Income Tax Officer vs Alpha Infrasolution Pvt. Ltd.

PER MANISH AGARWAL, A.M:-

The captioned appeal is filed by Revenue and Cross-objection filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 23.12.2019 u/s 147 r.w.s. 143(3) of the Act pertaining to Assessment Year 2012-13.

The assessee has also filed Cross-objections thus they are taken together and decided by a common order.

First, we take appeal of the Revenue in ITA No. 1006/Del/2025 for Assessment Year 2012-13.

The Revenue has raised following Ground of appeal:-

Before us, ld. CIT DR for the Revenue vehemently supported the order of AO and submits that ld. CIT(A) has simply accepted the submissions made by the assessee wherein it was contended that it has discharge the burden casted upon it of proving the identity and creditworthiness of the lender companies by filing their ITR’s and confirmation of income and bank statements of the lender companies and their Balance Sheets. However, nowhere in the appellate order, the ld. CIT(A) has made any comments on the doubts raised by the AO with respect to the financial capacities of the lender companies wherein AO had discussed about the funds raised by these lender companies through CCDs and their utilization in the shape of loans given. Ld. CIT DR submits that ld. CIT(A) though had accepted that AO has fresh and tangible material to initiate the reassessment proceedings us/s 147 of the Act however, no comments were made with respect to the allegation made by the AO of using the assessee company as conduit for providing accommodation entries. He therefore, submits that the matter be remanded back to the file of AO for necessary verification of the facts.

On the other hand, ld.AR for the assessee vehemently supported the order of AO and reiterated the arguments as raised before ld. CIT(A) which are reproduced in the appellate order. He further submits that ld. CIT(A) has deleted the addition after considering the factual details filed by the assessee and requested for the confirmation of the order of ld. CIT(A).

Heard the contentions of both parties at length and perused the material available on record. In the instant case, proceedings u/s 147 were initiated based on the information received from the AO, Central Circle that the assessee has received loans from Four entities which are being alleged as accommodation entries providers. Based on the material available, the AO has recorded the satisfaction that the income has escaped assessment and reassessment proceedings u/s 147 were initiated by issue of notice u/s 148 of the Act. Ld.CIT(A) while upholding the action of AO in re-opening the assessment, has observed that the AO has tangible material and relied upon the information in his possession before re-opening the case and the case has been opened after analyzing the information and with due application of mind. However, while adjudicating the issue on merits, ld. CIT(A) observed that AO has not conducted the inquiries which should have been conducted to examine the identity and creditworthiness of the lenders as well as genuineness of the transactions. Ld. CIT(A) further observed that the assessee by filing all the necessary documents has discharged the burden casted upon it and if the AO had any doubts about the existence and creditworthiness of the lender companies, summons u/s 133(6) of the Act could be issued to the lender companies or their Directions to examine the capacity for making such loans / advances and therefore, relying upon the various judicial redocuments, has deleted the additions made.

It is observed from the assessment order that the AO on 18.12.2019, has disposed off the objections raised by the assessee with respect to the reasons recorded and thereafter, on 23.12.2019, has passed the assessment order. Further, the assessee vide letter dated 26.11.2019 had filed the details with respect to the loans taken from four lender companies which comprised of confirmations, acknowledgements of their ITRs, bank statements and their financial statements. It is relevant to state here that the reassessment proceedings in the instant case, were carried out since September, 2019 when first notice was issued on 17.09.2019 however, the assessee at the very fag end of the proceedings i.e. on 26.11.2019, had filed the details of the lender companies for the first time before the AO. This clearly shows that the assessee has drag the proceedings to the fag end so that the AO cannot make any in-depth inquiry or investigation with respect to the funds borrowed. As observed above, ld. CIT(A) has failed to comment upon the deficiencies pointed out the AO with respect to the creditworthiness of the lender companies where all the four lender companies have one common and very peculiar facts that they all had issued Compulsory Convertible Debentures (CCD) and raised funds of more than INR 70.00 crores in each case. The precise figure of the CCD’s issued by all the four companies is as under:

Ld. CIT(A) has co-terminus powers as available to the AO and he himself can make necessary verification in terms of the powers given under section 250(4) of the Act or may direct the AO to make further enquiries and report the result. Ld.CIT(A) though had observed at page 84 of the order that the AO has failed to make any inquiry or investigation however, without doing any exercise of any inquiry or investigation at his end, has accepted the contention raised by the assessee and has accepted those evidences and financial statements on which the AO has already raised serious issues and doubted the creditworthiness of all the four lender companies. It is further observed that ld. CIT(A) has referred certain Finance agreements executed between the parties with respect to the loans given to the assessee however, from the perusal of the assessment order, we find no observation of the AO regarding filing of any such agreement and since these agreements were never produced before the AO, the same cannot be accepted without confronting the same to the AO by ld. CIT(A) nor any Remand Report was called for.

After careful consideration of the aforesaid facts and in the circumstances of the case and discussions made herein above, we are of the considered view that ld. CIT(A) has failed to make proper and sufficient inquiries before reaching to the conclusion that the loans taken by the assessee are genuine nor the AO was provided sufficient opportunity to rebut the additional documents placed before the ld. CIRT(A). Accordingly, in the interest of justice, we set aside both the orders of the lower authorities and remanded the matter back to the file of AO with the directions to carry out the proper investigation by issue summons u/s 133(6) of the Act, if desired, and to decide the issue in accordance with law. With these directions, solitary Grounds of appeal raised by the Revenue is allowed for statistical purposes.

In the result, appeal of the Revenue is allowed for statistical purposes.

Since we have already set aside the order of the ld. CIT(A) and remanded the matter back to the file of AO while deciding the appeal of the Revenue in ITA Nos. 1006/Del/2025, therefore, Cross-objection filed by the assessee become infructuous hence, not adjudicated.

In the result, appeal of the Revenue in ITA No.1006/Del/2025 for Assessment Year 2012-13 is allowed for statistical purposes and Cross objection of the assessee in C. O. No. 192/Del/2025 is dismissed.