INCOME TAX OFFICER 5(3)(1), MUMBAI, MUMBAI vs. VERVE INDUSTRIES PRIVATE LIMITED, MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against order dated
04.02.2025 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2021-22, raising following grounds:
“1(a) "Whether on facts and circumstances of the case and in law, the CIT(A) erred in allowing the appeal filed by the assessee and deleting the addition of Rs. 19,49,32,568/- being additio on the Issue creditworthine loans were transactions w
1(b) Whether and in law, C by deleting th of non genuin case and no PANS, ITRS, a of the credito onus cast upo
1961. 2(a)" Whether in law, the CI assesee and unsubstantiat to M/s. Rose assesse fail regarding rece
Pvt. Ltd. durin
2(b) "Whether in law, the CI assesse and unsubstantiat to M/s. Rosel u/s 133(6) of Sales Pvt. Ltd but no reply w
3. "Whether o law, the CIT(A assesse and disallowance ignoring the f the assessee par
4. "Whether o law, the CIT(A Assessing Off submitted b
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of non genuine unsecured loans though ess of the parties from whom the unsec taken and genuineness of the were not proved."
on the facts and circumstances of the CIT(A) erred in allowing the assessee's ap he addition of Rs.19,49,32,568/-on the i ne unsecured loans ignoring the facts of ot appreciating the fact that mere filin account confirmations and banks statem ors is not sufficient enough to discharge on the assessee u/s 68 of the Income tax r on facts and circumstances of the case
IT(A) erred in allowing the appeal filed by deleting the addition made on accoun ted service charge of Rs.7,09,24,217/- life Sales Pvt. Ltd. Ignoring the fact tha led to provide documentary evide eiving any service(s) from M/s. Rosellfe S ng the relevant period." ners of r on facts and circumstances of the case
IT(A) erred in allowing the appeal filed by deleting the addition made on accoun ted service charges of Rs.7,09,24,217/- life Sales Pvt. Ltd. ignoring the fact that n of the the Act was issued to M/s. Ros d to provide details of the said transac was received."
on facts and circumstances of the case an (A) erred in allowing the appeal filed by deleting the addition made on accoun of interest expenditure of Rs.5,65,5
fact that entire amount of funds borrowe e were treated as unexplained cash cre on facts and circumstances of the case an A) erred in deleting the additions made by fficer by accepting the additional evide by:
the assessee during the appe erve Industries Pvt. Ltd
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1961
h the cured said case ppeal issue f the ng of ments e the x Act, and y the nt of paid t the ences
Sales and y the nt of paid notice selife tions nd in y the nt of 507/- ed by edit."
nd in y the ences ellate proceedings assessment p
5. "Whether o law, the CIT(A Assessing
O submissions per sub-rule(3
calling for rem
6. The appell grounds to be 2. Briefly stated, f year, the assessee c trading, handling &
assessee filed its ret income at Rs.13,29,9
26.03.2022 retaining filed by the assessee under the Income-tax complied with. In the the Assessing Officer
Sr No.
Pa
1. Un
68
2. Di on 3. Di th
3. Aggrieved, the Before the Ld. CIT(A) including bank state
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ITA which were not submitted during proceedings despite adequate opportunitie on facts and circumstances of the case an A) erred in deleting the additions made by Officer on the basis of the asses but without giving opportunity to the AO
3) of Rule 46A of the Income tax, 1962
mand report."
lant prays that the order of the CIT(A) on e set aside and confirm the order of the AO facts of the case are that duri company was engaged in the b disposal of fly ash and related turn of income on 15.03.2022
90,950/-, which was subseque g the same total income. The re was selected for scrutiny and s x Act, 1961 (in short ‘the Act’) w e assessment completed u/s 14
made following additions:
articulars
Amount in nexplained cash credit u/s 8 of the Act
19,4932,5
isallowance un-substantial n service u/s 37 of the Act
7,09,24,27
isallowance u/s 36(1)(iii) of he Act
5,65,507/- assessee filed appeal before
, the assessee filed certain addi ement in respect of certain p erve Industries Pvt. Ltd
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the es."
nd in y the see's
O as 2 by n the O.”
ing the relevant business of coal d activities. The declaring total ently revised on eturn of income statutory notices were issued and 43(3) of the Act, n Rupees
68/-
70/-
- the Ld. CIT(A).
itional evidences parties. The Ld.

