AI Drafter 
TaxTMI 
TaxTMI 
2025 (7) TMI 1285
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....ugh a common order. ITA No. 4635/Del/2024 & CO No. -11/Del/2025 (AY 2013-14) M/s Filatax India Ltd 2. We first take the appeal filed by the Revenue in the case of Filatex India Ltd. in ITA No. 4635/Del/2024 and the corresponding C.O. No. 11/Del/2025 filed by the assessee for AY 2013-14. 3. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing Polyester Chips, Polyester/Nylon/Polypropylene Multi & Mono Filament Yarn and Narrow Fabrics. The return of income was originally filed electronically on 08.09.2013, declaring the net loss of INR 49,70,14,441/-. The return of income was processed u/s 143(1) of the Act. A search and seizure action was carried out by the Department u/s 132 of the Act in the case of Filatex India Ltd. group on 01.09.2021. Consequent upon the search and after obtaining the necessary approval from the Competent Authority, the cases from various AYs were re-opened and notices u/s 148 of the Act were issued which inter-alia includes AY 2013-14 for which the notice u/s 148 of the Act was issued on 20.03.2023. In response to said notice, return of income was filed on 30.03.2023, declaring same i....
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....ount of INR 5.90 crores as unexplained credits u/s 68 of the Act and further invoked the provision u/s 115BB of the Act. The interest paid of INR 1,00,53,494/- on the loans taken from four companies was disallowed by invoking the provisions of section u/s 37(1) of the Act and added back to the total income of the assessee. The AO further made an addition of INR 7,87,500/- by holding the same as unexplained expenditure u/s 69C of the Act by alleging that the same was paid as commission @ 0.25% to obtain the bogus accommodation entries of INR 24.25 crores and further on the repayment of the loans of INR 7.25 crores though the addition of alleged unexplained credits was made for INR. 5.90 crores only. 6. Aggrieved by the said order, the assessee preferred the appeal before Ld. CIT (A) who vide impugned order dated 22.08.2024 in Appeal No. CIT(A), Delhi/23/10125/2012-13 passed u/s 250 of the Act has partly allowed the appeal of the assessee wherein the additions made towards unsecured loans by treating them as bogus, disallowance of interest and further addition u/s 69C of the Act towards alleged payment of commission to obtain accommodation entries were deleted by observing th....
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....ve parties. 9. Ld. CIT (A) has failed to appreciate that the evidence collected clearly reveals the cash trails and in reply to notice u/s 133(6) of the Act the entry operators are not expected to accept that the loan transactions are not genuine. 10. The Ld. CIT (A) erred in deleting the addition of Rs. 1,00,53,494/- without appreciating the fact that interest paid on account of bogus unsecured loan is also bogus in nature, therefore, the interest paid by the assessee to the tune of Rs. 1,00,53,494/- is not genuine expense. 11. The Ld. CIT (A) erred in deleting the addition of Rs. 7,87,500/- without appreciating the fact that the accommodation entries to the tune of Rs. 5,90,00,000/- were taken during the year under consideration and commission must have paid to accommodate such entries. 12. The appellant craves to add or amend any/all the grounds of appeal before or during the hearing of the appeal." 8. The assessee also filed C.O. wherein the following objections are taken by the assessee:- 1. "On the facts and in the circumstances of the case and in law, the learned CIT (A) should have quashed the assessment or....
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.... heavy share capital and premium only without any proper and regular business activities. As per ld Sr. DR the AO further relied upon the statements of Shri Ankit Bhageria and his employees who confirmed that the companies belonged to Shri Bhageria were used as conduit to provide accommodation entries to assessee group. Ld. Sr. DR further submits that the AO has referred certain WhatsApp chats and messages which clearly indicate that these loans are not genuine and therefore, requested for the restoration of the additions made by the AO in this regard. 11. Before us, Ld.AR supported the order of Ld.CIT (A) and submits that during the course of search, no incriminating material whatsoever was found pertaining to the transactions carried out by the assessee for the year under appeal, based on which, it could be said that the assessee has obtained accommodation entries. Solely on suspicion, the AO has concluded that the loans taken were not genuine. The assessee discharged the onus lies upon it by filing all the relevant details as required to establish the genuineness of the loans u/s 68 of the Act. He further submits that the notice u/s 133(6) were issued to the lender companies ....
