NARAYAN TRADECOM PRIVATE LIMITED,KOLKATA vs. I.T.O., WARD - 6(1), KOLKATA

The only issue raised in various grounds of appeal is against the order of Ld. CIT(A) confirming the addition of Rs.22,00,119/- as made by the AO u/s. 68 of the Act in respect of unexplained cash credit.

The facts in brief are that the assessee filed its return of income on 16.10.2016 declaring total income of Rs.3,01,740/-. The AO received information that assessee has received accommodation entry from M/s. Outlook Highrise Ltd. and M/s. Neelgagan Nirman Pvt. Ltd. aggregating to Rs. 22,00,119/-. Accordingly, case of the assessee was reopened and notice was issued on 30.07.2022. The assessee filed the return of income on 29.05.2021 declaring total income at Rs.3,00,800/-. Thereafter, notice u/s. 142(1) along with questionnaire was issued to the assessee which was duly served on the assessee and replies were filed along with details called for by the AO. The AO also issued notice u/s. 133(6) of the Act to two parties which were duly responded confirming the transactions with the assessee. Thereafter, the AO did not issue any notice u/s.131 or carryout any further investigation to dig out the truth. Finally, addition was made by the AO on the basis of statement recorded of Shri Mukesh Banka during the course of search on the entities controlled and managed by him that those were shell companies and engaged in providing accommodation entries. Needless to say that the said statement was withdrawn and retracted subsequently.

In the appellate proceeding, the Ld. CIT(A) dismissed the appeal of the assessee by following the decision of the Hon’ble Calcutta High Court in the case of PCIT Vs. Swati Bajaj [2022] 139 taxmann.com 352 (Cal) and various decisions discussed in the order.

After hearing the rival contentions and perusing the material on record, we find that the assessee has received in aggregate Rs.22 lakh from two parties viz. M/s. Neelgagan Nirman Pvt. Ltd. Rs. 8 lakh and M/s. Outlook Highrise Pvt. Ltd. Rs. 16 lakh. These two amounts were received by the assessee during the year for facilitating trading of L&T shares. We note that these advances were also refunded within a period of three months only within the financial year itself. The assessee has filed all the evidences during the assessment proceedings as well as before the Ld. CIT(A) qua these advances received and refund thereof. We note that in the assessment proceedings the AO has even issued notice u/s. 133(6) to both the parties and they have confirmed to have entered into these transactions with the assessee. Thereafter, the AO did not issue any notice u/s. 131 or carry out any further verification but relied on the statement of Mahesh Banka recorded during the course of search which was retracted later on. Considering the facts of the case, in our opinion, the assessee has discharged its onus by filing of necessary evidences before the AO and the AO also confirmed the transaction by issuing of notice u/s. 133(6) to the parties who confirmed these transactions. Therefore, the mere addition on the basis of statement of