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Judgment
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the assessee passed by the Ld. CIT(A)/ NFAC vide order dated 22.02.2025 for the A.Y. 2015-16.
The grounds of appeal are as under :-
“Appeal against the order dated 22-02-2025 passed by the National Faceless Appeal Centre (NFAC) under section 250 of the Income Tax Act, 1961 ("the Act") for Assessment Year 2015-16 confirming the order dated 27-09-2021 passed by the Ld. Assessing officer under section 147 r.ws 1448 of the Act
1.That the Learned Assessing officer ("Ld. AO") has erred on facts and in law in completing assessment u/s 147 r.w.s 144B at Rs. 2,56,20,450 as against the returned income of Rs. 2,17,80,450.
2.That the Ld. AO/NFAC has erred on facts and in law in framing/confirming the impugned reassessment order and that too without assuming jurisdiction as per law and without complying with mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.
2.1That in any case and in any view of the matter, proceedings could be initiated, if any, u/s 153C and not u/s 148, as it is based on the material found from the search of Sh. Atul Tyagi.
2.2That in any case and in any view of the matter, action of Ld. AO/NFAC in passing/confirming the impugned reassessment order u/s 147/144/144B, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds.
2.3That the Ld. AO/NFAC has erred on facts and in law in framing/confirming the impugned reassessment order and that too without following the law laid down by Hon'ble Supreme Court and High Courts.
a. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212 (SC) (para 35)
b. Shyam Sunder Khandelwal 161 taxmann.com 255 (Rajasthan)
c. Sejal Jewellary vs. Union of India [2025] 171 taxmann.com 846 (Bombay)
d. Principal Commissioner of Income-tax vs. VSL, Mining Company (P.) Ltd. [2024] 167 taxmann.com 373 (Karnataka)/(2024) 301 Taxman 631 (Karnataka)
e. Sri Dinakara Suvarna vs. Deputy Commissioner of Income-tax [2022] 143 taxmann.com 362 (Karnataka)/[2023] 454 ITR 21 (Karnataka) SLP Dismissed in Deputy Commissioner of Income-tax vs. Sri Dinakara Suvarna [2023] 151 taxmann.com 489 (SC)/[2023] 293 Taxman 687 (SC)/[2023] 454 TTR 27 (SC)
3.That the Ld. AO/NFAC has erred on facts and in law in making/confirming addition of Rs. 30,00,000 u/s 69A of the Act on account of unexplained money without bringing any material on record in support of his contention.
3.1That the Ld. AO/NFAC has erred on facts and in law, in making/confirming addition amounting to Rs. 30,00,000 by alleging it to be unaccounted money in nature.
3.2That the Ld. AO/NFAC has erred on facts and in law, in relying on the information received from the DDIT (Inv-II), Gurugram without taking into cognizance of the evidence submitted by the appellant.
3.3That the Ld. AO/NFAC has erred on facts and in law in law, in not giving an opportunity to cross examine the party who had stated before the Income Tax Authorities that they had given accommodation entries to the appellant.
3.4That the Ld. AO/NFAC completely erred in making/confirming addition which are unlawful and made in violation of principle of natural justice.
3.5That the Ld. AO/NFAC has erred on the facts and in law in passing the order with pre-conceived notions which are based on conjectures and surmises.
3.6That the Ld. AO/NFAC has erred on the facts and in law in passing the order with pre conceived notions without considering the request for video conference to appraise hin about the facts of the matter.
3.7That the Ld. AO/NFAC has erred on the facts and in law in making/ confirming a huge addition which is merely based on non-production of signed confirmation of books account without appreciating the fact that the confirmations were sent though online mode of submission which doesn't requires separate authentication or signature.
3.8That the Ld. AO/NFAC has grossly disregarded the fact that the appellant completely discharged it onus to prove the alleged transactions are genuine and business purposes.
3.9That having regard to the facts and circumstances of the case, Ld. NFAC has erred in law and on facts in making cut and paste error while passing the impugned order and that too without applying independent application of mind.
