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Judgment
PER MAHAVIR SINGH, VP:
The Revenue has filed the Appeal against the Order of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi dated 24.3.2025, relating to assessment year 2016-17.
The grounds raised in the Revenue’s appeal read as under:-
1(i). Whether the impugned order given by the Ld. CIT(A) is perverse on both on the law and the facts of the case?
(ii). Whether the Ld. CIT(A) is right in law and on the facts of the case in deleting the addition of Rs. 59,68,521/- on account of unexplained credits u/s. 68 of the Income Tax Act despite of the facts that the assessee failed to prove the identity, creditworthiness and genuiness of the transaction of Rs. 59,68,521/- is just an accommodation entry? The information received from the O/o Income Tax Officer, Ward II(4), Faridabad vide his letter No. 607 dated 18.1.2019 during the assessment proceedings in the case of Sh. Sunil Kumar Garg, M/s Agarwal Trading Company for the AY 2016-17 the statement of the assessee was recorded on oath wherein he admitted that he had made bogus sale / purchase bills to various parties and Sh. Rajinder Prashad Singhal, Prop. SR Rubber Industries is one of the beneficiary who has obtained bogus bills by making bogus purchase of Rs. 59,68,521/-during the FY 2015-16 relevant to AY 2016-17.
At the outset, it is noted that the tax effect involved in this appeal is below the prescribed limit of Rs.60 lacs, as stipulated in CBDT Circular No.09/2024 dated 17.09.2024 in filing the appeal before the Tribunal, hence, the appeal of the revenue deserve to be dismissed. However, Ld. DR vehemently supported the orders of the AO and filed the written submissions which reads as under:-
“It is humbly submitted that the above appeal lies in the exception defined in Circular No. 05/2024 dated 15.3.2024 (copy enclosed) at Point No. (h) of Para No. 3.1 where it says “Cases involving organized tax evasion including cases of bogus capital gain/ loss through penny stocks and cases of accommodation entries” and the instance case issue of accommodation entries is involved.
2.In view of above, it is humbly submitted that the above appeal be restored back so that it can be argued on merits.”
We have heard the Ld. DR and perused the records. During the hearing, the Bench sought a query from the Ld. DR as to how the above appeal lies in the exception defined in Circular No. 05/2024 dated 15.3.2024, but he was unable to convince the same. However, we note that Ld. CIT(A) while adjudicating the merits of the case has observed as under:-
5.1.3Perusal of the re-assessment order, it is noticed from the page no. 2 at second para that the AO has issued notice u/s. 133(6) of the Act only to the appellant whereas he had purchased the goods several suppliers. It is also noticed that the AO has only relied the statement of Shri Sunil Kumar Gar, Prop. M/s Aggarwal Trading Company. All these facts clearly established that the AO simply generalized the statements in the re-assessment order that Shri Rajinder Prashad Singhal, Prop. S.R. Rubber Industries is one of the beneficiary who has obtained bogus bills by making bogus purchase of Rs. 56,68,521/- during the FY 2015-16 but could not understand the facts of the case as well as verification of the details / documents where the assessee has provided the relevant details / documents vide its reply dated 4.3.2022, 14.3.2022 & 28.3.2022 but the AO failed to reach the genuineness of the case.
5.1.4After considering above facts, it reveals that the appellant has filed all the evidences concerning transactions to establish the identity and creditworthiness of the lenders and prove the genuineness of the transactions and the AO has not carried out any further verification. Hence, the addition cannot be made in the hands of the appellant. In light of the foregoing facts and findings, the appeal on these grounds stand allowed.”
After carefully perusing the aforesaid findings of the Ld. CIT(A), it is crystal clear that the assessee has filed all the evidences concerning transactions to establish the identity and creditworthiness of the lenders and prove the genuineness of the transactions and the AO has not carried out any further verification, hence, addition in dispute is not sustainable in the instant case, as a result thereof, the Revenue’s plea that the appeal lies in the exception defined in Circular No. 05/2024 dated 15.3.2024 at Point No. (h) of Para no. 3.1 of the said circular is not justified and deserve to be rejected.
Keeping in view of the aforesaid factual matrix, we deem it fit and proper to dismiss the appeal of the Revenue in the light of the aforesaid Circular No.09/2024 of the CBDT dated 17.09.2024, as not maintainable. Resultantly, the appeal of the Revenue is dismissed, on account of low tax effect. However, if on a later date, the Revenue finds that the tax effect in dispute in the aforesaid appeal is more than the limit prescribed or it is protected by any of the exceptions provided in the CBDT Circular, the Revenue shall be at liberty to approach the Tribunal for recalling the order and reinstitution of the appeal for adjudication on merits. The Tribunal shall consider such application, as per the extant law.
In the result, the revenue’s appeal is dismissed in the very terms, as aforesaid.