CIT(A) after conside relief to the assessee by way of raising grou
4. Before us, the drew attention to Gro submission, go to t consent of both part grounds prior to delv submitted that, in Sections 68 and 37
additional evidence b that the Ld. CIT(A) mandated under R
(hereinafter “the Rule to the Assessing O comments on the me this contention, the the Ld. CIT(A) conce pointed out that the that the bank accoun during the assessme that during the cours was furnished and consideration of bank
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ITA ring the submission of the as . Aggrieved, the Revenue is in a unds as reproduced above.
learned Departmental Represen ound Nos. 6 and 7 of the appea the root of the matter. Accord ties, arguments were first addr ving into the merits of the addit connection with the addition
7 of the Act, the assessee ha before the Ld. CIT(A). However, it did not adhere to the procedu
Rule 46A of the Income-tax es”), inasmuch as no opportun
Officer (AO) to furnish objec erits of such additional evidenc
Ld. DR referred specifically to erning “Deomight Enterprises P e Ld. CIT(A), in the impugned nt of the said company had not ent proceedings. However, the L se of appellate proceedings, the considered. The ld DR submi k statement is without putting erve Industries Pvt. Ltd
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ssessee allowed appeal before us ntative (Ld. DR) al, which, in his dingly, with the ressed on these tion. The Ld. DR ns made under ad filed certain t was contended ural safeguards x Rules, 1962
nity was granted ctions or offer ce. In support of the findings of Pvt. Ltd.” It was order, observed t been produced
Ld. CIT(A) noted bank statement itted that said the same to the AO or seeking his co the Ld. CIT(A) is repr
“Deomight E
During the c financials of produced. D the company has duly ac and also he basis of this During app complete f undersigned sheets come advances gi which is q advanced to Profit and lo proceeding i operation as crores. Still company. Du found that company on by assessee funds have Banking cha of above com not produce bank statem
Thus, lookin account and imparted to worth mentio during Marc
Regarding th was also pro in making ad
Belly Gems bogus.”
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ITA omments thereon. The relevant oduced as under:
Enterprises Pvt Ltd-6,58,00,000
course of appellate proceeding compl f Deomight Enterprises
Pvt Ltd w uring F.Y. March 21 income declared y was income of 3,65,532/- which A cknowledged in the assessment ord eld that it is meagre income and on s fact only addition was made by A peal proceeding balance sheet a financials were submitted bef d. The total of all assets as per balan es to Rs 293.36 crores. Loans a iven (assets) comes to Rs 14.36 cro uite high in comparison to the lo o Verve industries. On examination oss account submitted during appell t was found that the total Revenue fr s on March 21 comes to Rs 286
Ld. AO held this company as bog uring the appeal proceeding it was a interest is being paid to the abo borrowing and TDS was also deduc e. With respect to the above lender been transferred to appellant throu annel only. Regarding the Bank Accou mpany AO has mentioned that same w ed.However, during appeal proceed ment was produced and was examin ng to the balance sheet profit lo d return of income of the company,lo appellant cannot be held bogus. It oning here that loan was already repa ch 2023 in the books of appella he loan payment copy of Bank statem oduced. Therefore, AO was not justif ddition on account of loan received fr
Private limited holding the compa erve Industries Pvt. Ltd
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t observation of lete were by AO der the AO.
and fore nce and res oan of ate rom
.62
gus also ove ted all ugh unt was ding ned.
oss oan t is aid ant.
ent fied rom any 4.1 Similarly, with unexplained cash cre
Ltd.”, the Ld. CIT(A) said party was not proceedings but was proceedings. The Ld.
two instances—name
Aviation Pvt. Ltd.”—a to a violation of Rule the appellate order p matter be restored to with the mandatory
Rules, including affor examine the addition
4.2 In response, th the alleged infraction pages of the bank sta been partially submi fairly conceded that only at the stage of ap
5. We have heard the relevant materi violation of the Rule
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ITA respect to the addition made edit pertaining to the entity “Ref has recorded that the bank s furnished during the course s subsequently produced durin
. Departmental Representative ely, “Deomight Enterprises Pvt. L as illustrative of a procedural la e 46A of the Rules. He therefore passed by the Ld. CIT(A) be se o his file for fresh adjudication procedure laid down under Ru rding an opportunity to the Asse nal evidence and furnish his com e Ld. Counsel for the assessee n, if any, was minor and only pe atements, which, according to h itted before the Assessing Offic the complete set of bank state ppellate proceedings before the rival submissions of the parti ials on record. In the groun e 46A of the Rules has been erve Industries Pvt. Ltd
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e on account of fex Aviation Pvt.
