TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 987
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....r passed u/s 250 of the act by Ld. CIT(A) is void and deserves to be quashed. 2. In law and in the facts and circumstances of the Appellant's case, the order u/s 250 of the income tax act, 1961 passed by Ld. CIT(A) is without considering facts of Appellant's case and without giving any opportunity of being heard. This constitutes a material procedural irregularity and renders the order bad in law and void. 3. In law and in the facts and circumstances of the Appellants case, learned CIT(A) has erred in giving direction to AO to examine bank accounts of the Appellant and retain quantum of addition under section 69 of the Act for credit to its bank account. This direction appears to be based on the alleged insubordination of the Jurisdictional Assessing Officer (JAO) and the non-submission of a Remand Report. The Appellant submits that penalizing the Appellant for the alleged shortcomings of the JAO is unjust and contrary to the principles of natural justice. 3.1. In law, and in the facts and circumstances of the Appellant's case, the order of CIT(A) giving direction to retain credit pertaining to bank account of the Appellant is beyond its scope....
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....ler with no return of income filed, and also a loan of Rs. 18,30,000/- to Shreeji Marketing, whereas the latter reported only a sum of Rs. 60,000/- in unsecured loans, casting doubt on the genuineness of the transactions. The Assessing Officer noted that the assessee failed to provide credible evidence or bank details to support the transactions, and accordingly, the Assessing Officer treated these amounts as unexplained and added them to the total income under section 68 of the Act. During the course of assessment proceedings, the assessee could not produce any fresh or satisfactory evidence. Consequently, the Assessing Officer assessed the total income at Rs. 21,25,88,626/-, and penalty proceedings under section 271(1)(c) of the Act were initiated for concealment of income and furnishing inaccurate particulars. 5. In appeal, CIT(Appeals) noted that the Assessing Officer had added the entire amount under Section 68 of the Act without verifying whether all eight bank accounts actually belonged to the HUF and treated the entire amount as unexplained income of the assessee. Before CIT(Appeals), the assessee submitted that only two of the eight bank accounts (Account Nos. 034501003....
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....ore us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted that initiation of proceedings u/s 147 of the Act were not sustainable since the notice was issued beyond a period of 4 years from end of assessment year and there was no new information which was available with the Assessing Officer to initiate re-assessment-assessment proceedings beyond the four year period. The Counsel for the assessee drew our attention to page 1 of Paper-Book i.e. the "reasons for reopening of assessment". The Counsel for the assessee submitted that accounts of the assessee were duly audited under section 44AB of the Act and the tax audit report contained full disclosures of all loans taken and repaid during the year. During the relevant assessment year, the assessee operated three bank accounts - two in the name of "Shreejibapa Finance" (Account Nos. 034505003804 and 01220102971) and one in the name of Nikul C. Patel HUF (Account No. 034501003061). All transactions from these accounts were properly recorded in the books of accounts, and the resultant income was offered to tax. The return of income was filed on 30/11/2014 dec....
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....,33,446/-. The reassessment notice under section 148 of the Act was admittedly issued beyond four years from the end of the relevant assessment year. Therefore, the provisions of the first proviso to section 147 apply, and the initiation of reassessment can only be sustained if there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. Upon examination of the reasons recorded for reopening and the submissions made by the assessee, we find that the bank accounts relied upon by the Revenue were already disclosed in the course of original assessment proceedings. The assessee had filed a tax audit report under section 44AB, which included full details of loans, repayments, and relevant bank accounts. The return of income, computation, and audited financial statements were also on record during the original assessment proceedings. No material has been brought on record by the Assessing Officer to show that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Further, the reasons recorded for reopening do not refer to any new/fresh tangible material coming i....
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....hat reopening of completed assessments beyond four years is not permissible in the absence of failure by the assessee to disclose material facts. Having regard to the above facts and in light of the settled legal position, we are of the considered view that the reassessment proceedings initiated under section 147 of the Act beyond the period of four years are not sustainable in law in the absence of any failure on the part of the assessee to fully and truly disclose material facts. Accordingly, the reopening of assessment is quashed and the additions made are liable to be deleted. 10. In the result, the appeal of the assessee is allowed. Now we shall come to Department's appeal in ITA 266/Ahd/2025 for A.Y. 2014-15 11. The Department has raised the following Grounds of Appeal: "(a) The Ld. CIT(A) erred in admitting additional evidence in the form of details of bank accounts ignoring that the details had never been filed and the supporting documents to explain the source of credit of Rs.19,70,00,000/- in the assessee's accounts were not filed even during appellate proceedings. (b) The Ld. CIT(A) erred in not dismissing the appeal, especially when he him....
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....sed the following Additional grounds of appeal: "1. In law and in the facts and circumstances of the appellant's case, the reassessment notice issued u/s. 148 of the Act is bad in law and deserves to be quashed. 2. The appellant craves to leave, to add, to amend or to raise any further grounds of appeal as case may raise." 16. The brief facts of the case are that the assessee filed its return of income for the Assessment Year 2015-16 on 27.03.2016 declaring a total income of Rs. 6,22,840/-. Initially, the return was processed without scrutiny. However, based on information received from the Insight portal and inputs from the Directorate of Investigation and Directorate of Systems, it was noted that the assessee had credited a substantial amount Rs. 1,01,79,388/- in its ICICI Bank account. This led to the reopening of the case under Section 147 of the Income Tax Act, and a notice under Section 148 was issued on 31.03.2021. In response, the assessee filed a revised return on 30.09.2021. The reasons for reopening, as provided to the assessee, indicated suspicion of unexplained credits which were allegedly routed through unsecured loans. The Assessing Officer obser....
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....ese requirements, he upheld the addition of Rs. 1,01,79,388/- made by the AO as unexplained credit under Section 69A of the Act. Accordingly, all grounds of appeal raised by the assessee were dismissed. 18. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the Counsel for the assessee submitted the loans in question were received during the relevant assessment year from the following persons: (1) Dharmendra Shantilal Patel HUF - Rs. 53,00,000/-, (2) Jigar Shivabhai Patel - Rs. 25,79,388/-, (3) Sunil Rambhai Patel - Rs. 14,00,000/-, and (4) Chirag Ambalal Patel - Rs. 9,00,000/-. These were all unsecured loans, received through proper banking channels, and were partly or fully repaid by the assessee in the subsequent financial years. In the case of Dharmendra Shantilal Patel HUF, the assessee received a total of Rs. 65,00,000/- and repaid Rs. 12,00,000/- during the year, leaving an outstanding balance of Rs. 53,00,000/- at year-end, which was entirely repaid in the following financial year. To substantiate the genuineness of the transaction, the assessee had submitted a confirmation of account, bank state....
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....urt held that where Department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. While passing the order the Gujarat High Court made the following observations: "6. Having heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue and on perusal of the order passed by the CIT(A) confirmed by the ITAT, it appears that CIT(A) was satisfied with respect to the genuineness of the transaction and creditworthiness of Shri Ishwar Adwani and, therefore, deleted the addition of Rs.1,45,00,000/- made by the Assessing Officer. It is required to be noted that as such an amount of Rs.1,00,00,000/- vide cheque no. 102110 and an amount of Rs.60 lakh vide cheque no. 102111 was given to the assessee and out of the total loan of Rs.1.60 crore Rs.15 lakh vide cheque no. 196107 was repaid and, therefore, an amount of Rs.1,45,00,000/- remained outstanding to be paid to Shri Ishwar Adwani. It has also come on record that the said loan amount s been repaid by the assessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it. I....
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....ed unsecured loan from an entity and repaid same within a short span of time, along with interest, Assessing Officer was not justified in making addition under section 68 in respect of said loan. 25. In the case of JCIT(OSD) vs. Mieza School Pvt. Ltd. in ITA No. 772/Ahd/2019 vide order dated 24.06.2022 while dealing with the similar issue the ITAT Ahmedabad made the following observations: "7. We have heard the rival contentions and perused the material on record. With regards to addition under section 68 of the Act, we are of the considered view that the Ld. CIT(Appeals) has after appreciation of evidence placed on record by the assessee during the course of appeal proceedings has deleted the additions. During appeal, the assessee was able to produce the confirmation from the creditors in support of genuineness of the transaction, loan agreement with M/s Sandesh Procon LLP, bank statement and audited balance sheet of M/s Sandesh Procon LLP evidencing the above transaction were also placed on record to prove the genuineness of transaction. Further, the fact that the loan was repaid back with interest, on which TDS was duly deducted also lends support to the genuineness ....
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.... under s.68 of the Act. 5.1 In the case of Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 (Gujarat), Hon'ble Gujarat High Court held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. 5.2 We further note that all details regarding the parties in respect of the loan transaction were duly submitted before the Revenue Authorities. The additions are proposed to be made on the basis of statement of by Shri Praveen Kumar Jain who stated that he was engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus share application money etc. The Department has made addition on the ground that the assessee company had received a sum of 1,00,00,000/- from M/s Nakshatra Business Private Limited (Hema trading company Private Limited), which was one of the companies operated by Shri Praveen Kumar Jain Group. However, apparently this figure too was incorrect since the Ld. CIT(Appeals) observed that the assessee had taken loan of Rs. 50 lakhs only and accordingly gave part relief to the assessee. We further note that the Tribunals on v....
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....erson. Similarly, learned CIT(A) has affirmed the order of Assessing Officer by simply relied on the statement recorded in the course of search u/s. 132(4) of the Act and further harping on the fact that summons issued u/s. 131 were not complied with. Learned AR also referred to the decision of the Coordinate Bench in the case of ACIT Vs. Shreedham Builders (ITA No. 5589/Mum/2017 for A.Y. 2012-13), wherein all these three entities have lent money and the Coordinate Bench has taken the view that no addition to be made u/s. 68 of the Act as the assessee has duly discharged burden cast upon it u/s. 68 of the Act. Learned AR therefore prayed before the Bench that the order of learned CIT(A) may be set aside and the Assessing Officer be directed to deleted the addition. 6. Per contra, learned DR relied on the order of learned CIT(A) heavily by submitting that facts revealed during the course of search unequivocally proved that the assessee was beneficiary of hawala racket which was being operated by Shri Pravin Kumar Jain and Associate concerns and he even admitted during the course of statement recorded u/s. 132(4) of the Act that business was not being done but only accommoda....
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....planation offered by the assessee solely on the ground that in some cases, the lenders had filed returns with low income or had not filed returns at all. However, the identity of the lenders was not in dispute and the transactions were through banking channels. There is no adverse material brought on record by the Assessing Officer to disprove the genuineness of the transactions or establish that the funds actually originated from the assessee. It is also an undisputed fact that the amounts were subsequently repaid, and the repayments were supported by documentary evidence including bank statements and ledger accounts. In this background, and in light of judicial precedents of the Hon'ble Gujarat High Court in the cases of Ayachi Chandrashekhar Narsangji (42 taxmann.com 251), Ambe Tradecorp Pvt. Ltd. (145 taxmann.com 27), and Ojas Tarmake Pvt. Ltd. (156 taxmann.com 75), where it has been held that once the repayment of the loan is established and the transaction is routed through proper banking channels, no addition under section 68 of the Act can be made merely because of low income of the lender or absence of return filing, we are of the view that the assessee has duly discharged....
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....ce. 3.1. In law and in the facts and circumstances of the Appellant's case, the order of CIT(A) giving direction to retain credit pertaining to bank account of the Appellant is beyond its scope of jurisdiction and is therefore without any legal effect 3.2. In law and in the facts and circumstances of Appellant's case, the CIT(A) ought to have deleted addition of Rs. 13,87,67,924/- made under section 69 of the Act in toto. 3.3 In law and in the facts and circumstances of Appellant's case, the CIT(A) ought to have deleted entire addition made by the Assessing officer more particularly when the Assessing Officer has never provided break up of quantum of deposits added u/s 68 of the Act till date of passing appellate order. 4. In law and in the facts and circumstances of Appellant's case, the CIT(A) has erred in passing appellate order without waiting for remand report as called by him in appellate proceedings. The Id CIT(A) ought to have appreciated that non- submission of remand report on time basis by Assessing Officer does not mean that addition made by Assessing Officer deserves to be upheld. 5. In law and in the facts a....
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....essee reiterated that only two bank accounts were owned by the HUF and the rest were unrelated. The assessee also highlighted that in a similar case for A.Y. 2013-14, where similar reasons were recorded, the AO had accepted the returned income without making any additions, after due explanation was provided. The CIT(A), after examining the facts, noted that while the reassessment was triggered based on the total credits across six bank accounts allegedly linked to the assessee's PAN, there was sufficient evidence to support the assessee's claim that only two of these bank accounts were actually owned by the HUF. The AO had failed to verify this aspect or respond to the assessee's repeated requests for a detailed breakup of the transactions. Even after directions from the CIT(A), the jurisdictional AO failed to submit a speaking remand report or undertake the required verification, which the CIT(A) viewed as a dereliction of duty. Accordingly, the CIT(A) held that while the addition of the entire Rs. 13.87 crore under section 68 of the Act was unjustified, a partial addition was still warranted to the extent of credits found in the two bank accounts that were admittedly owned by....