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Facts
The assessee filed its return for AY 2018-19, which was reopened under Section 147/148. The Assessing Officer added Rs. 33,35,000/- as unexplained cash credit under Section 68, alleging accommodation entries from three parties. The CIT(A) upheld this addition.
Held
The Tribunal found that the assessee provided sufficient evidence, including sales/purchase bills and bank statements, to prove the genuineness of the transactions related to sale of investments and refund of advance from two parties, and no money was received from the third. The AO failed to conduct proper verification. Citing a High Court judgment, the Tribunal held that the addition under Section 68 was unjustified and directed its deletion.
Key Issues
Whether the addition of Rs. 33,35,000/- as unexplained cash credit under Section 68, alleging accommodation entries, was justified given the evidence provided by the assessee regarding genuine transactions.
Sections Cited
250, 143(2), 143(1), 147, 148, 148A(d), 68, 234A, 234B, 234D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Manikala Vyapaar Pvt. Ltd., 27, Brabourne Road, 3rd Floor, Room No. 309, Kolkata - 700001 [PAN: AAHCM8418Q] ……..…...…………….... Appellant vs. ITO, Ward-4(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata - 700069 ................................. Respondent Appearances by: Assessee represented by : Manoj Kataruka, Advocate Department represented by : Shankar Naskar, Sr. DR Date of concluding the hearing : 09.09.2025 Date of pronouncing the order : 12.09.2025 O R D E R
This appeal arises from order dated 05.03.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Additional/Joint Commissioner of Income Tax (Appeals), Kochi [hereafter “the Ld. CIT(A)].
2. The assessee has raised following grounds of appeal:
“1. For that on the facts of the case, the Ld. CIT(A) has passed the Order on 05.03.2025 which is completely arbitrary, unjustified and illegal.
For that on the facts of the case, the Assessing Officer issuing the notice u/s. 143(2) of the 1.T. Act, 1961 on 09.08.2018 did not have jurisdiction over the case of the assessee, as there was no mention of the type of scrutiny under which the case of the assessee has been selected, hence the notice is bad-in- law and the assessment order passed on the basis of such notice is baseless and should be quashed.
For that on the facts of the case, the A.O. was wrong in issuing notice u/s. 143(2) on 09.08.2018 without complying to the CBDT Instruction F. No. 225/157/2017/ITA-II dated 23.06.2017 and so the notice issued u/s. 143(2) is not valid as per Provision of Act.
4. For that on the facts of the case the Ld. CIT(A) was not justified in confirming the addition of Rs. 14,51,462 made on account of estimation of income @ 8% Manikala Vyapaar Pvt. Ltd. on total cash deposits in banking accounts, as such his finding is completely wrong arbitrary, unjustified and illegal.
For that on the facts of the case that the Ld. CIT(A) was not justified in sustaining addition of Rs. 80,989/- as commission income which is also arbitrary as well as illegal.
For that the charging interest u/s 234A, 2348 & 234D amounting to Rs.15,020/-. Rs. 1,23,915/- and Rs.1,013/- which are mechanically wrong and illegal.
7. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.”
3. The issues in Ground No. 4 by the assessee is against the order of CIT(A) upholding the order of Assessing Officer, wherein the addition of Rs. 33,35,000/-was made on account of unexplained cash credit under Section 68 of the Act.
The facts in brief are that the assessee filed return of income for A.Y. 2018-19 on 13.10.2018 declaring total income at Rs. 55,720/- which was processed under Section 143(1) of the Act. Therefore, the case of the assessee was reopened under Section 147 of the Act by issuing notice under Section 148 of the Act on 22.03.2022 after passing order under Section 148A(d) of the Act. The assessee filed return of income in compliance on 16.04.2022 and declared total income of Rs. 55,720/-. Thereafter, statutory notices were issued and served upon the assessee. During the course of assessment proceedings, the Assessing Officer called for the various details along with evidences qua the money receipts from M/s Merygold Mercantile Pvt. Ltd., Jagkarta Electricals Pvt. Ltd. and Madhudhan Barter Pvt. Ltd. The same was replied by the assessee vide submission dated 22.11.2022 submitting therein all the details/evidences by before the Assessing Officer. It was submitted that the assessee had received Rs. 12,35,000/- from M/s Merygold Mercantiles Private Limited on different dates towards sale of investments. Similarly, the assessee received Rs. 15,00,000/- in total from M/s Jagkarta Electricals Private Limited on 04.08.2017 of which Rs. 5,00,000/- is towards return of advance given to the party on 06.05.2017 and balance Rs. 10,00,000/- towards sale of investments. It was also submitted before the Assessing Manikala Vyapaar Pvt. Ltd. Officer that the assessee has not received any money from M/s Madhudhan Barter Private Limited but in fact money was paid of Rs. 6,00,000/- to that party towards purchase of investments. The assessee filed copies of sales bills, purchase bills, bank statements of the parties, IT Acknowledgments, ledger accounts to prove the sale of investment. The assessee also submitted that these investments were made through banking channel and upon sale of investments, the money was realised through banking channel. Finally the Assessing Officer treated the same as accommodation tries as unexplained cash credit under Section 68 of the Act and added to the income of the assessee in the assessment framed.
5. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by upholding the order of the Assessing Officer when the assessee did not make any compliance on various dates however, decided the issue on merit.
6. After hearing the rival submissions and perusing the material on record, we find that the assessee’s case was reopened under Section 147 of the Act by issuing notice under Section 148 of the Act on the ground of receipt of accommodation entries from three parties as noted hereinabove. As a matter of fact, that the assessee received money from two parties namely M/s Merygold Mercantiles Pvt. Ltd. on account of sale of investments and also refund of advance given earlier. We note that so far as the third parties M/s Madhudhan Barter Pvt. Ltd. is concerned , the assessee has not received any money but in fact Rs. 6,00,000/- was paid to the party for purchase of investments. The assessee has filed evidences before the Assessing Officer. However, the Assessing Officer had not done any verification on the information/evidences furnished by the assessee and also available on website portal of the department. Therefore, so far as the first two parties are concerned, the assessee had received money from sale of investments besides receiving refund of advance to second party. The assessee had not received any money from the third party. We note that the assessee has furnished copies sale bills, purchase bills , bank Manikala Vyapaar Pvt. Ltd. statements, ITR acknowledgements etc. to prove the genuineness of the sales. Moreover, the investments sold during the instant financial year were in fact coming from the earlier years which were duly shown balance sheet of the assessee. We note that the assessee received Rs. 12,35,000/- on account of sale receipt from M/s Merygold Mercantiles Pvt. Ltd., whereas the second party received Rs. 5,00,000/- towards refund advance given earlier and Rs. 10,00,000/- towards sale of investments. No money was received from the third party. In our considered opinion, the Assessing Officer cannot make the addition on the basis of surmises and presumption since the investments in the hands of the assessee were accepted in all the preceding assessment years. Therefore, the investments made in the earlier years cannot be doubted when these were sold during the year. The case finds from on the decision of the Hon'ble Calcutta High Court in the case of PCIT Vs. Tulsyan & Sons Pvt. Ltd. reported in [2025] 174 taxmann.com 37 (Calcutta High Court) wherein same issue has been decided in favour of the assessee. Accordingly, we set aside the order of Ld. CIT(A) and direct the Assessing Officer to delete the addition. Ground No. 4 of the assessee is allowed.
The other grounds were not argued and hence not decided.
In result, appeal of the assessee is partly allowed.
Order pronounced on 12.09.2025