statement of the of assessment ng the appellate
(DR) cited these
Ltd.” and “Refex apse amounting e submitted that et aside and the after complying ule 46A(3) of the essing Officer to mments thereon.
submitted that ertained to a few him, had already er. However, he ments was filed
Ld. CIT(A).
ies and perused nds raised, the challenged and therefore, for ready said Rule as under:
“6[7Pro
8[8a[Jo
Comm
46A. (1) The the 8[8a[Joint the Commis documentary the course except in the (a) whe evid
(b) whe prod by t
(c) whe prod whi
(d) whe aga to a (2) No evidence s
11[11a[Joint Commis
Commissioner (Ap admission.
13(3) The 14[14a[Join be, the Commissi evidence produced has been allowed a (a) to e witn
(b) to p rebu app
(4) Nothing conta
17[17a[Joint Commis
Commissioner (App
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ITA reference, we feel it appropria oduction of additional evidence oint
Commissioner]
(Appea missioner (Appeals)].
e appellant shall not be entitled to p t Commissioner] (Appeals)] 9[or, as the ssioner (Appeals)], any evidence, wh y, other than the evidence produced b of proceedings before the 10[Asses e following circumstances, namely :—
ere the 10[Assessing Officer] has dence which ought to have been admit ere the appellant was prevented by s ducing the evidence which he was ca the 10[Assessing Officer] ; or ere the appellant was prevented by s ducing before the 10[Assessing Off ich is relevant to any ground of appea ere the 10[Assessing Officer] has made ainst without giving sufficient opportu adduce evidence relevant to any groun shall be admitted under sub-rule ( ssioner] (Appeals)] 12[or, as the case ppeals)] records in writing the rea nt Commissioner] (Appeals)] 15[or, as ioner (Appeals)] shall not take into d under sub-rule (1) unless the 16[Asse a reasonable opportunity—
examine the evidence or document or t ness produced by the appellant, or produce any evidence or document uttal of the additional evidence pellant.
ined in this rule shall affect the p ssioner] (Appeals)] 18[or, as the case peals)] to direct the production of any erve Industries Pvt. Ltd
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ate to reproduce e before the als)]
9[and produce before e case may be, hether oral or by him during ssing Officer], refused to admit tted ; or sufficient cause from alled upon to produce sufficient cause from fficer] any evidence al ; or e the order appealed nity to the appellant nd of appeal.
(1) unless the e may be, the asons for its the case may account any essing Officer]
to cross-examine the or any witness in produced by the power of the e may be, the y document, or the examination o appeal, or for any of the assessment request of the 19[As of section 251 or th
5.1 Upon a plain re of the Rules, it is ma to be adduced by the is incumbent upon t
Assessing Officer to comments on the me case, it is evident tha procedure so presc additional evidence opportunity constitu safeguard, and is, principles of natural j
5.2 In view of the fo the order passed by t the impugned order i file of the CIT(A) for f strictly complying wi obligation to grant th to the additional evid
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ITA of any witness, to enable him to d other substantial cause including the t or penalty (whether on his own mo ssessing Officer]) under clause (a) of s he imposition of penalty under section eading of the provisions contain anifest that where additional evi e assessee before the first appell the ld CIT(A) to provide an opp submit his objections, if an erits of such additional evidence at the learned CIT(A) has failed cribed under Rule 46A. The without affording the Assessin utes a breach of the mandat in substance and effect, a v justice.
oregoing, we are of the consider the learned CIT(A) stands vitiat is set aside, and the matter is r fresh adjudication in accordance th the requirements of Rule 46A he Assessing Officer due opportu dence.
erve Industries Pvt. Ltd
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dispose of the e enhancement otion or on the sub-section (1)
271.]”
ned in Rule 46A idence is sought late authority, it portunity to the ny, and to offer e. In the present to adhere to the e admission of ng Officer such tory procedural violation of the red opinion that ed. Accordingly, remanded to the e with law, after
A, including the unity to respond

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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Ground Nos. 6 and 7 of the pre he matter being restored to the f necessary or appropriate to adj s stage, which pertain to the accordingly.
appeal of the Revenue is allowe ced in the open Court on 17/0 AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu erve Industries Pvt. Ltd
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esent appeal are file of the CIT(A), judicate Ground e merits of the ed for statistical
07/2025. d/-
KASH KANT)
ANT MEMBER
R, gistrar) umbai