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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE&
The appeal filed by the assessee is filed against the order passed by the Ld. CIT(A)-6, Ahmedabad on 26.02.2018 for A.Y. 2008-09.
The grounds of appeal
raised by the assessee are as under: “1. That being aggrieved by the order of the learned CIT(Appeals)-6, Ahmedabad, the assessee has preferred appeal before this Hon’ble Tribunal.
2. In the said appeal, ground which goes to the root of the validity of the proceedings remained to be raised.
3. The ground sought to be raised as per the attached sheet goes to the root of the proceedings and it being jurisdictional one, the assessee may kindly be allowed to raised the same.
4. Appellant craves liberty to furnish additional grounds of appeal. Grounds which appellant intends to raise being a crucial issue and root cause to determine validity of order.”
The additional grounds of appeal raised by the assessee are read as under:
Kamla Merchantile Ltd. vs. ITO Asst.Years–2008-09 - 2 - “1. The reopening of assessment is bad and illegal as the reasons for reopening of assessment are recorded by assessing officer subsequent to the approval granted by the Ld JCIT U/ 151 of the Act.”
As per the information received from DGIT (Investigation), a search and seizure action was carried out in Praveen Jain Group on 01.10.2013 in which evidences collected and the statements of various persons recorded during the search and seizure proceedings. The statement of Shri Praveen Kumar Jain was also recorded which the Assessing Officer observed that the same establish modus operandi which led to detection of accommodation entries in the nature of sales/unsecured loans and share application money. The Assessing Officer observed that the assessee company filed objections for re-opening of the assessment under Section 148 of the Act. The objections were disposed of vide order dated 19.02.2016. The assessee company submitted the details of share application money received by the assessee to the tune of Rs. 25,00,000/- from the concern i.e. Ostwal Trading India Pvt. Ltd. & Yash V. Jewels Ltd. The Assessing Officer quoted that the assessee submitted following documents: a. Confirmation of account indicating the amount received with date b. Self-certificate regarding investment in shares c. Copy of resolution passed by the assessee to apply in shares d. Copy of bank statement e. Form No.2, Form No. 5 & Form No. 23 f. Share application form with respect to the share application money invited, g. Acknowledgement of return of income for A.Y. 2008-09
Kamla Merchantile Ltd. vs. ITO Asst.Years–2008-09 - 3 - h. Audited financial statement for A.Y. 2008-09 After going through the details the Assessing Officer observed that the identity of the creditor of share application remain unproved and the assessee could not establish genuineness of the transaction and made addition under Section 68 as unexplained cash credit towards Rs. 25,00,000/-.
Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee.
As regards, the additional ground the Ld. A.R. submitted that the Assessing Officer has recorded reasons prior to approval which is not just and proper. For which the assessee pointed out Page 5 & 86 of the Paper Book. As regards, Ground No. 1 the Ld. A.R. further submitted that no notice under Section 143(2) was issued. As regards, the merit of the case the Ld. A.R. submitted that all the details related to confirmation, bank statement and share capital were submitted before the Assessing Officer which was also taken note by the Assessing Officer in his order. Therefore, the addition made under Section 68 does not sustain on merit as well. In support of the additional evidences the Ld. A.R. submitted that the assessee was not granted any cross-examination with Shri Praveen Jain and therefore, the order under Section 143(3) r.w.s. 147 of the Act itself is bad in law.
The Ld. D.R. submitted that as regards approval obtained after the reasons recorded is concerned the same is not justifiable. As the Assessing
Kamla Merchantile Ltd. vs. ITO Asst.Years–2008-09 - 4 - Officer as properly recorded reasons after taking cognizance of the approval. As Ground No. 1 the Ld. D.R. submitted that the notice was properly issued which can be seen from assessment recorded itself. The Ld. D.R. further submitted that Shri Praveen Jain himself admitted that the accommodation entries were provided. The Ld. D.R. further submitted that there is no requirement of cross-examination and therefore, the addition was properly made by the Assessing Officer.
Heard both the parties and perused all the relevant material available on record. As regards, the additional ground can be seen that from the perusal of assessment records that approval was sought prior to recording reasons, therefore, the additional ground taken by the assessee does not sustain hence dismissed. As regards, Ground No. 1 related to notice from the records presented by the Ld. D.R. before was it can be seen that the reasons were properly recorded and the notice was issued to the assessee.
In respect to the contention of the assessee that no cross-examination was done related to statement of Shri Praveen Jain it appears to be genuine as the Assessing Officer has not given any opportunity for the assessee to counter the statement made by Shri Praveen Jain. As regards, the merit of the case is concerned the assessee has provided all the details related to creditworthiness, identity and genuineness of the transaction thereby provided share application form, copy of Gold Resolution of the Company to invest in shares of assessee company of those two companies. The assessee before the Assessing Officer presented the bank statement of said company i.e. Yash V. Jewels Ltd. & Ostwal Trading India Pvt. Ltd. reflecting these transactions of investment in assessee’s company as well as Kamla Merchantile Ltd. vs. ITO Asst.Years–2008-09 - 5 - the financial capacity of the said companies. In fact, no statement of the Directors of Creditors Company were recorded by the authorities and Praveen Jain was not the Director of the Creditor company. Nearly reliance on the statement of third party cannot be the sole criteria for making addition under Section 68 of the Act. The decision cited by the Ld. A.R. aptly applied in the present case. Hence, the appeal of the assessee is partly allowed.
In result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 11/11/2022