SAJAL IMPEX PVT. LTD.,,KOLKATA vs. ITO, WARD 12(1), , KOLKATA

AY 2012-13 Income Tax Officer, Sajal Impex Pvt. Ltd. Ward 12(1), 4, Synagogue Street, Vs. Aaykar Bhawan, Kolkata-700001, West Bengal P-7, Chowringhee Square, (PAN: AAHCS5794D) Kolkata-700069, West Bengal (Appellant) (Respondent) Present for: Appellant by : Shri Miraz D Shah, AR Respondent by : Shri S.B. Chakraborty, DR Date of Hearing : 17.06.2025 Date of Pronouncement : 15.07.2025 O R D E R

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

“1) For that on the facts and circumstances of the case, Ld. CIT (Appeals), NFAC was erred in not holding that the assessment is bad in law in as much as the assessing officer who completed the assessment was not having juris- diction over the assessee. 2) For that on the facts and circumstances of the case, since the notices issued by A.O. was not received by appellant resulting into ex-parte assessment Ld. CIT (Appeals) was wrong in not cancelling the assessment on the ground of lack of jurisdiction.

3) For that on the facts and circumstances of the case, Ld. CIT (Appeals), NFAC was grossly erred in not considering the submission regarding trans- action of Rs. 98,95,750/-with Divya Dharesti Merchants Ltd., where it was submitted that appellant had paid said sum to said concern and not received the said sum. 4) For that on the facts and circumstances of the case, the order of Ld. CIT(Ap- peals), NFAC is arbitrary, unjustified, unwarranted to the facts of the case and liable to be modified by allowing the relief to the appellant. 5) We may add, alter, amend or withdraw any grounds of appeal on or before the date of hearing.”

03. Brief facts of the case are that the assessee claims to be engaged in the business of wholesale trading of different types of textile products like fabrics and garments etc. It filed its return of income u/s 139(1) of the Act on 29.09.2012, declaring total income of ₹12,240/-. Thereafter, the Ld. AO received information from the Investigation Wing that the assessee is a beneficiary of accommodation entries and accordingly, the assess- ment of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 29.03.2019, which was not complied with by the assessee and thereafter the notice u/s 142(1) of the Act along with the questionnaire was issued. However, there was no further compliance by the assessee. The total income of the assessee was assessed by making an addition of ₹98,95,752/- u/s 68 of the Act as neither any return of income was filed nor any compliance was made to the notice issued. Ag- grieved with the assessment order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A), who, vide the impugned order, dismissed the appeal. In the appellate proceedings the Ld. CIT (A) dismissed the appeal of the assessee and the relevant extract from the order is as under: -

“I have gone through the grounds of appeal, statement of facts, assessment order and the submissions of the appellant. Remand report submitted by the JAO has also been perused. With regard to the issue of Jurisdiction of the AO, it is submitted by the JAO that erstwhile Ward 12(10, Kolkata, Ward 12(2) Kolkata, Ward 12(3) Kolkata and Ward 12(4) Kolkata were merged in a new

Ward i.e. Ward 12(1) Kolkata. It is further submitted that recurrence of non- response strongly indicates that M/s. Divyadrishti Merchants P Ltd. is shell company and transaction made by the assessee with this company was noth- ing but book entries. 5.4.1 In the assessment order, the AO held that according to information re- ceived from DDIT Inv. Unit-6 Kolkata, the assessee company is a beneficiary who brought back its unaccounted income in the books of accounts to the tune of Rs. 98,95,752/- through bank account No. 605010065 from shell company M/s. Divya Drishti Merchants P Ltd. It has seen that the appellant company has received money from companies having dubious creditworthiness and fictitious paper existing and the entire transaction should be considered as sham. The assessee has received funds from M/s. Divya Drishti Merchants P Ltd. In order to verify the genuineness of the transactions the AO has issued notice u/s. 133(6) of the IT Act on the available mail ID to M/s. Divya Drishti Merchants P Ltd. for providing details which was duly served upon the above party on available mail Id. No response in respect of the notices u/s. 133(6) of the IT Act has been received from the concerned party. 5.4.2 As the assessee had not offered any explanation with regard to credit- worthiness and genuineness of transactions with the above two parties, the same remained un-established. It is evident that the said transactions are bogus transactions. Hence, I am of the firm opinion that the AO had rightly made the addition of investment appearing in the books of the appellant as unexplained cash credits. 5.4.3 The Hon'ble Supreme Court in the decision of PCIT vs M/s .NRA Iron and Steel Pvt. Ltd., dated 5th March, 2019 (103 taxmann.com 48) held as follows :- • Identity, Creditworthiness and Genuineness have to be proved by the appellant to the satisfaction of the Assessing Officer. • The mere mention of the income tax file number of an investor was not sufficient to discharge the onus u/s.68 of the Income Tax Act. • The investor companies which had filed income tax returns with meager or nil income had to explain how they had invested huge sums of money in the appellant company. Hence, the onus to establish the creditworthiness of the investor companies was not discharged and the entire transaction seem bogus and lacked credibility. • The practice of conversion of unaccounted money though the cloak of share capital / premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares where a higher onus is required to be placed on the assessee since the information is within the personal knowledge of the assessee. The as- sessee is under a legal obligation to prove the receipt of share capital / premium to the satisfaction of the Assessing Officer, failure of which, would justify addition of the said amount to the income of the as- sessee. 5.4.4 It is a fact that the appellant company has not established Identity, Creditworthiness and Genuineness as per the rigors of Section 68 to the sat- isfaction of the Assessing Officer and subsequently also in the appellate pro- ceedings. The mere mention the financials of the investor was not sufficient to discharge the onus u/s.68 of the Income Tax Act. Hence, the onus to estab- lish the creditworthiness of the investor companies was not discharged and the entire transaction was bogus and lacked credibility. The practice of con- version of unaccounted money though unsecured loans has been duly no- ticed. In the case of unsecured loans onus is placed on the appellant company since the information is within its knowledge. The appellant is under a legal obligation to prove the receipt of unsecured loan to the satisfaction of the As- sessing Officer and failure of this justifies addition of the said amount to the income of the appellant company. On the other hand, from the facts and sur- rounding circumstances, human conduct, preponderance of probabilities etc. the Assessing Officer in the assessment has clearly established that the im- pugned transactions were without any basis and clearly were arranged or manipulated transactions. 5.4.5 Respectfully following the judgment of the Hon'ble Supreme Court in the case of M/s. NRA Iron and Steel Private Limited and also after examining various facts and circumstances of the appellant's case is, it is held that the Assessing Officer has aptly held that the appellant failed in discharging its onus of proving the identity, genuineness of the transaction and creditworthi- ness of the investor-companies. In view of the facts of the case mentioned above and the judicial pronouncements discussed above and also relied on the remand report submitted by the JAO, I agree with the AO that these are unexplained cash credits in the books of the appellant and the addition of Rs. 98,95,752/- is confirmed. This ground of appeal is dismissed.”

04. Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before us.

6. Order pronounced in the open court on 15th July, 2025.