Jr. Jindal Infraprojects Pvt. Ltd vs DCIT

PER M. BALAGANESH, A. M.:

The appeal in ITA No.3600/Del/2023 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. DIN & Order No: ITBA/NFAC/S/250/2023-24/1057061026(1) dated 14.10.2023 against the order of assessment passed u/s 271D of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.08.2022 by the Assessing Officer, JCIT, Range-4, New Delhi (hereinafter referred to as ‘ld. AO’).

At the outset, we find that the appeal is filed belatedly by the assessee before us by 12 days. Considering the reasons adduced in the condonation petition, in the interest of substantial justice, we are inclined to condone the delay and admit the appeal of the assessee for adjudication.

Though the assessee has raised several grounds before us, the only effective issue to be decided in this appeal is as to whether the learned CIT(A) was justified in confirming the addition of Rs 91 lakhs under section 68 of the Act, which represent the export sale proceeds which are already accounted in the turnover in the books of accounts of the assessee in the facts and circumstances of the instant case.

We have heard the rival submissions and perused the materials available on record. The assessee is actually engaged in the business of export of electrical insulation tapes. In the assessment order, the learned AO had erroneously recorded that assessee is engaged in the business of export of garments. The fact of assessee being engaged in the export business of export of electrical insulation tapes is proved by the customs documents. The return of income for the assessment year 2019-20 was electronically filed by the assessee company on 14-11-2019 declaring total income of Rs. 74,45,820. A search and seizure operation under section 132 of the Act was carried out in the case of Kochar Group on 6-2-2019. During the course of such search, incriminating evidences were found relating to Hawala and money laundering activities undertaken by Shri Avtar Singh Kochar. The Learned AO noted in his assessment order that Shri Avtar Singh Kochar is a well-known international hawala operator and is engaged in providing telegraphic transfers from Dubai and Middle East countries and Singapore in exchange of cash to the exporters, and he arranges transfers mainly from Dubai and Middle East countries to Hong Kong and China for importers against cash received in India for their under-invoiced imports to save import duty, provision of domestic accommodation entries, arranging telegraphic transfers outside of India from India on account of bogus import invoices or facilitate to various persons to transfer their unaccounted money in foreign currency from India to abroad like Singapore, Dubai, London, etc. The Learned AO noted that Shri Avtar Singh Kochar had admitted the fact that he is a hawala operator and facilitates importers, exporters and other persons to transfer their funds from abroad to India, from India to abroad, abroad to abroad and India to India as explained by him during his statement recorded during the course of search as well as during the course of post-search investigation as per the provisions of Section 132(4) and Section 131(1A) of the Act respectively. The Learned AO noted that the said fact was also verified from the digital evidences retrieved from his business premises and residence that he is involved in international hawala transactions.

The allegation leveled by the Learned AO is that the Indian exporters purchase goods in India at a very low price and export them at a very high price so as to earn fraudulent export incentives like duty drawback, GST refund, etc. For these inflated exports, they need to repatriate the foreign exchange to India from these countries and for the same, they take help from Shri Avtar Singh Kochar who arranges telegraphic transfers from these countries mainly Dubai and in turn receives cash from the exporters in India. The cash received by Shri Avtar Singh Kochar in India from the exporters is further given to the people as per the instructions of the persons transferring the funds from Dubai. In this whole transaction, Shri Avtar Singh Kochar earns an income which is in the form of differential in prevailing dollar rates versus dollar rates quoted by him. During the assessment year 2018-19, the assessee had made actual export to M/s Ocean Petro Gulf DMCC for USD 120000. The Learned AO noted that from the analysis of digital data unearthed during the course of search and seizure operation conducted on Kochar Group, various incriminating documents / information were found to be pertaining or relating to the assessee M/s J R Jindal Infra Projects Pvt. Ltd. having bearing on the determination of total income of the assessee and accordingly after recording satisfaction note under Section 153 C of the Act, proceedings stood initiated under Section 153 C of the Act on the assessee. In response to the said notice, the assessee filed return of income on 17-03-2023 declaring the same income of Rs. 74,45,820. Thereafter, statutory notices under Section 143(2) and 142(1) of the Act stood issued to the assessee. The Learned AO raised a specific questionnaire seeking details from the assessee with regard to telegraphic transfer made by Shri Avtar Singh Kochar worth Rs. 91 lakhs which got credited in the bank account of the assessee. The Learned AO noted that assessee did not give satisfactory reply for the same and accordingly issued a final show-cause notice as to why the sum of Rs. 91 lakhs ( USD 1,30,000 * Rs. 70 per USD) which found credited in the bank account of the assessee and which represent amount received from Tirupati Diam Trading FZE, Dubai which is an entity owned and controlled by Shri Avtar Singh Kochar be not treated as unexplained cash credit under Section 68 of the Act. In response to the said show cause notice, the assessee filed its written reply vide letter dated 23-03-2023. The entire reply is reproduced from pages 24 to 38 of the assessment order. The Learned AO, however, did not heed to the contentions of the assessee and proceeded to treat the amounts received in the sum of Rs. 91 lakhs as unexplained cash credit under section 68 read with section 115BBE of the Act and completed the assessment. This action of the Learned AO was upheld by the Learned CIT(A).

At the outset, we find that assessee had made export sales to M/s Ocean Petro Gulf, DMCC, Dubai in earlier assessment year and had received the sum of Rs. 91 lakhs from the said party during the year under consideration. In support of this, the assessee furnished the following documents before the lower authorities:-

Since the relief is granted to the assessee on merits, the other grounds raised by the assessee on law need not be adjudicated and they are left open.

In the result, the appeal of the assessee is partly allowed.