TaxTMI 
TaxTMI 
2025 (6) TMI 285
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....s 147 of the Act to be passed without necessary enquiries 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....
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.... AO that "only due to non-availability of any details or information on record, the Ld. AO proceeded to not to make 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 ....
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....he loan transaction. The information was communicated in result of search operations u/s 132 of the Income-tax Act, 1961 which shall have concrete basis for the 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 ....
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....had availed the afore mentioned fictitious loan and therefore, the assessment needs to be redone. It was submitted that the assessee cannot be expected to prove the negative that he has not availed afore 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) ....
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....2016-17 2.Jignesh Shah -Rs.4,48,250-FY:2016-17 3. Jignesh Shah -Rs. 23,95,660 -FY:2016-17 4. Jignesh Shah -Rs. 45,17,046-FY:201 6-17 Further, it is seen that the assessee has claimed current year loss of Rs. 32,07,156/- and the expenses claimed in P&L account of Rs. 5,57,31,489/- 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 t....
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....see company for verification or rebuttal. In view of the unconditional acceptance by revenue by letter dated 21.03.2022, that no information is available on records, no addition should have been proposed on the basis of such information and thus, it is most humbly requested that no addition for availing accommodation entry of unsecured loans shall be made to income of the 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 erroneo....
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.... as follows:- 6. We have carefully considered the rival submissions and facts of the case. It is found that the reason for which the case for AY 2013-14 was reopened by the Assessing Officer was duly confronted to the assessee vide notice u/s 142(1) of the Act dated 28.01.2022. In fact, this reason was reproduced in the notice and the assessee was asked to explain as to why the amount of 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....
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....hat once the Assessing Officer carried out detailed inquiries, it was not open for the Commissioner to reopen the issue on mere apprehension and surmises. The Explanation-2 to Section 263 of the Act stipulates that the order of the AO will be deemed to be erroneous and prejudicial to the interest of the revenue, if such order is passed without making enquiries for verifications which should have been made or if 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 ....