INCOME TAX OFFICER WARD-1(1), JAIPUR vs. KIRAN INFRA ISPAT LIMITED, JAIPUR

PER DR. S. SEETHALAKSHMI, J.M. The present appeal by revenue for Assessment Year 2013-14 arise out of the order of National Faceless Appeal Centre, Delhi [for short ‘CIT(A)’] dated 04.02.2025 in the matter of assessment order dated 23.05.2023 passed u/s147 r.w.s. 144B of the Income Tax Act 1961 [for short ‘Act’] by National Faceless Assessment Centre [for short ‘AO’] .

2. Vide this appeal, revenue has raised the following grounds:- “

2. Whether on the fact and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 8,34,73,192/- made by the AO on account of unexplained cash credit u/s 68 of the Act without waiting / receiving of remand report from JAO?

3. Whether on the fact and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 8,34,73,192/- made by the AO on account of unexplained cash credit u/s 68 of the Act without verifying the veracity of transaction or creditworthiness of the transactions with Mamta Trading company while remand proceeding, the credit worthiness of the above party was not proved?

4. Whether on the fact and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 8,34,73,192/- made by the AO on account of unexplained cash credit u/s 68 of the Act without properly considering the remand report and various facts finding during the assessment proceedings?

5. Whether on the fact and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 8,34,73,192/- disallowed of bogus sale.”

1. 3. Record reveals that in this case, the respondent assessee has raised legal grounds in terms of rule 27 of Income Tax (Appellate Tribunal) Rules, 1963 alongwith a request to admit the same. Legal ground raised

is reproduced below:-

1. On facts and in the circumstances of the case ld. CIT (A) grossly erred in confirming the action of ld. AO in re-opening the assessment u/s 148 of the Act arbitrarily. 1.1 That, the ld. CIT (A) grossly erred in confirming the action of ld. AO in re- opening the assessment u/s 148 of the Act as reassessment proceedings is initiated vide notice u/s 148 dated 12/05/2021 and same is barred by limitation as the notice under old law could have been validly issued on or before 31/03/2020 (i.e. not beyond 6 years). It is thus prayed that reassessment proceedings completed on the basis of notice issued u/s 148 is beyond the time limit stipulated u/s 149, is not in accordance with law and consequent order passed deserves to be held void ab initio.

Kiran Infra Ispat Ltd., jaipur. 1.2 That, the ld. CIT(A) has further erred in holding the proceedings u/s 148 as valid when the notice issued is itself bad in law and suffers from various defects. Hence the order so passed deserves to be held bad in law.”

4. All the grounds of appeal taken by the revenue involve single issue of addition of Rs. 8,34,73,192/- so deleted by ld. CIT(A) and accordingly these are discussed together.

Subsequently, the case of assessee was reopened by issuing notice u/s 148 dated 12.05.2021 on the basis of some information received by ld. AO from DDIT (Inv.), Rohtak. Thereafter in view of the decision of Hon’ble Supreme Court in the case of UOI Vs. Ashish Agarwal dated 04/05/2022 notice u/s 148A(b) dated 29.05.2022 was issued by which it was claimed by the revenue that assessee has received total amount of Rs.

Kiran Infra Ispat Ltd., jaipur. 8,34,73,192/- from bank account of M/s Mamta Trading Company, Proprietor Shri Suresh Kumar who had not filed return of income and accordingly amount so received from him is unexplained. Submissions were filed by the ld. AR mentioning that assessee has made sales of iron bar to him and these payments so received are by way of sale proceeds and furnished various evidences to support this claim. However, ld. AO initiated proceedings u/s 147 by issue of notice u/s 148, after passing order u/s 148A(d) of I.T. Act. Afterwards the assessee submitted detailed explanation and evidence in support of its claim, but the ld. AO observed that heavy payments have been received from M/s Mamta Trading Company and its proprietor Shri Suresh Kumar has not filed the return of income and accordingly these credits are unexplained and thereby added the same in the hands of assessee vide order dated 23.05.2023.

Aggrieved with the addition, the assessee filed appeal before ld. CIT(A), NFAC. It was submitted before ld. CIT(A) that the assessee company had made sales to M/s Mamta Trading Company during the regular course of business and amount received is by way of sale proceed through banking channels and which is duly accounted for as sales in the books of accounts. The assessee also produced copy of ledger account of Mamta Trading Company, copy of form C issued by Haryana Sales Tax Kiran Infra Ispat Ltd., jaipur. Department to M/s Mamta Trading Company which were given by the aforesaid purchaser to the assessee company, copy of stock register, copy of VAT-49 (e-way bill under VAT Act) before the AO and also before ld. CIT(A).

It was also mentioned that amount received from M/s Mamta Trading Company is not loan but is sale proceeds which has already been included in the Profit & Loss Account and same cannot be added again u/s 68.

