SULAY PAPER PVT. LTD.,AHMEDABAD vs. THE ITO, WARD-4(1)(1)(1), AHMEDABAD

The assessee is in second appeal before us. The following grounds of appeal have been taken in this appeal:

“1.1 The order U/s.250 passed on 25-10-2024 for AY 2013-14 by NFAC[CIT(A)], Delhi (for short "CIT(A)") upholding the addition of Rs. 1,80,00,000/- towards the loan from Rashmin K Vakt from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that there was a sufficient cause for failure to comply with the notices claimed to be issued by NFAC[CIT(A)]. 2.2 The ld. CIT(A) ought to have appreciated that in view of the explanation given and documents produced by the appellant with regard to the impugned amount of Rs. 1,80,00,000/-, the burden cast u/s 68 was duly discharged by the appellant. The CIT(A) has ignored the said explanation and material. 3.1 The ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,80,00,000/- towards the loan from Rashmin K Vakta from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd as unexplained. 3.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the addition of Rs.1,80,00,000/- towards the loan from Rashmin K Vakta from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd. as unexplained.”

Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 3 – 5. Shri S. N. Divatia, Ld. AR of the assessee submitted that all the grounds taken by the assessee pertain to addition of Rs.1.80 Crores made u/s.68 of the Act. He explained that the assessee had duly explained the source of credit of Rs.1.80 Crores appearing in his bank account. The said amount of Rs.1.80 Crores was received from Shri Rashmin K Vakta who was maintaining his account with Shri Renuka Mata Multi State Urban Co-operative Society Limited. The said amount was given as loan but since the assessee was no longer in need of funds the amount of Rs.1.80 Crores was returned on the same day to Dinesh Paper Traders, a proprietary concern of Shri Rashmin K Vakta. Thus, the assessee had duly explained the transaction. Further, since the amount of Rs.1.80 Crores was returned on the same day, the AO was not correct in making addition u/s.68 of the Act. The Ld. AR further submitted that in the assessment of Shri Rashmin K Vakta for A.Y. 2013-14 total addition of Rs.97,53,07,845/- was made u/s.68 of the Act, which was upheld by the Ld. CIT(A) to the extent of Rs.19,51,74,450/-. He, therefore, submitted that no addition was called for in the case of the assessee.

Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 4 – 7. We have considered the rival submissions. The assessee had submitted before the AO that a sum of Rs.1.80 Crores was received by it from Rashmin K Vakta who was maintaining his account with Shri Renuka Mata Multi State Urban Co-operative Society Limited. It was further explained that this amount was received as loan. However, since the assessee was no longer in requirement of funds, the amount was returned to Shri Rashmin K Vakta on the same day. In the bank account of the assessee the sum of Rs.1.80 crores was received on 28.03.2013 and the sum of Rs.1.80 crore was also transferred out on the same day. Under the circumstances, there was no reason for the AO to disbelieve the submission of the assessee and make addition of Rs. 1.80 crore on account of unexplained loan.

7.1 Before the Ld. CIT(A), no compliance was made by the assessee in spite of the fact that six opportunities were provided by him. The assessee had submitted that adjournments were sought on various occasions as the Tax Consultant was busy with audit and filing of ITRs. It is found that the assessee had sought adjournments on two occasions only which was allowed by the Ld. CIT(A). In spite of that, no compliance was made by the assessee. At the same time, the Ld. CIT(A) had dismissed the appeal due to non-compliance and without examining the merits of the addition. The contention of the AO that the intention of the assessee was to divert its own funds towards accommodation entry is without any basis. No evidence was brought on record to establish that the funds received by the assessee were its own fund. Further, if the assessee was an instrument in providing accommodation entry then only commission income should have Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 5 – been considered in its hand. Be that as it may, the facts remain that there was no basis to make addition of Rs. 1.80 crores in the hands of the assessee, when the amount was returned by the assessee on the same day. The assessee has produced copy of assessment order of Shri Rashmin K Vakta for A.Y. 2013-14 wherein total addition of Rs.97,53,07,845/- was made u/s.68 of the Act and also copy of CIT(A) order in that case wherein addition was upheld to the extent of Rs.19,51,74,450/-. These are the copy of orders passed by the Revenue and can’t be considered as fresh evidence on which any enquiry is necessary. Considering the fact that addition was already made in the hands of Shri Rashmin K Vakta, who had provided the funds, no addition was called for in the case of the assessee. Therefore, the addition as made by the AO is deleted.

This Order pronounced on 29/04/2025

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 29/04/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,