% of the gross sales shown in VAT Returns. Ground no.6: Addition of rs. 5,733/- as 8% of contract receipts are disallowed. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in estimating income of Rs. 5,733/- being 8% of the gross contract receipts Ground No 7: Addition Of Rs 10,99,31,342/- Interest Accrued On Loans And Advances. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in confirming additions of Rs. 10,99,31,342/- being interest accrued on the loans and advances given without considering the fact that the Appellant has correspondingly incurred the interest expense on unsecured loans obtain from third parties which is source of loans and advances given on which interest is assessed as income of appellant. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the Appellant that the TDS return is filed by the Appellant for the F.Y. 2012-13 which proves the fact that the TDS deducted on the interest expense incurred on unsecured loans which has been duly paid and deposited to the government's bank account. Ground no 8: Addition of rs.1,04,85,943/-as unexplained cash credit u/s 68. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts, in adding the Cash deposits amounting to Rs. 1.04,85,843/- separately to the total income of the Appellant even though the same form part of turnover declared in VAT returns. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts, in confirming additions made after having rejected the books u/s 145(3) of The Act as this items could not have been separately assessed, once book result was negated and profit estimated. Ground No 9: Addition Of Rs.8,48,00,000/-As Unexplained Cash Credit U/S 68 to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts, in treating advance of Rs.8,48,00,000/-given to M/s. Vintage Enterprises as unexplained cash credit under section 68 even though the same is given from explained sources and AO has assessed the interest income from M/s. Vintage Enterprises forming part of gross interest accrued to the tune of Rs. 10,99,31,342/- (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts, in confirming additions made after having rejected the books u/s 145(3) of The Act as this items could not have been separately assessed, once book result was negated and profit estimated. Ground no 10: Charging interest u/s. 234a, 234b, 234c & 234d of the act. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the levy of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961 while framing assessment and passing order dated: 14.03.2016 under section 143(3) of the I.T. Act, 1961. Ground No 11: Initiation Of Penalty Provisions (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the initiation of penalty proceedings u/s. 271(1)(C), 271B and u/s 271(F) while framing assessment and passing order dated 31.03.2015 under section 143(3) of the I.T. Act, 1961.”
(AY - 2012-13): Ground No 1: Illegal Assumption Of Jurisdiction, Order Passed Is Illegal Void-Ab- Initio (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming that impugned order is illegal, invalid and void-ab-initio in absence of valid notice u/s. 143(2). (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming impugned order which has been passed without affording "reasonable and "adequate opportunity of hearing since AO disclosed his mind and asked for details at fag end of Assessment proceeding i.e 27.03.2015 giving no time to Appellant to respond (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO which has been assumed on the basis of information received from third party and without providing copies thereof so as to allow opportunity to Appellant to rebut the said information. Ground No.2: Serious Violation Of Principle Of Natural Justice (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the failure of the AO to conduct necessary inquiries, issuing summons/notices to examine loan parties and in ignoring the repayment details to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world furnished by the Appellant and NFAC erred in law and on facts in not remanding the issue of unsecured loans prior to the completion of appellate proceedings and forming adverse inference on the aspect that Appellant repaid unsecured loan in subsequent years. AND in the facts and circumstances of the case NFAC ought to have remanded the matter to the Assessing Officer to hold/conduct further inquiry. (b) In the facts and circumstances of the case. National Faceless Appeal Centre (NFAC) erred in not adjudicating the following grounds raised by the Appellant in appellate proceeding before passing order u/s 250 of the Act reproduced as under. in (i) Because, impugned order is illegal, invalid and void-ab-initio absence of Notice u/s.143(2) received within statutory period by the Appellant. (ii) Because, impugned order has been passed without affording "reasonable" and "adequate" opportunity of hearing since AO disclosed his mind and asked for details at fag end of Assessment proceeding i.e 27.03.2015 giving no time to Appellant to respond. (iii) Because, the assessment has been made on the basis of alleged information collected at back of the Appellant and without providing copies thereof so as to allow opportunity to Appellant to rebut the said information. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the crucial fact that the Appellant went through bad time in various civil and criminal proceedings in last 10 years which also let to forceful acquisition of possession of business premises, business stock and business asset lying at business premises by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were also used to be kept and preserved. The Appellant along with their representative had been frequently informing the AO the unprecedented situation by submitting the details relating to litigation, copy of court documents and FIR filed with the Police department Ground No 3: Addition Of Rs.11,83,00,000 As Unexplained Cash Credit U/S 68. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in treating unsecured loans taken during the impugned assessment year even though Appellant duly placed on record the details such as Confirmation of loan party with PAN and address, balance sheets, returm of income together with affidavits and other relevant documentary evidence during the course of assessment proceedings in support thereof, (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO relying solely on report of the DDIT (Inv) even though the copy of the alleged report was never provided to the Appellant (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) unsecured erred in rejecting the affidavit submitted in support of the addition of the loan. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world ignoring the crucial fact that the Appellant had duly repaid these unsecured loans through proper banking channel. (e) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had paid interest on these unsecured loans to loan parties and after deducting tax at source (TDS) as per applicable law which itself proves the genuineness of loan transactions. (f) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the provisions of law that powers of NFAC are co-terminus to that of AO and in the peculiar facts of the case, NFAC could have made inquiry with the loan parties to verify the transaction independently. Ground no 4: Addition of rs 62,45,475/-by disallowing the interest paid on loans. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in disallowing Rs.62,45,475/- being interest paid on the unsecured loans without considering the fact that the Appellant has paid the interest on unsecured loans to loan parties through proper banking channels. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring that the TDS return is filed by the Appellant for the F.Y. 2011-12 which proves the fact that the TDS deducted on the interest paid on unsecured loans has been paid and deposited to the government's bank account. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the Appellant regarding confirmation of interest payment. Ground No 5: Addition Of Rs.1,42,67,832/-As Unexplained Cash Credit U/S 68 (a) In the facts and circumstancesof the case. National FacelessAppeal Centre (NFAC) erred in confirming additions made by AO in treating unsecured loans taken during the impugned assessment year even though Appellant duly placed on record the details such as Confirmation of loan party with PAN and address,balance sheets, return of income together with affidavits and other relevant documentary evidence during the course of assessment proceedings in support thereof. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO relying solely on report of the DDIT (Inv) even though the copy of the alleged report was never provided to the Appellant (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had duly repaid these unsecured loans through proper banking channels. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had paid interest on these unsecured loans to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world to loan parties and after deducting tax at source (TDS) as per applicable lawwhich itself proves the genuineness of loan transactions. (e) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the provisions of law that powers of NFAC are co-terminus to that of AO and in the peculiar facts of the case, NFAC could have made inquiry with the loan parties to verify the transaction independently. Ground no 6: Addition of rs 7,62,833/-by disallowing the interest paid on loans. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in disallowing Rs. 7,62,833/-being interest paid on the unsecured loans without considering the fact that the Appellant has paid the interest on unsecured loans to loan parties through proper banking channels. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the Appellant that the TDS return is filed by the Appellant for the F.Y. 2011-12 which proves the facts that the TDS deducted on the interest paid on unsecured loans has been paid and deposited to the government's bank account. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the appellant during the Appellate proceedings before NFAC regarding confirmation of interest payment. Ground no 7: Charging interest u/s. 234a, 234b, 234c & 234d of the act. In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the levy of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961 while framing assessment and passing order dated 31.03.2015 under section 143(3) of the I.T. Act. 1961.
Ground No.8: Initiation Of Penalty Provisions In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the initiation of penalty proceedings u/s. 271(1)(C), 271(1)(b) and u/s 271(F) while framing assessment and passing order dated 31.03 2015 under section 143(3) of the I.T. Act, 1961. The Appellant craves leave to add, amend, alter, modify and delete any of the above ground.”