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....re treated as bogus accommodation entries but the commission was calculated @ 0.25% on the total of loans received and repaid during the year itself. It is thus prayed by Ld. AR that additions were rightly deleted by Ld. CIT (A) and requested for confirmation of the orders of Ld. CIT(A). He also filed a written submission and reliance is placed on various judicial pronouncements. The written submission as filed by the ld. AR of the assessee is reproduced as under:- "The assessee has raised the following arguments before the AO and CIT (A) in response to the allegations made: 1. Regarding the addition being made on suspicion Though such evidences found during the course of search does give rise to suspicion but such suspicion alone cannot be the basis to reject all the documentary evidences filed by appellant in support of loans taken by it. It is also the presumption of law that the nature of the evidence or information gathered during the search should be of such nature that it instead of only raising doubt, the evidence establishes some wrong doing. No material pertaining to appellant is found. There is no scope of extrapolation and addition sh....
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....PAN details, and income returns of all alleged entities, conclusively establishing the identity of the depositors. Creditworthiness: The annual accounts of companies show their creditworthiness. Assessee provided source of source though not required u/s 68. The loan was taken through banking channels only. Genuineness: Appellant was advanced through banking channels. All lenders accepted the transaction with assessee complying with notice u/s 133(6). Assessment order of AY 2016-17 and 2018-19 of Satsai passed after the date of search in which it was not considered as shell entity. Decisions relied: Hon'ble Supreme Court of India in case of Commissioner of Income-tax v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC) held: ".. 2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961?. We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual as....
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....ment are entitled to great weight while evaluating the bona fides of loan transactions. * Assistant Commissioner of Income-tax, Circle-8(2) vs. Evermore Stock Brokers (P.) Ltd. [2024] 158 taxmann.com 211 (Delhi - Trib.)/[2023] 108 ITR(T) 13 (Delhi Trib.)[19-09-2023] * Director of Income-tax vs. Modern Charitable Foundation [2012] 20 taxmann.com 693 (Delhi) [18-05-2011] 5. Regarding addition being made solely on the basis of Statements Purushottam Bhageria (MD of Filatex India Limited) -He was diagnosed for arteries blockage on 28th August 2021 and coronary angioplasty was scheduled on 2nd September 2021. -He was forced to reschedule the appointment and give the statement, the angioplasty was finally conducted on 18th September 2021. - He was pressurized to sign the statement (Page 222-223 in his Affidavit of general Paper book 1) - He stated that there is no relation between unsecured loan and cash transactions in his Affidavit. (Page 225 of General PB 1) - Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant -Such statements are substantively clarified by duly no....
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.... explained above, though the statements are not reliable, still even otherwise the additions cannot be made merely on the basis of statement without any corroborative evidences. Sec. 132(4) specifies word "used in evidence" not "Used as evidence" The usage of the word "used in evidence" signifies that if there are any other corroborative evidence or documentary evidence, in that case the statement can be used as one of the evidences Decisions relied: * CIT Vs. Harjeev Aggarwal 70 taxmann.com 95 (Del-HC) [A statement under section 132(4) can be relied if it is corroborated by incriminating evidence] * Sambhav Buildwell (P) Ltd vs. ACIT vide ITA No. 1938/Del/2022 (Del ITAT)[Unsecured loan cannot be termed bogus only on the basis of statement without corroborative material] * Decision of Delhi High Court in the case of PCIT V. Pavitra Realcon Pvt. Ltd. (ITA 579/2018) * Ajay Gupta Vs. DCIT 81 Taxmann.com 462 (Del-ITAT) [Incriminating material must have been found to correlate the undisclosed income with such statement.] 6. The AO could not find any corroborative evidence to prove that the contents of the Whatsapp Messa....
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....ies was also deleted by Ld. CIT(A)." 14. Heard both the parties and perused the material available on record. From the perusal of the order of Ld.CIT(A), it is found that Ld.CIT (A) after considering the submissions of the assessee and the observations made by the AO in the assessment order and further by following the judicial pronouncements relied upon and after referring the WhatsApp chat etc. deleted the additions made by the AO towards the unsecured loan and interest paid thereon and alleged payment of commission. The relevant conclusion drawn by the ld. CIT (A) in para 130 of the order is as under: 130. "In view of above discussion, and considering relevant facts on record, it is observed as under: (i) The appellant has proved identity of the creditor which is not disputed by Assessing Officer in assessment order. (ii) The appellant has also proved creditworthiness of the creditor by submitting its audited annual account along with relevant bank statement of depositors. The Assessing Officer has not proved that any cash has been deposited prior to giving cheque to appellant even though appellant was not required to prove sources of source, the ba....
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....ovider or he is operating shell companies, but what is required to be seen is whether in the case of Assessee the documents found during the course of search at their premises or from the premises of Shri. Ankit Bhageria or otherwise show that Assessee was beneficiary of any accommodation entry or not. In the present case, the A.O. sans any specific link about loan taken from ANM, RMP, Bhageria Finance and RKG with any cash trail and on the contrary ANM, RMP, Bhageria Finance and RKG in reply to notice u/s 133(6) has accepted that genuine loan was given to appellant. The A.O. has failed to prove any direct nexus linking the Assessee with accommodation entries from SFPL or Ankit Bhageria group entities." 15. In the present case, the sole dispute is with respect to the unsecured loans taken by the assessee from four companies which were alleged as bogus accommodation entities. The assessee received total amount of loans of INR 24.25 crores from four companies however, the AO though had observed that these four companies are Shell companies which are managed and controlled by Shri Ankit Bhageria (alleged as entry operator) however, only loans of INR 5.90 crores were considered as a....
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....nterested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided also that nothing contained in the first proviso or second proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 17. That a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessee offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessee in the opinion of the Assessing Officer is not sa....
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....l Fund, Venture Capital Company registered with SEBI. This amendment has taken effect from 1st April, 2023 and accordingly applies in relation to the assessment year 202324 and subsequent assessment years. The year before us is AY 2013-14 thus this amendment is not applicable, yet the assessee has been able to establish the same as per the table reproduced herein above. 21. As observed above, the requirement of explaining 'Source' of 'Source' in respect of loans is applicable from A.Y. 2023-24 and subsequent years. Reliance in this regard is placed on coordinate bench of Delhi ITAT decision dated 31.05.2022 in the case of M/s Mall Hotels Ltd. Vs. CIT (ITA No. 2688/DEL/2014). The coordinate Delhi Bench of ITAT in the case of ACIT v Smt. Prem Anand (ITA No. 3514/Del/2014) vide its decision dated 13.04.2017 has held that amendment made in section 68 of the Act w.e.f. 01.04.2013 empowers the A.O. to examine source of source in case of share application money / share capital / share premium from 01.04.2013 and this amendment does not give power to the A.O. to examine source of source of non-share capital cases. 22. It is clear that the assessee has furnished source of so....
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....were relied by the AO for holding the loans as bogus. The observations of Ld .CIT(A) as contained in para 23 to 43 in this regard speaks about the non-application of such statements and relied upon various judgments for not providing opportunity to cross examine those third parties to the assessee has not been controverted by the Revenue before us therefore, we find no infirmity in these observations of Ld.CIT(A). 27. Regarding surrounding circumstances, it is observed that while making addition u/s 68 of the Act, the AO has doubted the financial capacity of loan creditors but such addition cannot be made on preponderance of probability and there has to be some evidence and substance in contention. The Assessing Officer has not brought anything on record to establish that the sources in the hands of loan creditors is non-genuine. Merely because they have shown meager income or no sufficient sources as presumed by Assessing Officer, loan taken by appellant from them cannot be held to be accommodation entries. It is well-settled position of law that no matter how strong suspicion is, it cannot take place of the evidence. Therefore, in the absence of any evidence showing that in fa....
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.... as share premium reserve during immediately preceding assessment year and amount of loan of Rs. 3.60 crore advanced to the assessee during present assessment year was from the said reserve amount. The remand report of the Assessing Officer supported the case of assessee which was based on the strength of additional evidence filed by the assessee without raising any doubt or discrepancy therein. 8. We also find and appropriate to reproduce the relevant operative part of first appellate order as follows:- The appellant company has received Rs. 3,60,00,000/- from M/s Fennie Commercial Pvt. Ltd. as unsecured loan / share application money during the year. The same was added by the AO on the ground that appellant has failed to file confirmation as well as other supporting documents of the lender party before AO to prove identity, genuineness and creditworthiness of the party. During the course of appellate proceedings, appellant filed an application under Rule 46A and filed following documents to prove identity, genuineness and creditworthiness of the party: (i) Copy of Acknowledgement of IT. Paper Book page no. 48. (ii) Copy of Audited Fin....
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.... Premium Reserve of Rs. 7,30,62,000/-, which is the same as in the immediately preceding previous year, out of which funds have been invested in the appellant company and others. 6. However, it is also seen from the P & L Account filed in this case that this company has no apparent business activity during the relevant period, i.e. during the FY 2010-11, and it has declared a nominal sum of Rs. 35,600/- as Consultancy / Commission income. This company has also furnished a copy of the intimation us 143(1) in its case, issued by CPC, Bangalore, in response to the specific query regarding furnishing copy of assessment order passed in its case for AY 2011-12. 7. As regards the present position of the said money advanced by M/s Fennie Commercial Pvt. Ltd. to the appellant company, it has been stated that they have not received any shares from M/s Alfa Contech Private Limited till date and the said Sum is lying as Loans & Advances in their books. However, this company has not furnished copy of its latest IT filed as well as copy of Audit Report, Balance Sheet and P & L Account despite being specifically called for in the letter issued us 133(6) to it. ....
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....orthiness and genuineness of the transaction. These facts have been verified by the AO in the remand proceedings and has submitted report in this regard. It is seen that name of the appellant company is appearing in the balance sheet of the lender company. In view of the documents filed by the above named lender company before me as well as AO, it is established that the identity, source, creditworthiness of the lender company and genuineness of the transactions has been established. I find that the AO has not been able to bring on record any evidence to negate the genuineness of the transaction done by the appellant. Therefore, the addition cannot be sustained only on suspicion and surmises. Considering the fact that the identity, genuineness and creditworthiness of the lender company duly established, the addition made by the A cannot be upheld and hence the AO is directed to delete the addition of Rs. 3,60,00,000/- made on account of unexplained income us 68 of the I.T. Act. In support of my above decision, reliance is placed on following judicial pronouncements: a. CIT Vs. Fair finvest Ltd. [ 2014 ] 44 taxmann.com 356 (Delhi) HIGH COURT OF DELHI "Section ....
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....t appellate authority and the documentary finding by the assessee before us, we are of the considered view that the learned first appellate authority has deleted the addition in dispute on the basis of various documentary evidence filed by the assessee before the Assessing Officer as well as before him. The hon'ble Supreme Court of India (sic.) in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 299 ITR 268 (Delhi) which has confirmed the order of the hon'ble Delhi High Court has held that once the identity of the shareholder have been established, even if there is a case of bogus share capital, it cannot be added in the hands of the company unless any adverse evidence is not on record. The learned first appellate authority has examined the documentary evidence filed by the assessee before the Assessing Officer as well as before him and held that the assessee has provided confirmations from all the parties as well as various evidences to establish the genuineness of the transaction, the assessee has also relied upon the judgment of Nemi Chand Kothari v. CIT [2003] 264 IT 254/[2004] 136 Taxman 213 (Gau.) wherein it has been held that it is a certain law that the assessee i....
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.... thereafter, in case such evidence is to be discarded or it is proved that the assessee has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act." e. Commissioner of Income Tax -9 Erstwhile CIT-VI v. Vrindavan Farms (P) Ltd, ITA 71/2015, ITA 72/2015, ITA 84/2015, the High Court of Delhi held as under : "3. The ITAT has in the impugned order noticed that in the present case the Revenue has not doubted the identity of the share applicants. The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their Income Tax Returns. The entire details of the share applicants were made available to the A by the Assessee. This included their PAN numbers, confirmations, their bank statements, their balance sheets and profit and loss accounts and the certificates of incorporation etc. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the above documents submitted to him. It has been righty commented by the ITAT that without doubting the documents, the AO completed the a....
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.... is no part of the Assessee's burden to prove either the genuineness of the transactions executed between the creditors and the sub-creditors nor is it the burden of the Assessee to prove the creditworthiness of the sub-creditors. 32. It was further observed by the Hon'ble court as under: 14. With this material on record in our view as far as the Assessee was concerned, it had discharged initial onus placed on it. In the event the revenue still had a doubt with regard to the genuineness of the transactions in issue, or as regards the creditworthiness of the creditors, it would have had to discharge the onus which had shifted on to it. A bald assertion by the ASSESSING OFFICER that the credits were a circular route adopted by the Assessee to plough back its own undisclosed income into its accounts, can be of no avail. The revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The ITAT, in our view, without adverting to the aforementioned principle laid stress on the fact that....
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....ence to establish that money which assessee had paid to investors was routed back to it in form of share capital/share premium and identity, creditworthiness and genuineness of investors was proved, there was no justification to make addition under section 68 - Held, yes [Paras 11.4, 11.5 and 14.4] [In favour of assessee]" 35. Regarding the additions made u/s 68 of the Act towards the unsecured loans though they were repaid subsequently, the Hon'ble Gujarat High Court in the case of PCIT vs Ojas Tarmake 150 taxmann.com 75 has observed as under: "where the appellant showed unsecured loans received during the relevant AY and AO made addition on the ground that appellant failed to discharge onus of liability as laid down u/s 68 of the Act since amount of loan received by the appellant was returned to the loan period during the year itself and all the transactions were carried out through banking channel, impugned addition was to be deleted." 36. In view of above facts and the circumstances of the case, we are of the considered view that the decision of the Ld. CIT (A) deleting the additions made is based on the appreciation of fact that all the relevant documentary evid....
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....orthiness and genuineness of the transactions, the said evidences cannot be rejected based on the statements without any contrary documentary evidence. It is seen that transactions have been done through banking channels and on the date of making of loans, there was balance available in the accounts of the lenders, which proves the creditworthiness and genuineness of the transactions. It is also relevant that out total amount of loans of 24.50 crores received from these lender companies, the AO has despite of doubting their creditworthiness, had made the addition of INR. 5.90 crores only meaning thereby the creditworthiness for the remaining amount is not doubted though the facts and the circumstances while granting these loans remained the same. This creates serious doubts about the mode and manner of the additions made by the AO. Once it is accepted that the lender has creditworthiness for part of the amount, the remaining amount cannot be held as unexplained. There is no case of any cash deposition in the account of any of the lender companies at the time of issuing cheques/RTGS in favour of the Assessee. Therefore, Appellant has duly discharged the burden casted upon it u/s 68 ....
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.... as accommodation entries u/s 68 of the Act out of total loan amount of INR 17.75 crores received during the year from six companies tabulated at page 101 of the assessment order. The AO further observed that the assessee had paid interest of INR 5,13,00,543/- on the said loans which was further disallowed. Besides this, an addition of INR 8,76,250/- was made on account of alleged commission on the loans received at INR 17.75 crores and repaid at INR 17.30 crores during the year (though addition was made of INR 9 crores of loan as accommodation entry). 44. The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT (A) also made similar observations as were made in AY 2013-14 while deleting the additions/disallowances. 45. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us in dismissing the appeal of the Revenue in ITA No. 4635/Del/2024, the Revenue's appeal for AY 2015-16 in....
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....ithdraw any ground or grounds of cross objections either before or during the course of hearing of the same. 49. During the course of hearing it was requested by the ld.AR that the issues raised in cross objections No. 1.1 and 1.2 are legal and thus prayed to adjudicate the same separately, therefore, in the interest of justice and looking to the very nature of the cross objections, the same are hereby taken for consideration. 50. Before us, Ld.AR submits that the case of the assessee was reopened on the basis of the information received by the AO that the assessee has made payment on account of technical services to a foreign company and that these remittances are liable to withhold taxes within the definition of Fee for Technical Services under the provisions of Sec 9(1)(vi) and (vii) of the IT Act and as per Article 12(4) of the DTAA also, chargeable to tax u/s 115A(1)(b)(A) and 115A(1)(b)(B) of the Income Tax Act. The assessee was required to deduct Tax at source on the remittance amounting to Rs. 87,34,375/- and thus after obtaining the approval from the competent authorities, notice u/s 148 was issued in 31.3.2021. Ld. AR submits that in response to said notic....
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....dverse inference was taken on this issue as has been observed in para 9.6 of the order and no addition was made on this account. In the context, the Hon'ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. (supra) has held as under:- 18. "We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of V. Jaganmohan Rao (supra). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Section 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation (3) if during the course of these proceedings the Assessing Off....
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....n.com 43/387 ITR 416 (Delhi) and CIT v. Software Consultants 2012 SCC OnLine Del 316/[2012] 21 taxmann.com 155/211 Taxman 120/341 ITR 240 (Delhi). 30. We thus, come to the conclusion that the enunciation with respect to the indelible connection between Section 148A(b) and Section 148 A(d) of the Act are clearly not impacted by Explanation 3. As we read Sections 147 and 148 of the Act, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened. 31. Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled. The Explanations would be applicable to issues which may come to the notice of the AO in the course of proceedings of reassessment subject to the supervening requirement of the reassessment action itself....
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....part of the reasons recorded for reopening the assessment when no addition was made on the issue covered in the reasons recorded. Therefore, no additions could be made dehorse the reasons recorded before issue of notice u/s 148 of the Act. Accordingly, the reassessment order passed u/s 147 of the Act is hereby quashed. Cross objections No. 1.1 and 1.2 taken by the assessee are accordingly allowed. 58. As we have already quashed the reassessment order dt. 31.03.2022 passed u/s 147 r.w.s. 143(3) of the Act while allowing the cross objections No. 1.1 & 1.2 taken by the assessee, thus the issues challenged by the revenue on the merits of the additions made in such reassessment order become infructuous and thus, the appeal of the Revenue in ITA No. 2060/Del/2024 is hereby dismissed. 59. In the result, appeal of the Revenue in ITA No. 2060 Del/2024 is dismissed and C.O.No.89/Del/2025 of the assessee is allowed. ITA No. 4999/Del/2024 & CO No. -33/Del/2025(AY 2017-18) 60. In this year, an addition of INR 48,72,50,000/- was made by holding the same as accommodation entries u/s 68 of the Act out of total amount of INR 68,25,00,000/- received during t....
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....of INR 11,55,500/- was made on account of alleged commission @ 0.25% on the loans received of INR 29,08,50,000/-, and repayment of INR 17,13,50,000/- made by holding the same as unexplained transactions. 67. The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT (A) also made similar observations as were made in AY 2013-14 while deleting the additions/disallowances. 68. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in ITA No. 4635/Del/2024, the Revenue's appeal for AY 201920 in ITA No. 4648/Del/2024 is also dismissed. 69. Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed. 70. Now we take up the appeal filed by the assessee in ITA No. 3988/Del/2024 (AY 2019-20). 71. The asse....
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....ay Jhunjhunwala employed of the assessee company and tabulated all the chat transactions at pages 73-74 of the appellate order. Ld. CIT (A) alleged that as per these chats total sum of Rs. 9.65 crores were owned by the assessee and source of the same is not explained and further the assessee has not been able to establish that the impugned cash was recorded in the books of accounts of the assessee company. He, therefore, invoked the provisions of section 69A of the Act and proposed enhancement to the total income. In reply, assessee stated that on mere assumptions based on forwards messages from third party, it cannot be alleged that transactions of Rs. 9.65 crores belong to appellant. It is further submitted by assessee that these messages were forwards to Shri Purshottam Bhageria or Shri Pillai by some unknown third party and nowhere contained the name of the assessee company and it is not clear whether the transactions referred therein were actually taken place. An affidavit of Shri Purshottam Bhageria was also filed wherein he categorically stated that these messages have not relationship with the loans taken by the assessee company. However, ld. CIT (A) by alleging t....
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....mmary of chats relied upon by the CIT (A) to make the enhancement are as follows: AY 2019-20 (Screenshots of the Chat are reproduced at Paper book Page 2-5) The enhancement cannot be sustained based on these messages due to the following reasons: 1. The WhatsApp messages do not clearly indicate whether any alleged cash transaction actually took place. 2. Shri Purshottam Bhageria, in his affidavit (Page 227, Para 8 of General PB 1) clarified that the WhatsApp messages bear no correlation to the unsecured loan taken by the appellant during the relevant financial year. 3. The name of the appellant does not appear in any of the said WhatsApp messages. 4. The chats do not mention that the appellant was involved in any alleged cash transaction, nor does it establish that the said amount belonged to the appellant. 5. There is no evidence to substantiate that the appellant was in possession of the cash or that any such amount changed hands as inferred from the chat. 6. No concrete evidence links the contents of the chat to the appellant. The mere existence of a WhatsApp conversation without supporting corroborative evi....
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....ase of Virendra Singh Ratnawat v. ACIT IT (ITA 179 to 181 (JP) of 2022) 5. Decision of in the case of Asstt CIT v. Shri Manchukonda Shyam (ITA 87 (Viz) of 2020) 6. Decision of in the case of A. Johnkumar v. DCIT CC 1(4) [ITA 3028 (Chny) of 2019] 7. A. Johnkumar v. DCIT CC 1(4) [IT Appeal 3028 (Chny) of 2019, dated 13-52022. 8. Decision of Hon'ble Kolkata ITAT in the case of Atul Tatia [ITA 492/Kol/2021]." 76. On the other hand, Ld. Sr. DR supported the order of Ld.CIT (A) and submits that Ld. CIT (A) in para 86 to 99 had made a detailed discussion on this issue and thus requested for the confirmation of the enhancement so made by Ld. CIT(A). 77. Heard both the parties and perused the material available on record. From the perusal of the order of Ld. CIT(A), it is seen that the enhancement is made solely on the basis of WhatsApp chats between a third party Sudhir Bhageria and Shri Purshottam Bhageria, Managing Director, Shri Prabhakaran Pillai and Shri Sudhir Bhimrajka who are the employees of the assessee. Some of the chats are reproduced in page 71 to 77 of the appellate order of Ld. CIT(A). Further, the final description of these chat....
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....fer letters were found & seized and during statement the said employees supported the factum of part cash payment of salary. However, we note that there was no other evidence in the hands of AO supporting the factum of cash payment to said two employees. It is also pertinent to note that under identical facts and circumstances the ld. CIT (A) has deleted part addition pertaining to other two employees Shri Dhananjay Singh & Ms Yamini Singh in absence of any sustainable and reliable evidence but confirmed the addition on account of alleged cash payment to said two employees. We are also in agreement with the contention of ld. AR that in absence of providing cross examination on the said two employees whose statements have been relied by the Assessing Officer, such statements cannot be used against the assessee for making addition on account of part payment of salary in cash to the said two employees only on the basis whatsapp chats which has no evidentiary value in absence of other collaborative adverse material against the assessee showing part payment of salary in cash to the said two employees. 7.1 This is also pertinent to mention that the Assessing Officer has proceede....
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....oned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions under section 65B(2). Following are the specified conditions under section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process Information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents, and (iv) The information contained in the record should b....
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....ourse of a search, it may be presumed - (i) That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) That the contents of such books of account and other documents are true; and (iii) That the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 83. From the plain reading of sub-section 132(4A), it is be seen that this provision is applicable to the books of accounts, other documents, money, bullion, jewellery or other valuable article or thing belongs to such person. The WhatsApp chats are neither books of accounts nor any valuable document etc. Further, in sub-section (4A) are "may be presumed". The presumption under sub-section (4A) is a rebuttable ....
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....making such enhancements. In view of the above discussions, the addition made by ld. CIT (A) at INR 9.65 crores as enhanced income is hereby deleted. Accordingly, the ground of appeal No. 1 taken by the assessee is allowed. 85. The Ground of appeal No. 2 is in relation to the invocation of the provisions of section 115BBE on the income enhanced by ld. CIT(A). Since we have already deleted the addition made by ld. CIT (A) by enhancing the income of the assessee, thus this ground of appeal becomes academic and is not adjudicated. 86. Grounds of appeal No. 3 is in respect of interest u/s 234A, 234B and 234C which is consequential and therefore, AO is directed to charge the interest as per law on the income computed after giving effect to the order of the Tribunal. This ground of appeal is partly allowed. 87. Ground of appeal No. 4 is regarding the initiation of penalty proceedings u/s 274 r.w.s. 271AAC(10 which is premature at this stage and thus dismissed. 88. In the result, appeal of the assessee is partly allowed. 89. In the result, appeal of the Revenue in ITA No. 4999/Del/2024 and C.O. No. 33/Del/2025 of the assessee are dismissed and ....
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....ch disallowance is not called for, the AO may be directed to delete the same. 2. On the facts and in the circumstances and in law, the learned CIT (A) has erred in making disallowance of Rs. 21,56,755/- u/s 36(1)(va) on account of employee's contribution after the due date specified in the said section but before the due date of filing of Return of Income. When such disallowance is not called for, the AO may be directed to delete the same. 3. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs. 35,00,000 on account of unexplained money by invoking the provisions of section 69A of the Act. When such disallowance is not called for, the AO may be directed to delete the same. 4. On the facts and in the circumstances and in law, the learned CIT (A) has erred in invoking provisions of Section 115BBE of the Act with regard to above enhancement and charging tax and surcharges at higher rates. When the addition on which such tax and surcharge were charged itself is unsustainable, the CIT (A) may be directed to delete the same. 5. On the facts and in the circumstances....
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....und of appeal No. 2 taken by the assessee is dismissed. 100. In Ground of appeal No. 3, assessee has challenged the enhancement of income of the assessee by Rs. 35,00,000/- by ld. CIT (A) based on WhatsApp chats found in the mobile phone of Shri Purushottam Bhageria, Managing Director of the company as unexplained money of the assessee company u/s 69A of the Act. 101. The facts and circumstances existed in the year under appeal and the observations and allegations made by Ld. IT(A) while enhancing the income of the assessee are the same, as were made in the appellate order for AY 2019-20. 102. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while deleting the additions made by ld. CIT (A) by enhancing the income of the assessee in the appeal filed by the assessee in ITA No. 3988/Del/2024 herein above, the addition of Rs. 35,00,000/- made by ld. CIT (A) is deleted. Accordingly, the Ground of appeal No. 3 taken by the assessee in the present appeal for AY 2020-21 is allowed. 103. The Ground of appeal No. 4 is in relatio....
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....le deleting the additions/disallowances. 111. As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in ITA No. 4635/Del/2024, the Revenue's appeal for AY 202122 in ITA No. 2062/Del/2024 is also dismissed. 112. Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed. 113. Now we take up the assessee's appeal in ITA No. 1456/Del/2024 (AY 2021-22). 114. The assessee has raised following grounds of appeal in the present appeal: 1. "On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs. 1,50,00,000 on account of unexplained money by invoking the provisions of section 69A of the Act. When such disallowance is not called for, the AO may be directed to delete the same. 2. On the facts and in the circumstances and in law, the learned CIT (A) has erred in invoking provisions of Section 115B....
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.... of interest u/s 234A, 234B and 234C which is consequential and therefore, AO is directed to charge the interest as per law on the income computed after giving effect to the order of the Tribunal. This ground of appeal is partly allowed. 120. Ground of appeal No. 4 is regarding the initiation of penalty proceedings u/s 271AAB(1A) of the Act which is premature at this stage and thus dismissed. 121. In the result, appeal of the assessee is partly allowed. 122. In the result, appeal of the Revenue in ITA No. 2062/Del/2024 and C.O. No. 91/Del/2025 of the assessee are dismissed and appeal of the assessee in ITA Nos. 1456/Del/2024 is partly allowed. 123. In the final result appeals filed by the revenue in ITA Nos. 4635, 5000, 2060, 4999, 4648, 2061 and 2062/Del/2024 for AYrs. 201314, 2015-16, 2016-17, 2017-18, 2019-20, 2020-21 and 2021-22 respectively, are dismissed. 124. The Cross Objections filed by the assessee in CO No. 11, 32, 33 and 34/Del/2025 for AYrs 2013-14, 2015-16, 2017-18 and 2019-20 respectively; and CO No. 89, 90 and 91/Del/2024 for AY 2016-17, 2020-21 and 2021-22 respective, are dismissed. 125. The appeals filed by the ....
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.... 1 ANM Fincap Private Limited Table - B Source of ANM Name of Party Amount Received (Rs. In Lakhs) Party Name PAN Bank Name Bank Account Number ANM Fincap Private Limited 85,00,000 Transnational Growth Fund AAACT0610Q Oriental Bank of Commerce 1391131001400 45,00,000 Vimal Enterprises prop vimal Bhageria AADPB7652C Corporation Bank 28300501120006 50,00,000 Purus Marketing Private Limited AAECP2129A IDBI Bank 201102000014216 50,00,000 Great fin leasing credit Limited AAACG5265C Axis Bank 912020030387863 Total 2,30,00,000 Table - C Source of RMP Name of Party Amount Received (Rs. In Lakhs) Party Name PAN Bank Name Bank Account Number RMP Holding Private Limited 50,00,000 vimal kumar bhageria AADPB7652C Corporation Bnak 28300501120006 50,00,000 Daus trading & const Private Limited AABCD9454H Axis Bank 910020014734160 15 50,00,000 Newstar info system india Private Limited Axis Bank 30,00,000 Great fin leasing credit Limited AAACG5265C Axis Bank 912020030387863 Total 1,80,00,000 Table -D Source of Bhageria Finance Name of Party Amount Received (Rs. In Lakhs) Party Name PAN Bank Name Bank Account Number Bhageria Finance ....