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Facts
The assessee, Sylvesa Infotech Private Limited, faced an addition of Rs. 19,67,82,241/- under Section 68 for unexplained bank deposits for AY 2014-15, after failing to file an ITR and being issued a notice under Section 148. The assessee submitted evidence claiming the deposits were realizations from debtors, EMD refunds, and matured FDs, which the AO did not accept. Additionally, there was a penalty levied under Section 271(1)(c) for AY 2014-15 and a reopening assessment under Section 148 for AY 2016-17.
Held
For the quantum appeal (ITA No.538), issues are restored to the AO for physical verification of evidence, including the option to issue notices under Section 133(6). The penalty levied under Section 271(1)(c) (ITA No.541) is deleted, with liberty for the AO to reinitiate if concealment is proven. For the reopening assessment (ITA No.565), the assessment order and CIT(A) order are set aside for a de novo assessment as the original ground for reopening did not lead to an addition.
Key Issues
Whether the addition under Section 68 for unexplained bank deposits was justified, whether the penalty under Section 271(1)(c) was valid, and the legality of the reopening assessment under Section 148 where the initial issue did not result in an addition.
Sections Cited
Section 139(1), Section 148, Section 142(1), Section 68, Section 133(6), Section 271(1)(c), Section 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
आदेश / O R D E R Per Bench : These are the three appeals filed by the assessee against the separate orders of the Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 21.08.2025 & 28.08.2025, passed for the assessment year 2014-2015 & 2016-2017.
(AY : 2014-2015) 2. It was submitted by the ld. AR that in the course of assessment the AO had asked the assessee to prove the deposits in the bank account of the assessee to an extent of Rs.11,73,40,969/-. It was the submission that the assessee had given the details as follows :- SYLVESA INFOTECH PRIVATE LIMITED ITA NO. 538/CTK/2025. AY 2014-15. Short note on Grounds of Appeal raised before Honorable ITAT. A. Facts. The assessee is a company engaged in business of dealing computer hardware, software and IT enabled services. The return of income under Section 139(1) for AY 2014-15 could not be filed due to management disturbances. Notice U/s 148 dated 28.07.2022 was issued to the assessee alleging that the return of income for the impugned AY has not been filed by the assessee though there are credits of Rs. Rs. 11,73,40,969/-in the bank accounts of the assessee maintained with Axis Bank and State Bank of India thereby remaining unexplained & found to have escaped assessment. B. Grounds of Appeal- We would like to take up point no 3 of Grounds of Appeal first.
1. The appellant filed its return of income in response to the said notice on 26.08.2022 and declared loss of Rs. 2,02,50,073/-.
2. The appellant in response to Notice U/s 142(1) issued on 04.01.2023 submitted all the necessary evidences of the credits to its bank accounts, which consisted of realisation from debtors, refund of EMD, Matured Proceeds of Fixed Deposits, Refund of Telephone Deposits.
3. Requesting my lords attention to Page no 3 of the Assessment Order, where appellant subrnitted that 4. Requesting my lords attention to Page no 3 para 3.5 after 8th line "Further on Persual
5. My lords, with your permission, I would like to take you through the evidences submitted before the Ld. AO. a. Requesting the attention of my lord to Page no 42 of the Paper book. Sl No 12-College of Eng, requesting attention to pg no 56 & 57 containing the invoices of the said parties, requesting attention to pg no 128 & 129 containing the ledger of the same party, confirming the transactions through sales entry and its realisation. b. Requesting the attention of my lord to Pg No 43 again Sl No 16- District Land Record Survey-Balasore, req attn to page no 58 to 63 consisting of the invoices raised and page no 137-DLRS Balasore, containing the ledger of the party, confirming the transactions through sales entry and its realisation. c. Similarly Rayagada Sl No 27 pg 43, pg 103 to 112 consisting of the invoices raised, Pg 139 to 140 containing the ledger of the party, confirming the transactions through sales entry and its realisation.
Requesting my lords attention to Pg 3 of Order last line. It is concluded 7. In the assessment order passed u/s 147 rws 144 of the previous AY, i.e. 2013-14 & 147 rws 1448 for AY 2016-17 (which is under appeal in fixed for hearing today) on similar issue, the Ld AO, on perusal of the similar documents submitted before him had accepted the credits to be realisation from Sales and Debtors. Requesting your kind attention my lord to Page no 1,2,3,4 of the Paper book for Assessment Order for AY 2013-14.
Assessee had filed an application for stay of demand against the impugned AY. Requesting attention of my lords to Pg no 12, 13 & 14 of paperbook. In Para 6.1 of the stay order, the party wise major receipts for AY 2013-14 & 2014-15 is given and after considering the same, the Ld. PCIT has granted full stay of the demand.
9. Requesting my lord's attention to page no 22. An overall reconciliation of receipts is given hereunder: Sales for FY 12-13 20,08,40,580 Receivables Outstanding in FY 2012- 11,57,84,947 13 (Pg 21) Add : Sales for FY 2013-14 15,06,23,853 Less: Receivables outstanding in FYY 5,95,94,579 13-14 Collection from Debtors 20,68,14,221/- 10. Other receipts such as maturity from FDs, EMD Refund, Backend Received can be traced from bank Statements which is given in Pg no 209 of Paperbook. (The breakup of the same is given in Pg no 13 of Paperbook). Also requesting the kind attention to Pg no 32 of Paperbook, where the comparison of FDs and EMD can be made to substantiate the transactions during the year.
It was the submission that the assessee had recovered nearly 19.27 crores. It was the submission that the AO after considering the response took the stand that the assessee has not proved that recoveries are from the debtors and consequently made an addition u/s.68 of the Act of Rs.19,67,82,241/-. Ld. AR drew our attention to page 50 to 52 which are details of receipt from debtors as on 31.03.2014 and also drew our attention to pages 58 to 137 of the paper book which are the copies of retail invoices. Ld. AR also drew our attention to the balance sheet of the assessee for the assessment years 2012-2013 and 2013-2014 to submit that recoveries being included in the balance sheet and the debtors are reduced on account of recoveries. It was the submission that these details had been produced before the ld. CIT(A). Even though the AO mentioned the details have not be produced. It was the prayer that the addition may be deleted.
In reply, ld. CIT-DR submitted that there is no evidence of the assessee having produced these evidences before the AO.
In response the ld. AR placed before us copies of the acknowledgement of having uploaded all the evidence before the AO.
6. It was the further submission by the ld. CIT-DR that he has no objection if the issue is restored to the file of AO for verification in regard to the invoices and the details of receipts from the debtors as shown in pages 50 to 53 of the paper book.
Ld. AR submitted that he has no objection to provide again these details before the AO but online submission would not make any difference because all the details have already been provided before the AO.
8. On this point, it was put to the ld.CIT-DR as to whether he is acceptable to physical verification by the jurisdictional AO. To this, ld. CIT- DR submitted that he has no objection if the jurisdictional AO would examine this issue.
Considering the submissions of both the sides and considering the fact that these details have been filed by the assessee online but the ld. CIT-DR has requested that verification to be done again, therefore, in the interest of justice the issues in this appeal are restored to the file of jurisdictional AO who shall do the physical verification of all the details that are produced by the assessee. The AO is also at liberty to issue notice u/s.133(6) of the Act to the concerned debtors from whom the recoveries are being done, insofar as the debtors are substantially Government organizations. With these directions, the issues in this appeal are restored to the file of jurisdictional AO for verification and readjudication afresh after granting the assessee adequate opportunity of being heard. Accordingly, appeal of the assessee in is partly allowed for statistical purposes.
(AY : 2014-2015) 10. This appeal has been filed by the assessee against the penalty levied by the AO u/s.271(1)(c) of the Act and confirmed by the ld. CIT(A) for A.Y.2014-2015.
As the quantum appeal in and the issues therein have been restored to the file of jurisdictional AO for physical verification, the penalty levied u/s.271(1)(c) of the Act would not more survive. Consequently, the penalty as levied by the AO and as confirmed by the ld. CIT(A) stands deleted. However, a liberty is granted to the jurisdictional AO to reinitiate the proceedings and addition be made if it is found that there is concealment of income. With this direction, the appeal of the assessee in stands allowed.
(AY : 2016-2017) 12. In regard to this appeal, ld. AR submitted that this is reopening assessment and the notice u/s.148 of the Act had been issued on the assessee for verification of the deposit in the bank account of the assessee. It as the submission that no addition on this account has been made by the AO in the assessment order but the books of accounts of the assessee have been rejected and the income of the assessee has been estimated. It was the submission that as the issue for which the reopening was done has not been culminated in any addition, the assessment order is liable to be quashed and the reopening notice is also liable to be quashed.
It was submitted by the ld. Sr. DR that the assessee has not given all the details has called for by the AO. This has resulted in the rejection of the books. It was the submission that he has no objection if the issues in this appeal are restored to the file of the jurisdictional AO for verification and passing appropriate assessment order. it was the submission that the assessee should be directed to cooperate in the set aside proceedings.
We have considered the rival submissions. As it is noticed that for the assessment year 2014-15, the issues have already been restored to the file of the jurisdictional AO for verification. In the interest of justice, the issues in this appeal for the assessment year 2016-2017 are also restored to the file of the jurisdictional AO for verification and examination of the accounts. In these circumstances, the assessment order passed as also the order of the ld. CIT(A) stands set aside and the assessment is directed to be done de novo after considering all the evidences that are to be produced by the assessee and as required by the AO in the set aside proceedings. Accordingly, appeal of the assessee in