TaxTMI 
TaxTMI 
2026 (2) TMI 1185
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....3,60,000/- with an entity, M/s Orange Tradex, which was a dummy entity carrying out no activity other than circulation of funds. Since, as per the AO income had escaped assessment, the case was reopened by issuing notice u/s.148 of the Act on 29.03.2021. In response to the said notice, the assessee filed return on 27.04.2021. Thereafter, assessment was completed adding the entire receipts from M/s. Orange Tradex of Rs. 89,23,60,000/- to the income of the assessee treating it as unexplained cash credits u/s.68 of the Act on account of failure of the assessee to demonstrate that it was engaged in real transactions with M/s. Orange Tradex and not mere circulation of funds as per the information in the possession of the AO. 3. Aggrieved by the said order, the assessee filed appeal before the Ld. CIT(A) raising both, legal grounds challenging the validity of the assessment framed, as well as grounds challenging the merits of the addition made. The Ld. CIT(A) rejected the legal grounds raised by the assessee. On merits, he held that the assessee was a mere conduit in the circulation of funds, finding the assessee to have transferred the funds received from M/s Orange Tradex to another....
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....ircumstances of the case, the Ld. CIT(A) has erred in not holding that the reassessment notice issued by Assessing Officer is on incorrect fact and deserves to be quashed. 7. In law and in the facts and in the circumstances of the case of appellant, the Ld. CIT(A) has erred in sustaining addition of Rs. 1,78,47,200/- being 2% of Rs. 89,23,60,000/- as commission income even when the appellant has already discharged its onus as cast u/s 68 of the Act. The Ld. AO may be directed to delete the entire addition. 7.1 Without prejudice to the above, the loan received by the appellant amounted to Rs. 46,95,30,000/- but the Ld. CIT(A) has sustained the addition on the basis of loan amounting to Rs. 89,23,60,000/-. The Ld. CIT(A) ought to have restricted the addition of alleged commission @ 2% on Rs. 46,95,30,000/- as against Rs. 89,23,60,000/-. 8. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 4.3 The Revenue in its appeal in ITA No.1038/Ahd/2024 has challenged the order of the Ld. CIT(A) deleting the addition made by the AO u/s.68 of the Act of the a....
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....ed for circulation of fund and no actual business activity has been carried out in these concerns. In the same way, other transactions in the bank accounts of these concerns also appears to be rotation of funds only. It seems that no actual business activity has been carried out in these concerns. Further, it has also been stated in the information uploaded that the concern viz. Orange Tradex Pvt Lid is merely paper concerns. 3. Basis of forming reasons to believe and details of escapement of income: On perusal of the details furnished and the information uploaded by the DDIT (Inv.), Unit-1(3), Ahmedabad, a is very clear that the as per the bank details of Orange Tradex Pvt. Ltd., transactions of Rs. 80,23,00,000/- in the name of the above named assessee have been carried out. In view of the above facts, I have reason to believe that the income of Rs. 80.23.60.000/- has escaped assessment within the meaning of Section 147 of the Act therefore, it is a fit case for reopening of the assessment by invoking the provision of sec. 147 of the IT. Act. Accordingly, it is a fit case for issuing notice u/s 148 of the LT. Ad 4. Applicability of the provisions of sec....
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....e assessee and all information forwarded by the Investigation Wing to the AO based on which reasons were recorded by the AO was also provided to the assessee during the re-assessment proceedings. This fact is noted at para 4 of the assessment order as under: "4. Further in the said reply stated to pass speaking order dealing the objection raised by the assessee. Accordingly all documents available i.e. Approval U/s. 151, Inspectors report, Statement of Chandresh C Vyas and Letter from DDIT(Inv), Unit1(3), Ahmedabad, have been forwarded to the assessee vide letter dated 11.03.2022 wherein the objections raised by the assessee have also been disposed off as well in a speaking order and requested to furnish information called for and posted the cases for hearing on 15.03.2022. The assessee has filed reply and sought further adjournment for 7 working days without furnishing any information. Later on, on 16.03.2022, the assessee has filed details enclosing the bank statements, ledger copies of Orange Tradex Pvt Ltd and also the details from whom the unsecured loans were obtained during the year." And the said fact has been admitted by the assessee in his submissions filed to....
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....elating to its alleged transaction with Orange Tradex gathered by the Investigation Wing of the Department, but despite so the allegation of borrowed satisfaction of the AO or for that matter non application of mind by the AO, is only a general allegation levelled by the assessee without any specific reference to the material and information made available to him. The assessee had all material with him regarding its transaction with Orange Tradex dug out by the Investigation Wing of the Department. The assessee therefore was aware of the specifics of the information relating to its transaction with Orange Tradex and why it was considered to be not real by the Revenue authorities, i.e both the Investigation Wing and the AO. That being so the assessee ought to have referred to the information made available to it while alleging that the AO had no knowledge of the nature of transaction or for that matter the quantum of transaction of the assessee with Orange Tradex, so as to attribute non application of mind/borrowed satisfaction of the AO of escapement of income of the assessee. The assesses case merely rests on the contents of the reason recorded and no reference has been made of th....
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....revious year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139" The assessee has furnished its return of income for the assessment year 2013-14 on 27.04.2021 in response to notice issued u/s 148. In continuation to the proceedings 143(2) was issued to the assessee on 13.01.2022 along with the reason duly enclosed for which the case has been reopened and notice U/s. 142(1) was issued on 20.01.2022. In spite of the reason duly available in the 143(2) notice, the assessee vide its reply has sought reasons for reopening. The same were duly furnished to the assessee vide notices issued U/s. 142(1) dated 31.01.2022 and further information has been called for, based on the reasons furnished. However the assessee failed to furnish the information and rather requested to quash the proceedings as proper proçedures were not followed. There is no doubt that Notice U/s. 148 was issued well in time. By the reply of the asse....
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....ued another notice was issued on 16/02/2022 calling for information. The assessee vide its latter dated 25/02/2022 raised further objections. With regard to the same it is herewith submitted that as the objections were duly disposed off vide dated 11/02/2022, the assessee is now requested to furnish the information called for without any further delay. In his reply the assessee has called for certain documents, whatever documents were asked for in the form of reasons etc were duly provided to the assessee which are the basis for reopening the case. However, further more documents were requested and the same are enclosed to this letter. Further, in his reply the assessee relied on Garden Finance Ltd. Vs ACIT (268 ITR pp.92). The said case cannot be treated as ratio, applicable to the facts in the assessee's case, as objections raised have already been duly disposed off. " As can been seen from the above the objections are duly disposed off and the contention of the assessee on the said issue is not tenable." 15. Referring to the same, he pointed out that the AO had categorically noted the assessee's objection being disposed off vide letter of the AO dated 11th Februa....
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....collected by the Investigation Wing of the department revealing the transaction of the assessee with Orange Tradex to be bogus. The assesses objections to the reopening, therefore, ought to have been specific, referring to all information available when objecting to the reopening. Merely referring to the reasons recorded for reopening stating them to be vague for not mentioning the nature or quantum of transaction of the assessee with orange Tradex, would not suffice, until this fact was pointed out from the information supplied to the assessee alongwith the reasons. All objections of the assessee, are clearly with reference to only the reason recorded and there is no reference to the material available alongwith the reasons. These general objections of the assessee, typically do not qualify as objections at all. And therefore the act of the AO in not disposing off the same, we hold, does not effect the validity of the assessment framed u/s 147 of the Act in the present case. The argument of the Ld.Counsel regarding non disposal by AO of the objection of the assessee to the reopening of the case, invalidating the assessment framed, is therefore rejected. 20. All the case laws re....
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....relation to the amounts received from Orange Tradex and commission income earned thereon only be taxed, as held by the Ld.CIT(A). The findings of the Ld.CIT(A) therefore, which have been assailed before us are: * That the transaction of the assessee with M/s Orange Tradex during the year is bogus. (assailed by the assessee) * That the quantum of the transaction is Rs. 89.23 Crs. (assailed by the assessee) * That the assessee is only an accommodation entry provider and not the real beneficiary of the bogus transaction. (assailed both by assessee and Revenue) 25. First, dealing with the findings of the Ld. CIT(A) that the transactions entered into by the assessee with Orange Tradex was a bogus transaction, we find that in discharge of its onus to prove the genuineness of the transaction, the assessee had merely filed documentary evidence i.e. its own bank account or the financials of Orange Tradex etc. The adverse information available with the AO from the Investigation Wing of the Department pertaining to transactions undertaken by the Orange Tradex and Orange Tradex being only a shell entity, have not at any point of time been controverted by the asses....
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.... needed to be taxed only on account of commission income received by it, is held to be correct. 27. Coming to the third aspect relating to this issue, the assessee contended that the quantum of transactions carried out by the assessee with Orange Tradex was not to the tune of Rs. 89.23 Crores but only to the tune of Rs. 46.95 Crores. That, therefore, even if any addition on account of commission income earned needed to be made it should be restricted to this quantum of transaction only. This fact has been, we have noted, pleaded by the assessee both before the AO and before the Ld. CIT(A). Ledger account of Orange Tradex in its books of account reflecting the fact of the assessee having received amount of only Rs. 46.95 Crores and not Rs. 89.23 Crores, as noted by the AO were filed. Even bank statement of Orange Tradex was filed by the assessee to the authorities below. However, we note that none of the authorities below have made any attempt to verify this fact. At the same time, we have also noted from the reasons recorded by the AO that the copy of the bank statement of Orange Tradex revealed the assessee to have entered into the transactions to the tune of Rs. 89.23 Crores w....