EBRAHIM ESSA DEVELOPERS PRIVATE LIMITED,MUMBAI vs. ITO-9(2)(4), MUMBAI, MUMBAI
Facts
The assessee filed its original return of income declaring Nil income. The assessment was reopened based on information that the assessee obtained bogus accommodation entries for unsecured loans from M/s Santoshima Tradelinks Ltd. The Assessing Officer added Rs. 1,00,00,000/- on account of unexplained unsecured loans.
Held
The Tribunal held that the grounds challenging the validity of the reassessment were infructuous. Regarding the addition on merit, the Tribunal found that the notice u/s 133(6) was not complied with by M/s Santosh Tradelink Ltd. and its identity could not be established. Therefore, the issue was restored to the Assessing Officer for fresh verification.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the addition of Rs. 1,00,00,000/- as unexplained unsecured loans was justified.
Sections Cited
147, 148, 143(1), 143(3), 68, 133(6), 142(1), 149
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 22.01.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:
On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of the Id. A.O. in reopening
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 2 ITA No. 1188/MUM/2024
the assessment u/s 147 by issue of notice u/s the assessment u/s 147 by issue of notice u/s 148 of the Act which is 148 of the Act which is merely due to change of opinion and therefore the re merely due to change of opinion and therefore the re-opening is bad in opening is bad in law. 2. On the facts and circumstances of the Appellant's case and in law 2. On the facts and circumstances of the Appellant's case and in law 2. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of the Id. A.O. in reopening the Ld. CIT(A) erred in confirming the action of the Id. A.O. in reopening the Ld. CIT(A) erred in confirming the action of the Id. A.O. in reopening the assessment u/s 147 by issue of notice u/s 148 of the Act dated nt u/s 147 by issue of notice u/s 148 of the Act dated nt u/s 147 by issue of notice u/s 148 of the Act dated 19.03.2019 which is barred by limitation in view of the first proviso to 19.03.2019 which is barred by limitation in view of the first proviso to 19.03.2019 which is barred by limitation in view of the first proviso to section 147 of Income Tax Act, 1961. section 147 of Income Tax Act, 1961. 3. On the facts and circumstances of the Appellant's case and in law 3. On the facts and circumstances of the Appellant's case and in law 3. On the facts and circumstances of the Appellant's case and in law the Ld. CIT(A) erred i the Ld. CIT(A) erred in confirming the action of the Id. A.O. in holding n confirming the action of the Id. A.O. in holding that the appellant had obtained accommodation entry in the form of that the appellant had obtained accommodation entry in the form of that the appellant had obtained accommodation entry in the form of unsecured loan from M/s Santoshima Tradelinks Ltd., as per the unsecured loan from M/s Santoshima Tradelinks Ltd., as per the unsecured loan from M/s Santoshima Tradelinks Ltd., as per the reasons stated in the impugned order or otherwise. reasons stated in the impugned order or otherwise. 4. On the facts and circ 4. On the facts and circumstances of the Appellant's case and in law umstances of the Appellant's case and in law the Ld. CIT(A) erred in confirming the action of the Id. A.O. in making an the Ld. CIT(A) erred in confirming the action of the Id. A.O. in making an the Ld. CIT(A) erred in confirming the action of the Id. A.O. in making an addition of Rs. 1,00,00,000/ addition of Rs. 1,00,00,000/- on account of alleged unexplained on account of alleged unexplained unsecured loans u/s 68 of the IT unsecured loans u/s 68 of the IT Act, 1961 as per the reasons stated in Act, 1961 as per the reasons stated in the impugned order or otherwise. the impugned order or otherwise. 5. On the facts and circumstances of the Appellant's case and in law 5. On the facts and circumstances of the Appellant's case and in law 5. On the facts and circumstances of the Appellant's case and in law the Id. A.O. erred in not providing an opportunity of cross examination the Id. A.O. erred in not providing an opportunity of cross examination the Id. A.O. erred in not providing an opportunity of cross examination of the various parties whose statements have been relied upon, as per of the various parties whose statements have been relied upon, as per of the various parties whose statements have been relied upon, as per the reasons stated in the stated in the impugned order or otherwise. 2. Briefly stated facts of the case are that the assessee filed its Briefly stated facts of the case are that the assessee filed its Briefly stated facts of the case are that the assessee filed its original return of income on 30.09.2012 declaring total income at original return of income on 30.09.2012 declaring total income at original return of income on 30.09.2012 declaring total income at Rs. Nil. The return of income filed by the assessee was processed Rs. Nil. The return of income filed by the assessee was processed Rs. Nil. The return of income filed by the assessee was processed u/s 143(1) of the Income the Income-tax Act, 1961 (in short ‘the Act’) on tax Act, 1961 (in short ‘the Act’) on 30.12.2013. Subsequently, the return of income filed by the 30.12.2013. Subsequently, the return of income filed by the 30.12.2013. Subsequently, the return of income filed by the assessee was selected for scrutiny assessment for verification of the assessee was selected for scrutiny assessment for verification of the assessee was selected for scrutiny assessment for verification of the entries of the unsecured entries of the unsecured loans. The assessment u/s 143(3 loans. The assessment u/s 143(3) of the Act was completed on 28.03.2015 wherein the total income was pleted on 28.03.2015 wherein the total income was pleted on 28.03.2015 wherein the total income was assessed at Rs. Nil after making disallowance of Rs.5,67,900/- and assessed at Rs. Nil after making disallowance of Rs.5,67,900/ assessed at Rs. Nil after making disallowance of Rs.5,67,900/ Rs.3,07,500/- on account of donation and depreciation respectively on account of donation and depreciation respectively on account of donation and depreciation respectively totaling to Rs.8,75,400/ totaling to Rs.8,75,400/-.
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 3 ITA No. 1188/MUM/2024
2.1 Subsequently, in view of receipt ubsequently, in view of receipt of information from the rmation from the Investigation Wing that assessee obtained bogus accommodation Investigation Wing that assessee obtained bogus accommodation Investigation Wing that assessee obtained bogus accommodation entries of loans from M/s Santosh entries of loans from M/s Santoshima Tradelink Ltd. which was a Tradelink Ltd. which was a company controlled and managed by Mr. Vipul Vidur Bhatt, he company controlled and managed by Mr. Vipul Vidur Bhatt company controlled and managed by Mr. Vipul Vidur Bhatt himself admitted during the course of the search action at his himself admitted during the course of the search acti himself admitted during the course of the search acti premises that he was engaged in issuing bogus accommodation premises that he was engaged in issuing bogus accommodation premises that he was engaged in issuing bogus accommodation bills through 347 companies including M/.s Santoshima Tradelink bills through 347 companies including M/.s Santosh bills through 347 companies including M/.s Santosh Ltd. Accordingly, the Assessing Officer recorded reasons to believe Ltd. Accordingly, the Assessing Officer recorded reasons to believe Ltd. Accordingly, the Assessing Officer recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the that income escaped assessment and issued notice u/s 1 that income escaped assessment and issued notice u/s 1 Act on 19.03.2019. Act on 19.03.2019. The assessee vide letter dated 26.03.2019 he assessee vide letter dated 26.03.2019 requested to treat the return of income which was filed on requested to treat the return of income which was filed on requested to treat the return of income which was filed on 30.09.2012 as return filed in response to notice u/s 148 of the Act as return filed in response to notice u/s 148 of the Act. as return filed in response to notice u/s 148 of the Act A copy of the reasons recorded was provided to the assessee. A copy of the reasons recorded was provided to the assess A copy of the reasons recorded was provided to the assess Subsequently, the notice u/s 142(1) of the Act was issued to the Subsequently, the notice u/s 142(1) of the Act was issued to the Subsequently, the notice u/s 142(1) of the Act was issued to the assessee requiring the information as per annexure to the notice. assessee requiring the information as per annexure to the notice. assessee requiring the information as per annexure to the notice. The assessee filed confirmation of accounts on M/s Santoshima The assessee filed confirmation of accounts on M/s Santosh The assessee filed confirmation of accounts on M/s Santosh Tradelink Ltd. along with copy of acknowledgement of its return of Tradelink Ltd. along with copy of acknowledgement of its Tradelink Ltd. along with copy of acknowledgement of its income showing the total income income showing the total income, copy of ledger account statement copy of ledger account statement of the total income, details of unsecured loans along with copy of of the total income, details of unsecured loans along with copy of of the total income, details of unsecured loans along with copy of the bank statement the bank statement. For verification of the genuineness of the or verification of the genuineness of the transaction, the Assessing Officer issued notice u/s the Assessing Officer issued notice u/s 133(6) of the the Assessing Officer issued notice u/s Act to M/s Santoshima ima Tradelink Ltd. at the address having office Tradelink Ltd. at the address having office No. 19, Building No. 3 Navjeevan Commercial Society, Lamington No. 19, Building No. 3 Navjeevan Commercial Society, Lamington No. 19, Building No. 3 Navjeevan Commercial Society, Lamington Road, Mumbai-400 008, but said notice returned un 400 008, but said notice returned un 400 008, but said notice returned un-served with the remarks ‘not known’ the remarks ‘not known’. Again, the Assessing Officer issued notice cer issued notice
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 4 ITA No. 1188/MUM/2024
u/s 142(1) of the Act at the another address i.e. MCA Portal at 205- u/s 142(1) of the Act at the another address i.e. MCA Portal at 205 u/s 142(1) of the Act at the another address i.e. MCA Portal at 205 A, 599, J SS Road, Kapadia Chambers Kalbadevi, Mumbai. The said A, 599, J SS Road, Kapadia Chambers Kalbadevi, Mumbai A, 599, J SS Road, Kapadia Chambers Kalbadevi, Mumbai notice also returned un notice also returned un-served with the remarks ‘not known’. served with the remarks ‘not known’. Thereafter the Assessing Officer deputed Ward Inspector for Thereafter the Assessing Officer deputed Ward Thereafter the Assessing Officer deputed Ward verification of the address but the said party was not found at both verification of the address but the said party was not found verification of the address but the said party was not found those addresses and the Ward Inspector reported that the said and the Ward Inspector reported that the said and the Ward Inspector reported that the said party never existed at those addresses. The Assessing Officer again party never existed at those addresses. The Assessing Officer again party never existed at those addresses. The Assessing Officer again issued notice u/s 133(6) of the Act to the issued notice u/s 133(6) of the Act to the Chairman/Secretary of Chairman/Secretary of Navjeevan Commercial Society Navjeevan Commercial Society but it was responded that said it was responded that said company was never a member of the Navjeevan Society. The company was never a member of the Navjeevan Society. The company was never a member of the Navjeevan Society. The Assessing Officer thereafter analyze Assessing Officer thereafter analyzed the bank statement and the bank statement and financial statement of M/s Santosh financial statement of M/s Santoshima Tradelink Ltd. an Tradelink Ltd. and opined that M/s Santoshima ima Tradeling Ltd. was not having much business Tradeling Ltd. was not having much business activity. In view of notice u/s 133(6) remain un-served, the activity. In view of notice u/s 133(6) remain un activity. In view of notice u/s 133(6) remain un Assessing Officer was of the view that genuineness of the Assessing Officer was of the view that genuineness of the Assessing Officer was of the view that genuineness of the transaction was not proved. In view of above observation, the transaction was not proved. In view of above observation, the transaction was not proved. In view of above observation, the Assessing Officer concluded the transaction with M/s Santosh sessing Officer concluded the transaction with M/s Santoshima sessing Officer concluded the transaction with M/s Santosh Tradelink Ltd. as unexplained Tradelink Ltd. as unexplained cash credit observing observing as under:
“13. Information was received from DDIT(Inv.), Unit 7(4) that during 13. Information was received from DDIT(Inv.), Unit 7(4) that during 13. Information was received from DDIT(Inv.), Unit 7(4) that during the search and seizure action in the case of Shri Vipul Vidur Bhatt the search and seizure action in the case of Shri Vipul Vidur Bhatt the search and seizure action in the case of Shri Vipul Vidur Bhatt and his other related entities, statement was recorded on oath and his other related entities, statement was recorded on oath and his other related entities, statement was recorded on oath wherein Shri Vipul Vidur Bhatt managed and controlled web wherein Shri Vipul Vidur Bhatt managed and controlled web wherein Shri Vipul Vidur Bhatt managed and controlled web of 347 front companies through dummy directors and is providing front companies through dummy directors and is providing front companies through dummy directors and is providing accommodation entries of share capital and premium, unsecured accommodation entries of share capital and premium, unsecured accommodation entries of share capital and premium, unsecured loans, entry of bogus long term capital gain and short term capital loans, entry of bogus long term capital gain and short term capital loans, entry of bogus long term capital gain and short term capital gain, bogus sales entries, expenditure, etc. to a large numbe gain, bogus sales entries, expenditure, etc. to a large numbe gain, bogus sales entries, expenditure, etc. to a large number of beneficiaries one of such company is the assessee company M/s beneficiaries one of such company is the assessee company M/s beneficiaries one of such company is the assessee company M/s Ebrahim Essa Developers Pvt. Ltd. Shri Vipul Vidur Bhatt has Ebrahim Essa Developers Pvt. Ltd. Shri Vipul Vidur Bhatt has Ebrahim Essa Developers Pvt. Ltd. Shri Vipul Vidur Bhatt has categorically said in his statement that he is providing only categorically said in his statement that he is providing only categorically said in his statement that he is providing only accommodation entries and no genuine business was carried on accommodation entries and no genuine business was carried on accommodation entries and no genuine business was carried on
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 5 ITA No. 1188/MUM/2024
and as per the information M/s Santoshima Trade Link is a bogus s per the information M/s Santoshima Trade Link is a bogus s per the information M/s Santoshima Trade Link is a bogus entity. 13.2. The asessssee M/s Ebrahim Essa Developers Pvt. Ltd. is one 13.2. The asessssee M/s Ebrahim Essa Developers Pvt. Ltd. is one 13.2. The asessssee M/s Ebrahim Essa Developers Pvt. Ltd. is one of the beneficiary to such transactions. of the beneficiary to such transactions. 13.3. The assessee has not offered any explanation for the purpose 13.3. The assessee has not offered any explanation for the purpose 13.3. The assessee has not offered any explanation for the purpose of loans taken f of loans taken from M/s Santoshima Trade Links Ltd. 14.4. All the transactions entered into between the above 14.4. All the transactions entered into between the above 14.4. All the transactions entered into between the above companies are accommodation entries to evade the tax. During the companies are accommodation entries to evade the tax. During the companies are accommodation entries to evade the tax. During the A.Y. 2012-13, the assessee 13, the assessee company is showing unsecured loans company is showing unsecured loans received of Rs.1,00,00,000/ received of Rs.1,00,00,000/- from M/s Santoshima Trade Links Santoshima Trade Links Ltd. 13.5. The creditworthiness of the M/s Santoshima Trade Links Ltd. 13.5. The creditworthiness of the M/s Santoshima Trade Links Ltd. 13.5. The creditworthiness of the M/s Santoshima Trade Links Ltd. is not proved. 13.6. Assessee has not proved genuineness of the transactions. 13.6. Assessee has not proved genuineness of the transactions. 13.6. Assessee has not proved genuineness of the transactions. 13.7. There is no explanation whatsoever with regard to the 13.7. There is no explanation whatsoever with regard to the 13.7. There is no explanation whatsoever with regard to the genuineness of source genuineness of source of these loans/funds. 13.8. All the correspondences made with M/s Santoshima Trade 13.8. All the correspondences made with M/s Santoshima Trade 13.8. All the correspondences made with M/s Santoshima Trade Links Ltd. returned back unserved. Links Ltd. returned back unserved. 14. In view of the above facts and circumstances of the case, the 14. In view of the above facts and circumstances of the case, the 14. In view of the above facts and circumstances of the case, the amounts totaling to Rs. 1,00,00,000/ amounts totaling to Rs. 1,00,00,000/- credited in assessee's bank credited in assessee's bank account are treated as Unexplained Unsecured Loans and are nt are treated as Unexplained Unsecured Loans and are nt are treated as Unexplained Unsecured Loans and are accordingly added to the total income of the assessee. accordingly added to the total income of the assessee. Subject to the above discussion, the total income of the assessee is Subject to the above discussion, the total income of the assessee is Subject to the above discussion, the total income of the assessee is computed as under: computed as under:
Total Returned income Total Returned income Rs. Nil Rs. Nil
Add: Unsecured Add: Unsecured loans u/s 68 as discussed 1,00,00,000/ 1,00,00,000/- above
Assessed total income Assessed total income Rs.1,00,00,000/- Rs.1,00,00,000/
Before the Ld. CIT(A), the assessee challenged the validity of Before the Ld. CIT(A), the assessee challenged the validity of Before the Ld. CIT(A), the assessee challenged the validity of the reassessment proceedings as well as addition on merit. The the reassessment proceedings as well as addition on merit. The the reassessment proceedings as well as addition on merit. The validity of the reassessment was challen reassessment was challenged on two grounds. Firstly, ged on two grounds. Firstly, the unsecured loan received from M/s Santosh Tradelink Ltd. was the unsecured loan received from M/s Santosh Tradelink Ltd. was the unsecured loan received from M/s Santosh Tradelink Ltd. was
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 6 ITA No. 1188/MUM/2024
already examined during the course of the scrutiny proceedings u/s during the course of the scrutiny proceedings u/s during the course of the scrutiny proceedings u/s 143(3) of the Act and no addi and no addition was made which means the n was made which means the Assessing Officer was satisfied with the identity, creditworthiness Assessing Officer was satisfied with the identity, creditworthiness Assessing Officer was satisfied with the identity, creditworthiness and genuineness of the transaction in respect of M/s Santosh and genuineness of the transaction in respect of M/s Santosh and genuineness of the transaction in respect of M/s Santosh Tradelink Pvt. Ltd. and thereafter reopening of the assessment for Tradelink Pvt. Ltd. and thereafter reopening of the assessment for Tradelink Pvt. Ltd. and thereafter reopening of the assessment for examining the same transaction of examining the same transaction of the loan amounted to change of the loan amounted to change of opinion, which is not permitted in law. Secondly, the reassessment opinion, which is not permitted in law. Secondly, the reassessment opinion, which is not permitted in law. Secondly, the reassessment was initiated beyond the period of four years and therefore, in view was initiated beyond the period of four years and therefore, in view was initiated beyond the period of four years and therefore, in view of first proviso to section 147 of the Act reassessment in the case of first proviso to section 147 of the Act reassessment in the case of first proviso to section 147 of the Act reassessment in the case where assessment was where assessment was already completed u/s 143(3) of the Act, completed u/s 143(3) of the Act, reassessment can only be eassessment can only be permitted beyond four years if there is beyond four years if there is failure on the part of the assessee in disclosing the material fcats failure on the part of the assessee in disclosing the material failure on the part of the assessee in disclosing the material fully and truly. However, in the reasons recorded, the Assessing fully and truly. However, in the reasons recorded, the Assessing fully and truly. However, in the reasons recorded, the Assessing Officer has no where recorded that reassessment was initiated on where recorded that reassessment was initiated on where recorded that reassessment was initiated on the ground of the failure on the part of the assessee in disclosing the ground of the failure on the part of the assessee in disclosing the ground of the failure on the part of the assessee in disclosing the material facts fully and truly. the material facts fully and truly.
After taking into consideration submission of the assessee the After taking into consideration submission of the assessee the After taking into consideration submission of the assessee the Ld. CIT(A) rejected the contention Ld. CIT(A) rejected the contention of the assessee with reference to of the assessee with reference to change of opinion. The relevant finding of the Ld. CIT(A) is change of opinion. The relevant finding of the Ld. CIT(A) is change of opinion. The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:
“5.0 Grounds no 1 and 2 relate to reopening of the assessment u/s 5.0 Grounds no 1 and 2 relate to reopening of the assessment u/s 5.0 Grounds no 1 and 2 relate to reopening of the assessment u/s 147 of the Act. The appellant argues that the reopening of the 147 of the Act. The appellant argues that the reopening of the 147 of the Act. The appellant argues that the reopening of the assessment u/s. 147 by issue of notice u/s. 148 dated 01.02.2018 u/s. 147 by issue of notice u/s. 148 dated 01.02.2018 u/s. 147 by issue of notice u/s. 148 dated 01.02.2018 which is barred by limitation in view of the first proviso to section which is barred by limitation in view of the first proviso to section which is barred by limitation in view of the first proviso to section 147 of Income Tax Act, 1961. It is further argued that the reopening 147 of Income Tax Act, 1961. It is further argued that the reopening 147 of Income Tax Act, 1961. It is further argued that the reopening the assessment u/s 147 by issue of notice dated 01.02.2018 u/s the assessment u/s 147 by issue of notice dated 01.02.2018 u/s the assessment u/s 147 by issue of notice dated 01.02.2018 u/s 148 is merely due to change of opinion and therefore the reopening is 148 is merely due to change of opinion and therefore the reopening is 148 is merely due to change of opinion and therefore the reopening is bad in law.
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 7 ITA No. 1188/MUM/2024
5.1 I have perused the submission of the appellant, copy of the I have perused the submission of the appellant, copy of the I have perused the submission of the appellant, copy of the assessment order and the reason recorded for reopening the assessment order and the reason recorded for reopening the assessment order and the reason recorded for reopening the assessment. I find that the Ld AO had received assessment. I find that the Ld AO had received information from the information from the DDIT(Inv), Unit DDIT(Inv), Unit-7(4), Mumbai that the appellant had taken bogus 7(4), Mumbai that the appellant had taken bogus accommodation entry in respect of unsecured loan amounting to Rs 1 accommodation entry in respect of unsecured loan amounting to Rs 1 accommodation entry in respect of unsecured loan amounting to Rs 1 crore from M/s Santoshima Tradelinks Ltd during the A Y 2011 crore from M/s Santoshima Tradelinks Ltd during the A Y 2011 crore from M/s Santoshima Tradelinks Ltd during the A Y 2011-12. There was a specific finding of the DDI There was a specific finding of the DDIT (Inv) that Sri Vipul Vidur T (Inv) that Sri Vipul Vidur Bhatt under oath had admitted that he is managing and controlling a Bhatt under oath had admitted that he is managing and controlling a Bhatt under oath had admitted that he is managing and controlling a web of 347 front companies through dunny directors and providing web of 347 front companies through dunny directors and providing web of 347 front companies through dunny directors and providing accommodation entries of share capital and premium, unsecured accommodation entries of share capital and premium, unsecured accommodation entries of share capital and premium, unsecured loans, entry of bogus LTCG and S loans, entry of bogus LTCG and STCG, bogus sales entries, bogus TCG, bogus sales entries, bogus expenditure entries, etc to large number of beneficiaries. From the expenditure entries, etc to large number of beneficiaries. From the expenditure entries, etc to large number of beneficiaries. From the information received, it became evident that the companies controlled information received, it became evident that the companies controlled information received, it became evident that the companies controlled and operated by Sri Vipul Vidur Bhatt had provided bogus and operated by Sri Vipul Vidur Bhatt had provided bogus and operated by Sri Vipul Vidur Bhatt had provided bogus accommodation entries in resp accommodation entries in respect of unsecured loan to the appellant ect of unsecured loan to the appellant through one M/s Santoshima Tradelinks Ltd during the A Y 2011 through one M/s Santoshima Tradelinks Ltd during the A Y 2011 through one M/s Santoshima Tradelinks Ltd during the A Y 2011-12. The investigation report received shows that the appellant is part of The investigation report received shows that the appellant is part of The investigation report received shows that the appellant is part of an organized racket of generating bogus entries to evade taxes. After an organized racket of generating bogus entries to evade taxes. After an organized racket of generating bogus entries to evade taxes. After examining the evidence provided by the investigation wing and he evidence provided by the investigation wing and he evidence provided by the investigation wing and return of income filed by the appellant, the Ld AO had come to the return of income filed by the appellant, the Ld AO had come to the return of income filed by the appellant, the Ld AO had come to the prima facie belief that this is a fit case for reopening of the prima facie belief that this is a fit case for reopening of the prima facie belief that this is a fit case for reopening of the assessment. assessment. assessment. Though Though Though the the the appellant appellant appellant during during during the the the assessment assessment assessment proceedings u/s 143 proceedings u/s 143(3) of the Act for the AY 2012-13 had provided 13 had provided the name and address of M/s Santoshima Tradelinks Ltd, however, the name and address of M/s Santoshima Tradelinks Ltd, however, the name and address of M/s Santoshima Tradelinks Ltd, however, the same can not be taken as true and full disclosure of the the same can not be taken as true and full disclosure of the the same can not be taken as true and full disclosure of the transaction in view of the finding of the DDIT(Inv). Thus, I find that transaction in view of the finding of the DDIT(Inv). Thus, I find that transaction in view of the finding of the DDIT(Inv). Thus, I find that there is a clear application of mind by the Ld AO. There is a live link ear application of mind by the Ld AO. There is a live link ear application of mind by the Ld AO. There is a live link or close nexus between the material obtained and formation of belief. or close nexus between the material obtained and formation of belief. or close nexus between the material obtained and formation of belief. It is not a case where the reasons recorded by the Ld. A.O. are not It is not a case where the reasons recorded by the Ld. A.O. are not It is not a case where the reasons recorded by the Ld. A.O. are not germane and the Ld. A.O. wanted to simply verify and make f germane and the Ld. A.O. wanted to simply verify and make f germane and the Ld. A.O. wanted to simply verify and make fishing enquiries with respect to bogus unsecured loan entries. The Ld. A.O. enquiries with respect to bogus unsecured loan entries. The Ld. A.O. enquiries with respect to bogus unsecured loan entries. The Ld. A.O. has applied his own mind. After the receipt of the information, AO has applied his own mind. After the receipt of the information, AO has applied his own mind. After the receipt of the information, AO verified the record Subsequently, reasons were recorded for verified the record Subsequently, reasons were recorded for verified the record Subsequently, reasons were recorded for reopening the assessment u/s 147 Of the Act and appro reopening the assessment u/s 147 Of the Act and appro reopening the assessment u/s 147 Of the Act and approval was sought from the Pr CIT sought from the Pr CIT-9, Mumbai. Thereafter, the notice U/s 148 9, Mumbai. Thereafter, the notice U/s 148 was issued. In response to this notice, the appellant filed return of was issued. In response to this notice, the appellant filed return of was issued. In response to this notice, the appellant filed return of income declaring income. The appellant also asked for a copy of the income declaring income. The appellant also asked for a copy of the income declaring income. The appellant also asked for a copy of the reason recorded for reopening of the assessme reason recorded for reopening of the assessment. The same was nt. The same was duly provided to the appellant. duly provided to the appellant. Thereafter notices u/e 143(2) and Thereafter notices u/e 143(2) and 142(1) were issued on various dates. In response to these notices, 142(1) were issued on various dates. In response to these notices, 142(1) were issued on various dates. In response to these notices, the A/R of the appellant filed submission. the A/R of the appellant filed submission. 5.2 Thus, I find that all the statutory requirements have been Thus, I find that all the statutory requirements have been fulfilled Thus, I find that all the statutory requirements have been by Ld AO before reopening the assessment. The AO has examined by Ld AO before reopening the assessment. The AO has examined by Ld AO before reopening the assessment. The AO has examined the information received along with the information available with the information received along with the information available with the information received along with the information available with him in the form of return of income, past assessment records him in the form of return of income, past assessment records him in the form of return of income, past assessment records available. I find that Ld AO after examining the details available. I find that Ld AO after examining the details had formed had formed his independent opinion that the case of the appellant is a fit case for his independent opinion that the case of the appellant is a fit case for his independent opinion that the case of the appellant is a fit case for reopening. Necessary approval for reopening was also obtained by reopening. Necessary approval for reopening was also obtained by reopening. Necessary approval for reopening was also obtained by the Ld AO. The appellant has also cooperated in the assessment the Ld AO. The appellant has also cooperated in the assessment the Ld AO. The appellant has also cooperated in the assessment proceedings by filing various submissions f proceedings by filing various submissions from time to time. The rom time to time. The reopening cannot be said to be a mere change of opinion. Similar reopening cannot be said to be a mere change of opinion. Similar reopening cannot be said to be a mere change of opinion. Similar
Ebrahim Essa Developers Pvt. Ltd. Ebrahim Essa Developers Pvt. Ltd. 8 ITA No. 1188/MUM/2024
view has been held in the case of Yogendrakumar Gupta, (2014) 46 view has been held in the case of Yogendrakumar Gupta, (2014) 46 view has been held in the case of Yogendrakumar Gupta, (2014) 46 taxmann.com 56 (Gujarat), in which the Hon'ble court has decided taxmann.com 56 (Gujarat), in which the Hon'ble court has decided taxmann.com 56 (Gujarat), in which the Hon'ble court has decided that the AO acquires jurisdiction u/s 1 that the AO acquires jurisdiction u/s 147 r.w.s. 148 of the Act when 47 r.w.s. 148 of the Act when specific and reliable information is received from investigating specific and reliable information is received from investigating specific and reliable information is received from investigating agencies. It was held in this case that where after the completion of agencies. It was held in this case that where after the completion of agencies. It was held in this case that where after the completion of original assessment, Assessing Officer, on basis of search carried original assessment, Assessing Officer, on basis of search carried original assessment, Assessing Officer, on basis of search carried out in case of another p out in case of another person, came to know that loan transactions of erson, came to know that loan transactions of assessee with a finance company were bogus as said company was assessee with a finance company were bogus as said company was assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh engaged in providing accommodation entries, it being a fresh engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceeding in information, he was justified in initiating reassessment proceeding in information, he was justified in initiating reassessment proceeding in case of assesse case of assessee. Reopening on the basis of the report of the e. Reopening on the basis of the report of the Investigation Wing about receipt of loans / LTCG / bogus bills from Investigation Wing about receipt of loans / LTCG / bogus bills from Investigation Wing about receipt of loans / LTCG / bogus bills from Entry Providers held to be justified by the hon'ble courts in the cases Entry Providers held to be justified by the hon'ble courts in the cases Entry Providers held to be justified by the hon'ble courts in the cases of Bright Star Syntex (P.) Ltd, 71 taxmann.com 64 (Bombay) [2016], of Bright Star Syntex (P.) Ltd, 71 taxmann.com 64 (Bombay) [2016], of Bright Star Syntex (P.) Ltd, 71 taxmann.com 64 (Bombay) [2016], Peass Industrial Engineers Pvt.Ltd. 2016 (72 Taxman.com 302 (Guj), ass Industrial Engineers Pvt.Ltd. 2016 (72 Taxman.com 302 (Guj), ass Industrial Engineers Pvt.Ltd. 2016 (72 Taxman.com 302 (Guj), Rajat Export Import India (P.) Ltd. 18 taxmann.com 311 (Delhi) Rajat Export Import India (P.) Ltd. 18 taxmann.com 311 (Delhi) Rajat Export Import India (P.) Ltd. 18 taxmann.com 311 (Delhi) [2012], Money Growth Investment & Consultants (P.) Ltd [2012], Money Growth Investment & Consultants (P.) Ltd [2012] 21 [2012] 21 taxmann.com 438 (Delhi), Jayant Security & Finance Ltd. Vs. ACI taxmann.com 438 (Delhi), Jayant Security & Finance Ltd. Vs. ACI taxmann.com 438 (Delhi), Jayant Security & Finance Ltd. Vs. ACIT 91 taxmann.com 181 (Guj.), Ankit Agrochem Pvt. Ltd. Vs. JCIT 89 taxmann.com 181 (Guj.), Ankit Agrochem Pvt. Ltd. Vs. JCIT 89 taxmann.com 181 (Guj.), Ankit Agrochem Pvt. Ltd. Vs. JCIT 89 taxmann.com 45 (Raj.), Pushpak Bullion Pvt. Ltd. Vs. DCIT 85 taxmann.com 45 (Raj.), Pushpak Bullion Pvt. Ltd. Vs. DCIT 85 taxmann.com 45 (Raj.), Pushpak Bullion Pvt. Ltd. Vs. DCIT 85 taxmann.com 84 (Guj.), Aradhana Estates Pvt. Ltd. Vs. DCIT 91 taxmann.com 84 (Guj.), Aradhana Estates Pvt. Ltd. Vs. DCIT 91 taxmann.com 84 (Guj.), Aradhana Estates Pvt. Ltd. Vs. DCIT 91 taxmann.com 119 (Guj). In this case also, the AO has received taxmann.com 119 (Guj). In this case also, the AO has received taxmann.com 119 (Guj). In this case also, the AO has received specific information from the investigation wing and the AO has fic information from the investigation wing and the AO has fic information from the investigation wing and the AO has applied his mind on such information and formed a reason to believe applied his mind on such information and formed a reason to believe applied his mind on such information and formed a reason to believe that income has escaped assessment, thus reopening of the that income has escaped assessment, thus reopening of the that income has escaped assessment, thus reopening of the assessment is a valid reopening. Accordingly, I find no merit in the assessment is a valid reopening. Accordingly, I find no merit in the assessment is a valid reopening. Accordingly, I find no merit in the argument of the appellant that the reopening is based on a change of gument of the appellant that the reopening is based on a change of gument of the appellant that the reopening is based on a change of opinion and this ground of the appellant is dismissed. opinion and this ground of the appellant is dismissed.” 4.1 In respect of second objection for reopening of assessment In respect of second objection for reopening of assessment In respect of second objection for reopening of assessment beyond four years, the Ld. CIT(A) held that reassessment was beyond four years, the Ld. CIT(A) held that reassessment was beyond four years, the Ld. CIT(A) held that reassessment was validly reopened beyond four years after obtaining prior approval eopened beyond four years after obtaining prior approval eopened beyond four years after obtaining prior approval from the competent authorities. The relevant finding of the Ld. from the competent authorities. The relevant finding of the Ld. from the competent authorities. The relevant finding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:
“5.4 From the plain reading of section 149 of the Act, it is seen 5.4 From the plain reading of section 149 of the Act, it is seen 5.4 From the plain reading of section 149 of the Act, it is seen that a notice under section 148 can be that a notice under section 148 can be issued for the relevant issued for the relevant Assessment year after four years, but before six years from the Assessment year after four years, but before six years from the Assessment year after four years, but before six years from the end of the relevant assessment if the income chargeable to tax end of the relevant assessment if the income chargeable to tax end of the relevant assessment if the income chargeable to tax which has escaped assessment amounts to or is likely to amount which has escaped assessment amounts to or is likely to amount which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. to one lakh rupees or more for that year. In the instant case notice In the instant case notice under section 148 was issued under section 148 was issued within six years from the end of the within six years from the end of the AY 2010-11 it is also clear from the reason recorded that the 11 it is also clear from the reason recorded that the 11 it is also clear from the reason recorded that the income chargeable to tax which has escaped assessment income chargeable to tax which has escaped assessment income chargeable to tax which has escaped assessment amounts is more than one lakh rupees. Thus, th amounts is more than one lakh rupees. Thus, the conditions e conditions enumerated in section 149 are clearly satisfied in the instant enumerated in section 149 are clearly satisfied in the instant enumerated in section 149 are clearly satisfied in the instant
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case. Accordingly, the second ground of the appellant is case. Accordingly, the second ground of the appellant is case. Accordingly, the second ground of the appellant is dismissed.” 4.2 As far as addition on merit is concerned, the Ld. CIT(A) upheld As far as addition on merit is concerned, the Ld. CIT(A) upheld As far as addition on merit is concerned, the Ld. CIT(A) upheld the addition mainly for the reason that the the addition mainly for the reason that the party M/s Santosh party M/s Santoshima Tradelink Ltd. did not comply to the notice u/s 133(6) of the Act. Tradelink Ltd. did not comply to the notice u/s 133(6) of the Act. Tradelink Ltd. did not comply to the notice u/s 133(6) of the Act. The Ld. CIT(A) further observed that the assessee should have The Ld. CIT(A) further observed that the assessee should have The Ld. CIT(A) further observed that the assessee should have taken step to explain the source of deposit made in the bank taken step to explain the source of deposit made in the bank taken step to explain the source of deposit made in the bank account account account of of of M/s M/s M/s Santosh Santosh Santosh Tradelink Tradelink Tradelink Ltd. Ltd. Ltd. and and and therefore, th th creditworthiness of the lender was not well founded. The Ld. CIT(A) the lender was not well founded. The Ld. CIT(A) the lender was not well founded. The Ld. CIT(A) relied on the decision of the Hon’ble Supreme Court in the case of relied on the decision of the Hon’ble Supreme Court in the case of relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 and Sumati Dayal v. Durga Prasad More [1971] 82 ITR 540 and Sumati Dayal v. Durga Prasad More [1971] 82 ITR 540 and Sumati Dayal v. CIT 214 ITR 801 (SC) CIT 214 ITR 801 (SC). On the issue of no opportu n the issue of no opportunity of cross- examination of Shri Vipul Vidur Bhatt, t tion of Shri Vipul Vidur Bhatt, the Ld. CIT(A) relied on the he Ld. CIT(A) relied on the decision of Hon’ble Supreme Court in the case of State of J & K decision of Hon’ble Supreme Court in the case of State of J & K decision of Hon’ble Supreme Court in the case of State of J & K Bakshi Gulam Mohd. (supra), decision of Hon’ble Chairman, Board Bakshi Gulam Mohd. (supra), decision of Hon’ble Chairman, Board Bakshi Gulam Mohd. (supra), decision of Hon’ble Chairman, Board of Mining Examination v. Ratijee (supra) and d of Mining Examination v. Ratijee (supra) and decision Mumbai ecision Mumbai Bench of the Tribunal in the case of GTC Industries Ltd. v. ACIT Bench of the Tribunal in the case of GTC Industries Ltd. v. ACIT Bench of the Tribunal in the case of GTC Industries Ltd. v. ACIT (supra), wherein it is held that if witness has given directly wherein it is held that if witness has given directly wherein it is held that if witness has given directly incriminating statement and the addition in the assessment is incriminating statement and the addition in the assessment is incriminating statement and the addition in the assessment is based solely or mainly on the basis of such statement, in that based solely or mainly on the basis of such stateme based solely or mainly on the basis of such stateme eventually it is incumbent on the Assessing Officer to allow cross- eventually it is incumbent on the Assessing Officer to allow cross eventually it is incumbent on the Assessing Officer to allow cross examination. The Ld. CIT(A) accordingly rejected the contention of examination. The Ld. CIT(A) accordingly rejected the contention of examination. The Ld. CIT(A) accordingly rejected the contention of the assessee on the merit of the addition. the assessee on the merit of the addition.
Aggrieved the assessee is in appeal before the Tribunal by way Aggrieved the assessee is in appeal before the Tribunal by way Aggrieved the assessee is in appeal before the Tribunal by way of two grounds reproduced above. of two grounds reproduced above.
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Before us, the Ld. counsel for the assessee submitted that M/s Before us, the Ld. counsel for the assessee submitted that M/s Before us, the Ld. counsel for the assessee submitted that M/s Santosh Tradelink Ltd. had responded to notice u/s 133(6) of the Santosh Tradelink Ltd. had responded to notice u/s 133(6) of the Santosh Tradelink Ltd. had responded to notice u/s 133(6) of the Act but there was a delay on the part of the said party in Act but there was a delay on the part of the said party Act but there was a delay on the part of the said party responding. H e submitted that responding. H e submitted that response to notice u/s 133(6) of the esponse to notice u/s 133(6) of the Act notice was sent after completion of the assessment to the AO. Act notice was sent after completion of the assessment to the AO. Act notice was sent after completion of the assessment to the AO. The Ld. counsel for the assessee submitted that delay might be on The Ld. counsel for the assessee submitted that delay might be on The Ld. counsel for the assessee submitted that delay might be on the part of the courier agency. He submitted that n the courier agency. He submitted that neither the the courier agency. He submitted that n Assessing Officer nor Assessing Officer nor the Ld. CIT(A) has taken into consideration Ld. CIT(A) has taken into consideration this factual observation and decided the issue against the assessee this factual observation and decided the issue against the assessee this factual observation and decided the issue against the assessee mainly for the reason that no compliance of notice u/s 133(6) of the mainly for the reason that no compliance of notice u/s 133(6) of the mainly for the reason that no compliance of notice u/s 133(6) of the Act was made. He further submitted that assessee was not obliged . He further submitted that assessee was not obliged . He further submitted that assessee was not obliged to explain source of the source i.e. source of money in the hands of rce of the source i.e. source of money in the hands of rce of the source i.e. source of money in the hands of M/s Santosh Tradelink Ltd. He submitted that assessee has duly M/s Santosh Tradelink Ltd. He submitted that assessee has duly M/s Santosh Tradelink Ltd. He submitted that assessee has duly explained the creditworthiness of the said party by way of the copy explained the creditworthiness of the said party by way of the copy explained the creditworthiness of the said party by way of the copy of the return of income and financial statement of said party along of the return of income and financial statement of said party along of the return of income and financial statement of said party along with copy of the bank statement. He further submitted that there th copy of the bank statement. He further submitted that there th copy of the bank statement. He further submitted that there was no material against the assessee except the statement of Shri was no material against the assessee except the statement of Shri was no material against the assessee except the statement of Shri Vipul Vidur Bhatt. He submitted Vipul Vidur Bhatt. He submitted that neither copy of the said neither copy of the said statement was provided nor cross statement was provided nor cross-examination of Shri Vipul Vidur Shri Vipul Vidur Bhatt Bhatt Bhatt was was was provided provided provided during during during the the the assessment assessment assessment proceedings. proceedings. proceedings. Accordingly, he submitted that addition in dispute should be Accordingly, he submitted that addition in dispute should be Accordingly, he submitted that addition in dispute should be deleted.
On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) relied on the order of the lower authorities. relied on the order of the lower authorities.
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We have heard rival We have heard rival submission of the parties and perused the submission of the parties and perused the relevant material on record. The Ld. counsel before us only relevant material on record. The Ld. counsel before us only relevant material on record. The Ld. counsel before us only emphasized for deciding the issue on the merit of the addition. emphasized for deciding the issue on the merit of the addition. emphasized for deciding the issue on the merit of the addition. Therefore, the grounds challenging the validity of the reassessment Therefore, the grounds challenging the validity of the reassessment Therefore, the grounds challenging the validity of the reassessment are accordingly dismis are accordingly dismissed as infructuous. As far as addition on sed as infructuous. As far as addition on merit is concerned, the lower authorities have made the addition the lower authorities have made the addition mainly for the reasons that notice u/s 133(6) of the Act issued by mainly for the reasons that notice u/s 133(6) of the Act mainly for the reasons that notice u/s 133(6) of the Act the AO was not complied was not complied by M/s Santosh Tradelink Ltd by M/s Santosh Tradelink Ltd. The Assessing Officer has ma Assessing Officer has made attempt by way of sending notice u/s de attempt by way of sending notice u/s 133(6) at the two addresses 133(6) at the two addresses of assessee and letter and letter to the Chairman/Secretary of the Chairman/Secretary of the Society, where office of said party was where office of said party was located and also by way of deputing Ward Inspector for verification and also by way of deputing Ward Inspector for verification and also by way of deputing Ward Inspector for verification of the address. But the of the address. But the said party was not found to be said party was not found to be in existence at that address provided. Now before us, the Ld. counsel for the at that address provided. Now before us, the Ld. counsel for the at that address provided. Now before us, the Ld. counsel for the assessee submitted that assessee submitted that said party had complied to the notice u/s complied to the notice u/s 133(6) of the Act but said reply was received in the office of the 133(6) of the Act but said reply was received in the office of the 133(6) of the Act but said reply was received in the office of the Assessing Officer after completion of the assessment. cer after completion of the assessment. cer after completion of the assessment. Since the identity of the party could not be established in assessment and identity of the party could not be established in assessment and identity of the party could not be established in assessment and appellate appellate appellate proceedings, proceedings, proceedings, the the the assessee assessee assessee is is is seeking seeking seeking one one one more more more opportunity. In view of facts and circumstances In view of facts and circumstances and in the interest and in the interest of substantial justice stice , we feel it appropriate to restore this issue , we feel it appropriate to restore this issue back to the Assessing Officer back to the Assessing Officer with the direction for issuing fresh for issuing fresh notice u/s 133(6) of the Act notice u/s 133(6) of the Act to M/s Santosh Tradelink Ltd to M/s Santosh Tradelink Ltd at the address which will be provided by the assessee to the Assessing address which will be provided by the assessee to the Assessing address which will be provided by the assessee to the Assessing Officer. Thereafter, the Assessing Officer may examine the issue of Officer. Thereafter, the Assessing Officer may examine the issue of Officer. Thereafter, the Assessing Officer may examine the issue of
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addition u/s 68 of the Act in accordance with law. The ground Nos. addition u/s 68 of the Act in accordance with law. The ground No addition u/s 68 of the Act in accordance with law. The ground No 3 to 5 of the appeal of the assessee are accordingly allowed for 3 to 5 of the appeal of the assessee are according 3 to 5 of the appeal of the assessee are according statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes. statistical purposes.
Order pronounced in the open Court on nced in the open Court on 11/12 /12/2024.
Sd/- Sd/ Sd/- Sd/ (RAHUL CHAUDHARY) (RAHUL CHAUDHARY (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 11/12/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai
