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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM
PER PRASHANT MAHARISHI, AM:
These are the four appeals pertaining to one assessee Bharti Lifestyle private limited (appellant/assessee) for four different years involving identical issue and therefore those are disposed of by this common order.
Assessee has raised following grounds of appeal
“The appellant has preferred an appeal against the order dated 28.10.2021 passed by National Faceless Appeal Centre (NFAC) u/s. 250 of the Income Tax Act 1961, in pursuance of appeal filed against assessment order dated 29.03.2016 passed u/s. 143(3) rw.s. 147 of the Income Tax Act, Following are the grounds of appeal without prejudice to one another:
The learned Commissioner of Income Tax (Appeal) failed to note that the learned Assessing Officer merely relied on the information received from DGIT (Investigations), Mumbai to reopen the assessment and neither the assessment order nor the reasons communicated indicate that the Assessing officer had applied his mind to the issue and therefore the entire reassessment proceedings are invalid, without jurisdiction, has no legs to stand and hence must be quashed.
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal)
The learned Commissioner of Income Tax (Appeal) failed to note that the entire evidences do prove the identity, creditworthiness and genuineness of the loan transaction amounting Rs. 2,00,000/- and therefore the CIT(A) fell into error in confirming the addition of Rs. 2,00,000/-.
The learned Commissioner of Income Tax (Appeal) failed to note while confirming the addition of Rs.2 lakhs that the entire enquiry by DGIT (Inv.), Mumbai and the information received by the Assessing Officer about Mr. Praveen Kumar lain was used against the appellant without giving a copy of the evidence/statement received from the DGIT (Inv.). Mumbai, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed and more so allowability of that addition of Rs.2 lakhs by the learned CIT(A).
The Learned Commissioner of Income Tax (Appeal) erred in ignoring the Fact that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in an addition of Rs. 1973/- on account of interest paid on borrowed fund / Short Term Loans considered now as unexplained cash credit u/s. 68 taken from loaner i.e. Olive Overseas Pvt. Ltd based on information received from investigation.”
Brief facts of the case shows that assessee is a company engaged in the business of textile trading, filed its return of income on 30/9/2008 declaring a total income of ₹ 69,930/–. Assessment was reopened as information was received from The Director Of Income Tax (Investigation) –II, Mumbai regarding the beneficiaries of accommodation entry obtained by the assessee from one company Olive overseas private limited of ₹ 2 lakhs which is controlled by a common entry provider Mr. Pravinkumar Jain. The notice u/s 148 of the act was issued on 27/3/2015. In response of the above notice the assessee filed a letter stating that original return filed u/s 139 (1) of the act may be treated as return filed in response to the above notice. Reasons of reopening were provided to the assessee on 4/2/2016. Assessee raised objection by letter dated 9/2/2016, which were disposed of by an order dated
The fact shows that assessee has taken an unsecured loan from Olive overseas private limited, which is one of the entities controlled operated and managed by one Mr. Praveen Kumar Jain group. During the course of search and seizure on 1/10/2013, various incriminating evidences were found and the name of this assessee appears in the list of the beneficiaries who have taken accommodation entries. Therefore based on the statement of various persons and information obtained during the course of search of that party, the learned assessing officer stated that neither the identity nor the creditworthiness of the depositor is proved. The entire sum of ₹ 200,000/- brought in by way of unsecured loan in the name of the above company whose identity, creditworthiness and genuineness could not be established by the assessee company beyond doubt with respect to the unsecured loans.
During the course of assessment proceedings assessee submitted (1) confirmation, (2) Ledger account from the books of lender, (3) bank statement of the lender
The learned AO rejected submissions made by the assessee and held that as the lender company is a benami concern of an accommodation entry provider, the entire transaction shows that the funds of Rs 2 lakhs have been brought in by the name of above company as an unsecured loan whose identity creditworthiness and genuineness is not established by the assessee company. Therefore, the above sum was added u/s 68 of the income tax act. Consequently the assessment order was passed on 29/3/2016 u/s 143 (3) read with Section 147 of The Act wherein the addition of Rs 2 lakhs u/s 68 of the act was made along with the disallowance of interest expenditure of ₹ 1973/– accordingly total income of the assessee was assessed at ₹ 271,900/–.
Aggrieved with the order of the learned AO assessee preferred an appeal before the national faceless Appeal entre [learned CIT – A] challenging the reopening of the assessment as well as the addition of Rs 2 lakhs on the merits. On reopening of the assessment assessee submitted, that the reopening has been made in a
[2] Assessment made is against the principles of natural justice as the statements relied upon by the learned AO was not provided to the assessee as well as an
[3] Opportunity of cross-examination was also not given,
[4] Addition has been made purely based on information received from the investigation wing
[5] On the information submitted by the assessee the learned assessing officer has not made any enquiry.
Therefore, it was submitted that addition deserves to be quashed on the merits also.
The learned Commissioner of appeals dismissed the grounds of appeal against reopening of the assessment. On the issue of natural justice, it was stated that the assessing officer has extracted the statement in the assessment order and therefore there is no violation of the principles of natural justice. On the issue of addition on the merits, he held that that the argument of the assessee rests on the fact that full documents regarding taking of the loan were placed before the assessing officer and it was repaid along with interest. The assessee also stated that the statement by Mr. Jain has been retracted and the opportunity of cross-examination was not afforded to the assessee and therefore the reliance by the learned
Aggrieved, assessee is in appeal. The learned authorised representative submitted a paper book containing 36 pages. He submitted that assessee has submitted the loan [1] confirmation, [2] income tax return, [3] annual audited accounts, [4] bank statement. [4] Ledger account of the party [5] affidavit of the directors of the lender company [6] the loan was taken by cheque, repaid by cheque along with interest. Therefore, initial onus is discharged. He submitted that the learned AO has merely relied upon the investigation wing’s report. On the details submitted by the assessee, no enquiry has been made by the AO and therefore onus has not been thrown back by the AO. He further stated that the reliance on the statement is not warranted because the same has been retracted by the person. He also placed on record his written submission containing 10 pages. In his written submission, he stated that it is mandatory for the assessing officer to confront the assessee with any material collected by the AO at the back of the assessee and in case of statement of third party recorded at the back of the assessee, opportunity of cross-examination
He also referred to the decision of the coordinate bench in ITA number 193 and 232/M/2018 in case of ACIT versus Abani sarbeshwar das wherein in the case of same lender on similar set of facts the addition is deleted. He also referred to the decision of SMC bench in ITO versus IDM Agro bio Tech Ltd ITA number 5805/M/2017 wherein for the same lender on same facts the addition is deleted. He therefore submitted that in this issue is squarely covered in favour of the assessee. He further stated that the decision of the coordinate bench binds this bench.
Learned departmental representative vehemently supported orders of lower authority and submitted reopening of assessment is made based on information provided by investigation wing. On merits, he relied on the orders of lower authorities.
We have carefully considered the rival contention and perused the orders of the lower authorities. We also considered the various judicial precedents cited before us by the learned authorised representative as well as stated in the assessment order and appellate order of the lower authorities.
The ground number 1 is with respect to the reopening of the assessment. The claim of the assessee is that case of
On the merits of the case this issue is covered by the decision of Coordinate bench in M/S. NISARG LIFE SPACE LLP VERSUS ITO 28 (2) (3) MUMBAI [ITA No. 629/Mum/2020
“3.1. We have heard the rival submissions and perused the materials available on record. We find that the assessee is engaged in the business of builders and developers. The return of income for the Asst Year 2013-14 was filed by the assessee LLP on 24.9.2013 declaring total loss of ₹ 13,36,999/-. This return was duly processed u/s 143(1) of the Act accepting the same. Thereafter, the case was selected for scrutiny by issuance of notice u/s 143(2) of the Act on 3.9.2014. Various details and documents that were called for by the ld AO wre duly submitted by the assessee during the course of assessment proceedings. The ld AO observed that on perusal of tax audit report for the year under consideration, it was seen that assessee had taken unsecured loans of ₹ 4 crores from 4 parties. A search and seizure action u/s 132 of the Act was conducted by the investigation wing of Income tax department on Shri Praveen Kumar Jain and the concerns managed by him on 1.10.2013, wherein it was unearthed that they were found to be indulged in the business of providing accommodation entries of bogus sales / purchases / loans and advances to many parties. The ld AO alleged that the assessee had taken accommodation entries of bogus loans from the concerns used by Shri Praveen Kumar Jain group to run its business. 3.2. We find
Name of the Loan Loan Interest Creditor Amount Amount Sumukh 50,00,000 4,81,667 Commercial Pvt Ltd Olive Overseas 1,00,00,000 10,21,667 Pvt Ltd Josh Trading Co 1,00,00,000 9,01,667 Pvt Ltd Casper 50,00,000 5,45,000 Enterprises Pvt Ltd Nakshatra 1,00,00,000 10,20,000 Business Pvt Ltd 4,00,00,000 39,70,001 3.3. We find that the ld AO had observed that the aforesaid concerns were operated by Shri Praveen Kumar Jain and belong to his group. During the course of search action u/s 132(1) of the Act on 1.10.2013, Shri Praveen Kumar Jain had given statement on oath that his concerns are engaged in the business of providing accommodation entries and that his concerns do not indulge in real business activities. Accordingly, the ld AO issued a show cause notice to the assessee as to why the aforesaid loans should not be treated as unexplained cash credit u/s 68 of the Act and consequential disallowance of interest thereon should not be made.
