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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
This appeal by the Revenue is directed against order dated 08.07.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that AO has not found fault with the evidences filed evidences filed by assessee in respect of money received of Rs. by assessee in respect of money received of Rs. 4,22,50,000/-, ignoring the facts that the AO in assessment order has , ignoring the facts that the AO in assessment order has , ignoring the facts that the AO in assessment order has specifically stated that the assessee has not filed Complete ITR and specifically stated that the assessee has not filed Complete ITR and specifically stated that the assessee has not filed Complete ITR and financials of lenders and hence creditworthiness of lenders is not financials of lenders and hence creditworthiness of lenders is not financials of lenders and hence creditworthiness of lenders is not established.
2. Whether on the facts and circumstances of the case and in law the 2. Whether on the facts and circumstances of the case and in law the 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) erred in holding that. AO has deviated from the reason for Ld. CIT(A) erred in holding that. AO has deviated from the reason for Ld. CIT(A) erred in holding that. AO has deviated from the reason for which approval of specified authority was taken and made addition of which approval of specified authority was taken and made addition of which approval of specified authority was taken and made addition of Rs. 4,22,50,000/ Rs. 4,22,50,000/-, ignoring the fact that the approval was taken for that the approval was taken for amount of Rs. 3,97,50,000/ amount of Rs. 3,97,50,000/-lent by assessee and source of this fund lent by assessee and source of this fund was amount of Rs. 4,22,50,000/ was amount of Rs. 4,22,50,000/-received by assessee and hence received by assessee and hence addition of Rs. 4,22,50,000/ addition of Rs. 4,22,50,000/- u/s 68 of the act covers the amount of Rs. u/s 68 of the act covers the amount of Rs. 3,97,50,000/-.
2. Before us, the Ld. Departmental Representative (DR) filed an ore us, the Ld. Departmental Representative (DR) filed an ore us, the Ld. Departmental Representative (DR) filed an additional grounds duly authorized by the respective Pr. CIT and additional grounds duly authorized by the respective Pr. CIT and additional grounds duly authorized by the respective Pr. CIT and requested that additional ground being only legal in the nature and requested that additional ground being only legal in the nature and requested that additional ground being only legal in the nature and not requiring investigation of the fresh facts not requiring investigation of the fresh facts, same might be same might be admitted. The said additional ground is reproduced as under: itted. The said additional ground is reproduced as under: itted. The said additional ground is reproduced as under:
Whether on the facts and circumstances of the case and in law, the La. Whether on the facts and circumstances of the case and in law, the La. Whether on the facts and circumstances of the case and in law, the La. CIT(A) erred in holding that AO has made addition on the ground which CIT(A) erred in holding that AO has made addition on the ground which CIT(A) erred in holding that AO has made addition on the ground which was not subject matter for which approval from specified was not subject matter for which approval from specified authority was authority was taken, ignoring the fact that the satisfaction note (para 13) clearly taken, ignoring the fact that the satisfaction note (para 13) clearly taken, ignoring the fact that the satisfaction note (para 13) clearly stated that reopening was required to verify the source of funds stated that reopening was required to verify the source of funds stated that reopening was required to verify the source of funds advanced by the assessee to Invent Group and that the addition is advanced by the assessee to Invent Group and that the addition is advanced by the assessee to Invent Group and that the addition is made by the AO u/s 68 for unexplained sou made by the AO u/s 68 for unexplained source of funds loaned by rce of funds loaned by assessee which was found to be over and above Rs. 397,50,000/ assessee which was found to be over and above Rs. 397,50,000/ assessee which was found to be over and above Rs. 397,50,000/- 3. We have heard the rival submissions on the issue of admission We have heard the rival submissions on the issue of admission We have heard the rival submissions on the issue of admission of additional ground. of additional ground. As the additional ground being purely of the As the additional ground being purely of the legal in nature without requiring any legal in nature without requiring any investigation of the fresh facts investigation of the fresh facts, same is admitted for same is admitted for adjudication, in view of the decision of the in view of the decision of the Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 NTPC Ltd. 229 ITR 283 Hon’ble Supreme Court in the case of (SC).
Briefly stated facts of the case are that in the case of the Briefly stated facts of the case are that in the case of the Briefly stated facts of the case are that in the case of the assessee specific information was received from the Investigation assessee specific information was received from the Investigation assessee specific information was received from the Investigation Wing of the Income-tax Department. In the said information it was tax Department. In the said information it was tax Department. In the said information it was stated that during the course of the search action u/s 132 of the stated that during the course of the search action u/s 132 of t stated that during the course of the search action u/s 132 of t Income-tax Act, 1961 (in short ‘the Act’) carried out on 08.12.2021 tax Act, 1961 (in short ‘the Act’) carried out on 08.12.2021 tax Act, 1961 (in short ‘the Act’) carried out on 08.12.2021 at at the the premises premises of of M/s Invent Invent Assets Assets Securitization Securitization & & Reconstruction Pvt. Ltd. Reconstruction Pvt. Ltd.( in short ‘the Invent’ ) certain books of certain books of accounts or documents were seized containing information related accounts or documents were seized containing information relate accounts or documents were seized containing information relate to the assessee i.e. M/s Malvika Herbopharma Pvt. Ltd. The said to the assessee i.e. M/s Malvika Herbopharma Pvt. Ltd. The said to the assessee i.e. M/s Malvika Herbopharma Pvt. Ltd. The said information contained that assessee had provided loan of information contained that assessee had provided loan of information contained that assessee had provided loan of Rs.3,97,50,000/- to to ‘Invent’ in the financial year 2014 in the financial year 2014-15 i.e. corresponding to the assessment year 2015 corresponding to the assessment year 2015-16 and source of the 16 and source of the said loan was not known. In view of the information, the Assessing loan was not known. In view of the information, the Assessing loan was not known. In view of the information, the Assessing Officer after obtaining prior approval of the specified authority, Officer after obtaining prior approval of the specified authority Officer after obtaining prior approval of the specified authority issued notice u/s 148 of the Act on 31.03.2023 requiring assessee issued notice u/s 148 of the Act on 31.03.2023 requiring assessee issued notice u/s 148 of the Act on 31.03.2023 requiring assessee to file return of income in the prescribed form. However, the to file return of income in the prescribed form. However, the to file return of income in the prescribed form. However, the assessee did not respond to the notice u/s 148 of the Act. assessee did not respond to the notice u/s 148 of the Act. assessee did not respond to the notice u/s 148 of the Act. Thereafter, the Assessing Officer issued notice u/s 142(1) of the Act Thereafter, the Assessing Officer issued notice u/s 142(1) of the Act Thereafter, the Assessing Officer issued notice u/s 142(1) of the Act on 30.06.2023 requiring the assessee to file return of income on 30.06.2023 requiring the assessee to file return of income on 30.06.2023 requiring the assessee to file return of income however same was not also however same was not also responded. Thereafter, the Assessing . Thereafter, the Assessing Officer issued show cause fficer issued show cause notice to the assessee on 06.12.2023. to the assessee on 06.12.2023. Subsequently, the assessee filed return of income on 23.08.2023 Subsequently, the assessee filed return of income on 23.08.2023 Subsequently, the assessee filed return of income on 23.08.2023 and thereafter notice u/s 143(2) of the A after notice u/s 143(2) of the Act and notice ct and notice u/s 142(1) of the Act requiring the assessee to furnish details were issued the Act requiring the assessee to furnish details were issue the Act requiring the assessee to furnish details were issue however same were not responded by the assessee. Thereafter, a however same were not responded by the assessee. Thereafter, a however same were not responded by the assessee. Thereafter, a notice u/s 144 was issued which was ultimately replied on notice u/s 144 was issued which was ultimately replied on notice u/s 144 was issued which was ultimately replied on 24.01.2024. In the said reply the assessee fi 24.01.2024. In the said reply the assessee filed ledger and financial led ledger and financial of ‘Invent’ and bank statement of the assessee and submitted th and bank statement of the assessee and submitted that and bank statement of the assessee and submitted th loan of Rs.3,97,50,000/ loan of Rs.3,97,50,000/- was given to ‘Invent’ towards interest free towards interest free security security security deposit deposit deposit under under under resolution resolution resolution agent agent agent agreement agreement agreement dated dated dated 18.03.2015 between 18.03.2015 between the ‘Invent’ and the assessee. The Assessing and the assessee. The Assessing Officer verified the financials of the assessee and observed that Officer verified the financials of the assessee and observed tha Officer verified the financials of the assessee and observed tha assessee had disclosed loss of Rs.22,157/ assessee had disclosed loss of Rs.22,157/- for the year under for the year under consideration and had taken loans of Rs.10,28,63,274/- for the consideration and had taken loans of Rs.10,28,63,274/ consideration and had taken loans of Rs.10,28,63,274/ year under consideration. year under consideration. The Assessing Officer also observed huge The Assessing Officer also observed huge credit in the bank statement including funds of Rs.1,32,50,000/- credit in the bank statement including funds of Rs.1,32,50,000 credit in the bank statement including funds of Rs.1,32,50,000 from Niyati Venture Pvt. Ltd. ; 2,55,06,000/ from Niyati Venture Pvt. Ltd. ; 2,55,06,000/- from M/s Kesar from M/s Kesar Petroproducts Lt. and Rs.27,00,000/ Petroproducts Lt. and Rs.27,00,000/- from Shri Dinesh Sharma from Shri Dinesh Sharma respectively.
4.1 The Assessing Office issued show cause notice to the assessee The Assessing Office issued show cause notice to the assessee The Assessing Office issued show cause notice to the assessee to substantiate the creditworthiness of the aforem to substantiate the creditworthiness of the aforementioned lenders entioned lenders parties with documentary evidence and in response the assessee parties with documentary evidence and in response the assessee parties with documentary evidence and in response the assessee provided copy of the ledger account duly confirmed from above provided copy of the ledger account duly confirmed from above provided copy of the ledger account duly confirmed from above three parties along with their copies of the income-tax return three parties along with their copies of the income three parties along with their copies of the income acknowledgement. After considering submission of the assessee, the acknowledgement. After considering submission of th acknowledgement. After considering submission of th Assessing Officer rejected the claim of the assessee regarding Assessing Officer rejected the claim of the assessee regarding Assessing Officer rejected the claim of the assessee regarding creditworthiness of the lender parties observing as under: creditworthiness of the lender parties observing as under: creditworthiness of the lender parties observing as under:
“Niyati Venture Pvt. Ltd. : Niyati Venture Pvt. Ltd. :-
From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income of Rs.27,15,810/ of Rs.27,15,810/-. The company has given loan of Rs. 1,32,50,000. The company has given loan of Rs. 1,32,50,000. However, in absence of complete ITR of the company, Balance sheet, However, in absence of complete ITR of the company, Balance sheet, However, in absence of complete ITR of the company, Balance sheet, Profit & Loss A/c, Computation of income and any other documentary Profit & Loss A/c, Computation of income and any other documentary Profit & Loss A/c, Computation of income and any other documentary evidence, the financial status and creditworthiness of said company is evidence, the financial status and creditworthiness of said company is evidence, the financial status and creditworthiness of said company is not established. As such, creditworthiness of the company is not established. As such, creditworthiness of the company is not established. As such, creditworthiness of the company is not justified due to lack of substantial documentary evidence. justified due to lack of substantial documentary evidence. Kesar Petroproducts Ltd. : Kesar Petroproducts Ltd. :- From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income at Rs.Nil. The company has given loan at Rs.Nil. The company has given loan of Rs. 2,66,05,000. However, in of Rs. 2,66,05,000. However, in absence of complete ITR of the company, Profit & Loss A/c, Balance absence of complete ITR of the company, Profit & Loss A/c, Balance absence of complete ITR of the company, Profit & Loss A/c, Balance sheet, Computation of income and any otherdocumentary evidence, sheet, Computation of income and any otherdocumentary evidence, sheet, Computation of income and any otherdocumentary evidence, thefinancial status and thefinancial status and creditworthiness of the company is not creditworthiness of the company is not established. As such, creditwo established. As such, creditworthiness of the company is not justified rthiness of the company is not justified due to lack of substantial documentary evidence. due to lack of substantial documentary evidence. Dinesh Sharma : Dinesh Sharma :- From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income From the ITR, it is noticed that company has declared returned income of Rs. 7,20,610/ 7,20,610/-. The party has given loan of Rs. 27,00,000. However, . The party has given loan of Rs. 27,00,000. However, in absence of complete ITR of the company, Profit & Loss A/c, Balance ce of complete ITR of the company, Profit & Loss A/c, Balance ce of complete ITR of the company, Profit & Loss A/c, Balance sheet, Computation of income and any other documentary evidence, the sheet, Computation of income and any other documentary evidence, the sheet, Computation of income and any other documentary evidence, the financial status and financial status and creditworthiness of said company is not creditworthiness of said company is not established. As such, creditworthiness of the company is not jus established. As such, creditworthiness of the company is not jus established. As such, creditworthiness of the company is not justified due to lack of substantial documentary evidence. due to lack of substantial documentary evidence.
6. In view of discussion in the foregoing paragraphs, it is to state that 6. In view of discussion in the foregoing paragraphs, it is to state that 6. In view of discussion in the foregoing paragraphs, it is to state that the assessee has not provided with satisfactory and substantial the assessee has not provided with satisfactory and substantial the assessee has not provided with satisfactory and substantial documentary evidence regarding creditworthiness of lender part documentary evidence regarding creditworthiness of lender part documentary evidence regarding creditworthiness of lender parties. Hence, it is established that total receipts of Rs. 4,25,55,000/ Hence, it is established that total receipts of Rs. 4,25,55,000/ Hence, it is established that total receipts of Rs. 4,25,55,000/- are not justified by the assessee. Therefore Rs. 4,25,55,000/ justified by the assessee. Therefore Rs. 4,25,55,000/- are herewith are herewith added back to the total income of the assessee u/s 68 of the I.T. Act. added back to the total income of the assessee u/s 68 of the I.T. Act. added back to the total income of the assessee u/s 68 of the I.T. Act. Penalty proceedings u/s 271(1)(c) of t Penalty proceedings u/s 271(1)(c) of the Act for concealment of income he Act for concealment of income on this issue are initiated separately. on this issue are initiated separately.” 4.2 The The The Assessing Assessing Assessing Officer Officer Officer accordingly accordingly accordingly made made made addition addition addition of of of Rs.4,25,55,000/- as unexplained cash credit in terms of section 68 as unexplained cash credit in terms of section 68 as unexplained cash credit in terms of section 68 of the Act. On further appeal, the assessee challenged validity of the of the Act. On further appeal, the assessee challenged valid of the Act. On further appeal, the assessee challenged valid reassessment proceedings as well as reassessment proceedings as well as addition on addition on merit. The Ld. CIT(A) deleted the addition on merit observing as under: CIT(A) deleted the addition on merit observing as under: CIT(A) deleted the addition on merit observing as under:
“(iv) The provisions relied upon by A.O. to prove source of the “(iv) The provisions relied upon by A.O. to prove source of the “(iv) The provisions relied upon by A.O. to prove source of the source for making addition u/s 68 were not applicable for A.Y source for making addition u/s 68 were not applicable for A.Y source for making addition u/s 68 were not applicable for A.Y. 15-16:
I have considered this ground taken by appellant, and as submitted by I have considered this ground taken by appellant, and as submitted by I have considered this ground taken by appellant, and as submitted by it that, under the amended provisions which were not in existence and it that, under the amended provisions which were not in existence and it that, under the amended provisions which were not in existence and not applicable for A.Y. 15 not applicable for A.Y. 15-16 having come into effect from 1/4/2021. I 16 having come into effect from 1/4/2021. I have gone through the amendment and have gone through the amendment and found that provisions were not found that provisions were not in existence for the year relevant to A.Y. 15 in existence for the year relevant to A.Y. 15-16. Hence, it is admitted Hence, it is admitted position in law that before amended provisions there was no onus on position in law that before amended provisions there was no onus on position in law that before amended provisions there was no onus on the assessee to prove source of the source for cash credits, once the the assessee to prove source of the source for cash credits, once the the assessee to prove source of the source for cash credits, once the identity, transaction details with confirmations were submitted by the action details with confirmations were submitted by the action details with confirmations were submitted by the appellant to A.O., without contradicting evidence to the details and appellant to A.O., without contradicting evidence to the details and appellant to A.O., without contradicting evidence to the details and further without giving opportunity to the assessee to explain the further without giving opportunity to the assessee to explain the further without giving opportunity to the assessee to explain the contradictory evidence put forth by A.O., no addition could have contradictory evidence put forth by A.O., no addition could have contradictory evidence put forth by A.O., no addition could have been made by the A.O. u/s 68 of the Act. made by the A.O. u/s 68 of the Act. I find that A.O. has not contradicted any details given by appellant I find that A.O. has not contradicted any details given by appellant I find that A.O. has not contradicted any details given by appellant before him during the assessment proceedings. On these given facts in before him during the assessment proceedings. On these given facts in before him during the assessment proceedings. On these given facts in the case of appellant, I am inclined to agree with the ground taken by the case of appellant, I am inclined to agree with the ground taken by the case of appellant, I am inclined to agree with the ground taken by the appellant relying upon decision given by the Honorable Calcutta ppellant relying upon decision given by the Honorable Calcutta ppellant relying upon decision given by the Honorable Calcutta High Court in case of High Court in case of - 1.
CIT v Sahibganj Electric cables (p) Ltd. [1978] 115 ITR 408 1. CIT v Sahibganj Electric cables (p) Ltd. [1978] 115 ITR 408 1. CIT v Sahibganj Electric cables (p) Ltd. [1978] 115 ITR 408 (Cal.) - In this case the amounts of loan received by cheques and repayments In this case the amounts of loan received by cheques and repayments In this case the amounts of loan received by cheques and repayments also made by cheques through also made by cheques through asessee's bankers, the creditors gave asessee's bankers, the creditors gave confirmation letters mentioning therein their income tax file numbers. confirmation letters mentioning therein their income tax file numbers. confirmation letters mentioning therein their income tax file numbers. ITO without making any further enquiry, disbelieving the evidence of ITO without making any further enquiry, disbelieving the evidence of ITO without making any further enquiry, disbelieving the evidence of the assessee made addition. ITAT held the additions not sustainble the assessee made addition. ITAT held the additions not sustainble the assessee made addition. ITAT held the additions not sustainble have to be deleted. deleted.
2. Further the Honorable Supreme Court held it in case as given below 2. Further the Honorable Supreme Court held it in case as given below 2. Further the Honorable Supreme Court held it in case as given below - Roshan Di Hatti Vs CIT (SC) 107 ITR 938 Kale Khan Mohammad Roshan Di Hatti Vs CIT (SC) 107 ITR 938 Kale Khan Mohammad Roshan Di Hatti Vs CIT (SC) 107 ITR 938 Kale Khan Mohammad Hanif Vs CIT (SC) 50 Hanif Vs CIT (SC) 50 In this case there were Credits shown in the name of third parties. The In this case there were Credits shown in the name of third parties. The In this case there were Credits shown in the name of third parties. The Court held that the Court held that the assessee must prove identity of credits, capacity of assessee must prove identity of credits, capacity of creditor to advance money and genuineness of transaction. Once that is creditor to advance money and genuineness of transaction. Once that is creditor to advance money and genuineness of transaction. Once that is done then burden shifts to the Department. done then burden shifts to the Department. I. In view of this decision of the Apex Court; on the fact that details were I. In view of this decision of the Apex Court; on the fact that details were I. In view of this decision of the Apex Court; on the fact that details were submitted and these evidences were never refuted by A.O. who without d these evidences were never refuted by A.O. who without d these evidences were never refuted by A.O. who without finding any fault in them and also without giving any opportunity to finding any fault in them and also without giving any opportunity to finding any fault in them and also without giving any opportunity to appellant, simply brushed away for making appellant, simply brushed away for making addition in the income, an addition in the income, an action not sustainable in law and hence additions are to be d action not sustainable in law and hence additions are to be d action not sustainable in law and hence additions are to be deleted on this ground. It is irrespective of the fact that on this ground taken on this ground. It is irrespective of the fact that on this ground taken on this ground. It is irrespective of the fact that on this ground taken on merit also addition u/s 68 is not sustainable in the case in the light of merit also addition u/s 68 is not sustainable in the case in the light of merit also addition u/s 68 is not sustainable in the case in the light of decision given in the cases prior to amendment are still valid. decision given in the cases prior to amendment are still valid. decision given in the cases prior to amendment are still valid.” 4.3 On the issue of the validity o On the issue of the validity of the reassessment, the Ld. CIT(A) f the reassessment, the Ld. CIT(A) held that the Assessing Officer has deviated from the reasons held that the Assessing Officer has deviated from the reasons held that the Assessing Officer has deviated from the reasons recorded and made addition recorded and made addition for credits of Rs.4,22,50,000/ credits of Rs.4,22,50,000/- received as against amount of Rs.3,97,50,000/ as against amount of Rs.3,97,50,000/- given as loan given as loan , which was recorded in the reasons to recorded in the reasons to believe. The relevant finding of the Ld. believe. The relevant finding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:
“J. The appellant has further taken the ground that Income escaped J. The appellant has further taken the ground that Income escaped J. The appellant has further taken the ground that Income escaped shown at Rs. 3,97,50,000/ in the reasons recorded is not the same shown at Rs. 3,97,50,000/ in the reasons recorded is not the same shown at Rs. 3,97,50,000/ in the reasons recorded is not the same which has been taxed by making addition of Rs. 4,2 which has been taxed by making addition of Rs. 4,22,50,000/ by A.O. 2,50,000/ by A.O. in the assessment order, the subject matter of this dispute. in the assessment order, the subject matter of this dispute. K. As the A.O. was asked to give his reply on the same but has not K. As the A.O. was asked to give his reply on the same but has not K. As the A.O. was asked to give his reply on the same but has not replied, I am inclined to agree with appellant that, having no approval replied, I am inclined to agree with appellant that, having no approval replied, I am inclined to agree with appellant that, having no approval for the amount of income shown as esca for the amount of income shown as escaped and further having ped and further having deviated by taxing some other amount for which obviously no approval deviated by taxing some other amount for which obviously no approval deviated by taxing some other amount for which obviously no approval was ever obtained the addition made is not sustainable being bad in was ever obtained the addition made is not sustainable being bad in was ever obtained the addition made is not sustainable being bad in law. These are pure facts and are verifiable from the reasons recorded law. These are pure facts and are verifiable from the reasons recorded law. These are pure facts and are verifiable from the reasons recorded by AO and other records a by AO and other records as available from CPC. I find that, the A.O. has s available from CPC. I find that, the A.O. has deviated from the reason which was never approved by specified deviated from the reason which was never approved by specified deviated from the reason which was never approved by specified authority under the provisions. The appellant has further relied upon authority under the provisions. The appellant has further relied upon authority under the provisions. The appellant has further relied upon the judicial decisions as cited in submissions and hence I have gone the judicial decisions as cited in submissions and hence I have gone the judicial decisions as cited in submissions and hence I have gone through them and found that in the case of : h them and found that in the case of :- (i) Principal Commissioner Of Income Tax (i) Principal Commissioner Of Income Tax-6 vs Meenakshi 6 vs Meenakshi Overseas Pvt. Ltd., where A.O. recorded reason as under: Overseas Pvt. Ltd., where A.O. recorded reason as under: Overseas Pvt. Ltd., where A.O. recorded reason as under:- "Information so received has been gone through. The above said "Information so received has been gone through. The above said "Information so received has been gone through. The above said instruments are in the nature of accomm instruments are in the nature of accommodation entry, which the odation entry, which the Assessee Assessee Assessee has has has taken taken taken after after after paying paying paying unaccounted unaccounted unaccounted cash cash cash to to to the the the accommodation entry given, who is a known entry operator as per the accommodation entry given, who is a known entry operator as per the accommodation entry given, who is a known entry operator as per the report of the Investigation Wing. In view of these facts, the alleged report of the Investigation Wing. In view of these facts, the alleged report of the Investigation Wing. In view of these facts, the alleged transaction is not the bonafide one. transaction is not the bonafide one. Therefore, I have reason to believe that an income of Rs. 5,00,000 has Therefore, I have reason to believe that an income of Rs. 5,00,000 has Therefore, I have reason to believe that an income of Rs. 5,00,000 has escaped assessment in the AY 2004 escaped assessment in the AY 2004-05 due to failure on the part of the 05 due to failure on the part of the Assessee to disclose fully and truly all material facts necessary for its Assessee to disclose fully and truly all material facts necessary for its Assessee to disclose fully and truly all material facts necessary for its assessment so far as this amount is conc assessment so far as this amount is concerned. Therefore, this case is erned. Therefore, this case is fit for issuing notice under Section 148 of the Income Tax Act, 1961. In fit for issuing notice under Section 148 of the Income Tax Act, 1961. In fit for issuing notice under Section 148 of the Income Tax Act, 1961. In this case the assessment was made under Section 143 (1) not under this case the assessment was made under Section 143 (1) not under this case the assessment was made under Section 143 (1) not under Section 143 (3) of the IT Act, 1961. Section 143 (3) of the IT Act, 1961. I am therefore, satisfied that the said income, o I am therefore, satisfied that the said income, on account of n account of accommodation entry worth Rs. 5,00,000 received by the Assessee has accommodation entry worth Rs. 5,00,000 received by the Assessee has accommodation entry worth Rs. 5,00,000 received by the Assessee has escaped assessment and accordingly after recording the above said escaped assessment and accordingly after recording the above said escaped assessment and accordingly after recording the above said reasons as laid down under the provisions of Section 148 (2) of the reasons as laid down under the provisions of Section 148 (2) of the reasons as laid down under the provisions of Section 148 (2) of the Income Tax Act, 1961 under Section 148 is Income Tax Act, 1961 under Section 148 is being issued."
Section 143 (3) read with Section 147 of the Act treating the credit Section 143 (3) read with Section 147 of the Act treating the credit Section 143 (3) read with Section 147 of the Act treating the credit received from Shubham Electronics & Electricals Pvt Ltd. as received from Shubham Electronics & Electricals Pvt Ltd. as received from Shubham Electronics & Electricals Pvt Ltd. as unexplained income under Section 68 of the Act. unexplained income under Section 68 of the Act. Besides from the Besides from the statement of the Assessee's bank account it statement of the Assessee's bank account it was found that there were was found that there were other credit entries that "remained unverified, unsubstantiated and other credit entries that "remained unverified, unsubstantiated and other credit entries that "remained unverified, unsubstantiated and unexplained." As a result, unexplained." As a result, "an amount of Rs. 74,50,000 after including "an amount of Rs. 74,50,000 after including Rs. 5,00,000 in respect of Subham Electricals Pvt. Ltd." was treated as Rs. 5,00,000 in respect of Subham Electricals Pvt. Ltd." was treated as Rs. 5,00,000 in respect of Subham Electricals Pvt. Ltd." was treated as unexplained credits unexplained credits under Section 68 of the Act and added to the total under Section 68 of the Act and added to the total income of the Assessee as income from undisclosed sources. income of the Assessee as income from undisclosed sources. income of the Assessee as income from undisclosed sources. The Assessee then appealed before the Commissioner of Income Tax The Assessee then appealed before the Commissioner of Income Tax The Assessee then appealed before the Commissioner of Income Tax (Appeals) ['CIT(A)"] which appeal was dismissed by an order dated 12th (Appeals) ['CIT(A)"] which appeal was dismissed by an order dated 12th (Appeals) ['CIT(A)"] which appeal was dismissed by an order dated 12th February, 2013. 2013. Thereafter, the Assessee filed an appeal before the ITAT. In the first Thereafter, the Assessee filed an appeal before the ITAT. In the first Thereafter, the Assessee filed an appeal before the ITAT. In the first round, the ITAT by an order dated 18th March, 2015 held that the round, the ITAT by an order dated 18th March, 2015 held that the round, the ITAT by an order dated 18th March, 2015 held that the requisite sanction had not been obtained by the AO from the Competent requisite sanction had not been obtained by the AO from the Competent requisite sanction had not been obtained by the AO from the Competent Authority under Section 151 of the Act and, Authority under Section 151 of the Act and, therefore, invalidated the therefore, invalidated the re-opening of the assessment under Section 147/148 of the Act." opening of the assessment under Section 147/148 of the Act." opening of the assessment under Section 147/148 of the Act." (ii) CIT vs. Jet Airways (I) Ltd (Bombay High Court) : (ii) CIT vs. Jet Airways (I) Ltd (Bombay High Court) : I have gone through the same and found that, it was observed by I have gone through the same and found that, it was observed by I have gone through the same and found that, it was observed by Hon'ble Court that If AO does not assess inc Hon'ble Court that If AO does not assess income for which reasons were ome for which reasons were recorded u/s 147, he cannot assess other income u/s 147. recorded u/s 147, he cannot assess other income u/s 147. "...In the department's appeal, the Court had to consider the question "...In the department's appeal, the Court had to consider the question "...In the department's appeal, the Court had to consider the question whether if the AO issues a notice u/s 148 to assess/ reassess a whether if the AO issues a notice u/s 148 to assess/ reassess a whether if the AO issues a notice u/s 148 to assess/ reassess a particular item of income but does no particular item of income but does not assess/reassess that income, is t assess/reassess that income, is it open to the AO to assess any other item of income. HELD dismissing it open to the AO to assess any other item of income. HELD dismissing it open to the AO to assess any other item of income. HELD dismissing the appeal: (i) S. 147 provides that the AO may assess the income which has (i) S. 147 provides that the AO may assess the income which has (i) S. 147 provides that the AO may assess the income which has escaped assessment "and also any other income chargeable to tax escaped assessment "and also any other income chargeable to tax escaped assessment "and also any other income chargeable to tax which has es which has escaped assessment and which comes to his notice caped assessment and which comes to his notice subsequently in the course of the proceedings under this section". subsequently in the course of the proceedings under this section". subsequently in the course of the proceedings under this section". Explanation 3 to s. 147 inserted by F (No. 2) Act, 2009 w.r.e.f 1.4.1989 Explanation 3 to s. 147 inserted by F (No. 2) Act, 2009 w.r.e.f 1.4.1989 Explanation 3 to s. 147 inserted by F (No. 2) Act, 2009 w.r.e.f 1.4.1989 provides that the AO "may assess or reassess the income in respect of provides that the AO "may assess or reassess the income in respect of provides that the AO "may assess or reassess the income in respect of any issue... notwithstanding the reasons for such issue have not been any issue... notwithstanding the reasons for such issue have not been any issue... notwithstanding the reasons for such issue have not been included in the reasons recorded ..." included in the reasons recorded ..." ii) The words "and also" indicate that reassessment must be with ii) The words "and also" indicate that reassessment must be with ii) The words "and also" indicate that reassessment must be with respect to the income for which the AO has formed an opinion and also respect to the income for which the AO has formed an opinion and also respect to the income for which the AO has formed an opinion and also in respect of any other income which comes to his notice subsequently. f any other income which comes to his notice subsequently. f any other income which comes to his notice subsequently. However, if the AO accepts the objection of the assessee and does not However, if the AO accepts the objection of the assessee and does not However, if the AO accepts the objection of the assessee and does not assess the income which was the basis of the notice, it is not open to assess the income which was the basis of the notice, it is not open to assess the income which was the basis of the notice, it is not open to him to assessee income under some other issue independen him to assessee income under some other issue independen him to assessee income under some other issue independently; (iii) Explanation 3 to s. 147 was inserted to supersede the judgements (iii) Explanation 3 to s. 147 was inserted to supersede the judgements (iii) Explanation 3 to s. 147 was inserted to supersede the judgements in Vipin Khanna 255 in Vipin Khanna 255 ITR 220 (P&H) & Travancore Cements 305 ITR 170 ITR 220 (P&H) & Travancore Cements 305 ITR 170 (Ker) where it was held that the AO could not assess income in respect (Ker) where it was held that the AO could not assess income in respect (Ker) where it was held that the AO could not assess income in respect of issues unconnected with the issue for w of issues unconnected with the issue for which the notice was issued. hich the notice was issued.
However, Explanation 3 does not affect the judgements in Shri. Ram However, Explanation 3 does not affect the judgements in Shri. Ram However, Explanation 3 does not affect the judgements in Shri. Ram Singh 306 ITR 343 (Raj) & Atlas Cycle Industries 180 ITR 319 (P&H) Singh 306 ITR 343 (Raj) & Atlas Cycle Industries 180 ITR 319 (P&H) Singh 306 ITR 343 (Raj) & Atlas Cycle Industries 180 ITR 319 (P&H) where it was held that if the AO accepted that the reasons for which the where it was held that if the AO accepted that the reasons for which the where it was held that if the AO accepted that the reasons for which the notice was issued wer notice was issued were not correct, he would cease to have jurisdiction to have jurisdiction to proceed with the reassessment; to proceed with the reassessment; (iv) Explanation 3 lifts the embargo inserted by judicial interpretation on (iv) Explanation 3 lifts the embargo inserted by judicial interpretation on (iv) Explanation 3 lifts the embargo inserted by judicial interpretation on the making of a s. 147 assessment in respect of items not referred to in the making of a s. 147 assessment in respect of items not referred to in the making of a s. 147 assessment in respect of items not referred to in the recorded reasons. the recorded reasons. However, it does not and cannot override the However, it does not and cannot override the substantive part of s. 147 that the income for which the notice was substantive part of s. 147 that the income for which the notice was substantive part of s. 147 that the income for which the notice was issued must be assessable." issued must be assessable." (il) | find that similar ground in case of P.R.P. Granites vs. ACIT (Madras (il) | find that similar ground in case of P.R.P. Granites vs. ACIT (Madras (il) | find that similar ground in case of P.R.P. Granites vs. ACIT (Madras High Court) Where the AO issued a show High Court) Where the AO issued a show-cause notice alleging that the cause notice alleging that the Appellant was not an "new undertaking" eligible for deduction u/s 10B Appellant was not an "new undertaking" eligible for deduction u/s 10B Appellant was not an "new undertaking" eligible for deduction u/s 10B but in the assessment order denied deduction on the different ground but in the assessment order denied deduction on the different ground but in the assessment order denied deduction on the different ground that the activity of the assessee did not constitute "manufacturing" that the activity of the assessee did not constitute "manufacturing" that the activity of the assessee did not constitute "manufacturing" without consideri without considering any of the several judgements on the issue, HELD ng any of the several judgements on the issue, HELD that arbitrariness was writ large on the face of the assessment order that arbitrariness was writ large on the face of the assessment order that arbitrariness was writ large on the face of the assessment order and that the same had to be quashed by the Court by exercise of its and that the same had to be quashed by the Court by exercise of its and that the same had to be quashed by the Court by exercise of its extraordinary powers under Article 226 of the Constitution even th extraordinary powers under Article 226 of the Constitution even th extraordinary powers under Article 226 of the Constitution even though the assessee had alternative remedies of appeal against the said order. the assessee had alternative remedies of appeal against the said order. the assessee had alternative remedies of appeal against the said order. L. Hence, on this ground also, I am in agreement with the appellant L. Hence, on this ground also, I am in agreement with the appellant L. Hence, on this ground also, I am in agreement with the appellant that, the action of the A.O. was not sustainable in law, as was decided that, the action of the A.O. was not sustainable in law, as was decided that, the action of the A.O. was not sustainable in law, as was decided in cases cited above and relied upon. A in cases cited above and relied upon. Accordingly, on these facts in case ccordingly, on these facts in case of appellant and applicable decisions of on those facts of Hon'ble of appellant and applicable decisions of on those facts of Hon'ble of appellant and applicable decisions of on those facts of Hon'ble Courts, I have no hesitation to hold that instant order passed u/s 148 Courts, I have no hesitation to hold that instant order passed u/s 148 Courts, I have no hesitation to hold that instant order passed u/s 148 rws 144 of the Act for making addition in income of appellant of Rs. rws 144 of the Act for making addition in income of appellant of Rs. rws 144 of the Act for making addition in income of appellant of Rs. 4,22,50,000/ i 4,22,50,000/ is neither sustainable on merit nor sustainable in Law s neither sustainable on merit nor sustainable in Law and hence is deleted. Both the grounds of appellant no. and hence is deleted. Both the grounds of appellant no.-1 and 2 are 1 and 2 are thus allowed.” 4.4 Aggrieved with the above finding, the Revenue is in appeal Aggrieved with the above finding, the Revenue is in appeal Aggrieved with the above finding, the Revenue is in appeal before the Income-tax Appellate Tribunal (ITAT) raising tax Appellate Tribunal (ITAT) raising tax Appellate Tribunal (ITAT) raising the grounds and additional ground reproduced as above. and additional ground reproduced as above.
5. Before us, the Ld. DR file Before us, the Ld. DR filed copy of the reasons recorded and copy of the reasons recorded and submitted that in the information supplied by the Investigation submitted that in the information supplied by the Investigation submitted that in the information supplied by the Investigation Wing, it was mentioned that sources of the loan given were it was mentioned that sources of the loan given were it was mentioned that sources of the loan given were unknown. In the reasons recorded reference of the information has In the reasons recorded reference of the information has In the reasons recorded reference of the information has been made according to which namely Shreyas Intermediates Ltd. been made according to which namely Shreyas Intermediates Ltd. been made according to which namely Shreyas Intermediates Ltd. has routed funds to has routed funds to ‘Invest’ group through network of connected group through network of connected entities or through coordinators and ultimately routed funds entities or through coordinators and ultimately routed funds entities or through coordinators and ultimately routed funds through ‘Malvika Herbo Pharma Pvt. Ltd lvika Herbo Pharma Pvt. Ltd’. for acquiring . for acquiring non performing assets(NPA NPA). The said reason recorded is reproduced as recorded is reproduced as under:
“This office is in receipt of an information vide email dated 24 This office is in receipt of an information vide email dated 24-03- This office is in receipt of an information vide email dated 24 2023 of the DDIT. Cent. Cir. (1)(4), Mumbai informing about the 2023 of the DDIT. Cent. Cir. (1)(4), Mumbai informing about the 2023 of the DDIT. Cent. Cir. (1)(4), Mumbai informing about the assessee Malvika Herbo Pharma Private Limited having PAN assessee Malvika Herbo Pharma Private Limited having PAN assessee Malvika Herbo Pharma Private Limited having PAN AACCM3645G.
In the information received through email it is stated that a 2. In the information received through email it is stated that a 2. In the information received through email it is stated that a search and survey action was conducted in the case of M/s. Invent search and survey action was conducted in the case of M/s. Invent search and survey action was conducted in the case of M/s. Invent Assets Secularization & Reconstruction Pvt. Ltd. (Invent Assets Secularization & Reconstruction Pvt. Ltd. (Invent) and related ) and related entities on 08.12.2021. The main concerns of the group are M/s. entities on 08.12.2021. The main concerns of the group are M/s. entities on 08.12.2021. The main concerns of the group are M/s. Invent Assets Secularization & Reconstruction Pvt. Ltd., West End Invent Assets Secularization & Reconstruction Pvt. Ltd., West End Invent Assets Secularization & Reconstruction Pvt. Ltd., West End Investment and Finance Consultancy Pvt. Ltd. etc. Investment and Finance Consultancy Pvt. Ltd. etc.
During the course of search action; some incriminating docu During the course of search action; some incriminating docu During the course of search action; some incriminating documents were seized from the search premises and in the seized material as were seized from the search premises and in the seized material as were seized from the search premises and in the seized material as per the panchana enclosed (Enclosure 1 to Annexure A) extracts in per the panchana enclosed (Enclosure 1 to Annexure A) extracts in per the panchana enclosed (Enclosure 1 to Annexure A) extracts in respect of the Invent were found which contain the lender ledgers respect of the Invent were found which contain the lender ledgers respect of the Invent were found which contain the lender ledgers information. The extracts of the Ledger account of information. The extracts of the Ledger account of the assessee the assessee Malvika Herbo Pharma Private Limited is also found. Malvika Herbo Pharma Private Limited is also found.
4. Thus the following information pertaining to the assessee Malvika 4. Thus the following information pertaining to the assessee Malvika 4. Thus the following information pertaining to the assessee Malvika Herbopharma Private Limited is shared by the DCIT.Cent.Cir.1(4), Herbopharma Private Limited is shared by the DCIT.Cent.Cir.1(4), Herbopharma Private Limited is shared by the DCIT.Cent.Cir.1(4), Mumbai: Person from PAN AY Amount Name of the Type Name of the whom received entity amount taken Malvika AACCM3645G AACCM3645G 2015-16 39750000 Invent Invent Assets Assets Loan Herbopharma Securitization Securitization Pvt. Ltd. & Reconstruction Reconstruction Pvt. Ltd.
In the Corroborative Seized Materials In the Corroborative Seized Materials – “Billing Sheet” the “Billing Sheet” the name of the assessee Malvika Herbo Pharma name of the assessee Malvika Herbo Pharma Pvt. Ltd. is reflected Pvt. Ltd. is reflected and the transaction extracts is reproduced herein as under: and the transaction extracts is reproduced herein as under: 5.5. In the case of BGG namely Shreyas litermediates Limited has 5.5. In the case of BGG namely Shreyas litermediates Limited has 5.5. In the case of BGG namely Shreyas litermediates Limited has routed funds to Invent group through network of connected entities routed funds to Invent group through network of connected entities routed funds to Invent group through network of connected entities
or through coordinators and ultimately ro or through coordinators and ultimately routed its funds through uted its funds through Malavika Herbo Pharma Pvt Ltd for acquiring NPA. In other words, Malavika Herbo Pharma Pvt Ltd for acquiring NPA. In other words, Malavika Herbo Pharma Pvt Ltd for acquiring NPA. In other words, the funds utilized for acquiring the NPA of Shreyas intermediates the funds utilized for acquiring the NPA of Shreyas intermediates the funds utilized for acquiring the NPA of Shreyas intermediates Limited belongs to BG/IG. Limited belongs to BG/IG. 5.6 The screenshot of transaction reflected in excel workbook 5.6 The screenshot of transaction reflected in excel workbook 5.6 The screenshot of transaction reflected in excel workbook named “MIS SHEET FOR ICD FMPL’ seized one of the search ET FOR ICD FMPL’ seized one of the search ET FOR ICD FMPL’ seized one of the search premises i.e. M01 is as under: premises i.e. M01 is as under:
(The above data is in regard to unsecured loan taken in Invent (The above data is in regard to unsecured loan taken in Invent (The above data is in regard to unsecured loan taken in Invent Group of Rs.3.97 crores from Malvika Herbo Pharma Pvt. Ltd.) Group of Rs.3.97 crores from Malvika Herbo Pharma Pvt. Ltd.) Group of Rs.3.97 crores from Malvika Herbo Pharma Pvt. Ltd.) 5.7 The aforesaid screenshot corroborates with the modus 5.7 The aforesaid screenshot corroborates with the modus operandi operandi stated by investigation wing and as explained by Mr. GK Sharma, stated by investigation wing and as explained by Mr. GK Sharma, stated by investigation wing and as explained by Mr. GK Sharma, the Ex CEO of Invent Group. This raises serious doubts regarding the Ex CEO of Invent Group. This raises serious doubts regarding the Ex CEO of Invent Group. This raises serious doubts regarding the source of funds.
6. Parallel books of accounts found with Co 6. Parallel books of accounts found with Co-ordinator’s. 6.1 It is noted from the above data from It is noted from the above data from billing sheet with has billing sheet with has received the connection of NPA accounts and lenders along with received the connection of NPA accounts and lenders along with received the connection of NPA accounts and lenders along with coordinators. The coordinators play a very important role in coordinators. The coordinators play a very important role in coordinators. The coordinators play a very important role in maintaining the funds flow. This has been explained again by Shri maintaining the funds flow. This has been explained again by Shri maintaining the funds flow. This has been explained again by Shri GK Sharma in his statement below: GK Sharma in his statement below:
6. Thus from the : eized material of Invent; the lender ledgers were s from the : eized material of Invent; the lender ledgers were s from the : eized material of Invent; the lender ledgers were extracted in which the name of the assessee Malvika Herbopharma extracted in which the name of the assessee Malvika Herbopharma extracted in which the name of the assessee Malvika Herbopharma Private Limited is reflected. The relevant part of the ledger account Private Limited is reflected. The relevant part of the ledger account Private Limited is reflected. The relevant part of the ledger account appearing in the books of Invent Assets Securitisation & appearing in the books of Invent Assets Securitisation & appearing in the books of Invent Assets Securitisation & Reconstruction P.L. pertaining to the assesee Malvika Herbopharma construction P.L. pertaining to the assesee Malvika Herbopharma construction P.L. pertaining to the assesee Malvika Herbopharma Private Limited is reproduced as under: Private Limited is reproduced as under:
The Ld. DR also filed The Ld. DR also filed a copy of the approval granted by the Pr. copy of the approval granted by the Pr. Chief Commissioner of Income Chief Commissioner of Income-tax. The Ld. DR referred to the tax. The Ld. DR referred to the reasons recorded and submitted that in relation to the loan given to reasons recorded and submitted that in relation to the loan given to reasons recorded and submitted that in relation to the loan given to the ‘Invent’ , the source was the source was required to be examined required to be examined in the hands of the assessee. The source has been found to be as credit or loan he source has been found to be as credit or loan he source has been found to be as credit or loan from three parties and from three parties and as the assessee failed to explain the as the assessee failed to explain the creditworthiness of the parties from whom credit was shown to be creditworthiness of the parties from whom credit was shown to be creditworthiness of the parties from whom credit was shown to be received. The Assessing Officer has correctly made the addition received. The Assessing Officer has correctly made the addition received. The Assessing Officer has correctly made the addition invoking section 68 of the Act and there is no deviation in the 68 of the Act and there is no deviation in the 68 of the Act and there is no deviation in the addition made as compared to the reasons recorded. She further addition made as compared to the reasons recorded. She further addition made as compared to the reasons recorded. She further submitted that issue in the case was not examination of the ‘source submitted that issue in the case was not examination of the submitted that issue in the case was not examination of the of the source’ but the Assessing Officer held that creditworthiness but the Assessing Officer held that creditworthiness but the Assessing Officer held that creditworthiness of the lender party was not establish der party was not established by way of copy of the ledger by way of copy of the ledger account and the acknowledgement of the return of income filed by account and the acknowledgement of the return of income filed by account and the acknowledgement of the return of income filed by those parties. She submitted that no balance s those parties. She submitted that no balance sheet of those parties heet of those parties or networth statement was filed in support of creditworthiness a statement was filed in support of creditworthiness a statement was filed in support of creditworthiness and therefore, the action of the Assessing Officer is justified on merit of therefore, the action of the Assessing Officer is justified on merit of therefore, the action of the Assessing Officer is justified on merit of the addition. She also justified the action of the Assessing Officer in the addition. She also justified the action of the Assessing Officer in the addition. She also justified the action of the Assessing Officer in making the reassessment as per law. making the reassessment as per law.
On the other hand, the Ld. counsel for the assessee submitted On the other hand, the Ld. counsel for the assessee submitted On the other hand, the Ld. counsel for the assessee submitted that the Assessing Officer deviate e Assessing Officer deviated from the reasons for which from the reasons for which approval of the specified authority was given. She submitted that it approval of the specified authority was given. She submitted that it approval of the specified authority was given. She submitted that it is settled position in law new reasons cannot be supplied or is settled position in law new reasons cannot be is settled position in law new reasons cannot be introduced by way of affidavit and validity of order must be judged introduced by way of affidavit and validity of order must be judged introduced by way of affidavit and validity of order must be judged by the reasons so mentioned therein. She further submitted that the reasons so mentioned therein. She further submitted that the reasons so mentioned therein. She further submitted that reasons recorded cannot be supplemented reasons recorded cannot be supplemented filing affidavit or making filing affidavit or making oral submission and Department cannot amend or change notice of oral submission and Department cannot amend or change notice of oral submission and Department cannot amend or change notice of the reason. She referred to the decision of the Hon’ble Bombay High the reason. She referred to the decision of the Hon’ble Bombay the reason. She referred to the decision of the Hon’ble Bombay Court in the case of Jet Airways India Ltd. IT Appeal No. (L) 1526 of Court in the case of Jet Airways India Ltd. IT Appeal No. (L) 1526 of Court in the case of Jet Airways India Ltd. IT Appeal No. (L) 1526 of 2008 and 1714 of 2009 wherein the Hon’ble High Court held that 2008 and 1714 of 2009 wherein the Hon’ble High Court held that 2008 and 1714 of 2009 wherein the Hon’ble High Court held that the AO does not assess income for which reasons were recorded u/s the AO does not assess income for which reasons were recorded u/s the AO does not assess income for which reasons were recorded u/s 147 of the Act, he cannot assess other income u/s 147 of the Act. 147 of the Act, he cannot assess other income u/s 14 147 of the Act, he cannot assess other income u/s 14 She also submitted that no copy of the reason recorded was She also submitted that no copy of the reason recorded was She also submitted that no copy of the reason recorded was provided to the assessee. The Ld. counsel accordingly submitted provided to the assessee. The Ld. counsel accordingly submitted provided to the assessee. The Ld. counsel accordingly submitted that reassessment proceedings is not sustainable in law. On the that reassessment proceedings is not sustainable in law. On the that reassessment proceedings is not sustainable in law. On the issue of the merit of the addition she supported the finding of the issue of the merit of the addition she supported the fi issue of the merit of the addition she supported the fi Ld. CIT(A) and submitted that the Assessing Officer was not Ld. CIT(A) and submitted that the Assessing Office Ld. CIT(A) and submitted that the Assessing Office authorized to examine authorized to examine source of the source of credit of credit as said amendment came into effect from 01.04.2021 only and therefore, amendment came into effect from 01.04.2021 only and therefore, amendment came into effect from 01.04.2021 only and therefore, once ledger confirmation confirmation and acknowledgment of income and acknowledgment of income–tax Return were submitted by the assessee were submitted by the assessee, no addition could have no addition could have been made by the Assessing Officer u/s 68 of the Act. been made by the Assessing Officer u/s 68 of the Act been made by the Assessing Officer u/s 68 of the Act
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The second ground of appeal and the relevant material on record. The second ground of appeal and the relevant material on record. The second ground of appeal and the additional ground are in relation to validity of the reassessment ground are in relation to validity of the reassessment ground are in relation to validity of the reassessment proceedings. The main contention of the Ld. CIT(A) is that in the proceedings. The main contention of the Ld. CIT(A) is that in the proceedings. The main contention of the Ld. CIT(A) is that in the reasons recorded, the Assessing Officer the Assessing Officer has referred to the loan has referred to the loan given by the assessee given by the assessee of Rs.3,97,50,000/- and accordingly obtained and accordingly obtained the approval from the appropriate authority for reopening the e approval from the appropriate authority for reopening the e approval from the appropriate authority for reopening the assessment but in the assessment order, t nt but in the assessment order, the Assessing Officer has he Assessing Officer has made addition of Rs.4,25,55,000/ made addition of Rs.4,25,55,000/- as unsecured loans/credits as unsecured loans/credits received from three parties M/s Niyati Venture Pvt. Ltd.; Kesar received from three parties M/s Niyati Venture Pvt. Ltd.; Kesar received from three parties M/s Niyati Venture Pvt. Ltd.; Kesar Petroproducts Ltd. and Dinesh Sharma. According to the Ld. CIT(A) products Ltd. and Dinesh Sharma. According to the Ld. CIT(A) products Ltd. and Dinesh Sharma. According to the Ld. CIT(A) therefore, the Assessing Officer has deviated from the reasons therefore, the Assessing Officer has deviated from the reasons therefore, the Assessing Officer has deviated from the reasons recorded and made addition for different amount in the assessment recorded and made addition for different amount in the assessment recorded and made addition for different amount in the assessment order. According to the Ld. CIT(A) the Assessing Officer is not order. According to the Ld. CIT(A) the Assessing Officer is not order. According to the Ld. CIT(A) the Assessing Officer is not permitted to deviate from the reasons recorded and therefore, rmitted to deviate from the reasons recorded and therefore, rmitted to deviate from the reasons recorded and therefore, reassessment was not sustainable in law. However, we do not agree reassessment was not sustainable in law. However, we do not agree reassessment was not sustainable in law. However, we do not agree with the observation of the Ld. CIT(A) for the reason that firstly, in with the observation of the Ld. CIT(A) for the reason that with the observation of the Ld. CIT(A) for the reason that the reasons recorded the Assessing Officer has recorded that in the reasons recorded the Assessing Officer has recorded that in the reasons recorded the Assessing Officer has recorded that in view of routing of the funds through network of entities including view of routing of the funds through network of entities including view of routing of the funds through network of entities including the assessee funds were provided to the assessee funds were provided to ‘Invent’ and therefore, source of and therefore, source of funds was prima-facie facie not genuine. Accordingly, t Accordingly, the Assessing Officer Officer Officer recorded recorded recorded reasons reasons reasons to to to believe believe believe that that that income income income escaped escaped escaped assessment. In the reassessment proceedings, t . In the reassessment proceedings, t . In the reassessment proceedings, the Assessing Officer examined source of funds giving loans to Officer examined source of funds giving loans to the ‘Invent’ and the source has not been explained by the assessee on the standard of source has not been explained by the assessee on the standa source has not been explained by the assessee on the standa the requirement of section 68 of the Act and therefore, the the requirement of section 68 of the Act and therefore, the the requirement of section 68 of the Act and therefore, the Assessing Officer has correctly made the addition for the Assessing Officer has correctly made the addition for the Assessing Officer has correctly made the addition for the unexplained cash credit u/s 68 of the Act rather than making any unexplained cash credit u/s 68 of the Act rather than unexplained cash credit u/s 68 of the Act rather than addition for the loan given. The loan given is once linked with the addition for the loan given. The loan given is once linked with the addition for the loan given. The loan given is once linked with the credits appearing in the books of accounts of the assessee no credits appearing in the books of accounts of the assessee no credits appearing in the books of accounts of the assessee no addition could be made for the loan addition could be made for the loan given when same is linked with when same is linked with the credit and in such a situation it is the said credit which are to the credit and in such a situation it is the said credit which are to the credit and in such a situation it is the said credit which are to be explained by the assessee. Since, the assessee be explained by the assessee. Since, the assessee failed failed to explain such credit, in our opinion n our opinion, there is no deviation by the Assessing there is no deviation by the Assessing Officer from the reasons recorded. Accordingly Officer from the reasons recorded. Accordingly, we reject the finding we reject the finding of the Ld. CIT(A) on the issue in dispute and we uphold the validity of the Ld. CIT(A) on the issue in dispute and we uphold the validity of the Ld. CIT(A) on the issue in dispute and we uphold the validity of the reassessment. The ground No. 2 of the reassessment. The ground No. 2 and additional ground of the and additional ground of the Revenue are accordingly allowed. accordingly allowed.
8.1 As far as the ground No. 1 of the appeal relating to the meri As far as the ground No. 1 of the appeal relating to the meri As far as the ground No. 1 of the appeal relating to the merit of the addition is concerned, t the addition is concerned, the Ld. CIT(A) has deleted the addition he Ld. CIT(A) has deleted the addition mainly for the reason that Assessing Officer was not authorized to mainly for the reason that Assessing Officer was not aut mainly for the reason that Assessing Officer was not aut examine ‘source of the source source of the source’ as same changes in law changes in law has been made effective from the assessment year 2022 made effective from the assessment year 2022-23 only only. Whereas we find that before the Assessing Officer find that before the Assessing Officer, the assessee only filed copy of the assessee only filed copy of the ledger confirmation and income the ledger confirmation and income-tax return acknowledgement acknowledgement and no other evidence in support of creditworthiness was filed and no other evidence in support of creditworthiness was filed and no other evidence in support of creditworthiness was filed and therefore, the Assessing Officer is justified in rejecting the the Assessing Officer is justified in rejecting the the Assessing Officer is justified in rejecting the contention of the assessee. Before us, also no documentary contention of the assessee. Before us, also no documentary contention of the assessee. Before us, also no documentary evidence in support of creditworthiness of those p evidence in support of creditworthiness of those parties have been arties have been filed. In absence of any such documents filed filed. In absence of any such documents filed, the creditworthiness the creditworthiness of those parties is not explained and therefore, action of the of those parties is not explained and therefore, action of the of those parties is not explained and therefore, action of the Assessing Officer in making addition u/s 68 of the Act is justified. Assessing Officer in making addition u/s 68 of the Act is justified. Assessing Officer in making addition u/s 68 of the Act is justified. The finding of the Ld. CIT(A) on the issue in dispute is accordingly The finding of the Ld. CIT(A) on the issue in dispute is accordingly The finding of the Ld. CIT(A) on the issue in dispute is accordingly set aside and finding of AO is re and finding of AO is restored. The ground No. 1 of the . The ground No. 1 of the appeal of the Revenue is accordingly allowed. appeal of the Revenue is accordingly allowed.
In the result, the appeal of the Revenue is allowed. In the result, the appeal of the Revenue is allowed. In the result, the appeal of the Revenue is allowed.