Loading judgment…
Facts
The assessee filed its return of income and later the case was reopened on grounds of an alleged cash credit of Rs. 2,02,00,000/-. The assessee failed to provide satisfactory explanations for the transaction, and the third-party M/s Gokul Commodities Pvt. Ltd. also did not comply with notices.
Held
The Tribunal noted that while the assessee failed to provide satisfactory explanations, a valid contention was raised regarding the transaction being sale proceeds from shares, which was not adequately considered. Therefore, the matter was remitted back to the Assessing Officer for fresh adjudication.
Key Issues
Whether the reopening of assessment and addition on account of unexplained cash credit was valid, and if the nature of the transaction as sale of shares was properly considered.
Sections Cited
147, 148, 68, 133(6), 143(1), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma
order
: January 28, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 10.06.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) pertaining to assessment year 2011-12.
In this appeal, the assessee challenged the validity of reopening proceedings u/s 147/148 of the Act and the addition of Rs.2,02,00,000/- made u/s 68 of the Act as unexplained cash credit.
Brief facts of the case are that the assessee filed its return of income on 30.03.2012 by declaring a total income of Rs.35,061/-. The return was processed u/s 143(1) of the Act. Subsequent to that, the case of the assessee was reopened u/s 147 of the Act and a notice u/s 148 of the Act was issued on 31.03.2018 after obtaining prior approval Assessment Year: 2011-12 Link Commercial Pvt. Ltd from the competent authority. In response to the notice, the assessee filed its return electronically reiterating the earlier disclosed total income. During the assessment proceedings, the Assessing Officer recorded reasons for reopening and forwarded the same to the assessee. The reopening was based on financial transaction of Rs.2,02,00,000/- with M/s Gokul Commodities Pvt. Ltd. In this connection, a notice u/s 133(6) of the Act was issued to the said M/s Gokul Commodities Pvt. Ltd. which was not complied with raising doubts about the identity, creditworthiness and genuineness of the transactions. Consequently, the Assessing Officer issued show-cause notice dated 17.12.2018 to the assessee seeking clarification as to why Rs.2,02,00,000/- should not be treated as unexplained cash credit u/s 68 of the Act. However, the assessee failed to provide sufficient explanations or evidences to prove the transactions as genuine leading the Assessing Officer to add the entire amount of Rs.2,02,00,000/- to the income of the assessee as unexplained cash credit.
Dissatisfied with the above order, the assessee went in appeal before the ld. CIT(A), wherein, the ld. CIT(A) upheld the order of the Assessing Officer by observing that the assessee did not comply with the show-cause notice issued to the assessee to substantiate the alleged unexplained cash credit made during the assessment year and even the subscriber namely M/s Gokul Commodities Pvt. Ltd. did not appear before the Assessing Officer in response to notice issued u/s 133(6) of the Act.
Aggrieved by the above order, the assessee is in appeal before this Tribunal raising multiple grounds. The ld. AR argued that the reopening u/s 147/148 of the Act is invalid and improper as the addition u/s 68 of the Act was erroneous as the transaction with M/s Gokul Commodities Pvt. Ltd. were related to the sale of shares and not as Assessment Year: 2011-12 Link Commercial Pvt. Ltd unexplained cash credit as alleged by the Assessing Officer. He also contended that necessary documents including ledger account, bank statement were furnished before the authorities below in order to prove its case. However, the Assessing Officer erred in concluding that the identity and genuineness of M/s Gokul Commodities Pvt. Ltd. were not established merely due to non-compliance of M/s Gokul Commodities Pvt. Ltd. before the Assessing Officer in response to notice u/s 133(6) of the Act.
On the other hand, the ld. DR stated that the assessee failed to comply with the show-cause notice 17.12.2018 and did not substantiate the nature and source of Rs.2,02,00,000/- credited in his bank account which is clearly reflected from the assessment order itself. The ld. DR also stated that M/s Gokul Commodities Pvt. Ltd. also did not comply with the notice u/s 133(6) of the Act which further raised doubts about the genuineness of the transactions, therefore, the Assessing Officer rightly invoked section 68 of the Act as the assessee failed to prove the identity, creditworthiness and genuineness of the transactions.
We, after hearing the rival submissions and perusing the materials on record, find that the assessee submitted certain documents including ledger account and bank statement before the Assessing Officer at the time of framing of the assessment order, but the assessee failed to provide a satisfactory explanation or clarification about the source and genuineness of the transactions of Rs.2,02,00,000/- during the assessment proceedings. We also note that non-compliance of notice u/s 133(6) of the Act by M/s Gokul Commodities Pvt. Ltd. further formed doubts regarding the genuineness of the transactions. We note that assessee raised valid contention regarding the nature of the transactions was sale proceeds from shares Assessment Year: 2011-12 Link Commercial Pvt. Ltd which was not adequately considered by the Assessing Officer while framing of the assessment order, therefore, we observe that this issue is required to be examined properly. Therefore, in the interest of justice and fair play, we deem it appropriate to remit the matter back to the file of the Assessing Officer for fresh adjudication after providing an opportunity to the assessee to substantiate its claim. The assessee is also directed to submit all relevant documents including the confirmations from M/s Gokul Commodities Pvt. Ltd. and details of the sale of shares transactions and any other documents to prove its case. The Assessing Officer shall pass a reasoned order in accordance with law after considering all submissions, evidences or explanations given by the assessee before him.
In terms of the above, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 28th January, 2025.