a) Confirmation letter from the companies (loan creditors) duly confirming the amount of loan given by them.
b) Master data of the companies (loan creditors) extracted from the website of the registrar of
c) Copy of the financial statements of the companies (loan creditors) for the financial year 2012-13.
d) Copy of ITR acknowledgement of the companies (loan creditors) for the Asst Year 2013-14.
e) Extracts of the bank statements of the companies (loan creditors) showing the amounts paid by them to the assessee.
f) Declaration given by the companies (loan creditors) duly confirming the loan transactions.
g) Copy of the letter filed by the said companies (loan creditors).
3.5. It was pleaded that based on the aforesaid documents, the loans taken by the assessee from the aforesaid 5 parties are genuine loans taken for commercial expediency for business purposes and not accommodation entries. The assessee also sought for cross-examination of Shri Praveen Kumar Jain before the ldAO , which was not provided by the ld AO.
3.6. We find that the ld AO completely ignored the aforesaid contentions of the assessee and the documentary evidences filed hereinabove and concluded that the assessee had not been able to satisfactorily explain the nature and source and
3.7. From the perusal of the assessment order, we find that the ld AO had given more emphasis in the entire assessment order to discuss the modus operandi adopted by Shri Praveen Kumar Jain and his group which had been unearthed during the search action carried out on him on 1.10.2013. We find that the assessee had submitted before the ld AO that nowhere in the statements of Shri Praveen Kumar Jain or his accomplices, the name of the assessee LLP had been mentioned. This fact has not been controverted by the ld DR before us. Moreover, the assessee had also sought for cross-examination of Shri Praveen Kumar Jain, which was never afforded to the assessee either by the ld AO or by the ld CITA. Hence we hold that the entire addition made by the ld AO and confirmed by the ld CITA, merely based on the statement of Shri Praveen Kumar Jain (third party) (which also stood subsequently retracted by him by way of an independent affidavit), deserve to be deleted on this count itself. No other corroborative evidence was brought on record by the revenue to
3.7.1. It is pertinent to note that the assessee had duly discharged its onus by submitting all the relevant details (as listed supra) that are available with it before the ld AO. All these documents clearly prove the identity of the loan creditors, creditworthiness of the loan creditors and genuineness of transactions. We find that the ld AO had not even bothered to issue notice u/s 133(6) of the Act to the loan creditors to verify the veracity of the documents submitted by the assessee. In other words, the ld AO simply remained silent after receiving all the documentary evidences from the assessee. It is settled law that when documentary evidences are submitted by the assessee, the ld AO is duty bound to examine its veracity by making further enquiries in the manner known to law. Without testing such documents by making proper enquiries, no adverse inference could be drawn by the ld AO on those documents. We hold that once all the relevant documents are submitted by the assessee regarding the loan creditors together with the latest addresses available with it supported by confirmations from them, the onus cast on the assessee u/s 68 of the Act stands duly discharged and no addition could be made in its hands. Reliance in this regard is placed on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Orchid
3.8. Moreover, we also find that all the aforesaid loan parties had been accepted to be genuine and additions made u/s 68 of the Act had been directed to be deleted by this tribunal in the following cases :-
a) DCIT vs D.N.H.Spinners Pvt Ltd in ITA Nos. 6315 & 6316/M/2017 for Asst Years 2013-14 & 2014-15 dated 8.8.2019 (Mumbai Tribunal)
3.9. In view of aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we direct the ld AO to treat the loans received from aforesaid 5 parties as genuine and delete the addition made u/s 68 of the Act. Correspondingly, the interest paid on such loans also should be allowed as deduction. Accordingly, the grounds 2 to 4 raised by the assessee in this regard are allowed.