(AY - 2011-12) Ground no 1: Illegal assumption of jurisdiction. a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world notice dated: 05.09.2014 u/s 148 even though the fact that the said notice is wholly without jurisdiction, illegal, invalid and void-ab-initio. b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that the said notice is issued without making any independent inquiry and was issued merely on the basis of information of Director General of Income Tax (Investigation), Mumbai. Ground No 2: Proceedings Vitiated In Absence Of Approval Of Appropriate Authority Under Section 151 a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that AO failed to obtain approval from appropriate authority as envisaged under section 151 of the Income Tax Act, 1961 \ (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that AO failed to mention the designation of appropriate authority from whom approval was obtained prior to the issuance of notice dated: 05.09.2014 u/s 148, as envisaged under section 151 of the Income Tax Act, 1961. Ground No 3: Serious Violation Of Principle Of Natural Justice (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the failure of the AO to conduct necessary inquiries, issuing summons/notices to examine loan parties and in ignoring the repayment details furnished by the Appellant and NFAC erred in, law and on facts in not remanding the issue of repayment of unsecured loans prior to the completion of appellate proceedings and forming adverse inference on the aspect that Appellant repaid unsecured loan in subsequent years. AND in the facts and circumstances of the case NFAC ought to have remanded the matter to the Assessing Officer to hold / conduct further inquiry. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in adjudicating following grounds raised by the Appellant in appellate proceeding holding that the AO had valid jurisdiction and has acted upon specific information from Maharashtra Sales Tax Department and DGIT(Inv) Mumbai and also erred in holding no infirmity in the action of the AO which is reproduced as under: (i) Because, the notice u/s.148 is wholly without jurisdiction, illegal, invalid and void-ab-initio (ii) Because, the notice u/s.148 is issued without making any inquiry on the part of AO and is issued merely on the basis of information of Director General of Income Tax (Investigation), Mumbai. (iii) Because the reasons recorded by Ld.AO is incomplete and without quantifying the amount of income which has escaped assessment. to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the crucial fact that the Appellant went through bad time in various civil and criminal proceedings in last 10 years which also let to forceful acquisition of possession of business premises, business stock and business asset lying at business premises by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were also used to be kept and preserved. The Appellant along with their representative had been frequently informing the AO the unprecedented situation by submitting the details relating to litigation, copy of court documents and FIR filed with the Police department. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in not quashing the re-assessment proceedings even though NFAC vide its order dated: 24.05.2024 deleted the addition of Rs. 81,97,053/- being estimation of Gross profit (Refer Point no.3 of Order u/s. 250) made by AO in re-assessment proceedings which implies that the very foundation of reasons for re-opening of assessment does not survive leading to illegal assumption of jurisdiction by AO in reassessing the total income of the Appellant. Ground No 4: Addition Of Rs.26,32,813/- By Disallowing Depreciation Claimed On Addition Made To Fixed Assets (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in confirming disallowance of claim of depreciation amount of Rs.26,32,813/- on addition made to Fixed Assets without appreciating genuine hardship faced by Appellant in not submitting the documentary evidence due to forceful acquisition of possession of business premises of the Appellant by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were used to be kept and preserved. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in confirming disallowance of claim of depreciation amount of Rs.26,32,813/- on addition made to Fixed Assets without appreciating the fact that the Appellant had made claim after getting the books of accounts duly audited from chartered accountant u/s 44AB of the Income Tax Act. And Payments for acquisition of Fixed Assets are through proper Banking Channel. Ground No 5: Addition Of Rs.3,65,59,500 As Unexplained Cash Credit U/S 68. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in treating unsecured loans taken during the impugned assessment year even though Appellant duly placed on record the details such as Confirmation of loan party with PAN and address during the course of re-assessment proceedings in support thereof; (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had duly repaid these unsecured through proper banking channel. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had paid interest on these unsecured loans to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world to loan parties and after deducting tax at source (TDS) as per applicable law which itself proves the genuineness of loan transactions. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the provisions of law that powers of NFAC are co-terminus to that of AO and in the peculiar facts of the case, NFAC could have made inquiry with the loan parties to verify the transaction independently. Ground No 6: Addition Of Rs 53,90,668/- By Disallowing The Interest Paid On Loans a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in disallowing Rs.53,90,668 being interest paid on the unsecured loans without considering the fact that the Appellant has paid the interest on unsecured loans to loan parties in the through proper banking channel. b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring that the TDS return is filed by the Appellant for the F.Y 2010-11 which proves the fact that the TDS deducted on the interest paid on unsecured loans has been paid and deposited to the government's bank account. c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the Appellant during the Appellate proceedings before NFAC regarding confirmation of interest payment. Ground no 7: Charging interest u/s. 234a, 234b, 234c & 234d of the act. In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the levy of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961 while framing assessment and passing order dated 15.03.2016 under section 143(3) read with section 147 of the I.T. Act, 1961. Ground No.8: Initiation Of Penalty Provisions In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the initiation of penalty proceedings u/s 272A(1)(c), while framing assessment and passing order dated 15.03.2016 under section 143(3) read with section 147 of the I.T. Act, 1961. The Appellant craves leave to add, amend, alter, modify and delete any of the above ground.”
