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Facts
The Assessing Officer (AO) made an addition of Rs. 1,00,00,000/- under Section 68 of the Income Tax Act, treating a receipt from Cyprus Multi-trade Pvt. Ltd. as undisclosed income. The assessee failed to provide substantiating documents for this receipt, and the Commissioner of Income Tax (Appeal) dismissed the assessee's appeal.
Held
The Tribunal noted that the assessee failed to produce any cogent document to prove that the amount was not received from M/s Cyprus Multitrade Ltd. Despite the assessee's contention of non-receipt, the matter was restored to the AO for de-novo adjudication with liberty to the assessee to produce supporting documents.
Key Issues
Whether the addition made by the AO under Section 68 treating a receipt as undisclosed income is justified without proper substantiation by the assessee.
Sections Cited
143(3), 147, 68, 148, 142(1), 133(6)
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Income Tax Appellate Tribunal, DELHI
ORDER
PER YOGESH KUMAR, U.S. JM:
1. The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal)-29, New Delhi (‘Ld. CIT(A)’ for short) order dated 24/03/2025 for Assessment Year 2012-13.
Brief facts of the case are that, an assessment order came to be passed on 14/12/2019 under Section 143(3)/147 of the Income Tax Act, 1961 ('Act' for short) by making an addition of Rs. 1,00,00,000/- u/s 68 of the Act. Aggrieved by the assessment order dated 14/12/2019, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the Appeal vide order dated 24/03/2025. Aggrieved by the present Appeal.
The Ld. Counsel for the Assessee submitted that the Ld. CIT(A) has committed error in dismissing the appeal and confirming the addition made by the A.O. Further submitted that the findings of both the authorities regarding amount received by the Assessee company from Cyprus Multi-trade Pvt. Ltd. and treating the said receipt as undisclosed income u/s 68 of the Act is not only erroneous and same is contrary to the material available on record. The Ld. Counsel has also made elaborate submission and sought for allowing the Appeal.
Per contra, the Ld. Department's Representative submitted that the Assessee has not responded to the show-cause notice issued by the A.O. and even before the Ld. CIT(A) except making written submission, the Assessee has not produced any document to substantiate the claim of the Assessee. Thus, Ld. Department's Representative submitted that the grounds of Appeal of the Assessee is meritless, accordingly sought for dismissal of the appeal.
We have heard both the parties and perused the material available on record. During the assessment proceedings, the Assessee has not responded to the show cause notice issued by the A.O., therefore, A.O.
made addition u/s 68 of the Act of Rs. 1,00,00,000/- which being proceedings except filing the written submission by denying the amount received from M/s Cyprus Multitrade Ltd., the Assessee has not submitted any proof. The Ld. CIT(A) has dismissed the Appeal in following manners:-
“Findings: 5. Ground Nos. 1 & 5: are general in nature and are therefore not adjudicated upon.
6. Ground Nos. 2 to 4: The brief facts of the case are that the appellant company e- filed its return for the year under reference declaring income of Rs. 4,66,000/-. As per the information received from DDIT (Inv.), Unit-3(1), Kolkata the appellant had received accommodation entries during the year under consideration. Accordingly, the case was reopened and notice u/s 148 of the act was issued. Assessment u/s 147/143(3) of the Act was completed on 14.12.2019 at assessed income of Rs. 1,04,66,000/-. 6.1 During the assessment proceedings, the AO issued notice u/s 142(1) of the Act on various dates and finally a show cause notice dated 06.12.2019 to the appellant and asked specifically to furnish explanation along with supporting documentary evidences in respect of amount of Rs. 1,00,00,000/- from M/s Cyprus Multitrade Pvt. Ltd. during F.Y. 2011-12. This company was found to be controlled and managed by Shri Praveen Aggarwal and others who were running non-descript shell companies. In response to this appellant failed to furnish explanation to prove identity, genuineness and creditworthiness of the transaction undertaken. Hence, the AO added this amount u/s 68 of the Act to the income of appellant. 6.2 During the appellate proceedings, in response to hearing notices appellant filed the written response including the copy of submission made earlier during assessment proceedings. I have perused the submission and found that the appellant simply denying of receiving any amount from M/s Cyprus Multitrade Pvt. Ltd. but no substantiating proof are submitted alongwith its submission. On the other hand, AO had in his possession the specific information forwarded by investigation wing after conducting detailed enquiries on the basis of which the appellant company was found to be beneficiary of availing accommodation entries. AO has replied to the objections raised by the appellant stating as under:- ‘In this regard Para wise reply is as under: 3 (i). The Investigation Wing Kolkata has established that cash was deposited in the accounts of M/s ShardaVanijya Private Limited and then transferred M/s Parmeshwar Merchandise Private Limited. Therefrom the funds were transferred to M/s Link Point Construction Limited, Sampark Advisory Private Limited, Suryamukhi Project Limited, Khushboo Complex Private Limited, CyperusMultitrade Private Limited and various others shell companies as mentioned in the report.
M/s Frozen Iron and Steel Private Limited Vs. DCIT The investigation wing has established trail of fund flow through bank accounts which is ultimately received by the assessee i.e. M/s Frozen Iron & Steel Private Limited during Financial year 2011-12. Notice u/s 133(6) of the Income tax Act-1961 dt. 20.03.2019 was issued to the assessee seeking its response by 25/03/2019. However, no response from the assessee was received. In absence of any denial from the assessee reason to believe was formed. 6.3 In view of this discussion, I am inclined to agree with the addition made by AO and accordingly, these grounds of appeal are dismissed.”
6. Considering the fact that except filing the written submission denying the receipt of amount received from M/s Cyprus Multitrade Ltd., the Assessee has not produced any cogent document to prove that the Assessee has not received any amount from M/s Cyprus Multitrade Ltd., since it is the specific case of the Assessee that no amount has been received from the said Company, we restore the matter to the file of the A.O. for de-novo adjudication to the issue and we hereby reserve liberty to the Assessee to produce all/any document in support of its contention. All the contentions of the Assessee are kept open.
Accordingly, the Grounds of Appeal of the Assessee are partly allowed
In the result, the Appeal of the Assessee is partly allowed for statistical purpose.