In the result, the appeal of the assessee is partly allowed.”
Even on the issue of failure to afford cross-examination coordinate bench in identical facts and circumstances have deleted the addition in SAHAKAR GLOBAL LTD. VERSUS DCIT-CC-4 (1), MUMBAI AND (VICE-VERSA) [I.T.A. No 5125 to 5128/Mum/2017 and I.T.A. No 5340/Mum/2017 and I.T.A. No 5968/Mum/2017 and I.T.A. No 5341/Mum/2017 dated 26/03/2021] holding as under :-
“10.5 The third category includes 5 entities viz. (i) M/s Olive Overseas; (ii) M/s Yash V.Jewels; (iii) M/s Vanguard Jewels Ltd.; (iv) M/s Triangular Infocom Ltd.; (v) M/s Ansh Merchandise P. Ltd.
10.6 The addition has been confirmed by Ld. CIT(A) on the basis of appellate order for AY 2009-10.
Further, all the stated entities have duly furnished replies along with sufficient documentary evidences. They have confirmed that there is no buy back of shares. These entities are not listed as entities to whom the cash is stated to have been paid by the assessee in exchange of accommodation entries. Therefore, the allegations of lower authorities would have no legs to stand. Similar ratio is applicable to this category of investors, facts being pari-materia the same. Therefore, the addition as sustained by Ld. CIT(A) stand deleted.” 017. In M/S. KUNDALI JEWELS (INDIA) PVT. LTD. VERSUS THE INCOME TAX OFFICER 12 (3) (1) , MUMBAI AND VICE-VERSA [I.T.A. No. 3511/Mum/2019 I.T.A. No. 4337/Mum/2019 February 23, 2021] it has been held that :-
“10. I have considered the facts of the case and submission of the appellant and findings by the AO. On the merits, the issue is of unexplained credits u/s 68, to which my findings are as under. The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onus is on the assessee to prove the genuineness of the same and on failure of the assessee, the presumption u/s 68 becomes absolute and the credits are treated as income of the assessee. The assessee can discharge the onus by producing confirmation from the share applicants, and proving the source of the credits. It is submitted by the AR that, when the share applicants accept/own the share application money paid the assessee is deemed to have discharged his onus and no further responsibility lies on the assessee to prove the
10.2 When share application money is received through normal banking channels, the identity of the share applicant stands proved. However, it is to be mentioned that merely because amounts have been received through banking channels, it is not sufficient to prove the genuineness of the credits. But the existence of a bank account of the share applicant itself proves the existence of the share applicants. For this proposition, the appellant referred to the decision of the Hon‟ble Patna High Court in the case of Sarogi Credit Corporation V/s. CIT{1976 }103 ITR 344 (Pat). The AR further referred to these following decisions in support of its contention. In the case of Shantilal Jain ITXA/687/2004 decided on31.7.2007, the Hon‟ble jurisdictional High Court held that merely because the creditors are not assessed to tax, it does not follow that the amounts should be assessed as assessee's income. Where the amounts are owned by the creditors, then even if it be presumed that the creditors had advanced the amounts from his undisclosed
10.3 A further cue for this proposition can be had from the proviso inserted in sec 68 by Finance Act, 2012 from A.Y. 2013-14. Under this proviso, where the assessee receives share application monies/premium, the assessee is expected to prove source-of-source as well. Firstly, in the case in hand, the amounts received were in the F.Y. i.e. A.Y.2012-13 and further this proviso would apply only from AN. 2013-14. {Ref: decision of the Bombay High Court in Gangadeep Infrastructure 394 ITR 680 (Born.)). The Hon‟ble jurisdictional High Court reiterated the said position in PCIT V/s. Veedhata Tower Pvt. Ltd. ITXA/819 of 2015 dated 17th April 2018. However, the said proviso was inserted because, sec.68
10.4 From the above, as submitted by the AR, it follows that it is not the business of the assessee to find out the source of the money of his creditors {CIT V/s. Daulat Ram Rawaltmull 87 ITR 349 (SC). Reference can also be made to the decision of the Apex Court in CIT vs Orissa Corporation Pvt Ltd. 158 ITR 78 (SC). It is also possible that a creditor may have advanced funds from out of his exempted income. For eg. If the creditor has agricultural income which is exempt, then merely because the creditor is not assessed to tax, it does not follow that the credits are assessee's income.
