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Facts
The assessee's appeal pertains to assessment year 2017-18, challenging an addition of Rs. 80,60,000 made under Section 68 for unexplained cash credits. The addition was based on a report from the Investigation Wing, Kolkata, which indicated that the assessee had taken accommodation entries through M/s Kashi Impex for bogus sales.
Held
The Tribunal held that the assessee failed to prove the genuineness and creditworthiness of the impugned cash credits. The transactions with M/s Kashi Impex were found to be not genuine, with M/s Kashi Impex being a paper concern used for routing unaccounted money. The addition was confirmed as deemed income under Section 68.
Key Issues
Whether the addition of Rs. 80,60,000 on account of unexplained cash credit, treated as bogus sales, is justified under Section 68 of the Income Tax Act, and whether Section 115BBE is applicable.
Sections Cited
143(3), 68, 115BBE, 131
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI MANOJ KUMAR AGGARWAL
Date of Hearing 12.02.2025 Date of Pronouncement 12.02.2025 ORDER PER SATBEER SINGH GODARA, JUDICIAL MEMBER:
This assessee’s appeal for assessment year 2017-18 arises against Commissioner of Income Tax (Appeals)-3, [in short, the “CIT(A)”] Bhopal’s order dated 28.03.2022, in case No. CIT(A)-3, Bhopal/IT-11050/2019- 20, in proceedings under Section 143(3) of the Income Tax Act, 1961, [hereinafter referred to as ‘the Act’].
Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.
Learned departmental representative vehemently argues in the light of both the lower authorities respective findings that they have rightly made Section 68 unexplained cash credit additions of Rs.80.60 lacs in the assessee’s hands, in the course of assessment framed on 28.12.2019 and upheld by the CIT(A) as under:
“4.1 Ground Nos. 1 and 2:- Through these grounds of appeal, the appellant has challenged the addition made by the AO amounting to Rs. 80,60,000/- on account of undisclosed income. 4.1.1. The appellant filed its return of income declaring total income at Rs. 63,88,270/- on 30.10.2017. The appellant is engaged in trading and manufacturing of Oil. The case of the appellant was selected for scrutiny under CASS for the following two reasons. (i) Quantitative details of principal items of goods traded or raw material as well as finished goods not submitted. (ii) Custom duty paid as shown in the ITR is less than the duty paid as per export import data. Accordingly, the Ld AO issued necessary notices under the Act. During the proceedings, the Ld AO received a report from Investigation Wing, Kolkata on the issue of cash deposit after demonetization in respect of Mi's AK International and Rishabh Trading Company. DDIT (Inv), Unit-3(1), Kolkata has forwarded his report vide letter No. DDIT (Inv)/Unit- 3(1)/Kol/report/2017-18/1193 dated 30.05.2017. It was found in the course of investigation by the DDIT (Inv), Unit-3(1), Kolkata that huge cash of Rs. 2,48,00,000/- and Rs. 2,40,00,000/- were deposited in the Bank A/c of Rishabh Trading Company and M/s AK International, both are the proprietary concerns of Ms. Surabhi Burman, in the Bank A/c No. 7311713681 and 7711725017 respectively maintained in Kotak Mahindra Bank. Harish Mukharjee Road, Kolkata. Cash of Rs. 1,21,00,000/- was also found to be deposited in the Bank A/c of M/s Radhey Vallabh Exports, Proprietorship concern of Ms. Lashika Agrawal, in the Bank A/c No. 36133962154 maintained with SBI, Burra Bazar, Branch, Kolkata. Information was also received in respect of cash deposit of Rs. 1,57,00,000/- in the Bank A/c of M/s Rameshwaram impex having account no. 35915050023 maintained with SBI Burra Bazar, Kolkata. During enquiry proceedings before DDIT (Inv), Unit -3(1), Kolkata Proprietors of various concerns including Shri Kamal Burman, Proprietor of M/s Kashi Impex and other concerns were also appeared and examined. Statements of various Proprietors were recorded. They specifically stated that they are the proprietors for the name sake and no concern was engaged in doing any real business. They also stated that all the bank accounts and transactions were managed and controlled by Mr. Dipanshu Gupta. Statement of Mr. Dipanshu Gupta was also recorded u/s 131 of the Act wherein he admitted that he is engaged in providing only accommodation entries through various paper entities. He also admitted that through the various concems benefits of accommodation entry were provided to needy persons/concerns. All the concerns in the name of Surabhi Burman, Kamal Burman, Kashi Nath Adhikari, Alpesh Shaw are managed and controlled by him only. The DDIT(Inv), Unit-3(1), Kolkata also found that Mr. Dipanshu Gupta had provided accommodation entries before demonetization for a total value of Rs. 500 crores approximately. The report also contains sworn statements of Mr. Dipanshu Gupta, bank statements of various concerns through which accommodation entries were provided. On the basis of statement of Dipanshu Gupta and bank statement of M/s Kashi Impex (SBI A/c No.35859322171), the Ld AO found that the appellant had taken accommodation entry amounting to Rs. 80,60,000/- in form of sales of goods to M/s Kashi Impex. The Ld AO issued show causc notice enclosing statements of various persons as recorded by DDIT(Inv), Unit-3(1), Kolkata to the appellant. The appellant was required to explain the above mentioned amount of accommodation entry taken from M/s Kashi Impex. The entire matter was examined by the Ld AO in the light of the facts of case, bank statements of M/s Kashi Impex, sworn statements of Mr. Dipanshu Gupta and sworn statement of Shri Kamal Burman, proprietor of M/s Kashi Impex. The Ld AO found that transactions entered into by the appellant with M/s Kashi Impex were not genuine. Shri Kamal Burman, Proprietor of M/s Kashi Impex acted as accomplice of Mr. Dipanshu Gupta in providing accommodation entry to the appellant and other beneficiaries. The Ld AO found that amount of Rs. 80,60,000/- was credited in the books of account of the appellant through the non genuine sales and thus, the appellant introduced its own unaccounted money in the garb of ingenuine sales. Accordingly, Ld AO made addition of Rs. 80,60,000/- to the total income on account of undisclosed income under the deeming provision. The entire addition has been taxed as per the provisions of section 115BBE of the Act. 4.1.2. The appellant has submitted that the case was selected for scrutiny for the two reasons on which no discrepancy was noticed by the Ld AO whereas the addition has been made on the other issues which is, in view of instruction no. 7/2014 issued by CBDT, not permissible in the eyes of law and therefore, the assessment order is not a valid order. The Ld AO acted beyond the permissible limits of law. 4.1.3. I find that during the assessment proceedings, the appellant has not objected the show cause notice issued by Ld AO on the issue of accommodation entry of Rs. 80,60,000/- and participated in the assessment proceedings. At the appellate stage, this issue has been raised through submission by the appellant. In support of its contentions no relevant instructions or directions of the higher authorities in this regard applicable to the year under consideration has been brought on record to establish the action of the Ld AO beyond the permissible limit of law. The appellant has mentioned instruction no. 7/2014 issued by CBDT. This instruction was applicable to the cases selected under CASS 2014 only. This has been clarified by the CBDT vide instruction no. 20/2015 dated
29.12.2015. Thus, the appellant failed to bring any relevant instruction during the appellate proceedings to show the action of the Ld. AO was beyond scope of scrutiny guidelines. Since, the appellant has not objected the proceedings before the Ld AO, the contentions of the appellant are hereby rejected. 4.1.4. Regarding addition of Rs. 80,60,000/- it has been submitted by the appellant that the goods have been sold through five invoices. Sales was done against declaration of F-form prescribed under Sales Tax Act. Declaration issued by Department of Trade and Taxes, Government of NCT, New Delhi was also provided by M/s Kashi Impex to the appellant company. M/s Kashi Impex is duly registered with the Department of Trade and Taxes, Government of NCT, New Delhi. Goods were despatched via road transport. Vehicle numbers are also mentioned in the invoices. Copy of ledger account along-with invoices have been furnished by the appellant during the appellate and assessment proceedings. I find that detailed discussion on the issue of accommodation entries provided by Mr. Dipanshu Gupta through M/s Kashi Impex and many other concerns have been made by the Ld AO from page 02 to page 09 of the assessment order. Statement recorded during the enquiry proceedings by the DDIT (Inv), Unit- 3(1), Kolkata has been reproduced in the assessment order. From the discussion made in the assessment order, it is evidently clear that M/s Kashi Impex was used only for providing accommodation entries by Mr. Dipanshu Gupta. The proprietor Shri Kamal Burman was for the name sake only. Mr. Dipanshu Gupta was confronted with the statement of Shri Kamal Burman wherein in answer to question no. 31 he stated as under:- "Ans. I confirm and agree that the deposition made by the proprietors are correct and are managed and controlled by me. They really do not know the actual business of their proprietorship concerns. I kept them in dark. I own up that I used these proprietorship concerns for providing accommodation entries. These proprietorship concerns have not did any actual business." In answer to question no. 32, Shri Dipanshu Gupta stated as under:- "M/s Rameshwaram Impex, M/s Kashi Impex are the main proprietorship concerns from which exit route of funds is provided to main beneficiaries." From the above confession of Shri Dipanshu Gupta, it is amply evident that the appellant has taken accommodation entry from M/s Kashi Impex in the garb of bogus sales of goods and brought amount of Rs. 80,60,000/- by crediting the same in its books of account. The appellant has used M/s Kashi Impex to bring its own unaccounted money in the books of account. M/s Kashi Impex is a paper concern being used for routing unaccounted money of the needy concerns/ persons. No actual sales and purchase has been done by the M's Kashi Impex. Since, the amount of Rs. 80,60,000/- has been credited in the books of account of the appellant, this amount is treated as deemed income within the meaning of section 68 of the Act for which explanation of the appellant regarding nature and source of such credit is not found satisfactory. Therefore, the Ld AO has rightly held that the transaction of Rs. 80,60,000/- entered into by the appellant with M/s Kashi Impex is unexplained credit in its books of account. Considering the above discussion, addition of Rs. 80,60,000/- made by the Ld AO is hereby confirmed. Since, this income is deemed income u/s 68 of the Act, taxes shall be charged as per the provisions of section 115BBE of the Act. 4.1.5. The appellant has also submitted that the addition has been made on the basis of third party statement and no opportunity to cross examination to Shri Kamal Burman and Shir Dipanshu Gupta was provided by the Ld AO. In support of these contentions the appellant has placed reliance upon various judicial pronouncements also. I have found that Ld AO had issued show cause notice and provided all the statements recorded in the course of enquiry proceedings by DDIT(Inv), Unit-3(1), Kolkata to the appellant. The statement and enquiry report of the said authority are the conclusive evidences regarding accommodation entry taken by the appellant from M/s Kashi Impex. Thus, the appellant was confronted with the all material which were against it. This has been done by the Ld AO so that the appellant could represent itself properly. Thus, in these circumstances, providing opportunity for cross examination was not warranted. Further, the appellant had never asked the AO to provide opportunity to cross examine Shri Dipanshu Gupta and Shri Kamal Burman. Therefore, no question of providing opportunity to cross examine the above persons arises. This cannot be taken as matter of right by the appellant. While deciding Writ Petition No.16633/2018 in the case of Harivallabh Mohanlal Joshi & Ors. vide order dated 13.08.2018, Hon'ble M.P. High Court has held as under: "16. In view of the law laid down by the Supreme Court as well as other High Court, as quoted above, I am of the opinion that that the right to cross-examine cannot be considered to be an integral part of the principle of natural justice, however, it is open for the authority to examine the available circumstances and if deems fit, the opportunity to cross-examine can be provided, but not as a matter of right". Therefore, I am of the opinion that there was no requirement of providing opportunity of cross examination and order passed by the AO is valid. In view of the above discussion, the appeal on the above grounds is dismissed.”
It has come on record that assessee has failed to prove the genuineness and creditworthiness of the impugned cash credits and therefore, we are of the considered view that in light of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) and CIT Vs. Durga Prasad More (1971) 82 ITR 540 (SC) that the learned lower authorities have rightly proceeded against the assessee based on the investigation wing before holding it to have received accommodation entries forming subject matter of addition. Rejected accordingly.
So far as the assessee’s assessment under Section 115BBE is concerned, we quote the hon’ble Madras high court’s decision in S.M.I.L.E Microfinance Limited Vs. The ACIT CC-1 in W.P.(MD) No.2078 of 2020 & W.M.P. (MD) No. 1742 of 2020 holding that the said provision applies for transactions done on or after 01.04.2017 only an direct the Assessing Officer to assessee the impugned cash credits under normal provision only.
This assessee’s appeals is partly allowed in above terms.
Order pronounced in the open court on 12.02.2025