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TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 285
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....iries and verification and thus, to be erroneous and prejudicial to the interest of revenue." 3. Brief facts of the case are as follows:- The assessee is a company. For the assessment year 2017-18, the return of income was filed on 03.11.2017 declaring total income of Rs. 7,03,710/-. The assessment u/s. 143(3) of the Act was completed on 30.12.2019 determining total income at Rs. 16,01,75,252/-. Thereafter, notice was issued u/s. 148 of the Act on the information that assessee had received fictitious loan of Rs. 13,00,000/- from Wellman Tradelinks Pvt. Ltd., and Rs. 73,60,956/- from Shri Jignesh Shah. The assessment was completed u/s. 147 r.w.s. 144B of the Act vide order dated 30.03.2022 wherein total income was determined at Rs. 17,26,21,549/-. Out of the total impugned fictitious loan received by the assessee company amounting to Rs. 86,60,950/- (Rs.13,00,000/- from Wellman Tradelinks Pvt. Ltd., and Rs. 73,60,956/- from Shri Jignesh Shah), the AO added only a sum of Rs. 13,00,000/- in the re-assessment order completed u/s. 147 r.w.s. 144B of the Act. 4. Thereafter, the PCIT initiated revisionary proceedings u/s. 263 of the Act in order to examine the genuineness of loan recei....
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....e any additions to the income of the assessee on this ground" and need to explain the transactions on its own. 10. During the course of assessment proceedings, in the show cause notice dated 29/03/2022, the following was communicated to the assessee: "On perusal of the submissions, it reveals that assessee failed to substantiate the loan transactions. The assessee has merely relied upon the assessment order passed in its case for the year under consideration. It is pertinent to note that the case was reopened only on the loan transaction that was not considered during assessment proceedings. Further the assessee has failed to submit the loan transactions with M/s. Wellman Trade Links Pvt. Ltd. and other loan transactions as mentioned in the reasons recorded. No explanation/evidences were submitted to substantiate the claim in respect of loan transactions. In absence of documentary evidence to establish the identity, genuineness and credit worthiness of loan transaction, an addition of Rs. 86,60,956/- is made in the hands of the assessee as unexplained credit u/s. 68 of the IT Act. Penalty proceedings u/s. 271AAC(1) are initiated in respect of such addition. Addition:Rs.86,60,9....
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....he transactions and cannot be ignored without valid explanation. 15. The Assessing Officer ought to have called for the complete financials of the assessee, unsecured loan creditors details and ledger of the unsecured loans and Creditors for verifying the above loan transactions including fresh loans and squared up loans during the year, which was not done. No finding on the information regarding Rs. 73,60,956/- has been given by the assessing Officer. 16. In the circumstances, the action of the Assessing Officer, making addition in respect of one loan creditor to the tune of Rs. 13.00.000/- and leaving the balance without any finding is untenable. When no explanation was given by the Assessee in respect of the source of the loan creditors. the AO should have added the entire amount u/s 68 of the Income-tax Act, 1961. 17. In the case of Malabar Industrial Co. Ltd. vs. CIT[2000] reported in (2000) 109 Taxman 66/ 243 ITR 83(SC), the Supreme Court held that when the Assessing Officer does not apply his mind to the issue at hand or violates any of the principles of natural justice, the order shall be prejudicial to the interests of the Revenue. Also, it is held that an incorrect ....
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....mentioned fictitious loan (since the assessee has totally denied having received the loan from Shri Jignesh Shah). The ld.AR further submitted, on identical issue, the Ahmedabad Bench of the Tribunal in the case of Kaivan Jitendrakumar Shah HUF vs. PCIT in ITA No.644/AHD/2024 (order dated 14.08.2024) had held that since there is nothing on record to suggest that assessee in the said case had received fictitious loan from the entry operator namely Shri Jignesh Shah, the revisionary proceedings u/s. 263 of the Act is legally not tenable. The ld.AR also relied on the following judicial pronouncements in support of his contentions that section 263 cannot be invoked since the order of the AO was not erroneous and prejudicial to the interest of the Revenue:- i) ITAT, Ahmedabad Bench in the case of Dee Are Texfab Pvt. Ltd., vs. PCIT, order dated 25.07.2024 ii) ITAT, Ahmedabad Bench in the case of HBC Lifesciences Pvt. Ltd., vs. PCIT, order dated 05.07.2024 iii) ITAT, Rajkot Bench in the case of M/s. Pramukh Realty vs. PCIT, order dated 21.03.2023 iv) Hon'ble High Court of Gujarat in the case of CIT vs. Kamal Galani (order dated 11.06.2018) v) Hon'ble Delhi High Court in the case....
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....7,31,489/- which was not considered in the limited scrutiny proceedings. In view of the above, I have every reason to believe that an amount exceeding more than 1 lakh has escaped assessment for the AY 2017-18 in the case of the assessee and accordingly, it is a fit case where action u/s 147 is warranted. Hence, the proposal to initiate proceedings u/s 147 is prepared and submitted for the approval of Addl.Commissioner of Income Tax, Non- Corporate Range-10, Chennai." 9. From the above reasons recorded by the AO, it is evident that the notice u/s. 148 of the Act has been issued primarily to examine the loan transaction of the assessee company with a) M/s. Wellman Tradelinks Pvt. Ltd., - Rs. 13,00,000 b) Jignesh Shah - Rs. 4,48,250 c) Jignesh Shah - Rs. 23,95,660 d) Jignesh Shah - Rs. 45,17,046 10. The assessee company in this regard, had given submissions on 16.02.2022 stating therein the assessee has not availed any of the above stated loans during the year under consideration. It stated that assessee company had given advance to M/s. Wellman Tradelinks Pvt. Ltd., in the preceding year which was recovered during the relevant assessment year. In this context, the copy....
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....e assessee. Making additions to the income of the assessee company without having any negative evidences on records or without providing the same for rebuttal is against the principles of natural justice and law. It is most humbly prayed that such injustice may please not be done with the assessee company." 12. Considering the facts of the case as well as the replies submitted by the assessee, the assessment order u/s 147 r.w.s. 144B of the Act was passed on 30.03.2022 and no addition with respect to alleged transaction with Jignesh Shah was made. 13. After completion of two assessments in the case of the assessee company, the PCIT had passed the impugned order u/s. 263 of the Act on 20.03.2024 stating that the order of the AO passed u/s. 147 r.w.s. 144B of the Act dated 30.03.2022 is erroneous and prejudicial to the interest of Revenue. The PCIT had concluded that the AO ought to have obtained the explanation / reply regarding the identity, genuineness and creditworthiness of loan transaction in respect of the amount received as loan amounting to Rs. 73,60,956/- from Shri Jignesh Shah. The re-assessment proceedings have been initiated by the AO specifically to examine the loan....
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....Rs. 35,04,500/- should not be added to the income of the assessee. It transpires that the information was received regarding accommodation entry taken by the assessee from paper/dummy company controlled and managed by one Shri Rajiv Shah. The assessee had filed a detailed reply dated 24.02.2022 wherein he had denied having received any amount from Shri Rajiv Shah (of Jignesh Shah & Sanjay Shah Group). In fact, the assessee had also enclosed the details of his unsecured loans and the bank book copy to establish the fact that there was no entry from anyone amounting to Rs. 35,04,500/-. Further, the assessee had requested the Assessing Officer to provide the evidence for such transaction and also the supporting documents as available with the Assessing Officer in support of the information on the basis of which the case was reopened. After considering the reply of the assessee, the Assessing Officer had completed the assessment and the returned income was accepted. It is found that the issue on which the case was reopened was duly examined by the Assessing Officer in the course of assessment proceedings. The assessee had denied the alleged transaction and thereafter no evidence was br....
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.... the order is passed allowing any relief without enquiring into the claim. This condition is not found fulfilled in this case as the AO had made detailed inquiries on the issue of accommodation entry which was denied by the assessee and no further evidence was brought on record to establish the said alleged transaction. It was held by the Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. - (2011) 332 ITR 167 (Delhi) that one has to see from the records as to whether there was application of mind before allowing the expenditure and one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any enquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass order under Section 263 of the Act merely because he has a different opinion in the matter. It is only in cases of 'lack of inquiry' that such a course of action would be open. The present case cannot be treated as a case of 'lack of inquiry' as the AO had examined the issue in the course of assessment proceeding. The scope of Commissioner's power under Section 263 of the Act would be available when the AO conducts no enquiry or no proper en....