10.5 I have considered the above contentions raised and it is seen from the record that, the assessee has produced before the AO as well as before me the following documents:
PAN
Complete Name and Address of the Applicants
Copy of Board Resolution for making Share Application in the Appellant Company.
Copy of Bank Statement of the applicant reflecting payment of Share Application Money and Source thereof.
Copy of Acknowledgement of Return of Income filed by the Appellant companies for the year under consideration.
Audited Financial Statements of the applicants for the year under consideration.
For the following Share Applicants
Nakshatra Business Pvt. Ltd. (Hema Trading Co. Pvt. Ltd)
Olive Overseas Pvt. Ltd. (Real gold Trading Pvt. Ltd)
Rangoli Commerce Pvt. Ltd.
Kavya Shares and Securities Pvt. Ltd.
Arawali Stock Braking Pvt. Ltd.
10.6 As is evident, the assessee has produced all evidences to prove the identity, source and the genuineness and credit worthiness. It is submitted that the assessee has done
10.7 The assessee has produced all the details, confirmation with PAN, even the return of income of the share applicants. When such material is produced the assessee can be said to have discharged his onus and the onus would shift to the AO to bring some material on record which would prove that the material's produced by the assessee is either not genuine or are insufficient. The AO's response to the assessee's material is simply that the assessee has not proved the source of funds in the hands of the share applicants viz. 1] Nakshatra Business Pvt. Ltd. (Hema Trading Co. Pvt. Ltd), 2] Olive Overseas Pvt. Ltd. (Real gold Trading Pvt Ltd), 3 Rangoli Commerce Pvt. Ltd., 4] Kavya Shares and Securities Pvt. Ltd. & 5) Arawali Stock braking Pvt. Ltd. The AR also submitted and referred that, in the case of CIT V/s. U.M. Shah, Proprietor, Shrenik Trading Co. 90 ITR 396 (Bom.)). the Hon'ble jurisdictional High Court held that once credible material is produced before the AO, the AO is expected to make efforts to dislodge the explanation given by the assessee. No such thing has been done by the
1 ITO-4(3)(1) Mumbai Vs. Nityanand Industries Pvt. Ltd. ITA. No.4277 & 4278/M/2017 2 Komal Agrotech Pvt. Ltd. Hyderabad Vs. The ITO, ward 2(1) Hyderabad ITA. No.437/Hyd/2016 3 Arceli Realty Ltd. Vs. ITO 15(1)(1), Mumbia 4 Shri Naresh Hiran VS. ITO 30(2)(4), Mumbai ITA 1236/M/2017, ITAT Mumbai 5 ITO 25(3)(5), Mumbai VS. M/s. Vikram Kuktilal Vora, ITA. 842/Mum/2017 6 M/s. Reliance Corporation Vs. ITO IRA. NO.1069 to 1071/M/2017 7 Sanghvi Realty P. Ltd. V DCIT Cirlce 5(3)(1) 3018/M/2017, 3019/M/2017, 3020/M/2017 8 ITO 32(1)(5) Vs. Gujarat Construction 9 ACIT VS. M/s. Gujarat Estate ITA.6990/M/2016 order dated 18.05.2018 10 Sunshine Metals & Alloys Industries Pvt. Ltd. Vs. ITO 4(3)(4 ITA. 3213/M/2014 11 DCIT VS. M/s. Rohini Builders (2002) 256 ITR Gujarat HC 12 CIT VS. M/s. Orchid Industries P. Ltd. ITA. 1433 of 2014 13 Rohini Builders Vs. DCIT ITAT Ahmedabad (2001) 117 Taxmann.25 14 CIT Vs. M/s. Gagandeep Infrastructure Pvt. Ltd. 15 DCIT, Surat Vs. M/s. Rohini Builders SLP 16 CIT Vs. Lovely Exports 2016 CTR 195
Similar to the appellant's case and the Hon'ble ITAT after appreciating the facts on record, accepted that the transaction with these investor companies are genuine. Thus, the addition of ₹ 4,00,00.000/- u/s. 68 is not justified. The AO is. therefore, directed to delete the said addition of ₹ 4,00,00,000/-. Accordingly, this ground is allowed.”
