INCOME TAX OFFICER, AAYAKAR BHAWAN, ESPLANADE vs. JODHRAJ FINASSIST PRIVATE LIMITED, PRINCE BAKTIAR SHAH ROAD

During the course of the appeal the assessee has filed written submission which is as under: “Ground No. 1 I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 29,91,00,000/- with respect to cash credit u/s. 68 of the I.T. Act, 1961. It is submitted that the assessee company is a Non Banking Financial Company and the nature of business is Investment in Shares & Making Loans & Advances. Copy of Registration Certificate issued by RBI is enclosed on Pg. No. 161 of the paper book. It is submitted that in this case the Ld. AO has issued a show cause notice dt. 29-09-2021 for which compliance was required to be made by 28-09- 2021. Copy of the same is enclosed on Pg. No. 157 of the paper book. Thus, it is clear that asking the assessee to make the compliance even before the date of issue of notice is as good as giving no opportunity to the assessee. However, the assessee still managed to furnish reply to the said notice on 29-09-2021 i.e. same day itself. A copy of the reply dt. 29-09-2021 is enclosed on Pg. 159-160 of the paper book. Further it is also submitted that the Ld. AO has passed the assessment order on 30-09-2021 i.e. on the very next day of the issue of notice without even considering the submissions filed by the assessee on two occasions i.e. reply dt. 05-02-2021 (Copy of Reply enclosed on Pg. 100-156 of the Paper Book) and Reply dt. 29-09-2021 (Copy of Reply enclosed on Pg. 157-160 of the Paper Book). Reliance in this regard is placed on the following judicial decisions:- 119 Taxman 430 (SC) In this case Hon'ble Supreme court held as under:- "Where appellant was given, in reality, only three days to respond which was plainly most inadequate, and also where no document relating to sale instance was furnished by appropriate authority along with notice or thereafter in order to enable appellant to adequately respond to allegation of under-statement of consideration as compared to said sale instance, there had been a gross breach of principles of natural justice, and, therefore, order of appropriate authority had to be quashed" In the case of the assessee company, asking it to submit the response even before the date of issue of notice, which is practically impossible and as such it is a case of No opportunity of being heard. And hence the same is gross violation of the principles of Natural Justice and on this ground also assessment order is ab initio void and is liable to be quashed. I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. As per the said notice dt. 29-09-2021, The allegations as made by the Ld. AO are as under:- “It is seen from the records that i) a total amount of Rs. 1,25,00,000/- was deposited in your bank account from the bank account of one M/s. Quest Infrastructure Private Limited ii) a total amount of Rs. 1,65,00,000/- was deposited in your bank account from the bank account of one M/s. Drishti Dealers Private Limited ii) a total amount of Rs26,76,00,000/- was deposited in your bank account bearing number: 2511116898, maintained with the Kotak Mahindra Bank, Park Street Branch, Kolkata, and iv) a total amount of Rs. 25,00,000/- was deposited in your bank account from the bank account of one M/s. Ocean Trading Co. via one M/s. Axisline Agencies Private Limited, during the relevant period, despite issuing several notices and letters, no compliance has yet been made on your part. It is also seen from the records that no sales were made by you during the relevant period. Therefore, your creditworthiness has not been established and as such, you are hereby given the final opportunity to be heard and are required to explain/show cause as to why such amount of Rs.29,91,00,000/-, would not be treated as unexplained cash credited into your books of accounts through accommodation entries and added back to your total income." In this connection it is submitted that the above allegations are summarized as under:- Sl. no. Particulars Amount

Reliance in this connection is made on the following judicial decisions: 63 ITR (Trib.) 294 (Delhi) In this case Hon'ble Delhi Tribunal held as under: “Cash credits - Sale of shares - Audited Financial Statements showing assessee holding investment from earlier years - Presumption that investments duly accepted in earlier years." ITA No. 24O4/Kol/2O17 In this case also Hon'ble Kolkata Tribunal has accepted the genuineness of investments made in earlier years and sold in the current year and addition made u/s. 68 was deleted. A perusal of the above details would also reveal that the Ld. AO has made the addition only on doubts, suspicions, surmises and conjectures which is not permitted in law. I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. Reliance in this regard is placed on the following judicial decisions:- 70 ITR 407 (Cal.) In this case Hon'ble Calcutta High Court held as under:- "The fate of the assessee cannot be decided by the revenue on the basis of surmises, suspicions or probabilities." 37 ITR 288(SC) In this case Hon'ble Supreme Court held as under:- "Assessment of income should not be made on the basis of assumptions, presumptions, surmises and suspicions." In view of the facts, circumstances and judicial decisions stated above the addition made of Rs. 29,91,00,000/- is liable to be deleted and we fully rely on the order of the Ld. CIT(A).”