4.That the Ld. AO has erred on the facts and in law, in making alleged addition amounting to Rs. 30,00,000 on account of unexplained money to the assessed income of Rs. 2,26,20,450 as determined u/s 143(3) of the Act instead of retuned income of Rs. 2,17,80,450.
The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal and/or the relief claimed, at any time before or at the time of hearing of the appeal, so as to enable your goodself to decide this appeal according to law.”
The first ground of appeal is general in nature and second ground of appeal is on jurisdictional issue in which the assessee has claimed that since the reopening has been done on the basis of information gathered from searched operation of Atul Tyagi, therefore action of the AO of reopening of the case u/s.148 of the Act is not justified. The assessee claims that the assessment should have been made u/s.153C of the Act. The Ld. Counsel for the assessee argued on this jurisdictional issue and brought on record different case law as mentioned in ground No.2.3 above.
Per contra the Ld. DR relied on the order of the Ld. CIT(A).
We have considered the findings given by the AO in the assessment order and by the Ld. CIT(A) in the appellate order. We have also considered the arguments brought before the Bench by both the parties. We find that in this case a search was conducted on one entry operator Sh. Atul Tyagi where in his statement he had given names of various parties to whom he had given entries assessee’s names also figured alongwith amount in that statement but no document or books of account pertaining to / belonging to the assessee was found during that search. Further no document pertaining to or belonging to the assessee was even handed over by the assessee of the searched party to the AO of assessee. Therefore, in our considered view there is no question of making any assessment u/s.153C of the Act which primarily require above mentioned two additions for the sake of convenience, section 153C is being reproduced as under :
[(1)] Notwithstanding anything contained in section 139, section 147, section 148. section 149. section 151 and section 153, where the Assessing Officer is satisfied that ;-
(a)any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b)any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to.
a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] 24 and that Assessing Officer shall proceed against each such other person and issue notice provisions of section 153A. if that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A]:
Now, the question is section 153C of the Act is not to be invoked then under which section the assessment will be made on the basis of information received from the investigation wing. In our considered view on the basis of information received from the investigation wing the AO is very much justified in reopening the case u/s.148 of the Act, therefore, ground No.2 which is jurisdictional issue is dismissed.
In assessee’s appeal ground No.3 and 4 is related to the addition of Rs.30 lacs u/s.69A of the Act made by the AO and confirmed by the Ld. CIT(A). Infact in the statement of Sh. Atul Tyagi an entry operator on whom a search operation u/s.132 took place, the entry operator Sh. Atul Tyagi accepted that he had given an entry of Rs.30 lacs to the assessee. Information from the investigation wing also revealed that the assessee has received unaccounted money amounting to Rs. 30 lacs from sale / bogus source i.e.
Sahil Tradewell marketing Pvt Ltd
Samrat Trading Company and
AKT International
During assessment proceedings the assessee provided PAN and address balance confirmation of the parties and proof of payment through banking channels etc to the A.O. but the AO concluded that all these things are always available with assessee’s in three operators because all documents are duly and made/ arranged and provided to the department in such cases, therefore, rejecting documents provided by the assessee the AO made addition of Rs.30 lacs. On the basis of entries received from this shell companies. The Ld. CIT(A) also confirmed the addition on this issue.
We have considered the findings given by the authorities below and we have also considered the arguments made by the Ld. Counsel for the assessee as well as by the Ld. DR. We find that making addition of the entire amount of Rs.30 lacs would be injustice to the assessee because the assessee has already shown this amount in its books of account and has paid tax on it. Therefore, making entire addition will be tantamount to double taxation which is not acceptable. Therefore, in the fitness of things we are inclined to confirm the addition of 5% of the total amount received as entry from bogus companies to be added in the taxable / net income of the assessee. Accordingly, assessee’s appeal on this issue is partly allowed.
In the result, the appeal filed by the assessee is partly allowed.