(AY - 2010-11) Ground No 1: Illegal Assumption Of Jurisdiction a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that the said notice is wholly without jurisdiction, illegal, invalid and void-ab-initio. to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that the said notice is issued without making any independent inquiry and was issued merely on the basis of information of Director General of Income Tax (Investigation), Mumbai. Ground No 2: Proceedings Vitiated In Absence Of Approval Of Appropriate Authority Under Section 151
(a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that AO failed to obtain approval from appropriate authority as envisaged under section 151 of the Income Tax Act, 1961. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming illegal assumption of jurisdiction of the AO in the issuance of the notice dated: 05.09.2014 u/s 148 even though the fact that AO failed to mention the designation of appropriate authority fromwhom approval was obtained prior to the issuance of notice dated: 05.09.2014 u/s 148, as envisaged under section 151 of the Income Tax Act, 1961.
Ground No 3: Serious Violation Of Principle Of Natural Justice (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the failure of the AO to conduct necessary inquiries, issuing summons/notices to examine loan parties and in ignoring the repayment details furnished by the Appellant and NFAC erred in, law and on facts in not remanding the issue of repayment of unsecured loans prior to the completion of appellate proceedings and forming adverse inference on the aspect that Appellant repaid unsecured loan in subsequent years. AND in the facts and circumstances of the case NFAC ought to have remanded the matter to the Assessing Officer to hold/conduct further inquiry. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in not adjudicating following grounds raised by the Appellant in appellate proceeding by before passing order u/s 250 of the Act reproduced as under: (i) Because, the notice u/s.148 is wholly without jurisdiction, illegal, invalid and void-ab-initio (ii) Because, the notice u/s.148 is issued without making any inquiry on the part of AO and is issued merely on the basis of information of Director General of Income Tax (Investigation), Mumbai. (ii) Because the reasons recorded by Ld.AO is incomplete and without quantifying the amount of income which has escaped assessment. c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in ignoring the crucial fact that the Appellant went through bad time in various civil and criminal proceedings in last 10 years which also let to forceful acquisition of possession of business premises, business stock and business asset lying at business to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world premises by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were also used to be kept and preserved. The Appellant along with their representative had been frequently informing the AO the unprecedented situation by submitting the details relating to litigation, copy of court documents and FIR filed with the Police department. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in not quashing the re-assessment proceedings even though NFAС vide its order dated: 24.05.2024 deleted the addition of Rs. 14,45,968/- being estimation of Gross profit (Refer Point no.3 of Order u/s. 250) made by AO in reassessment proceedings which implies that the very foundation of reasons for reopening of assessment does not survive leading to illegal assumption of jurisdiction by AO in re- assessing the total income of the Appellant Ground no 4: Addition of rs.2,81,559/-on account of disallowance u/s. 40(a)(ia) (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming addition of Rs.2,81,559 on account of disallowance under 40(a)(ia) of the Act even though the fact that amendment made by Finance Act, 2010, to provisions of section 40(a)(ia) is curative in nature has to be given retrospective operation from date of insertion of said provision i.e. with effect from assessment year 2005-06 onwards and only thirty percent of expenditure can at all be disallowed. (b) in the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming addition of Rs.2,81,559 on account of disallowance under 40(a)(ia) of the Act without verifying the fact whether recipient of the sum has offered the same to the return of income so as to avoid double taxation of one source of income. Ground No 5: Addition Of Rs.2,13,738 By Disallowing Depreciation Claimed On Addition Made To Fixed Assets (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in confirming disallowance of claim of depreciation amount of Rs.2,13,738 on addition made to Fixed Assets without appreciating genuine hardship faced by Appellant in not submitting the documentary evidence due to forceful acquisition of possession of business premises of the Appellant by one of the business creditor with which Appellant had dispute related to financial transactions wherein various records and evidences were used to be kept and preserved. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in confirming disallowance of claim of depreciation amount of Rs.2,13,738 on addition made to Fixed Assets without appreciating the fact that the Appellant had made claim after getting the books of accounts duly audited from chartered accountant u/s 44AB of the Income Tax Act and payment for acquisition of fixed Assets are through proper Banking Channel. Ground No 6: Addition Of Rs.4,48,09,500 As Unexplained Cash Credit U/S 68. (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in treating unsecured loans taken to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world during the impugned assessment year even though Appellant duly placed on record the details such as Confirmation of loan party with PAN and address during the course of re-assessment proceedings in support thereof; (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had duly repaid these unsecured loans through proper banking channel. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the crucial fact that the Appellant had paid interest on these unsecured loans to loan parties and after deducting tax at source (TDS) as per applicable law which itself proves the genuineness of loan transactions. (d) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in confirming additions made by AO in respect of unsecured loan ignoring the provisions of law that powers of NFAC are co-terminus to that of AO and in the peculiar facts of the case, NFAC could have made inquiry with the loan parties to verify the transaction independently. Ground No 7: Addition Of Rs 18,32,495 By Disallowing The Interest Paid On Loans (a) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts in disallowing Rs.18,32,495 being interest paid on the unsecured loans without considering the fact that the Appellant has paid the interest on unsecured loans to loan parties through proper Banking Channel. (b) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring that the TDS return is filed by the Appellant for the FY. 2009-10 which proves fact that the TDS deducted on the interest paid on unsecured loans has been paid and deposited to the government's bank account. (c) In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in law and on facts by ignoring the details furnished by the Appellant regarding confirmation of interest payment.
Ground no 8: Charging interest u/s. 234a, 234b, 234c & 234d of the act. In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the levy of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961 while framing assessment and passing order dated 16.12.2019 under section 144 of the I.T. Act, 1961. Ground No.9: Initiation Of Penalty Proceeding In the facts and circumstances of the case, National Faceless Appeal Centre (NFAC) erred in dismissing ground raised by appellant with respect to the initiation of penalty proceedings u/s. 271(1)(C), 271(1)(b) and u/s 271(F)while framing assessment and passing order dated 16.12.2019 under section 144 of the I.T. Act, 1961. to 3273 Ay 2010-11 to 2013
14. M/s. Krishna Fashion world The Appellant craves leave to add, amend, alter, modify and delete any of the above ground.”
Since common issues are involved in all the appeals and the facts and circumstances are identical, all the four appeals are being disposed off by a common order. For the sake of convenience, for AY 2010-11 is taken up as the lead case.
Brief facts are that the assessee filed return declaring income of Rs. 2,00,520/- for AY 2010-11 on 30.09.2010. Return was processed u/s. 143(1) at the returned income. The assessee has shown income from wholesale trading of readymade garments and hosiery items. Subsequently, on receipt of information from sales tax/ Vat department regarding bogus purchases made from hawala dealers, the case was reopened and a notice u/s. 148 was issue on 05.09.2014. Ld. AO noted that the assessee had shown bogus purchases from the following parties: Name of the party who have PAN Amount of such bogus bill issue bogus bills (Rs.) C.K. Enterprises AMEPS0125N 63,07,627 Sheetal Trading Co. ABPPL5107M 4,21,874 Payal Enterprise AAGHB7856M 3,00,000 4.1. During the course of assessment proceedings, the assessee who asked to produced purchase bills, delivery challans and other documentary evidences to establish the genuineness of impugned purchases. The assessee filed a copy of his purchase register and ledger account of the parties as well as the party wise details of purchases and sales. However, he failed to submit any evidence to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world regarding transportation of goods and could not also produce the above mentioned three parties when specifically directed after the notices u/s. 133(6) issued by the Ld. AO were returned back unserved. Accordingly, Ld. AO held that the assessee had not discharged its onus to prove the genuineness of purchases and rejected the books of accounts u/s. 145(3) of the Act. Thereafter, he applied a GP rate of 20.57% on the non-genuine purchases amounting to Rs. 70,29,501/- and calculated the suppression of profits at Rs. 14,45,968/-.
4.2. Ld. AO further observed from the balance sheet that a large amount of unsecured loans outstanding at the year end were shown totalling Rs. 2,38,21,342/-. Ld. AO noted that the assessee had obtained total unsecured loans of Rs. 4,92,09,500/- out of which loans to the extent of Rs.2,60,66,450/- were claimed to have been repaid. From the details forwarded by the assessee it was seen that the information in respect, of several lenders was incomplete as the addresses and/or PAN of the creditors were not mentioned. Accordingly, notices were issued to 54 such parties by the Ld. AO u/s. 133(6) of the Act. Since no response/ confirmation was received from 49 creditors the unsecured loans obtained from these entities amounting to Rs. 4,48,09,500/- were added u/s. 68 of the Act, on account of being unexplained cash credits. Consequently, interest on take unexplained cash credits to the extend of Rs. 18,32,495/- was also disallowed.
4.3. Further, Ld. AO noticed that as per the Schedule B, the TDS on expenses amounting to Rs. 2,81,559/- was not deducted. Accordingly, he proceeded to to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world add this amount comprising of advertisement expenses (Rs.1,33,300/-), Professional Fees (Rs. 50,500/-) and brokerage (Rs. 97,759/-) to the assessees income u/s. 40(a)(ia) of the Act.
4.4. Finally, the assessment was completed at an income of Rs. 4,87,83,780/- vide order u/s. 143(3) r.w.s 147 of the Act. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). Vide order dated 24.05.2024, Ld. CIT(A) deleted the addition on account of bogus purchases after holding that even if the purchases were bogus, the same are claimed against total sales reported by the assessee on which he has declared a GP rate of 20.57% and therefore, no separate addition was called for. The addition u/s. 40(a)(ia) of Rs. 2,81,559/- and of unexplained cash credit of Rs. 4,48,09,500/- made u/s. 68 were upheld. Consequently, the disallowance of interest paid on their loans, amounting to Rs. 18,32,495/- was also confirmed. Aggrieved with the order of Ld. CIT(A), the assessee has preferred an appeal before us raising various grounds.
Before the Tribunal, the case was fixed for hearing several times, however, adjournment had been sought on all earlier occasions. Vide order sheet entry dated 05.03.2025, when the case was fixed giving final opportunity to the assessee, it again sought an adjournment. In order to give fair opportunity, one more adjournment was allowed by the bench subject to the deposit of a cost of Rs. 11,000/- in the revenue’s account and the case was fixed for 07.05.2025. On this date, the case was again adjourned for 10.07.2025 on a to 3273 Ay 2010-11 to 2013-14 M/s. Krishna Fashion world specific request made by the assessee. Finally, on 10.07.2025 none appeared on behalf of the assessee. In view of the non-cooperative conduct of the assessee, the appeal is decided ex-parte after hearing the departmental representative. We note that Ld. CIT(A) has passed a reasoned order giving partial relief to the assessee. It is seen that despite numerous opportunities given, the assessee has not furnished any details/evidences in support of the grounds of appeal taken before us. From the assessee’s non-compliant behaviour, we infer that it is not interested in pursuing its appeal and the same is, therefore, dismissed.
Since the facts and circumstances of the remaining three appeals are identical, these are also dismissed as the assessee has failed to furnish any details or documentary evidences in support of the grounds of appeal raised by it.
In the result, all the four appeals are hereby dismissed.