On appraisal of the above mentioned finding, we noticed that the CIT(A) has examined all the necessary ingredients to prove the transactions such as identity, creditworthiness, genuineness of the claim. The details of the necessary documents have been mentioned by CIT(A) in his order. The CIT(A) has also relied upon the number of decisions which has been specifically mentioned in the order which is not repeated herein for the sake of brevity. Initially, the AO has not verified the claim of the assessee and was not having proper material to decline the claim of the assessee. The documents relied by the assessee nowhere discredited with the sufficient evidence on
The above decision of the coordinate benches have categorically held that the addition with respect to the above party cannot be made in the hence of the assessee. However, we do not comment on the merits of the case. But we hold that the addition cannot be made in the hence of the assessee wherein, assessee tries to discharge the onus initially by submitting whatever the details available with him and learned assessing officer despite having enormous information in the form of investigation wing’s report did not do anything to throw back onus on the assessee, he even did not go beyond whatever is the information available in the investigation wing report. However, that information was good enough to reopen the case of the assessee. However, without bringing any further information on investigation during the course of assessment proceedings when assessee produces overwhelming evidence, addition merely on the basis on which the reopening of the assessment has been made cannot be sustained. If that were the case that whatever
Honourable Supreme court in PCIT V NRA Iron & Steel P Ltd [[2019] 103 taxmann.com 48 (SC)/[2019] 262 Taxman 74 (SC)] has held that :-
“8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors under Section 68 of the Act.
The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31/[1994] 208 ITR 465 (Cal.):
For this reason, only, we direct the learned assessing officer to delete the addition of ₹ 2 lakhs u/s 68 of the act. Accordingly, ground number 2 – 5 of the appeal is allowed.
In view of the addition of the principal amount, the disallowance of interest also does not survive. Accordingly
In the result ITA number 2420/M/2021 four assessments year 2008 – 09 is partly allowed.
ITA number 2417/M/2021 (assessment year 2009 – 10)
this appeal is filed by the assessee against the order passed by National faceless appeal Centre (NFAC), Delhi for assessment year 2009 – 10 dated 28/10/2021 wherein the appeal filed by the assessee against the order passed u/s 143 (3) with Section 147 of the income tax act passed by the earned income tax Officer , Ward – 9 (2) (1), Mumbai dated 29th of March 2016 was dismissed confirming the addition of ₹ 15 lakhs u/s 68 of the income tax act.
The facts in this case are identical to the facts in the appeal of the assessee for assessment year 2008 – 09 including the lender entities except one party. The sequence of events, information received, reopening of the proceedings, reassessment proceedings, information submitted by the assessee and the manner of making the addition u/s 68 is same.
Brief facts of the case shows that assessee filed its return of income on 24/9/2009 declaring nil income. Information was received with respect to the accommodation entry
Assessee has raised following grounds for A.Y. 2009-10:-
“The appellant has preferred an appeal against the order dated 28.10.2021 passed by National Faceless Appeal Centre (NFAC) u/s. 250 of the Income Tax Act 1961, in pursuance of appeal filed against assessment order dated 29.03.2016 passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, Following are the grounds of appeal without prejudice to one another:
The learned Commissioner of Income Tax (Appeal) failed to note that the learned Assessing Officer merely relied on the information received from DGIT (Investigations), Mumbai to reopen the assessment and neither the assessment order nor the reasons communicated indicate that the Assessing officer had applied his mind to the issue and therefore the entire reassessment proceedings
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in confirming the addition of Rs. 15,00,000/- u/s. 68 of the Income tax Act 1961 as unexplained cash credit.
The learned Commissioner of Income Tax (Appeal) failed to note that the entire evidences do prove the identity, creditworthiness and genuineness of the loan transaction amounting Rs. 15,00,000/- and therefore the CIT(A) fell into error in confirming the addition of Rs.15,00,000/-.
The learned Commissioner of Income Tax (Appeal) failed to note while confirming the addition of Rs. 15,00,000 that the entire enquiry by DGIT (Inv.), Mumbai and the information received by the Assessing Officer about Mr. Praveen Kumar Jain was used against the appellant without giving a copy of the evidence/statement received from the DGIT (Inv.), Mumbai, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed and more so allowability of that addition of Rs.15,00,000 by the learned CIT(A).