Rival contentions were heard and the submissions made have been examined and we have also gone through the facts of the case. It was argued by the Ld. AR that the Ld. AO issued notice dated 29.09.2021 to comply on 28.09.2021, yet the assessee complied. The assessee had filed a return in response to the notice u/s 143(2) of the Act and notice u/s 148 of the Act and also in response to notice u/s 142(1) of the Act in the mid-year but at the end of the year when the limitation was approaching, on 29.09.2021 the assessee was required to file the details by 28.09.2021. Our attention was also drawn to other pages of the paper book.

The Ld. AR argued that despite not being given adequate opportunity, the assessee had filed the required details and the Ld. AO passed the order on 30.09.2021 without considering the reply of the assessee which was filed. As regards the merits of the case, it was argued that the names of several companies with whom transactions I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. were not made were also mentioned and general observation was made without giving any specific finding. The Bench brought it to the notice of the Ld. AR that the assessment order was u/s 144 of the Act and the assessee furnished some details before the Ld. CIT(A) but no remand report was called for by the Ld. CIT(A). The Ld. AR drew our attention to page 43 of the paper book relating to Ground no. 6 to 11 in which it is mentioned that there was no transaction from three companies, four companies were still active on the stock exchange on the MCA Portal and the transaction with M/s. Wrinkle Marketing Private Limited related to loan of Rs. 50,00,000/- which was given and returned on the same date. There was no transaction with six companies have been mentioned and page 100 of the paper book was relied upon in support of the claim that the notice u/s 142(1) of the Act dated 28.01.2021 was duly complied with and all evidences were furnished online. The Ld. AO also admitted the submission and documents filed by the assessee and page 94 of the paper book para 1.7 of the assessment order was relied upon in this regard in which it is mentioned that the assessee company e-filed its Audited Accounts, Tax Audit Report and relevant bank statements for examination. Copy of bank statement was also filed and is available at page 129 to 139 of the paper book relating to Kotak Mahindra Bank. It was submitted that the Ld. AO added the credit of Rs. 29,91,00,000/- which the Ld. CIT(A) has worked out at Rs. 27,32,24,007/-, most of which related to sale of shares relating to earlier years. It was also conveyed to the Ld. AR that no bank statement of the companies with which transactions were carried out was filed. The Ld. DR also drew our attention to page 45 of the paper book in which the discussion about the creditors has been made. It was stated that no brokerage was paid for the money raised and no remand report I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. was called for by the Ld. CIT(A). On identical lines, the appeal of the AY 2014-15 was also allowed. The written submissions filed by the assessee have also been examined.

The assessment order in this case was made u/s 147 read with Section 144 of the Act. There was no compliance relating to the notice issued u/s 142(1) of the Act in which at para 6 the Ld. AO had required the assessee to provide name, address and e-mail ID, ledger account of the parties with whom these transactions were made and also to provide bank account statement through which these transactions have been made. The details were filed before the Ld. CIT(A) however, the Ld. CIT(A) admitted these details without calling for a remand report from the Ld. AO and the appeal has been decided in violation of Rule 46A of the Income Tax Rules,1962. Since proper opportunity was not allowed to the Ld. AO and no representation was made before the Ld. AO , therefore, we deem it appropriate in the interest of justice to set aside the order of the Ld. CIT(A) as well as the Ld. AO and remit the matter to the Ld. AO to frame the assessment order de novo after examining the evidence filed before the Ld. CIT(A) and after granting an opportunity of being heard to the assessee. The assessee shall not seek unnecessary adjournments and shall be at liberty to file all evidences before the Ld. AO in support of the relief claimed. Hence, the appeal for AY 2013-14 filed by the Revenue is allowed for statistical purposes.

As regards the appeal for AY 2014-15 in 1310/KOL/2023, since the facts are identical, the order of the Ld. CIT(A) as well as of the Ld. AO are set aside in view of the finding in AY 2013-14 and the matter is remitted to the Ld. AO to frame the assessment order de novo after I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. complying with the directions issued as per the findings for AY 2013-

In the result, both the appeals filed by the Revenue are allowed for statistical purposes. Order pronounced in the open Court on 27th February, 2025. [Duvvuru RL Reddy] [Rakesh Mishra] Vice President (KZ) Accountant Member Dated: 27.02.2025 Bidhan (P.S.) I.T.A. Nos.: 1309 & 1310/KOL/2023 Assessment Years: 2013-14 & 2014-15 Jodhraj Finassist Private Limited. Copy of the order forwarded to:

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order