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Facts
The Revenue appealed against the CIT(A)'s deletion of additions made on account of unexplained income and cash credit. The additions were based on information regarding the assessee entertaining transactions with a shell entity controlled by an individual involved in routing bogus accommodation entries.
Held
The Tribunal held that for ITA No. 3732/DEL/2024, the tax effect was below the threshold for maintainability, thus dismissing the appeal. For ITA No. 3755/DEL/2024, a partial lump-sum addition was deemed appropriate for unexplained payments and expenditures, and the higher rate under Section 115BBE was disallowed.
Key Issues
Whether the CIT(A) correctly deleted additions related to unexplained cash credit and expenditure, and whether the appeal is maintainable based on tax effect thresholds. Also, the applicability of Section 115BBE for tax levy.
Sections Cited
69A, 68, 69C, 148, 147, 144B, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
The above captioned two appeals by the Revenue are directed against two separate orders of the NFAC, Delhi dated 27.06.2024 and 28.06.2024 for A.Ys 2014-15 and 2015-16 respectively.
Page 1 of 8 and 3755/DEL/2024 Agya Imports [A.Ys 2014-15 & 2015-16]
Since these two appeals pertain to same assessee and involve common issues, they were heard together and are disposed of by this common order for the sake of convenience and brevity.
The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 1,73,52,271/- on account of unexplained income u/s 69A of the Act.
A perusal of the grievance of the revenue shows that the tax effect is Rs 56,29,077/-, therefore, this appeal is not maintainable as per CBDT Circular No. 9/2024 dated 17.09.2024.
This appeal is, accordingly, dismissed with liberty to the revenue to approach the Tribunal as per the provisions of law, should it feel that the tax effect is more than Rs. 60 lakhs.
As a result, the appeal of the Revenue stands dismissed.
ITA No. 3755/DEL/2024 [A.Y 2015-16]
The grounds raised by the Revenue read as under:
“1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,70,04,498/- on the account of unexplained cash credit u/s 68 of IT Act, 1961 without appreciating the fact that the Entry Provider himself has stated on Page 2 of 8 and 3755/DEL/2024 Agya Imports [A.Ys 2014-15 & 2015-16] oath that he has routed accommodation entries to different beneficiaries through his companies in return for the commission income and the same forms the basis of addition made by the assessing officer.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,70,04,498/- on the account of unexplained cash credit u/s 68 of IT Act, 1961 without appreciating the fact that no documentary evidence was provided by the assessee to substantiate the legitimacy of the transaction in question other than the ledger and bank statements which in itself is part of the fabricated evidence of the modus operandi of adopted by the entry operator.
3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 85,022/- on the account of unexplained expenditure u/s 69C of IT Act, 1961 without appreciating the fact that the Entry Provider himself has stated on oath that he has routed accommodation entries to different beneficiaries through his companies in return for the commission income and the same forms the basis of addition made by the assessing officer. 4 The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s)
Brief facts of the case are that assessee company has filed its Return of Income on 30.09.2015 declaring total income of Rs. 21,71,340/-. As per credible information available on system, the Page 3 of 8 and 3755/DEL/2024 Agya Imports [A.Ys 2014-15 & 2015-16] Assessing Officer noticed that one Shri Anil Kumar Singhal and his wife Smt. Anita Rani Singhal are partner in M/s G. P. Trading Co. Apart from this, Shri Anil Kumar Singhal in his statement before the investigation Wing accepted that he and his family members are Prop./Partner/Director in more than 25 Firms/ Companies where accounts were opened in the name of these entities in different banks and these firms/companies were used to issue bogus/bill/parcha. Sh Singhal charged 25 to 50 paisa per ton in case of Iron and steel trading and 10 paisa per meter in case of cloth trading.
During the course of investigation, it is found that the assessee M/s Agya Imports Ltd has entertained transaction worth Rs. 1,70,04,498/- with one of the shell entity Multiblizz Traders Pvt. Ltd, under control of Shri Anil Kumar Singhal and his associates involved in the modus operandi. The AO reopened the case u/s 148.Thereafter, the Assessing Officer completed the assessment at Rs. 1,92,60,860 /- u/s 147 read with section 144B of the Act on 30.03.2022 by making an addition of Rs.1,70,04,498/- u/s 68 of the Act as unexplained cash credit and Rs. 85,022/- u/s 69C of the Act as an unexplained expenditure.
Page 4 of 8 and 3755/DEL/2024 Agya Imports [A.Ys 2014-15 & 2015-16]
Aggrieved, the assessee went in appeal before the ld. CIT(A) who allowed the appeal of the assessee. The Revenue, now aggrieved, is before us.
The ld. DR relied on the orders of the authorities below.
Per contra, the ld. counsel for the assessee relied on the orders of the ld. CIT(A).
We have heard the rival submissions and have perused the relevant material on record. In the instant case, we find that the assessee has attempted to prove the entire source of payments made to Multiblizz Traders as advance for purchase of empty old glass & packing boxes.
Although the assessee, prima facie, appears to have discharged its onus of explaining source of payments, it’s contentions to prove the source, hardly deserves to be accepted in entirety especially when the AO found that the dealing with Anil Singhal involved bogus accommodation entries who charged 25 to 50 paisa per ton in case of Iron and Steel Trading and 10 paisa per meter in case of cloth trading. On the other hand, the Revenue’s endeavour to disbelieve the assessee’s contention cannot be fully justified. In this factual matrix, there is some element of failure to explain some of the payments, cannot be ruled out. Be that as it may, it is deemed appropriate, in larger interest of justice, that a lump-sum addition of ₹ 5 lakh only would be just and proper to cover the issues of Page 5 of 8 and 3755/DEL/2024 Agya Imports [A.Ys 2014-15 & 2015-16] payment made to Multiblizz Traders and unexplained expenditure, with a rider that the same shall not be treated as a precedent, so as to cover all loopholes. The ground of appeal no 1 to 3 is partly allowed.
14. In so far as assessee's levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the Madras High Court in the Writ petition in the case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. Accordingly, we direct the AO to tax the addition under normal provisions of tax and not under the provisions of 115BBE. dismissed whereas appeal in is partly allowed.
Order pronounced in open court on 03.09.2025.