TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1622
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....Act on 31.03.2021. In response there-to, the assessee filed its return of income on 28.05.2021 declaring the same income as was declared in the original return of income. 2.1 The reasons recorded by the Ld. AO for reopening are that based on the information available, he found that during the demonetization period, M/s AB Agrotech Pvt. Ltd., had deposited cash of Rs. 2.33 crores in its Bank Account maintained with Janta Sahakari Bank, Mumbai and this cash was specifically transferred to various beneficiaries including the assessee to the tune of Rs. 10,00,000/- This cash was deposited on the direction of Shri Atul Bora, Director of M/s AB Agrotech Pvt. Ltd. During the assessment proceeding in the case of M/s AB Agrotech Pvt. Ltd., for A.Y. 2017-18, It was found that the Company, M/s AB Agrotech Pvt. Ltd. had filed its return of income till A.Y. 2011-12 only and thereafter it was claimed to be struck off. The Ld. AO further found that, though Shri Atul Bora, director of M/s AB Agrotech Pvt. Ltd. had left the Directorship he was still operating the Bank Accounts of the Company and the cash deposits were made under his directions. During the assessment proceedings in the case of M/....
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....er the last return filed, the cash in hand of the Company, M/s. Agrotech Pvt. Ltd. was noted to be of Rs. 87,000/- only. As regards to the bill of sale of jewellery as submitted by the Assessee, on perusal of the same it is found that the bill has been issued in the name of Shri. Atul Bora whereas the money was transferred from the company's account. Therefore, the conclusion drawn by the AO while finalizing the assessment in the case of M/s. Agrotech Pvt. Ltd. seems to be very logical and therefore proves it beyond doubt that the Assessee has received its own accounted money through the above said entity. "8.2 Rebuttal: The Company M/s. AB Agrotech Pvt. Ltd. had filed its last return for the A.Y.2011-12. In the return of income filed for A.Y.201-12 the company had shown total cash in hand amounting to Rs. 87,000/- only. Further during the Demonetization period in the month of November 2016, M/s. AB Agrotech Pvt. Ltd. had deposited cash of Rs. 2,33,40,000/- in its bank account. Shri. Atul Bora, the key person associated with M/s. AB Agrotech Pvt. Ltd. had accepted in his statement that the company was in financial crisis therefore he could not file the return of income....
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....ipping, that first of all the cash is received from the beneficiaries. The entry provider gets his commission in cash for such entry provision. After receiving of such cash, the entry provider introduces the same in the various bank accounts opened in the names of paper entities which are maintained and managed by him. And thereafter he transfers such amounts to the bank accounts of the beneficiaries. 9.2 Rebuttal: The basic requirement of section 147 is that the Assessing officer must have a reason to believe that income chargeable to tax has escaped assessment based on the facts and material available in the custody of the officer reopening the case. It is possible that the 'information' for reopening of the case may be discovered from new and important matter or fresh facts or even from external sources. The finding drawn in the reasons recorded for reopening of the case vide paras 2,3,4 and 5 are based on the information in the hand of the AO which is sufficient enough to draw the conclusion that the income to the tune of Rs. 10,0,00,000/-me so scaped assessment. 10.2 Rebuttal: First of all, it is submitted that there is no provision in the Income Tax ....
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....e of principles of natural justice, then it is for the person so complaining to demonstrate the same and show the prejudice caused to him." 10.2.3 Further, in the case of GTC Industries Ltd. v ACIT 65 ITD 380, ITAT Bombay Benchhas relied upon the judgment of Calcutta High Court in the case of Kisanlal Agarwalla v.Collector of Land Customs AIR 1967 & Cal. 80 and quoted this judgment in para 90 which throws light on the right of cross examination-."90. There is a good deal of misconception on this question of the right of cross-examination as part of natural justice. Natural justice is fast becoming the most unnatural and artificial justice and for that confusion the Courts are no less responsible than the litigants. Ordinarily the principle of natural justice is that no man shall be a judged in his own cause and that no man should be condemned unheard. This latter doctrine is known as audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is placed on evidence or record against a person then that evidence or record must be placed before him for his info....
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.... Section 68 of Income Tax Act 1961, where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source of the same or the explanation offered by him is not satisfactory in the opinion of A.O.. the sum so credited may be charged to income tax as the income of the assessee of that previous year. 13. Thus, in the absence of any supportive evidences as well as any satisfactory explanation furnished thereto it clear that the cash deposit as made by the M/s. AB Agrotech Pvt Ltd during the demonetization period, is nothing but the cash received from various parties which were subsequently transferred to their account through NEFT in lieu of commission. The verification done during the course of the assessment proceedings in the case of M/s. AB Agrotech Pvt. Ltd. alearly establishes that Mis Rathod Jeweller is one of the beneficianes for an amount of Rs. 10.00000/- which has brought back its unaccounted money during the F.Y. 2018-18. Thus, the amount of Rs. 10,00,000/- represents the assessee, therefore the same is added back to the total income of the assessee for A.Y. 2017-18. ....
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....oceedings were conducted based on general information. In fact, the Assessing Officer had received specific information about the appellant having received the cash transferred by M/s AB Agrotech Pvt. Ltd. 4.2.3 The Hon'ble Supreme Court in Raymond Woolen Mills vs. ITO (1999) 236 ITR 34 (SC) has held that there should be reason to believe about the escapement of income at the stage of initiation of reassessment of reassessment proceedings. Sufficiency or correctness of such materia o considered at that stage. The Hon'ble Apex Court has held in As Rajesh Jhaveri stock Broker (P) Ltd. (2007) 291 ITR 500 (SC) that: 'The word reason" in the phrase "reason to believe would mean cause or justification. If the AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusions'. Explaining the position further, it laid down that: at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income.....
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....sons to believe that income has escaped assessment. 5.3 During the appellate proceedings, the appellant filed a detailed submission which has been reproduced above. In brief, the appellant submitted that the amount received by the appellant through normal banking channel via RTGS and the said amount received by the appellant is nothing but advance received from the customer against sale bill No. SBBG-3325 dated 25.03.2018 in respect of jewellery sold to the customer i.e. Shri Atul Bora. The transaction is duly disclosed in the regular books of accounts of the appellant firm. In support of the ground raised the appellant relied on various case laws mentioned below. (a) Hon'ble Delhi Tribunal in the case of DCIT vs. Subhash Chand Gupta I.T.A. No. 1548/Del/2022 order dated 25.05.2023. (b) Hon'ble Kolkata Tribunal in the case of Bhagwant Merchants Private Limited vs. ITO, Ward-13(1), Kolkata I.T.A. No. 2614/2019 order dated 29.05.2020 (c) Hon'ble jaipur Tribunal in the case of ACIT vs. Chandra Surana I.T.A. No. 166/JP/2022 dated 15.12.2022. (d) Hon'ble Jaipur Tribunal in the case of Smt. Kanchan (widow)S/Shri Dinesh Kumar Sha....
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....ein all the transaction were duly verified. ii. There was no tangible and fresh material on record to show that there is escapement of income iii. The Ld. AO made the addition without the application of his independent competent mind to the information received from Dy. Commissioner of Income Tax, Circle-5, Pune. iv. The re-assessment proceedings were been initiated only on the basis of assessment proceedings in the case of M/s. AB Agrotech Pvt. Ltd. v. Reasons recorded were based on presumption and surmises and on the borrowed satisfaction by the AO. vi. The assessment order was passed without providing the appellant an opportunity of cross-examination of Shri Atul Bora and other persons whose statement were relied upon. vii. The learned AO failed to appreciate the facts of the case and the valid documents submitted during the course of assessment proceedings. 2. The Id CIT(A) has erred in confirming the addition of Rs. 10 lakhs made by the ld AO u/s 68 of the Act as unexplained income on account of advance received from Shri Atul Bora, director of M/s AB Agrotech Pvt Ltd by the appellant on the ground that the appella....
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....nfirmation letter given by Mr. Atul Bora, placed on page No. 133-134 of the Paper Book, the Ld. AR submitted that the transfer of Rs. 10,00,000/- from Bank Account of M/s AB Agrotech Pvt. Ltd. to the Bank Account of the assessee, M/s Rathod Jewellers was made via RTGS. Mr. Bora has stated in the said confirmation letter that the transfer of Rs. 10,00,000/- was made on 19.11.2016 from the Janta Sahakari Bank account of M/s AB Agrotech Pvt. Ltd. via RTGS as advance amount towards the purchase of Diamond jewellery by him from the assessee, M/s Rathod Jewellers totaling to Rs. 1,00,003/-. The sale bill was raised subsequently via invoice No. SBBG-3325 dated 25.03.2018 (a copy of which is placed at page 137 of the paper Book) and the advance amount given in FY 2016-17 of Rs. 10,00,000/- was adjusted against purchase of jewellery and Rs. 3/- was paid in cash. He also brought to our attention the Bank of India bank account statement of the assessee, placed at page No. 138 of the Paper Book, to show the transaction via RTGS. He further submitted that this confirmation letter was also filed with the Ld.AO during the assessment proceedings but he failed to consider the same. 5.3 The Ld. A....
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....mmissioner of Central Excise, Tirunelveli (295) ELT 195 (MAD) e. Hon'ble Pune Tribunal in the case of Anita Sanjay Agarwal and others in ITA No. 2622 to 2624 f. Hon'ble Pune Tribunal in the case of Full Moon Housing Private Limited vs The DCIT ITA No.289/PUN/2016 3. The amount offered as a sale cannot be treated as deemed Income under section 68 of the Act. a. Hon'ble Delhi Tribunal in the case of DCIT us, Subhash Chand Gupta I.T.A No. 1548/Del/2022 b. Hon'ble Kolkata Tribunal in the case of Bhagwant Merchants Private Limited vs. ΠΟ Ι.Τ.Α. Νο. 2614/Kol/2019 c. Hon'ble Jaipur Tribunal in the case of ACIT Vs. Chandra Surana I.T.A. No. 166/JP/2022 d. Hon'ble Jaipur Tribunal in the case of Smt. Kanchan (Widow)S/Shri Dinesh Kumar Sharma & Shri Yogesh Kumar Sharma (Sons) vs. ITO ITA No. 184/JP/2021 e. Hon'ble Hyderabad Tribunal in the case of NECX (P.) Ltd. v. ITO Tax Corp (A.T.) 101795 (ITAT -HYDERABAD) f. Hon'ble Lucknow Tribunal in the case of Kwality Zippers (P.) Ltd. V DCIT [2022] 143 taxmann.com 427 (Lucknow Trib.) 6. Ld. DR strong....
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.... which the payment of Rs. 10,00,000/- was made via RTGS from the bank account of M/s. Agrotech Pvt. Ltd. to the assessee's bank account as an advance payment in FY 2016-17 and the balance of Rs. 3 was paid in cash. This statement of Mr. Atul Bora itself is little hard to believe and raises doubt in our minds, considering the overall factual context of the assessee case as we fail to understand why Rs. 3 was paid in cash and not transferred along with Rs. 10,00,000 to the bank account of the assessee via RTGS. 8.1 Against this background, though the assessee seems to have created a good paper trail, we do not find force in the arguments advanced by the Ld. Counsel for the assessee. It is now well settled position of law that it is essential on the part of the Assessing Officer to look into the real nature of transaction and what happens as the real word and contextualize the same to such transactions in the real market situation in the light of the judgments of the Hon'ble Apex Court. We may here refer to the decision(s) of the Hon'ble Supreme Court in Sumati Dayal vs. CIT 214 ITR 801 (SC) which laid down the "test of human probabilities" for drawing inference where c....