TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1215
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....or scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 28.02.2014, wherein the total income was assessed at Rs. 1,86,71,510/- after making certain additions, including disallowance under section 14A and addition of unexplained income. Against the said additions, as stated in the form 35 under the statement of facts, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), which was allowed, and the additions were deleted. Subsequently, the case was reopened by issuance of notice under section 148 of the Act dated 31.03.2018, purportedly on the ground that income had escaped assessment within the meaning of section 147 of the Act. The reasons recorded for reopening of assessment inter alia referred to information available from the Individual Transaction Statement (ITS) and NMS database indicating that the assessee, through its amalgamated entity Green Channel Travel Services Ltd. (merged into IRM Private Limited pursuant to the scheme of amalgamation sanctioned by the Hon'ble Gujarat High Court), had received taxable receipts which were not reflected in its books of account or return of income. The reasons recorded by ....
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....ed in NMS; and (iii) Rs. 10,12,600/- under section 68, being unexplained cash credits received through an employee's bank account into the company account, as per report from ITO Jalandhar. 4. Accordingly, the AO determined total assessed income at Rs. 2,14,81,080/- and initiated penalty proceedings under section 271(1)(c) of the Act. 5. Being not satisfied with the order of AO, the assessee preferred an appeal before the CIT(A) raising multiple grounds, including challenge to the validity of reassessment proceedings, denial of natural justice, and the merits of the three additions. The assessee also filed written submissions and contended, inter alia, that the reopening was time-barred and initiated without jurisdiction, as the original assessment was completed under section 143(3) and there was no failure on the part of the assessee to disclose material facts, the alleged transactions related to Green Channel Travel Services Ltd. and not to the assessee directly and the additions were made without any independent inquiry or corroborative evidence and without affording an effective opportunity of being heard. 6. In the appellate order the CIT(A) rejected all contentions raise....
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....e IT Act. 4. On the facts and in the circumstances of the case and in law, the NFAC erred in not considering the detailed written submissions and additional evidences furnished by the Appellant from time to time and accordingly impugned Order is violative of principles of natural justice and deserves to be quashed. 5. On the facts and in the circumstances of the case and in law, the NFAC erred in not granting personal hearing to the Appellant despite repeated requests made by the Appellant and accordingly impugned Order is violative of principles of natural justice and deserves to be quashed. 6. On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO in making an addition of INR 50,46,979/- as income from other sources under section 56 of the IT Act. 7. On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO in making an addition of IN 10,00,000/- on account of alleged 'unexplained expenditure' under section 69C of the IT Act. 8. On the facts and in the circumstances of the case and in law, the NFAC erred in confirming the action of the Ld. AO in....
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....ed that the foreign exchange transactions were carried out by the assessee in the ordinary course of business, and the cash payments were well within the RBI's permissible norms. In particular, the AR referred to RBI license and authorisations (PB Pg 153-156) and RBI Circulars permitting foreign exchange sales against cash up to USD 1000 per transaction (PB Pg 157-161). Supporting documents and details of foreign exchange purchases were also placed on record (PB Pg 17-18), and it was submitted that these transactions were carried out in accordance with law and are duly recorded. 11. As regards the cash deposit routed through the bank account of employee Shri Hemant Srivastava, the AR explained that the transaction pertained to collection of foreign exchange from customers as part of the travel business. Detailed explanation regarding the accounting treatment and taxability of the said amount was submitted before the lower authorities (PB Pg 19, 19B, 164), along with business justifications and related entries. It was urged that the receipt was a part of gross business turnover and not an unexplained credit. 12. The AR forcefully contended that the entire reassessment was complete....
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.... of the AO for de novo consideration. 14. We have carefully considered the rival submissions of both parties, perused the material available on record including the assessment order passed, the appellate order passed by the CIT(A) and the paper book filed by the assessee. The contentions of the learned AR and the learned DR have been duly considered. The appeal raises multiple grounds relating to the validity of reassessment proceedings, violation of natural justice, and sustainability of additions made under sections 56, 69C, and 68 of the Act. Ground Nos. 1 to 3 - Validity of Reassessment Proceedings 15. The assessee has challenged the reassessment initiated by the AO by issuance of notice under section 148 dated 31.03.2018 on two principal grounds: (i) that there was no tangible material to justify reopening, and (ii) that the reassessment was time-barred as per the first proviso to section 147. From the record, it is evident that the original assessment was completed under section 143(3) on 28.02.2014 determining income at Rs. 1.86 crores. The reopening was initiated on 31.03.2018-after the expiry of four years from the end of the relevant assessment year-on the basis of inf....
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....ragraph 6.8, we find that the CIT(A) has confirmed all three additions summarily, without rendering any reasoned finding on the assessee's explanations, evidences, or accounting records. In our considered view, while the CIT(A) has the discretion to decide appeals on merits without oral hearing, the mandate under section 250(6) obliges the appellate authority to pass a reasoned and speaking order. The failure to consider submissions despite voluminous material filed constitutes a serious procedural irregularity. We also note that the CIT(A) did not independently verify or call for a remand report on key factual issues. Accordingly, we hold that the principles of natural justice were violated in the appellate proceedings and Ground Nos. 4 and 5 are allowed. Ground Nos. 6 to 8 - Additions under Sections 56, 69C, and 68 17. On merits, the assessee has challenged three additions. Insofar as the addition of Rs. 50,46,979/- made under section 56 of the Act is concerned, the assessee has submitted that the said amount represented professional receipts and commission income duly accounted for in the books of account and reflected in its audited financial statements. The receipts were sup....
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....pertains to cash deposits routed through the bank account of one Shri Hemant Srivastava, an employee of Green Channel Travel Services Ltd., into the account of the company. The Department alleged that these were unaccounted receipts. The assessee, however, submitted that the said sum represented collections from customers against foreign exchange or tour services, and that the employee in question was entrusted with the task of temporarily receiving payments on behalf of the company. It was further explained that the receipts were duly recorded in the gross revenue of the assessee, forming part of its declared turnover, and the underlying documentation and bank statements evidencing the trail were placed at PB Pg 19, 164, and 198. However, the Assessing Officer did not issue any summons or conduct any verification in this regard, and the CIT(A) also omitted to consider the explanations and documents placed before it. As a result, the addition has been confirmed without any specific finding on whether the transaction was, in fact, unexplained or whether it formed part of the assessee's declared business income. 20. In view of the above, and considering the absence of findings by th....