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Facts
The assessee, M/s Ankit Briks, challenged an addition of Rs. 15 lakhs under Section 69A by the AO, upheld by the CIT(A), based on an alleged ledger entry showing cash receipts from M/s HJM Fuels Pvt. Ltd. The assessee denied any such transactions, claiming natural justice violations, while M/s HJM Fuels Pvt. Ltd. had disclosed these transactions, including those with the assessee, to the Income Tax Settlement Commission and paid taxes on them.
Held
The Tribunal held that since the third party (M/s HJM Fuels Pvt. Ltd.) had already disclosed the transactions, including those with the assessee, to the Settlement Commission, and taxes were paid, the same amount cannot be subjected to further addition in the assessee's assessment. The appeal was allowed, recognizing that once an amount is disclosed and taxed by a party before the Settlement Commission, it cannot be added again in another's assessment.
Key Issues
Whether an addition under Section 69A is valid when the third party allegedly involved has already disclosed and paid tax on the transaction to the Income Tax Settlement Commission, and if the principles of natural justice were violated.
Sections Cited
69A, 144B, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Appeal in this case has been filed by the assessee against the order dated 28.12.2024 passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi
Grounds of appeal are as under: -
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 2
That the upholding of the addition by Learned CIT(A) made u/s 69A is totally wrong and against the provisions of the law since the alleged ledger as reproduced in the Assessment order alleging that a sum of Rs 15 Lakh has been given to the appellant by the SJM Fuels Pvt Ltd on different dates making it evidentially clear that there is neither any credit entry in the books nor any deposit has been made by the appellant which does not make any sense as far as the imaginary allegation made by the Learned AO is concerned Moreover the Learned CIT(A) has failed to appreciate and verify that there are cheque numbers and bank accounts given in the ledger which do not pertain to us and that the appellant is a brick kiln operator and has nothing to do with fuel, since the alleged company is SJM Fuels Pvt ltd. Thus the Appellate order is bound to be quashed at your Honor's kind hands.
2. That the Learned CIT(A) as well as the Learned AO have grossly erred by not taking note of the fact that the alleged ledger on the basis of which the whole addition has been made pertains to some random entity and does not pertain to us as the name of the party in the ledger is different with no address with no reference to our firm whatsoever. Order passed on mere wild guesswork is illegal and bad in law and is prayed to be quashed.
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 3
That the order passed by Learned CIT(A) is illegal, bad in law and liable to be nullified since opportunity of personal hearing has not been allowed inspite of specific request, as has been held by Hon'ble Courts and as prescribed by Rule 12(2) & 12(3) of the Faceless Assessment scheme.
4. That the learned CIT Appeal has grossly erred in not passed a speaking order and the addition of Rs 15,00,000/- is arbitrary, unjustified, illegal, bad in law and against the facts placed on record since even the remand report on which Learned CIT(A) has placed reliance has not been confronted to us which results in the order passed to be liable to be quashed. The Appellate order needs to be quashed at your honor's hands since Section 144B of the Act had been violated.
5. That the Learned CIT Appeal has not considered the grave injustice done by the ld. AO by not allowing proper opportunity to the appellant to present and prove his submissions by not giving proper show cause notice and draft assessment order as clearly required under law and as enshrined in the principles of natural justice thus invalidating the Assessment Order. 6. That the Learned CIT(A) has failed to appreciate the fact that any alleged entries with any third party or person will not and cannot falsify the truth of the audited books of accounts and statement of the appellant
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 4 who is an honest taxpayer, filling his return of income disclosing the true profits since the past many years and there is no change in the method of accounting or in the system of accountancy.
7. That it is totally illegal, bad in law and absolutely against the principles of natural justice that admittance of some alleged transaction by a random 3rd party in ITSC for its own benefit should be taken as conclusive evidence against the appellant without verifying any fact, record and without even giving the appellant an opportunity to cross examine the so-called alleged entity.
That without prejudice to above grounds of appeal
, the appellant disputes the order passed u/s 250.
9. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
The facts of the case as per the order of the Ld. CIT(A) 3. are as under: - ‘The appellant is a brick kiln trader operator and has been carrying on the same business since past many many years, maintaining the same accounting system as per previously followed
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 5 method of accounting without any change since the past many years. The Appellant makes purchases and sales in the routine course of business from many parties. All the transactions entered into are duly incorporated in the books of accounts. The entries in the bank are fully reconciled in the books of accounts. The cash book and ledger are regularly maintained showing all the transactions entered into. The Learned AO has himself taken on record our submissions that we have earlier intimated that we have never had any dealing with the alleged party M/s Him Fuels Pvt Ltd or any other party by similar name. We have never received any cash from this party as alleged in your notice. We have duly filed our return along with the Audited Balance sheet and also filed the return in response to your notice. It is again vehemently denied that we had any transactions with the party as alleged in your notice. We request you to kindly close the case after duly verifying from our balance sheets submitted in the department or any other record that you may desire. Any allegation or false testimonial by any third person or party cannot be taken us when we had no dealing with any such party during the year under consideration. There is no sale whether
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 6 bogus or otherwise in our books of accounts from the said party nor is there any payment from our bank account towards the said party. Our books of accounts have been duly audited under law and the audit report along with the audited balance sheet is with the department. The Learned AO has neither asked us to provide any document whatsoever nor has asked us to provide our books of accounts and related documents to verify his allegation. We have not been served with any show cause notice nor have we been confronted with any draft assessment order. The order has been passed totally in gross violation of the income tax law and principles of natural justice. The Learned AO has not cared to verify any fact from any source including us but has chosen to summarily pass an arbitrary order without even appreciating that when we do not have any dealing whatsoever with the alleged party, how can we be penalized wrongfully for anything which does not even remotely concern us. We pray to your goodself to save us from this grave injustice and to nullify this arbitrary and illegal order in order to save an Innocent person from a default which he has not committed.’
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 7
Although, the Assessee has taken many grounds of appeal but the only relevant issue involved in the appeal is addition of Rs. 15 lacs made by the Assessing Officer on the basis of alleged ledger as produced during the assessment proceedings. The AO gave his findings that the Assessee received Rs. 15 lacs from M/s HJM Fuels Pvt. Ltd on various dates during the year under consideration. It was alleged that all the payments were received in the form of unaccounted cash receipts and the same were not recorded in the books of account of the appellant. The Ld. Counsel brought it on record that the said M/s HJM Fuels Pvt. Ltd had filed an application before the Income Tax Settlement Commission by showing of such cash transactions for disclosure of additional income. In the remand report from the AO to the CIT(A), the AO has also stated as under: -
“The assessee furnished its reply on 17.11.2022 vide which the assessee has again denied to have made any transaction with M/s HJM Fuels Pvt. Ltd. From perusal of its reply, it is noticed that above transactions with M/s HJM Fuels Pvt. Ltd.
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 8 have not been recorded in the regular books of accounts of the assessee, M/s Ankit Bricks Works Unit-1. Further, the fact remains that during the survey operation conducted an Mis HJM Fuels Pvt. Ltd., it was gathered that the assessee, M/s HJM Fuels Pvt. Ltd. had made entries of bogus sales to adjust unaccounted cash and this fact is further strengthened by the fact that the assessee, M/s HJM Fuels Pvt. Ltd. has filed application before the Hon'ble ITSC and has owned all these cash transactions even for disclosure of additional income. Further, Ledger account proves that the assessee. Mis Ankit Bricks Works indeed had cash transactions with M/s HJM Fuels Pvt. Ltd.”
Per contra, the Ld. DR relied on the orders of the authorities below.
We have considered the findings given by the Assessing Officer in the assessment order and the Ld. CIT(A) in the appellate order. We have also seen the remand report filed by the Assessing Officer stating that the person / concern in the ledger which showed the unaccounted payments to the Assessee has already owned up all such unaccounted payments to different parties
253-Chd-2025 M/s Ankit Briks, Ambala Cantt. 9 including the Assessee before the Settlement Commission and has already paid taxes on it on the acceptance of its claim by the Settlement Commission. We are of the considered view that once the amount has been disclosed in an application to the Settlement Commission and the Application has been accepted by the Settlement Commission and tax had been paid by the Assessee, the same amount cannot be matter of addition in any further assessment orders. Therefore, on this issue, Assessee’s appeals is allowed.
In the result, Assessee’s appeal is allowed.
Order pronounced on 29.07.2025.