The sales so made to the aforesaid purchaser are properly recorded in the stock register also and before making such sale, there have been sufficient stock with the assessee company. It was also submitted before ld. CIT(A) that AO has not disturbed the sales nor has disturbed the closing stock. Since sales has been accepted and amount so received from the M/s Mamta Trading Company is on account of sale proceed which is already included in the Profit & Loss account, there is no case for making any addition u/s 68 of I.T. Act. The ld. CIT(A) has supported his view by the decision of Hon’ble Delhi High Court in the case of Kailash Jewellery House (613 of 2010 dated 09.04.2010) and Hon’ble Gujarat High Court in the case of Vishal Export Overseas Ltd. (2471 of 2009 dated 03.07.2012). In view of these overall facts and circumstances supported by legal position, ld. CIT(A) deleted the addition.

Kiran Infra Ispat Ltd., jaipur.

6. Now, the revenue is in appeal before us. The ld. DR has strongly supported the order of ld. AO and facts mentioned therein. Apart from the above, it was also argued that ld. CIT(A) has erred in passing the order without waiting for the remand report from the AO. It was submitted by ld. DR that in view of the information received from DDIT (Inv.) Rohtak, it was noticed that assessee company has received heavy amount to the extent of Rs. 8,34,73,192/- from one M/s Mamta Trading Company Proprietor Shri Suresh Kumar from his bank account but Shri Suresh Kumar has not filed his return of income for A.Y. 2013-14. Thus, huge amount so received by assessee company from bank account of a non- filer is on account of bogus sale of TMT Bars to the said M/s Mamta Trading Company and accordingly the amount of credit is unexplained and ld. AO has rightly added the same. It was requested by ld. DR that order of ld. CIT(A) may be reversed and order of AO may be restored.

“Departmental Ground of Appeal No. 1 to 5: (Submission filed by assessee) In these grounds of appeal, department has challenged the action of ld. CIT(A) in deleting the addition of Rs. 8,34,73,192/- made by ld.AO u/s 68 of Income Tax Act by alleging the amount received from one customer Mamta Trading Co. on account of Sales as unexplained.

Kiran Infra Ispat Ltd., jaipur. Brief facts pertaining to the grounds as stated above are that on the basis of information stated to have been received by ld.AO from the DDIT (Inv.) Rohtak through insight portal of the department, it was held that during the year under consideration assessee company has received an amount of Rs. 8,34,73,192/- from the M/s Mamta Trading Company, Prop. Shri Suresh Kumar (PAN: CLSPK-9222-P) through Bank Account No. 1025CBCA01000339 with Corporation Bank and since Shri Suresh Kumar (PAN: CLSPK-9222-P) has not filed his return of income for AY 2013-14, it was presumed that the transaction could not be verified in absence of filing of return and the income to the tune of Rs. 8,34,73,192/- has escaped the assessment in the hands of assessee company for AY 2013-14. During the course of re-assessment proceedings, various details and explanation as sought by ld.AO were furnished. However, ld.AO without pointing out any single discrepancy in such details proceeded to make addition of entire sale consideration of Rs.8,34,73,192/- u/s 68 of the Income Tax Act. In this regard, it is submitted that assessee company is regularly filling its return of income and maintains regular books of accounts, which are subject to audit by qualified chartered accountant. It is submitted that the alleged credit proceeds received from M/s Mamta Trading Company were on account of Sale of goods which are forming part of the total sale appearing in the Trading Account of the assessee company. It is submitted that the assessee has regularly made sales of goods to said party during the year under consideration. Such sales have been examined by the Assessing Officer during the course assessment proceedings u/s 143(3) also, and were accepted without raising any doubts. In support of this contention of sales made, following details as furnished before ld.AO are submitted for your goodself’s kind perusal and record: 1. The copy of the acknowledgement of income tax return filed u/s 139(1) along with copy of Audited Balance Sheet and P&L Account and the relevant schedules and annexures (APB 01-18) 2. Copy of Ledger Account of M/s Mamta Trading Company as appearing in the books of accounts of the Assessee Company (APB 112-131) 3. Copy of relevant extracts of the ledger account of sales as appearing in the books of accounts of the assessee company wherein the sales made to M/s Mamta Trading Co. is included in the total sales of the assessee for the year under consideration and is duly appearing (APB 132-210) 4. Copies of “C” Form issued by Haryana Sales Tax Department to M/s Mamta Trading Co. which in turn were issued by M/s Mamta Trading Co. to the assessee company in support of the claim of lower payment of CST since the transaction is inter-state transaction and as per prevailing CST Law, upon furnishing the C Forms by the purchaser Kiran Infra Ispat Ltd., jaipur. party, the CST would be charged at concessional rates. The said C Forms so received by the assessee company were submitted in original to the Rajasthan State Commercial Taxes Department who after making verification of the genuineness of the form has assessed the assessee company on such sale at concessional rate of tax. It is also relevant to state that C Form can be issued only by the trader or manufacturer who purchase the goods in furtherance of the business and cannot be issued by any other entity like a direct consumer of the goods (APB 104-111) 5. Copy of day to day stock register maintained by the assessee company wherein the outward entry of the goods sold to M/s Mamta Trading Co. is duly highlighted (APB 211-281) 6. Copy of the VAT 49 (e-way bill under old VAT Act) issued by Rajasthan Sales Tax Department containing complete details of the recipient of the goods i.e. Mamta Trading Co., details of invoice raised of the goods under transportation, details of transportation vehicle including vehicle number etc. It is also relevant to state that VAT 49 form was mandatory to be carried with the vehicle under transport and a copy of the same stood submitted by the buyer to the respective Government VAT authorities (APB 282-408) 7. Copy of Assessment order for AY 2013-14 passed u/s 143(3) of the Income Tax Act, 1961 wherein after verification of the books of accounts and other relevant bills and vouchers, the trading results declared were accepted (APB 58-59) 8. Copy of Bank Statements highlighting transactions with M/s Mamta Trading Company (APB 60-103) 9. Copies of the relevant extract of the RG-1 Register (stock register) maintained under the erstwhile Central Excise Act wherein the outward movement of the goods were recorded and duly verified by the authorities from time to time (APB 211-281) With the above details, it is very much evident that the assessee company has sold the goods manufactured by it to M/s Mamta Trading Co. in the regular course of business and had received the payments against such sale through banking channels in its bank account. Since the transaction of sales is duly backed by the necessary evidences such as invoices, e-way bill (VAT 49), availability of stock through stock register, declaration of sales in the financial statements, receipt of C form from the buyer and the assessment completed u/s 143(3) where such sale has been accepted meaning thereby the corresponding payments of such sale is also accepted. The necessary correspondence made during the course of assessment proceedings where on specific query the copy of the excise records were submitted before the assessing officer vide letter dated 30.12.2015 (APB 428-430). It may also be noted that the party had even Kiran Infra Ispat Ltd., jaipur. submitted C Form issued by State Government Authority of Haryana i.e Haryana Sales Tax Department for lower payment of GST and these forms in original were submitted to Rajasthan State Commercial Tax Department who after verification has accepted such sale on concessional rate of tax. Thus it is evident that two Government Authorities of two different States have found the transactions of sale to the party M/s Mamta Trading as not having any irregularity. It is submitted that ld. AO was totally unjustified in brushing aside these plethora of evidences without rebutting them or without bringing any contrary evidences on record and merely making addition of such huge amount only because that party has not filed return of income. If by any chance that party has failed to file his Income Tax Return and avoided paying due Income Tax, then appropriate action needs to be taken in his case, instead of penalizing assessee by making huge addition in its case. Accordingly addition so made deserves to be deleted. It is further submitted that ld.AO has made addition on account of credits in bank account u/s 68, which is not applicable in the present case as the sum is properly recorded in books of accounts and no adverse inference was drawn by ld.AO towards such entries in books of accounts either in assessment proceedings u/s 143(3) or re-assessment proceedings. It is further submitted that provisions of Section 68 are not applicable on the sale transactions recorded in the books of accounts as sales are already part of the income which is already credited in P&L account. Hence, there is no occasion to consider the same as income of the assessee by invoking the provisions of Section 68 of the Act. Furthermore, assessee has discharged its burden by substantiating the transaction through all the plausible evidences. Therefore, the same cannot be held as unexplained cash credit in any manner. Hon’ble Delhi bench of ITAT in the case of DCIT vs Subhash Gupta in has held that sales cannot be added u/s 68 unless they are proved as bogus on the basis of some reliable evidences. Hon’ble Hyderabad bench of ITAT in the case of NECX (P) Ltd. vs ITO vs [2022] 145 taxmann.com 232 (Hyderabad - Trib.) has held that: Section 68 of the Income-tax Act, 1961 - Cash credit (Bank deposits) - Assessment year 2013- 14 - During year, assessee had made cash deposits of certain amount in his bank account - Assessing Officer made additions on account of same on ground that source of same was not explained by assessee - It was noted that assessee furnished number of sales invoices to show from where said cash in question was received - Further, turnover of assessee was also not disputed by Assessing Officer - Whether since all these invoices were part of total sales, Commissioner (Appeals) was not justified in sustaining additions made by Assessing officer and thus, addition was to be deleted - Held, yes [Para 13] [In favour of assessee] Hon’ble Amritsar bench of ITAT in the case ofRajkumar vs ITO ITA No.195.Asr/2022 has observed that:

Kiran Infra Ispat Ltd., jaipur. “12.1 We also considered that the amount deposited in the bank account was out of sale of various items which had been held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. Therefore, nothing could have been doubted when the source of cash was well explained and was shown in the bank account. However the addition was made only on the basis of surmises without establishing any motive on the part of the assessee and without disturbing the closing stock as on 31/03/2017 which had been arrived at after reducing the sale in quantity of stock in trade.” Your kind attention is also invited to judicial pronouncements given with reference to the bank deposits made during demonetization wherein various Courts has held that once the sales has been admitted and accepted by the department, corresponding deposit in the bank account of the sale consideration cannot be held as bogus. Few cases are as under: (i) ACIT vs Shri Chandra Surana (Jaipur ITAT) (ii) M/s Ramlal Jewellers vs ACIT (Mumbai ITAT) (iii) Shree Sanand Textiles Industries Ltd Vs The Dy.CIT (OSD), Circle-8, Ahmedabad (ITA 995/AHD/2014) dated 06/01/2020 (Ahmedabad ITAT) (iv) Abhishek PrakashchandChhajed vs ITO ITA No. 113/Ahd/2023 (Ahmedabad ITAT) (v) M/s Hirapanna Jewellers Vishakhapattnam ITA No. 253/Viz/2020 and CO No. 02/Viz/2021 (Vishakhapattnam ITAT) (vi) DCIt vs Bawa Jewellers Pvt. Ltd. ITAT No. 352/del/2021 (Delhi ITAT) It is further submitted that ld.AO has passed the re-assessment order solely on the basis of information received from DDIT (Inv.) Rohtak, which information was recorded by some other officials in some other case, behind the back of assessee without providing assessee of opportunity of cross examination of the purchasing party alleged to be a non-filer. Also, ld. AO did not provide complete information relied upon before making such a huge addition in the hands of the assessee company. Hon’ble Apex court in the case of CCE Vs. Andaman Timber Industries, (324) ELT 641 has held as under: “6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Kiran Infra Ispat Ltd., jaipur. Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.

7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above.” CIT vs Odeon Builders (P.) Ltd [2019] 110 taxmann.com 64 (SC) Hon’ble Supreme Court held that if the addition was based on third party information gathered by Investigation wing then addition cannot be made unless such information is provided to the assessee and opportunity of cross examination is provided more so when assessee placed on record all the evidences. The relevant findings are as under: Headnote: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual Kiran Infra Ispat Ltd., jaipur. findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee] (403 ITR 183)SunitaDhadda, order dt 28.03.2018 SLP (SC) The ratio laid down by Hon’ble Rajasthan High Court and also Hon’ble ITAT, Jaipur Bench as below was upheld: “Their Lordships ADARSH KUMAR GOEL and ROHINTON FALL NARIMAN Ji.- dismissed the Department's special leave petition against judgment dated July 31, 2017, of the Jaipur Bench of the Rajasthan High Court in DB of 2012 whereby the High Court held that the Tribunal was justified in deleting the addition of Rs. 4,07,00,000 of "on money" said to have been received with respect to subject land of the assessee holding that the question what was the price of the land at the relevant time, was a pure question of fact and that unless it was established on record by the Department, that as a matter of fact, the consideration did pass to the seller from the purchaser, the Department had no right to make any additions, especially since none of the witnesses were examined before the Assessing Officer, and the assessee did not have any opportunity to cross-examine them” [Emphasis Supplied] Hon’ble Jaipur Bench of Tribunal in the case of Sh. Pramod Jain vs. DCIT in has relied upon the view taken by Hon’ble Apex Court in Andaman Timbers and held that the statements of witness cannot be made sole basis of making assessment without giving an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. Hon’ble Ahmedabad bench of ITAT also in the case of Smt. Sunita Jain vs ITO quashed the assessment order by placing reliance on Apex Court judgment in the case of Andaman Timber (cited supra) as entire assessment was based upon the statements of Sh. MukeshChoksi, which were neither supplied to assessee nor was opportunity of cross examination was provided. In view of above, it is submitted that addition made by ld. AO without providing opportunity of cross examination is against the principle of natural justice and order so passed deserves to be quashed and addition so made be deleted. Ld. AO has further alleged that notice u/s 133(6) was issued on 26.4.2023 to Sh. Suresh Kumar Prop. M/s Mamta Trading Co., which was to be complied with on or before 29.4.2023. However, as the response was not received from the said party, ld. AO took the adverse view and concluded that sum of Rs. 8,34,73,192/- received by assessee from M/s Mamta Trading Co. is unexplained. In this regard, it is submitted that first of all, notice u/s 133(6) was issued at the feg-end of the re-assessment proceedings and further a time of merely 3 days was allowed to the said other party to furnish documents related to transactions which took place around 10 years back.

Hon’ble Delhi bench of ITAT in the case of Phool Singh Vs. ACIT (ITAT Delhi) in has held that: “Merely because 133(6) notices issued to the party returned un-served though it was the same address, which was supplied by supplier while filing its income tax return, no fault can be put on the shoulder of assessee.” Hon’ble Delhi bench of ITAT in the case of M/s Kesha Appliances Pvt. Ltd. vs ITO in has held as under: “It is undisputed facts that the distinctive nos. for the sale of shares in respect of three companies were not provided by the assessee but the same cannot be basis for treating the same as unexplained cash credit under section 68 of the Act after disregarding the other evidences submitted by the assessee during the course of proceedings before the AO & ld. CIT-A. We also observe that the assessee has furnished all the necessary details of the aforesaid six companies along with PAN but none of the lower authorities have confirmed the same from the AO having jurisdiction over the six aforesaid companies. Thus the assessee cannot be penalized merely on the ground that the six companies as discussed above failed to reply to the notices issued to them under section 133(6) of the Act. The assessee has duly explained the source of money received on the sale of shares/ investment and the assessee is not answerable for the source of money in the hands of aforesaid six companies. It is undisputed fact that the necessary details as the confirmation and contract notes were duly filed by the assessee in respect of the aforesaid parties and no defect of whatsoever was pointed out by the lower authorities. After considering the facts and totality of the case as discussed above, we are inclined to reverse the order of authorities below hence the ground of appeal of assessee is allowed.” Hon’ble Calcutta Bench of ITAT reported in 56. ITD 561 in the case of Sagar Bose Vs. ITO would throw light on settled legal proposition. Head notes reads as under: Section 143(3) of the Income Tax Act, 1961 – Assessment – Additions to – Assessment year 1990-91 – During assessment proceedings Assessing Officer conducted certain enquiries through Inspector about purchases of goods from different concerns and it was found by him that seven parties were non- existent and not traceable at addresses given by assessee – In four cases summons sent by Assessing Officer were returned by postal authorities with remarks ‘not known’ – Assessee’s suggestion to issue summons to parties under section 131 for production of account books was rejected by AO – Assessee explained that purchases were backed by account payee cheques and sales tax registration numbers were printed on their bills, that all purchased material was consumed and thereafter respective sales had been made and that Kiran Infra Ispat Ltd., jaipur. he had produced all documentary evidence about sales and consumption of those purchases – Assessing Officer rejected all explanations and treated those purchases as bogus and also opined that these could represent concealed stock or inflated expenses and made addition – Commissioner (Appeals) confirmed addition – Whether since AO neither made any enquiry from bank authorities to find out final destination of money nor enquired from sales tax department about persons to whom relevant sales tax registration number was allotted, and also did not find any defect and irregularity in statements, books of account and bills, etc., produced by assessee he was unjustified in treating purchase as bogus and making addition – Held, yes – Whether, therefore, order of Commissioner (Appeals) confirming addition was to be quashed and addition was to be deleted – Held, yes. With regards to allegation of ld. AO that assessee was informed about notice issued to Mamta Trading Co, u/s 133(6) and that assessee was responsible to communicate with the party and ensure compliance, it is submitted that: firstly, assessee was intimated about this only vide show cause notice dated 02.05.2023, i.e. merely 20 days prior to completion of assessment and secondly, assessee entered into transactions of sale with that party 10 years back and in such long span of time, changes in the address/ contact no. cannot be ruled out. As regards observation of ld. AO of huge sale to this party is concerned, it is submitted that total revenue from operations (sales) excluding other income of assessee during the year under consideration is Rs. 189.84 Crore and the sale to M/s Mamta Trading Co. is just about 4.39% only and not the majority of sales as has been alleged by the ld. AO. In view of above, it is submitted that adverse view taken for the reason that notice u/s 133(6) could not be complied with by the party that too after long span of 9-10 years, is not in accordance with law and deserves to be deleted. It is further submitted that Ld. CIT(A) after duly considering the submission made and evidence adduced by the assessee company deleted the addition by acknowledging that receipts from M/s Mamta Trading Co. in the bank account of the assessee company represent the Sale which is duly recorded in the books of accounts and profits on such sales is duly offered for taxation. It is further submitted that ld. DR before the Hon’ble Bench challenged the action of ld. CIT(A) in deleting the addition without waiting for the remand report. In this regard, it is submitted that ld. CIT(A) has provided ample of opportunity to ld. AO furnished the remand report and same is also evident from the para 5.1 of the ld. CIT(A) order which is reproduced as under for ready reference— “5.1 In this case remand report was sought from the AO through ITBA portal on 27.05.2024. Thereafter, 6 reminders were issued to the AO on 04.07.2024, 02.08.2024, 22.08.2024, 19.11.2024, 20.12.2024 and 17.01.2025. However, inspite of several reminders, the AO did not submit the remand report. This being a priority case, it was decided to Kiran Infra Ispat Ltd., jaipur. dispose off the appeal without remand report on the basis of the submissions made by the appellant.” At this juncture, it is also relevant to state that assessee company during the course of appellate proceedings has not filed any additional evidence u/r 46A of Income Tax Rules, 1962. All the evidences that assessee has filed were submitted before ld. AAO during the course of assessment proceedings. It is further submitted that ld. AO sought comment from assessee company many times during the course of remand proceedings, to which assessee duly filed the replies along with the submission and paper booked filed before the ld. CIT(A) and same is tabulated below for ready reference: Date of notice issued by ld. AO in Date of Reply filed by assessee APB remand proceedings company 466 – 27.06.2024 08.07.2024 469 470 – 05.11.2024 06.11.2024 & 15.11.2024 477 Thus looking into facts of the case it is evident that it is not the case where ld. CIT(A) passed the order without waiting for the remand report as alleged by the ld. DR in the grounds of appeal. Instead, despite being having all the information, ld. AO choses to not to provide the remand report to ld. CIT(A), even though ample of time was provided by ld. CIT(A). Thus ld. CIT(A) rightly passed the order after providing nearly 8 months to ld. AO to provide the remand report and therefore consequential deletion of addition made by ld. AO by ld. CIT(A) after considering the facts and circumstances of the case of assessee company deserves to be upheld. In view of the facts and circumstances of the case, it is reiterated that the assessee company has genuinely carried out the transaction of sales of goods with M/s Mamta Trading Co. and also submitted all the plausible evidences in support of the same and merely for the reason that the buyer of the goods has not filed his return of income cannot be a basis to treat the genuine transaction of sales as unexplained. Also, ld. CIT(A) after going through all the evidences adduced before it held that there is no room for suspecting the genuine trading transaction carried out by assessee, merely on the basis of some information received from some other investigating authority, without bringing on record any supporting material for alleging that assessee has escaped the income to this extent and moreover deleted the addition of Rs. 8,34,73,192/- made by ld. AO on account of credits received in bank account by considering it as receipts out of sales made by assessee company.”

PAGE S.No PARTICULARS NO.

5. Copy of order issued u/s 148A (d) of The Income Tax Act, 1961 dated 33-43 29.07.2022.

PAGE S.No PARTICULARS NO. Copy of Invoices to M/s Mamta Trading Co. [some invoices being attached being 12 478-505 voluminous, however complete invoices are submitted before ld. AO & ld. CIT(A)]

“5.1 In this case remand report was sought from the AO through ITBA portal on 27.05.2024. Thereafter, 6 reminders were issued to the AO on 04.07.2024, 02.08.2024, 22.08.2024, 19.11.2024, 20.12.2024 and 17.01.2025. However, inspite of several reminders, the AO did not submit the remand report. This being a priority case, it was decided to dispose off the appeal without remand report on the basis of the submissions made by the appellant.” Apart from above, ld. AR has further argued that no any additional evidence u/r 46A of I.T. Rules, 1962 were filed by the assessee company before the ld. CIT(A). Thus we see that it is not a case where the ld. CIT(A) has accepted some additional evidences of assessee company and It has also been submitted by ld. AR that ld. AO sought details and comments from the assessee company few times during the course of remand proceedings and assessee company duly filed replies alongwith the submission and paper book filed before ld. CIT(A). The ld. AR has specifically mentioned that in response to notice for remand proceedings dated 27.06.2024 by the AO, reply was filed on 08.07.2024[APB 466- 467] and similarly for notice dated 05.11.2024, replies were filed vide dated 06.11.2024 [APB 470-473]and 15.11.2024 before the AO. Accordingly, as per the ld. AR, despite having information, ld. AO chose not to furnish his remand report to the ld. CIT(A), even though sufficient time was allowed to him by ld. CIT(A).

We have perused the relevant details and considering the overall facts and more particularly the fact that ld. CIT(A) has not admitted any additional evidence of the assessee and consequently has not taken support from any additional evidence of assessee, and also considering that sufficient time and opportunity was allowed by ld. CIT(A) to the ld. AO for furnishing remand report, we do not find any merit in the argument and ground to this effect taken by the revenue is rejected.

Kiran Infra Ispat Ltd., jaipur.

Kiran Infra Ispat Ltd., jaipur. v. Day to day stock register maintained by the assessee company wherein the outward entry of the goods sold to M/s Mamta Trading Co. is mentioned [APB 211-281]. vi. Copy of the VAT 49 (e-way bill under old VAT Act) issued by Rajasthan Sales Tax Department containing complete details of the recipient of the goods i.e. Mamta Trading Co., details of invoice raised of the goods under transportation, details of transportation vehicle including vehicle number etc. [APB 282-408] vii. Copies of the relevant extract of the RG-1 Register (stock register) maintained under the erstwhile Central Excise Act wherein the outward movement of the goods were recorded and duly verified by the authorities from time to time.

Kiran Infra Ispat Ltd., jaipur.

“12.1 We also considered that the amount deposited in the bank account was out of sale of various items which had been held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. Therefore, nothing could have been doubted when the source of cash was well explained and was shown in the bank account. However the addition was made only on the basis of surmises without establishing any motive on the part of the assessee and without disturbing the closing stock as on 31/03/2017 which had been arrived at after reducing the sale in quantity of stock in trade.”

Kiran Infra Ispat Ltd., jaipur. Where Assessing Officer made addition of certain amount to assessee's income on account of cash credit and Tribunal deleted addition holding that said amount actually represented sale proceeds realized by assessee, no question of law arose from order of Tribunal. The Hon’ble Court observation are as under: Section 68, read with section 260A, of the Income-tax Act, 1961 - Cash credit (Question of law) - Assessment year 2011-12 - Assessing Officer made addition of certain amount to income of assessee on account of unexplained credit under section 68 - Tribunal deleted addition by arriving at a finding of fact that amount in question was received by assessee in its bank account against sale made by it and it was credited in sales account offering as income - Whether no question of law arose from order of Tribunal - Held, yes [Paras 10, 12and 15] [In favour of assessee] Section 68, read with section 260A, of the Income-tax Act, 1961 - Cash credit (Question of law) - Assessment year 2011-12 - Assessing Officer made addition of certain amount to income of assessee on account of cash credit - Tribunal deleted addition holding that said amount actually represented sale proceeds realised by assessee - Whether no question of law arose from order of Tribunal - Held, yes [Para 18] [In favour of assessee]”

We have seen that Hon’bleDelhi bench of ITAT in the case of Phool Singh Vs. ACIT (ITAT Delhi) in has held that “Merely because 133(6) notices issued to the party returned un-served though it was the same address, which was supplied by supplier while filing its income tax return, no fault can be put on the shoulder of assessee.” Further Delhi bench of ITAT in the case of M/s Kesha Appliances Pvt. Ltd. vs ITO in has held as under:

“It is undisputed facts that the distinctive nos. for the sale of shares in respect of three companies were not provided by the assessee but the same cannot be basis for treating the same as unexplained cash credit under section 68 of the Act after disregarding the other evidences submitted by the assessee during the course of proceedings before the AO & ld. CIT-A. We also observe that the assessee has furnished all the necessary details of the aforesaid six companies along with PAN but none of the lower authorities have confirmed the same from the AO having jurisdiction over the six aforesaid companies. Thus the assessee cannot be penalized merely on the Kiran Infra Ispat Ltd., jaipur. ground that the six companies as discussed above failed to reply to the notices issued to them under section 133(6) of the Act. The assessee has duly explained the source of money received on the sale of shares/ investment and the assessee is not answerable for the source of money in the hands of aforesaid six companies. It is undisputed fact that the necessary details as the confirmation and contract notes were duly filed by the assessee in respect of the aforesaid parties and no defect of whatsoever was pointed out by the lower authorities. After considering the facts and totality of the case as discussed above, we are inclined to reverse the order of authorities below hence the ground of appeal of assessee is allowed.”

Rule 27: Respondent may support order on grounds decided against him. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.

“Ground of Appeal

No. 1 to 1.2: In these grounds of appeal, assessee has challenged the action of ld.AO in reopening of assessment primarily on two grounds, i.e.: (i) Mamta Trading Co. from whom assessee has received money as against sales made, has not filed Return of Income and; Kiran Infra Ispat Ltd., jaipur. (ii) Reopening solely on the basis of information received from some other officials without recording his own subjective satisfaction and thus same is based on borrowed satisfaction. In this regard, at the outset, information as shared by ld.AO vide notice u/s 148A(b) and on the basis of which case was reopened is reproduced hereunder for ready reference (APB 19-20):

1. In your case, information was received from the DDIT(Inv.), Rohtak through Insight. As per specific information available with the department, during the year under consideration you have received an amount of Rs.8,34,73,192/- from the account of M/s Mamta Trading Company, Prop. Shri Suresh Kumar (PAN: CLSPK9222P) having Account No. 1025CBCA01000339 with Corporation Bank. Shri Suresh Kumar (PAN: CLSPK9222P) has not filed his return of income for the A.Y. 2013-14. Thus, the huge credit in your account from an account of a non-filer is without any business rationale & source of these credits in account of the assessee remains unexplained. You have filed return of income for A.Y. 2013-14 on 26.09.2013 declaring total loss of Rs.5,60,705/-.

2. On going through return of income filed by you for AY 2013-14, it is noticed that income from above transaction is not included in your ITR. Therefore, it is established that same is not offered for tax and due tax has not been paid.

 Golden Tobacco ltd. vs DCIT,ITAT Mumbai, held that,“the case of the assessee is that there was no fresh tangible material in the possession of AO at the time of recording of impugned reasons. A perusal of the ‘Reasons’ recorded by the AO in this case reveals that at the time of recording of these ‘Reasons’ the AO had examined original assessment records only and no fresh material had come in the possession of the AO. In response to our specific query also, Ld DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted.” It is also submitted that “information” available with AO must suggest that income chargeable to tax has escaped assessment, whereas in the instant case information is that assessee has received credit in bank account from account of a non filer, which in itself does not suggest any escapement. Moreover, in response to notice issued by ld.AO u/s 148A(b), assessee furnished all the Kiran Infra Ispat Ltd., jaipur. necessary evidences in support of genuineness of the transaction is respect of which information was available, however ld.AO without rebutting any single document and without bringing any other contrary material on record, simply proceeded on the basis of information as that person being non filer, which is definitely not the intention of legislature. Remarks of ld.AO as per order passed u/s 148A(d) dated 29.07.2022 itself show that ld.AO has proceeded solely on the basis of “borrowed satisfaction as the objections filed by the assessee along with documents/ material given in support of the objections were not considered on merits and simply rejected by stating that – “The written submissions and documentary evidence furnished by the assessee has been perused carefully. The assessee in its reply stated that the assessee has regularly made sales of goods to said party during the year under consideration. The assessee company has furnished copies of sale register, copy of 'C- form' (issued by Haryana Sales Tax Department) and ledger copy of M/s Mamta Trading Company as appearing in the books of assessee company against sale of those goods the sale consideration was received by the assessee company in its bank account. Further for movement of goods, the assessee company has furnished copy of Stock Register and copy of VAT 49 wherein all the details related to movement of goods was mentioned and same was issued by Rajasthan Sales Tax Department. The reply of the assessee considered but not found tenable as the information was received from the DDIT(Inv.), Rohtak in which mentioned that bank account of Kiran Infra Ispat Limited got credited by huge amount of Rs.8,34,73,192/- during the F.Y. 2012-13 from the account of M/s Mamta Trading Company Prop. Shri Suresh Kumar (PAN-CLSPK9222P) having bank account No.1025CBCA01000339 with Corporation bank. Shri Suresh Kumar Prop. M/s Mamta Trading Company had not filed his return of income for AY 2013-14, the huge credits in account of assessee i.e. Kiran Infra Ispat Limited from account of non-filer is without any business rational & source of these credits in account of assessee remains unexplained. From the perusal of the above observation, it is evident that Ld. AO, himself accepted that amount credited in the assessee bank account’s related to sales and that assessee has submitted that all the information related to the transaction. However, the case was only reopened solely on the basis of the information received from DDIT(Inv.), Rohtak that the said party has not filed Income Tax Return and documents produced for verification were simply brushed aside. In this regard, as submitted above, assessee has made the commercial transaction of sale of goods to M/s Mamta Trading Co. and had received the payments against such supplies which is duly recorded in the books of accounts of the assessee company who has not only complied with all the statutory requirements of getting its accounts audited and filing the income tax return within the stipulated time permitted under the law but also complied with the other relevant laws such as VAT, Central Excise, etc. where the taxes on such sales were duly collected and paid and the respective authorities have assessed the same without any doubts.  Sarthak Securities Co. Pvt. Ltd. Vs. ITO 329 ITR 110 (Delhi)

Kiran Infra Ispat Ltd., jaipur. Reassessment – Notice – Condition precedent – Formation of belief that income escaped assessment – Assessing Officer treating share application money as bogus accommodation entries – Payments through banking channel and companies investing money genuine – No independent application of mind by Assessing Officer but acting under information from investigation wing – Notice to be quashed – Income Tax Act, 1961, ss. 147, 148.  ITO Vs ChampaklalMathurbhai Mehta (ITAT Mumbai)

 DCIT Vs R.S. Associates Commerz (ITAT Mumbai) & 1349/Mum/2020 It is further submitted that Ld. CIT(A) arbitrarily dismiss this legal ground of assessee company by simply observing that information in question was received after conclusion of regular original assessment and hence, was the basis for issue of notice u/s 148A(d) of the Act. It is submitted that assessee company had made sales to M/s Mamta Trading Company and after duly considering the trading result of assessee company than ld. AO concluded the assessment proceeding u/s 143(3) of the Act. In alternate ld. CIT(A) further erred in holding the proceedings u/s 148 as valid despite the fact that proceedings u/s 148 of the suffered from various defects as under—  Hon’ble Supreme Court in the case of UOI vs. Ashish Agarwal dated 04.05.2022 has given direction to provide complete information on the basis of which reassessment was opened. However, ld. AO in the case of assessee company has failed to provide complete information on the basis of it is alleged that income has escape assessment.  Further during the course of assessment, vide show cause notice dated 02.05.2023, ld. AO proposed to made addition u/s 69A of the Act, however while concluding the assessment addition were made u/s 68 of the Act, which is bad in law.”

“Time limit of issuance of notice (TOLA 2020) – A.Y. 2013-14 to 2017-18 – Whether Taxation and Other Laws (Relaxation & Amendment of certain provisions) Act, 2020 [TOLA] overrides Income Tax Act to the extent of relaxing time limit for issuance of a reassessment notice which fell for completion from 20.03.2020 to 31.03.2021, till 30.06.2021 – Held – Yes. At para 113, the Hon’ble Supreme Court in the case of Rajeev Bansal has observed as follows:

“1. In your case, information was received from the DDIT(Inv.), Rohtak through Insight. As per specific information available with the department, during the year under consideration you have received an amount of Kiran Infra Ispat Ltd., jaipur. Rs.8,34,73,192/- from the account of M/s Mamta Trading Company, Prop. Shri Suresh Kumar (PAN: CLSPK9222P) having Account No. 1025CBCA01000339 with Corporation Bank. Shri Suresh Kumar (PAN: CLSPK9222P) has not filed his return of income for the A.Y. 2013-14. Thus, the huge credit in your account from an account of a non-filer is without any business rationale & source of these credits in account of the assessee remains unexplained. You have filed return of income for A.Y. 2013-14 on 26.09.2013 declaring total loss of Rs.5,60,705/-.

3. As stated in preceding paras, the income of Rs.8,34,73,192/- chargeable to tax in your case has escaped the assessment within the meaning of provision of section 147 of the IT Act, 1961 for the assessment year 2013- 14.”

On perusal of aforesaid content, we have noticed that the ld. AO has recorded the finding that the income / receipt by way of above transaction is not included in the ITR of the assessee company. On the other hand it is seen that the ld. AR of the assessee has responded to this letter mentioning therein that the assessee company has made sale to the aforesaid party and amount has been received as sale proceed through banking channel from the said party and same has been included in the turnover of the assessee company and thereby in the Profit & Loss Account. Thus it is clear that this finding of the ld. AO of the aforesaid transactions from the said party not included in the income of the assessee company is incorrect and contrary to the facts and records.

“Section 37(1), read with sections 147 and 148, of the Income-tax Act, 1961 – Business expenditure - Allowability of (Reassessment) - Assessment year 2016-17 - Assessee-NBFC claimed expenditure on software consumables - During scrutiny, assessee submitted transaction wise summary on expenditure on software consumables and Assessing Officer after considering said submission passed assessment order without making any adjustments - Thereafter, Assessing Officer issued reopening notice on ground that expenses on software consumables were capital expenditure which would not be allowable under section 37(1) - Whether since expenses on account of software consumables were debited in profit and loss account and a detailed Kiran Infra Ispat Ltd., jaipur. break-up of said expenses were submitted before Assessing Officer during course of assessment proceedings, Assessing Officer would not have any power to review his own assessment when during original assessment assessee provided all relevant information which was considered by him before passing assessment order - Held, yes - Whether thus, reopening of assessment was a mere change of opinion and thus invalid - Held, yes [Paras 37 and 41] [In favour of assessee]”

In the result, the appeal of the revenue is dismissed.

Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board.