The Learned Commissioner of Income Tax (Appeal) erred in ignoring the Fact that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the
On the facts and in the circumstances of the case. The learned Commissioner of Income Tax (Appeal) has erred in an addition of Rs. 1,18,603/- on account of interest paid on borrowed fund / Short Term Loans considered now as unexplained cash credit u/s. 68 taken from loaner i.e. Olive Overseas Pvt. Ltd and Nakshatra Business Pvt. Ltd based on information received from investigation.
The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.”
The arguments of the parties also remained the same as they advanced in appeal of the assessee for assessment year 2008 – 09.
We have carefully considered the rival contention and perused the orders of the lower authorities. We have dealt with the facts and circumstances of the case, as well as the reason for confirming the reopening of the assessment and deleting the addition. There is no change
In view of this we dismiss ground number 1 of the appeal of the assessee with respect to reopening of the assessment and allow ground number 2 – 5 of the appeal with respect to the addition u/s 68 of the income tax act and also 6 of the appeal with respect to the disallowance of interest paid to those parties.
Accordingly, appeal of the assessee in ITA number 2417/M/2021 four assessment year 2009 – 10 is partly allowed.
ITA number 2418/M/2021 assessment year 2010 – 11
this appeal is filed by the assessee for the assessment year 2010 – 11 against the order passed by the National faceless appeal Centre, Delhi dated 28/10/2021 wherein the addition of ₹ 5 lakhs made u/s 68 of the income tax act and disallowance of interest expenses of ₹ 166,019 is
The facts and circumstances in the case of this year are identical to the facts and circumstances in the case of the assessee for assessment year 2008 – 09 and 2009 – 10. There is no change in the orders of the lower authorities as well as the submissions made by the assessee. The
The learned assessing officer has reopened the assessment based on the information received from investigation wing. Assessee has submitted the details of the identity, creditworthiness, and genuineness of the above party. However the learned assessing officer has made the addition of ₹ 5 lakhs in the hence of the assessee on the same material which was available before him for reopening of the assessment.
Assessee has raised following Grounds for A.Y. 2010-11:-
“GROUNDS OF APPEAL
The appellant has preferred an appeal against the order dated 28.10.2021 passed by National Faceless Appeal Centre (NFAC) u/s 250 of the Income Tax Act 1961, in pursuance of appeal filed against assessment order dated 29.03.2016 passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, Following are the grounds of appeal without prejudice to one another:-
The learned Commissioner of Income Tax (Appeal) failed to note that the learned Assessing Officer
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in confirming the addition of Rs. 5,00,000/- u/s. 68 of the Income tax Act 1961 as unexplained cash credit.
The learned Commissioner of Income Tax (Appeal) failed to note that the entire evidences: do prove the identity, creditworthiness and genuineness of the loan transaction amounting Rs. 5,00,000/- and therefore the CIT(A) fell into error in confirming the addition of Rs. 5,00,000/-.
The learned Commissioner of Income Tax (Appeal) failed to note while confirming the addition of Rs.5,00,000 that the entire enquiry by DGIT (Inv.), Mumbai and the information received by the Assessing Officer about Mr. Praveen Kumar Jain was used against the appellant without giving a copy of the evidence/statement received from the DGIT (Inv.). Mumbai, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed and
The Learned Commissioner of Income Tax (Appeal) erred in ignoring the Fact that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc, will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed.
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in an addition of Rs. 1,66,019/- on account of interest paid on borrowed fund / Short Term Loans considered now as unexplained cash credit u/s. 68 taken from loaner i.e. Olive Overseas Pvt. Ltd based on information received from investigation.
The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.”
For assessment year 2008 – 09 and 2009 – 10 we have upheld the reopening of the assessment however, deleted
Accordingly appeal filed by the assessee for assessment year 2010 – 11 in ITA number 2418/M/2021 is partly allowed.
ITA number 2419/M/2021 assessment year 2012 – 13
this appeal is filed by the assessee against the order passed by the National faceless appeal Centre dated 28/10/2021 wherein the appeal filed by the assessee against the order passed u/s 143 (3) of the act read with Section 147 of the act passed by the learned assessing officer income tax Officer, Ward 9 (2) (1), Mumbai on 23/12/2016 was dismissed and the addition made by the learned assessing officer of ₹ 30 lakhs u/s 68 of the act as
Aggrieved with the above order of the assessee has preferred following grounds of appeal for A.Y. 2012-13
“The appellant has preferred an appeal against the order dated 28.10.2021 passed by National Faceless Appeal Centre (NFAC) u/s. 250 of the Income Tax Act 1961, in pursuance of appeal filed against assessment order dated 23.12.2016 passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, Following are the grounds of appeal without prejudice to one another :-
The learned Commissioner Income Tax (Appeal) failed to note that the learned Assessing Officer merely relied on the information received from DGIT (Investigations), Mumbai to reopen the assessment and neither the assessment order nor the reasons communicated indicate that the Assessing officer had applied his mind to the issue and therefore the entire reassessment proceedings are invalid, without jurisdiction, has no legs must be quashed. stand and hence must be quashed.
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in confirming the addition of Rs. 30,00,000/- u/s. 68 of the Income tax Act 1961 as unexplained cash credit.
The learned Commissioner of Income Tax (Appeal) failed to note that the entire evidences do prove
The learned Commissioner of Income Tax (Appeal) failed to note while confirming the addition of Rs. 30,00,000 that the entire enquiry by DGIT (Inv.), Mumbai and the information received by the Assessing Officer about Mr. Praveen Kumar Jain was used against the appellant without giving a copy of the evidence/statement received from the DGIT (Inv.), Mumbai, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed and more so allowability of that addition of Rs.30,00,000 by the learned CIT(A). The Learned Commissioner of Income Tax (Appeal) erred in ignoring the Fact that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed.
During the course of assessment proceedings the assessee furnished the requisite details called for as it furnished for assessment year 2008 – 09 to assessment year 2010 – 11. The learned assessing officer proceeded to make the
Both the parties confirmed that their arguments, and submissions are identical to what they already made in earlier years.
We have carefully considered the rival contention and perused the orders of the lower authorities. However, the issue on the merit is squarely covered in favour of the assessee by the decision of the several decisions of the coordinate benches. However, we following our own decisions in the earlier years in the case of the assessee for assessment year 2008 – 09 to assessment year 2010 – 11 wherein we have upheld reopening of the assessment u/s 147 of the income tax act. However we have deleted the addition u/s 68 of the income tax act for the sole reason that the assessing officer has not made any enquiry on the information furnished by the assessee during the course of assessment proceedings but solely relying on the information available with him made by investigation wing which were used by him for reopening of the assessment. We have given our detailed reason for
Accordingly appeal filed by the assessee for assessment year 2012 – 13 is partly allowed.
ITA number 2416/M/2021 assessment year 2014 – 15
this appeal is filed by the assessee for assessment year 2014 – 15 against the order passed by the National faceless appeal Centre dated 28/10/2021 and aggrieved with that order Assessee has preferred following grounds of appeal
“The appellant has preferred an appeal against the order dated 28.10.2021 passed by National Faceless Appeal Centre (NFAC) u/s. 250 of the Income Tax Act 1961, in pursuance of appeal filed against assessment order dated 13.12.2018 passed u/s. 143(3) r.w.s. 147 of the Income Tax Act, Following are the grounds of appeal without prejudice to one another :
The learned Commissioner of Income Tax (Appeal) failed to note that the learned Assessing Officer
The Learned Commissioner of Income Tax (Appeal) erred in ignoring the Fact that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal, thus violating the principles of natural justice and on this ground alone, the entire assessment must be quashed.
On the facts and in the circumstances of the case, The learned Commissioner of Income Tax (Appeal) has erred in disallowing of Rs. 2,14,521/- on account of interest paid on borrowed fund/Short Term Loans considered now as unexplained cash credit u/s. 68 taken from loaner i.e. Olive Overseas Pvt. Ltd, Nakshatra Business Pvt. Ltd and
As in the earlier years i.e. assessment year 2008 – 09 to assessment year 2012 – 13, we have confirmed the reopening of the assessment made by the learned assessing officer and therefore we dismiss ground number 1 of the appeal of the assessee.
With respect to ground number 2 – 3 of the appeal are concerned is only with respect to the disallowance of interest. As we have already deleted the addition u/s 68 of the act, the consequent disallowance of interest will also not survive. Accordingly we allow these grounds.
Accordingly appeal of the assessee is partly allowed.
Order pronounced in the open court on 29.06.2022.
Sd/Sd/-- SdSd/-/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 29.06.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT DR, ITAT, Mumbai 5. 6. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai