DEPUTY COMISSIONER OF INCOME TAX, CIRCLE-3(1), VISAKHAPATNAM vs. BLACKBURN FUELS PRIVATE LIMITED, VIZIANAGARAM

प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.

The present appeal filed by the Revenue is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 28.05.2024, which in turn arises from the order passed by the Assessing Officer (for short, “A.O.”)

2 Blackburn Fuels Private Limited

under Section 147 r.w.s. 144B of the Income Tax Act, 1961 (for short, “the Act”) dated 27.09.2021 for A.Y. 2017-18. The Revenue has assailed the impugned order on the following grounds of appeal before us:

“1. The Order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi is erroneous in law and to the facts of the case. 2) The Ld CIT(A) erred in not appreciating the fact that Assessing Officer has made the addition of Rs 4,45,00,000/- as unexplained credits u/s 68 of the Income-tax Act in the assessment completed u/s 147 r.w.s. 144 dated 29.09.2021 after taking into account the assessee's reply that the payment was received against coal payment outstanding from M/s Shakti Sugars Limited and M/s. Infant Jesus Foundation has made the payments on behalf of Mis Shakti Sugars Limited, which was not corroborated by any documentary evidence 3) The CIT(A) erred in observing the fact that during the course of assessment proceedings, the assessee had furnished only confirmation letter from M/s Shakti Sugars Ltd which will not be suffice and should be supported by documentary evidence explaining the nature and source of the amount of Rs 4,45,00,000/- received in its bank account from M/s Infant Jesus Foundation the payment of which was said to have been made on behalf of M/s Shakti Sugars Ltd. 4) The Ld.CIT(A) erred in not appreciating the fact that the Assessing Officer in the assessment order had clearly mentioned that in the statement of Shri Alwyn Stephan recorded on oath on 17.03.2017 stated that the cash was deposited in the account of Mis infant Jesus Foundation by Mr Kulasekharan, proprietor of a furniture firm Mis Jayabharatham Marketing and Mr. Suresh. He stated that the cash was allowed to be deposited to clear the outstanding loan of Rs 15 crores of M/s Infant Jesus Foundation but was later on transferred to Mis Maheswari Brothers Coal Limited, Chennai (assessee in the present case) and M/s. Arumug Holdings Pvt. Ltd. for amounts of Rs.4.45 crores and Rs. 6.5 crores respectively. Mr. Alwyn Stephen said to have retained an amount of Rs. 60 lakhs as commission. Shri Alwyn Stephan, in his statement recorded on oath, had nowhere stated that the said amount of Rs. 4,45,00,000/- deposited in bank account of the assessee on 05.01.2017 was made on behalf of M/s. Shakthi Sugars Ltd. 5) The Ld CIT(A) erred in observing the fact that during the assessment proceedings. M/s Shakti Sugars Ltd. except confirming that the amount was deposited in the assessee's account by Infant Jesus Foundation on its behalf, could not able to establish the nexus between M/s. Shakti Sugars Ltd. and Infant Jesus Foundation. 6) The Ld. CIT(A) erred in adjudicating that "the assessee has discharged all the onus placed Le identity and the creditworthiness of the creditor as well as 3 Blackburn Fuels Private Limited

the genuineness of transaction. On perusal of the books of account of the assessee for the AY 2016-17 it is noted that the assessee is having trade receivables of Rs. 1,22,16,53, 140/-. Out of these the amount receivable from M/s Shakti Sugars Ltd is Rs. 14,77,87.068/- Thus it is seen that this is a business transaction. But the assessee has not submitted any proof of ledger of the trade receivable of M/s Shakti Sugars Ltd. and hence the same cannot be accepted as business transaction 7) The Ld.CIT(A) erred in adjudicating that in spite of appellant having filed relevant details to, discharge its onus to prove the facts, the A.O has not conducted any investigation or enquiry in respect of the information and data submitted by the appellant which prima-facie complies the elements required u/s 68 of the Act of identity, genuineness and creditworthiness; the appellant has submitted confirmation from the referred party. However, the Ld. CIT(A) erred in observing that in the event of Assessing Officer failing to discharge his functions property, obligation to conduct proper inquiry shifts to Commissioner (Appeals) and cannot simply delete addition made by Assessing Officer on ground of lack of inquiry. 8) The appellant craves leave to add or delete or amend or substitute any ground of appeal before and/or at the time of hearing of appeal 9) For these and other grounds that may be urged at the lime of appeal hearing, it is prayed that the above addition be restored.”

M/s. Infant Jesus Foundation Trust held with Lakshmi Vilas Bank, Adyar, Chennai, out of which an amount of Rs. 4.45 crores was transferred to the bank account of M/s. Maheswari Brothers Coal Ltd. (erstwhile name of the assessee company), initiated proceedings as per “Explanation 2(b)” of Section 147 of the Act. Notice u/s 148 of the Act dated 06.03.2020 was issued to the assessee company. However, the assessee company failed to file its return of income in compliance to the aforesaid notice.

5 Blackburn Fuels Private Limited

and audit report for the subject year. Apart from that, the A.O. called upon the assessee company to explain that as it was one of the beneficiaries of an accommodation entry received from M/s. Infant Jesus Foundation amounting during the subject year, therefore, why the same may not be treated as its unaccounted income for the subject year. Also, the assessee company was directed to furnish a copy of the ledger account of Shri Alwyn Stephen and M/s. Infant Jesus Foundation Trust appearing in its Books of Accounts for the relevant period, i.e., 01.04.2016 to 31.03.2017. 5. In reply, the assessee company submitted before the A.O. that it had received the payment of Rs. 4.45 crores (supra) from M/s. Infant Jesus Foundation Trust on 05.01.2017 against the payment that was outstanding from M/s. Shakti Sugars Limited. Elaborating further, it was the claim of the assessee company that it had supplied coal to M/s. Shakti Sugars Limited (supra), and the payment in question was received from M/s. Infant Jesus Foundation Trust on behalf of its aforesaid customer, i.e. M/s. Shakti Sugars Limited. The assessee company, to support its aforesaid claim filed before the A.O. its correspondence with M/s. Shakti Sugars Limited.

6 Blackburn Fuels Private Limited

7 Blackburn Fuels Private Limited

that was credited in its bank account on 05.01.2017. Further, the A.O. observed that a perusal of the bank account No.044136000000904 of M/s. Infant Jesus Foundation Trust with Lakshmi Vikas Bank, Branch: Adyar, Chennai, revealed that immediately before the transfer of an amount of Rs. 4.45 crores (supra) to the assessee company on 05.01.2017, there were cash deposits of Rs. 11.78 crores (supra) made in the bank account of M/s. Infant Jesus Foundation Trust on 30.12.2016. Also, the A.O. took cognisance of the fact that before the aforesaid cash was deposited in the bank account of M/s. Infant Jesus Foundation on 30.12.2016, there was a meagre balance of only Rs. 10,000/- in the said bank account. The A.O. observed that a perusal of the bank account of M/s. Infant Jesus Foundation revealed that the total cash deposit of Rs. 11.78 crores (supra) was transferred to three parties, viz, (i). M/s Arumuga Holdings Pvt. Ltd: Rs. 6.50 crores; (ii) M/s Maheshwari Coal Pvt. Ltd. (i.e assessee company): Rs. 4.45 crores; and (iii). M/s. Chennai Raj Chits: Rs. 23 lacs on 18.01.2017. Apart from that, the A.O. observed that Shri. Alwyn Stephen had admitted that the balance amount of Rs. 60 lac was received by him for facilitating the money transfer to the aforesaid entities.

8 Blackburn Fuels Private Limited

9 Blackburn Fuels Private Limited

through his friends Shri Kulasekaran, Proprietor of M/s. Jaya Bharatham Marketing, i.e., a furniture firm and Shri Suresh (supra), and the said money did not belong to him. Elaborating further, it was stated by him that M/s. Infant Jesus Foundation had taken loans from ICICI Bank, Cenetoph Road, Chennai in November 2016, and the same was outstanding at an amount of Rs. 15 crores (approx.). It was further stated by him that as he wanted to settle the loan, he had approached his friend Shri Kulasekaran, who had in turn introduced him to Shri Suresh, whom he had met for the first time on around 23rd or 24th of December, 2016 in Raoyapettaha. Shri Alwyn Stephen (supra) had further stated that Shri Suresh (supra) had promised to help him in settling the loan, wherein he would deposit Rs. 11.78 crores in cash in the bank account of M/s. Infant Jesus Foundation to facilitate settling the outstanding loan. Also, it was stated by him that it was agreed between them that the aforesaid amount would thereafter be repaid by him later on.

10 Blackburn Fuels Private Limited

account of M/s. Infant Jesus Foundation to facilitate settling of the latter’s outstanding bank loan, but on going through the bank statement, it was revealed that the aforementioned amount of Rs. 11.78 crores (supra) was transferred to three parties through RTGS, viz., (i) M/s. Maheswari Brothers Coal Ltd (assessee company) Chennai in their account with Lakshmi Vilas Bank, Main Branch, Chennai on 05.01.2017: Rs. 4.45 crores; (ii). M/s. Arumug Holdings Private Limited in their account with Axis Bank, Trichy Road, Coimbatore on 11.01.2017: Rs. 6.5 crores; and (iii) the balance amount transferred to others: Rs. 83 lacs, had submitted that though he had allowed the aforementioned persons to deposit their cash in the bank account of M/s. Infant Jesus Foundation Trust, but immediately after depositing the amount, they started pressurising him to transfer the said amount to the accounts mentioned by them. It was further stated by him that the said persons had assured him that they would definitely help him in settling the outstanding bank loan, and thus, on the said pretext, had taken his signature on five blank cheques. The A.O. further observed that Shri Alwyn Stephen (supra), on being queried as to how much commission he had received for allowing the bank account of M/s. Infant Jesus Foundation to be used for facilitating the aforesaid money transfer, had stated that though he had initially retained the 11 Blackburn Fuels Private Limited

balance amount of Rs. 83 lacs as his commission, but at the request of Shri Suresh (supra), he had further transferred Rs. 23 lacs to the bank account of M/s. Chennai Raj Chits (Rs. 10 lacs on 13.01.2017 and Rs. 13 lacs on 18.01.2017). Accordingly, it was stated by him that he had received Rs. 60 lacs as commission that was utilized by him for partly settling his financial liabilities through the banking channel.

credited the account of M/s. Shakti Sugars Limited in its books of accounts, therefore, the same evidenced that the amount so received was in part discharge of the outstanding trading liability by M/s. Shakti Sugars Limited.

13 Blackburn Fuels Private Limited

any corroborating evidence/confirmation from M/s. Infant Jesus Foundation Trust, from whom it had received the amount of Rs. 4.45 crores (supra). The A.O. observed that the amount of Rs. 4.45 crores (supra) was not received in the assessee’s bank account from the bank account of M/s. Shakti Sugars Limited, but was transferred on 05.01.2017 from the bank account of M/s. Infant Jesus Foundation Trust out of the cash deposit (SBNs) of Rs. 11.78 crores (supra) that was made in the latter’s bank account on 30.12.2016. The A.O. observed that Shri Alwyn Stephen, (supra) had in his statement recorded u/s 131(1A) of the Act, dated 17.03.2017, on specifically being queried regarding the cash deposit of Rs. 11.78 crores (supra) in the bank account of M/s Infant Jesus Foundation Trust, had nowhere stated that the amount of Rs. 4.45 crores (out of Rs. 11.78 crores) was made on behalf of M/s. Shakti Sugars Limited. Accordingly, the A.O., based on his aforesaid observations, held a firm conviction that there was no evidence which would corroborate the assessee’s claim that the amount of Rs. 4.45 crores (supra) received from M/s. Infant Jesus Foundation Trust was transferred in its bank account on behalf of its business transactions with M/s. Shakti Sugars Limited. Rather, the A.O. observed that Shri Alwyn Stephen (supra) in his statement recorded u/s 131(1A) of the Act, dated 17.03.2017, had stated that the amount of Rs.

14 Blackburn Fuels Private Limited

15 Blackburn Fuels Private Limited

16 Blackburn Fuels Private Limited

17 Blackburn Fuels Private Limited

18 Blackburn Fuels Private Limited

19 Blackburn Fuels Private Limited

that have been pressed into service by them to drive home their respective contentions.

M/s. Shakti Sugars Limited, i.e., its customer. Also, it is a fact discernible from the record that the assessee company, to substantiate its aforesaid claim, had placed on record a copy of the ledger account of M/s. Shakti Sugars Limited in its books of accounts, the copy of the ledger account of the assessee company appearing in the books of account of M/s. Shakti Sugars Limited, and the confirmation letter of M/s. Shakti Sugars Limited, wherein it had accepted that the payment of the subject amount of Rs. 4.45 crore (supra) was made by M/s. Infant Jesus Foundation to the assessee company on their behalf.

discharged the onus that was cast upon it as per the mandate of Section 68 of the Act.

22 Blackburn Fuels Private Limited

23 Blackburn Fuels Private Limited

(supra) transferred to M/s. Maheshwari Coal Pvt. Ltd., i.e., the assessee company, was as per the directions/on behalf of M/s. Shakti Sugars Limited. On the contrary, we find that Shri Alwyn Stephen (supra) in his statement recorded under Section 131(1A) of the Act, had stated that the cash (SBN’s) amounting to Rs. 11.78 crores (supra) was deposited in the current account of M/s. Infant Jesus Foundation with Lakshmi Vilas Bank, Adayar, Chennai by S/Shri Kulasekaran (supra) and Suresh (supra), and that he had only signed the duly filled pay-in- slips. Shri Alwyn Stephen (supra) in his statement dated 17.03.2017 had further deposed that he had approached his friend Shri Kulasekaran to settle the loan of Rs. 15 crores of M/s. Infant Jesus Foundation Trust outstanding towards ICICI Bank. Shri Alwyn Stephen (supra) had further stated that his friend, i.e., Shri Kulasekaran (supra), had introduced him to Shri Suresh (supra) for the necessary help, who had thereafter agreed to deposit an amount of Rs. 11.78 crores in the bank account of M/s. Infant Jesus Foundation Trust to facilitate settling the latter’s outstanding loan. Shri Alwyn Stephen had nowhere in his statement recorded under Section 131(1A) of the Act, dated 17.03.2017, ever stated that the amount of Rs. 11.78 crores or any part thereof was deposited in the bank account of M/s Infant Jesus Foundation Trust on behalf of M/s. Shakti Sugars Limited. In fact, the 24 Blackburn Fuels Private Limited

entire statement of Shri Alwyn Stephen (supra), nowhere makes any mention of M/s. Shakti Sugars Limited, or the claim of the assessee company that the amount of Rs. 4.45 crores (supra) was transferred from the bank account of M/s Infant Jesus Foundation Trust to the account of the assessee company on behalf or as per the dictates of M/s Shakti Sugars Limited.

25 Blackburn Fuels Private Limited

and was thereafter routed through RTGS transfer to the bank account of the assessee company. Also, there is nothing available on record from where it can be gathered that Shri Kulasekaran (supra) and Shri Suresh (supra), who had made the cash deposit amounting to Rs. 11.78 crores in the bank account of M/s. Infant Jesus Foundation Trust had ever stated/admitted that they were the representatives of M/s. Shakti Sugars Limited or had made such cash deposit on its behalf. We, thus, find that though M/s. Shakti Sugars Limited had claimed that the payment to the assessee company was made by M/s. Infant Jesus Foundation Trust on their behalf, but it had nowhere owned the cash deposits (SBNs) made in the bank account of M/s. Infant Jesus Foundation, which, as observed by us hereinabove, was transferred through RTGS to the bank account of the assessee company.

cash deposits made in the demonetized currency/SBN’s in the bank account of M/s. Infant Jesus Foundation Trust, which, thereafter, was utilized for making payments to the aforementioned beneficiaries, viz. (i). M/s Arumuga Holdings Pvt. Ltd: Rs. 6.50 crores; (ii) M/s Maheshwari Coal Pvt. Ltd. (i.e the erstwhile name of the assessee company): Rs. 4.45 crores; and (iii). M/s Chennai Raj Chits: Rs. 23 lacs belonged to the said respective beneficiary concerns, and have been laundered and routed back to them using the bank account of M/s Infant Jesus Foundation Trust, cannot be ruled out. Our aforesaid conviction is fortified by the fact that Shri. Alwyn Stephen, sole trustee of said M/s. Infant Jesus Foundation Trust, had in his reply to Questions No. 11 and 12 of his statement recorded under Section 131(1A) of the Act on 17.03.2017, stated that he had received a commission of Rs. 60 lacs for facilitating the aforesaid accommodation entries.

statements of the persons involved in the present case, viz. (i). Shri Alwyn Stephen (supra); (ii). M/s. Shakti Sugars Limited; (iii). Shri Kulasekaran (supra); (iv). Shri Suresh; (v) M/s Arumug Holdings Pvt. Ltd. (one of the parties to whom an amount of Rs. 6.50 crores was transferred); (vi). M/s Maheshwari Coal Pvt. Ltd., i.e., the assessee company (to whom an amount of Rs. 4.45 crores was transferred); and (vii). M/s Chennai Raj Chits (one of the parties to whom an amount of Rs. 23 lacs was transferred) requires to be recorded. We thus, in terms of our aforesaid observations, set aside the order of the CIT(A) and direct the A.O. to summon the aforementioned parties and record their statements on oath under Section 131(1A) of the Act. Apart from that, the A.O. shall, in the course of the set aside proceedings, remain at liberty to carry out such other enquiries and verifications as he may deem fit.

28 Blackburn Fuels Private Limited

Order pronounced in the Open Court on 9th September, 2025. S /- (एस. बालकृष्णन) (रिीश सूद) (S. BALAKRISHNAN) (RAVISH SOOD) लेखा सदस्य/ACCOUNTANT MEMBER न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 09.09.2025. #*TYNM/sps

आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : M/s. Blackburn Fuels Private Limited, 1/81, NCS Road, Srinivas Nagar, Andhra Pradesh – 535001. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle 3(1), Visakhapatnam.

आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam