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Facts
The assessee appealed against an order related to AY 2012-13. There was a delay of 119 days in filing the appeal, which was attributed to changes in the company's functioning and staff shortage. The assessee had received unsecured loans of Rs. 45,00,000/-, which the AO reopened the case for.
Held
The Tribunal condoned the delay, subject to a deposit of Rs. 2200/-. It held that the reopening of the assessment appeared to be a review of earlier proceedings or a change of opinion, which is not permissible. The Tribunal noted that the loan amounts and interest were returned, and the addition was not sustainable.
Key Issues
Whether the reopening of assessment based on accommodation entries of unsecured loans was justified and whether the delay in filing the appeal should be condoned.
Sections Cited
250, 147, 132, 68, 142(1), 37
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 28.06.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2012-13.
At the outset, it is observed that there is delay of 119 days in filing the instant appeal, on which the Assessee by filing an affidavit of Shri Virendra Chheda {Director of Assessee’s Company} has claimed that the impugned order was received electronically on email but due to the change in the manner of functioning of the company due to shortage of staff/personal, mail could not be checked up immediately and therefore the delay has been occurred which was neither intentional nor malafide, however, because of the aforesaid reasons. On the contrary, the Ld. DR refuted the claim of the Assessee. This court has given thoughtful considerations to the contention raised by the Assessee with regard to the condonation of delay duly supported by sworn affidavit of Director of the Assessee’s Company. The reason stated by the Assessee for condonation of delay prima facie appears to be sufficient and bonafide. Thus, considering the peculiar facts and circumstances of the case in the context of delay, the delay is condoned, however subject to deposit of Rs. 2200/- in the Revenue Department under “other head” within 15 days from the date of the order.
Coming to the merits of the case, we observe that in this case, the case of the assessee was reopened u/s. 147 of the Act mainly on the allegations
“ That the Assessee has received the accommodation entries of unsecured loan amounting to Rs. 45,00,000/- (in total) from Karishma Diamond Pvt. Limited and M/s. Parshwanath Gems Pvt. Ltd. as unearthed in the search and survey action u/s 132 of the Act conducted in the premises of Shri Gautam Jain and since there is a fresh information received, there is an escapement of assessment of such income and the above information was not in the possession of the assessing officer earlier, therefore it can be reasonably concluded that there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment, which are in the nature of unsecured loans u/s 68 of the Act”.
Admittedly, the Assessee in response to the notice dated 14.10.2014 u/s 142(1) of the Act, vide its reply dated 05.02.2015 submitted before the assessing officer on 06.02.2015 during the original scrutiny assessment proceedings, has duly submitted copy of the loan confirmations along with the bank statements and ITR acknowledgments of the loaner parties qua the amount of loans on which the case of the Assessee was reopened and which ultimately resulted into making the addition of Rs. 45,00,000/- along with the disallowance of Rs. 8,10,000/- on account of interest expenses u/s 37 of the Act.
Therefore, it cannot be said that the issue involved in reopening proceedings and making the addition, remained to be examined. In fact, the reopening of the assessment proceeding appears to be review of earlier proceedings and/or change of opinion, which is not permissible in the eyes of law, as clarified by various courts in various cases, specifically by the coordinate bench of the Tribunal in the case of ITO-25(2)(5) Vs Leena Haresh Harde in decided on 20.07.2020, wherein the Hon’ble Coordinate Bench of the Tribunal has also dealt with the issue qua making of identical addition in the case of the then Assessee, based on the same search and operation and the Hon’ble bench consequently on the similar facts and circumstances and deleted the identical addition, as involved in this case. Contention of the Ld. DR to the effect that the Assessee by colorable device circulated the funds and/or converted un-accounted money into income/loan is un-substantiated and hence untenable. As observed above that the Assessing Officer is not permitted to review the original proceedings and/or the settled issue, which infact in the instant case has thoroughly been examined and it is also an admitted fact that loans amounts taken by the Assessee, have also been returned back along with the interest and therefore simply on the assumption and presumption, the addition cannot be sustained. Thus, the addition is deleted by allowing appeal of the Assessee.
In the result, appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 11.06.2025.