NILDHARA LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD

“Regarding the contention of the appellant that the genuineness of the sale transaction was proved before AO, I find from the assessment order that the appellant has claimed to have done transactions of sales with M/s. Shoryaraj Enterprises but as per the Investigations carried out by the Investigation wing, it was admitted by the Prop. Of M/s. Shoryaraj Enterprises Shri. Satyajitsinh R. Gohil that he was not doing any real business but only bills were arranged as accommodation entries. During the course of assessment proceedings the AO had asked the appellant to prove the genuineness of transaction in the background of the above investigations carried out by the Investigation wing. However the appellant could not prove with supporting evidences as to how the investigations carried out by the Investigation wing were not correct. Therefore the AO had made the addition of Rs.2,97,45,000/- u/s 68 of the Act being unexplained credits. During appellant proceedings, the appellant re-iterated the same submission/explanation that was submitted before AO, however the appellant has not controverted the finding of the AO with supporting evidences and failed to prove the genuineness of credit transactions appearing in the bank accounts. Therefore the addition made by the AO is confirmed and grounds of appeal raised by the appellant are dismissed.”

5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A).

6. With respect to Ground No. 1, in which the assessee has challenged the reopening of assessment under Section 147 of the Act, we observe that in the instant case, the assessment of the assessee was reopened on the basis of information received by the Assessing Officer from the Investigation Wing that the assessee had obtained accommodation entries from M/s. Shoryaraj Enterprises and on the basis of such information, the Assessing Officer formed a reasonable beliefe that income of the assessee had escaped assessment. Further, Shri Satyajitsinh R. Gohil, proprietor of M/s. Shoryaraj Enterprises, in Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 4– his statement also accepted that he was not doing any retail business and only dealt in providing accommodation entries. The Assessing Officer observed that the assessee had taken accommodatin entries from Shri Satyajitsinh R. Gohil during the impugned year, in his account held with Bank of India. Accordingly, looking into the instant facts, we are of the considered view that the Assessing Officer had sufficient tangible material to form a view that income had escaped assessment and therefore, we find no infirmity in the order of Ld. CIT(A), in which he had quashed the challenge to reopening of assessment under Section 147 of the Act by holding that the Assessing Officer had a reasonable belief on the basis of cogent tangible material, that income of the assessee had escaped assessment.

7. In the result, Ground No. 1 of the assessee’s appeal is dismissed.

8. Ground Nos. 2 to 5: The Counsel for the assessee submitted that the amount which was added by the Assessing Officer of Rs.2,97,45,000/- crores has already been reflected as sales in the books of accounts of the assessee. Secondly, it was submitted that the Assessing Officer has not doubted the corresponding purchases against the sales made by the assessee in the assessment order. Therefore, the income element embedded on such sales has already been offered to tax by the assessee. Further, the Counsel for the assessee furnished details of sales and transport bills, corresponding purchase bills, bank statement, confirmation of M/s. Shoryaraj Enterprises and also the VAT return in support of genuineness of the transaction. However, the basic argument of the Counsel for the Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 5– assessee was that once the amount which has been added as income of the assessee under Section 68 of the Act has already been reflected as “sales” and duly accounted for by the assessee in the books of accounts and such income has also been accepted by Assessing Officer, then the very same amount cannot be added again under Section 68 of the Act or else it shall amount to double taxation. Further, the Counsel for the assessee also submitted that the Assessing Officer has also not doubted the corresponding purchases against these sales and therefore, in the instant facts, no addition is called for again in terms of Section 68 of the Act. In addition, the Counsel for the assessee also raised a legal contention that in the instant case, the entire additions have been made only on the basis of statement of Shri Gohil without giving any opportunity of cross-examination to the assessee and therefore, even on this count the assessment order is liable to be set-aside.

9. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A), in their respective orders.

10. On going through the facts of the instant case, we observe that the amount which has been added by the Assessing Officer has already been reflected as sales in the assessee’s books of accounts. Evidently, the Income Tax Authorities have also not disputed the genuineness of purchases against the corresponding sales reflected in the assessee’s books of accounts. Accordingly, we are of the considered view that once the amount which has been added as income of the assessee under Section 68 of the Act had already been recorded as sales by the assessee in it’s books of accounts, then the Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 6– same amount cannot be again added under Section 68 of the Act. Notably, the Assessing Officer has not doubted the corresponding purchase against such, sales made by the assessee. The aforesaid facts have not been disputed by the Department. In our view, once the underlying amount forms parts of sales duly accounted for in the books of accounts and such income has been accepted by the Assessing Officer, the very same amount cannot be again added under Section 68 of the Act, else it shall tantamount to double taxation of the same income. Further, we also observe that the entire additions have been made solely on the basis of statement of Shri Satyajitsinh R. Gohil, proprietor of M/s. Shoryaraj Enterprises and no opportunity of cross-examination was also afforded to the assessee. We observe that the Assessing Officer has not made any independent enquiry prior to making the impugned addition and the additions have been made only on the basis of finding of investigation in the case of Satyajitsin R. Gohil, proprietor of M/s. Shoryaraj Enterprises. The Assessing Officer did not issue summons under Section 131 of the Act nor issued notice under Section 133(6) of the Act carry out any independent enquiry, nor was any opportunity of cross-examination given to the assessee. Even for the above reasons, in our considered view, the addition made under Section 68 of the Act is not sustainable in the hands of the assessee.

11. In the result, the Ground Nos. 2, 3 and 4 of the assessee’s appeal are allowed.

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/01/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,