Income Tax Appellate Tribunal - Nagpur
Ramsons Steel Pvt Ltd,Nagpur vs Income Tax Officer, Nagpur on 24 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND
SHRI KHETTRA MOHAN ROY, ACCOUNTANT MEMBER
ITA No. 312/Nag/2023 (AY: 2013-2014)
(Physical hearing)
Income Tax Officer, Ramsons Steel Pvt Ltd
Room No. 12, RTTC Building, 1st Floor, Agrawal Complex, Loha Oli,
Seminary Hills, Nagpur, Vs Itwari, Nagpur- 440002
Maharashtra- 440006 PAN- AAACR8418G
Appellant / Revenue Respondent / Assessee
C.O. No. 01/Nag/2024 in ITA No. 312/NAG/2023 (AY: 2013-14)
Ramsons Steel Pvt Ltd Income Tax Officer
1st Floor, Agrawal Complex, Loha Oli, Vs Room No. 12 RTTC Building,
Itwari, Nagpur- 440002 Seminary Hills, Nagpur,
PAN- AAACR8418G Maharashtra- 440006
Appellant / Assessee Respondent / Revenue
Assessee by Shri K.P. Dewani, Advocate
Revenue by Shri Pankaj Kumar, CIT DR
Date of hearing 16.02.2026
Date of pronouncement 24.04.2026
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER:
1. This appealby revenue and Cross Objection (C.O.) therein by assessee are directed against the order of Ld. CIT(A) dated 16.07.2023 for AY 2013-14. In ITA No. 312/NAG/2023for AY 2013-14, the revenue has raised following grounds of appeal;-
i. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 2,35,50,000/- made by AO u/s. 68 of I.T. Act, 1961 even though the assessee failed to explain the credit entry in bank account of assessee made by M/s. Shubhbijay Properties Advisory Pvt. Ltd. ii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 192,67,37,950/- made by AO u/s. 68 of I.T. Act, 1961 even though the assessee failed to establish the identity and the creditworthiness of the persons from whom loans/deposits were received. iii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC has erred in accepting the transaction with M/s. Shubhbijay Properties Advisory Pvt. Ltd. as genuine transaction inspite of the fact that the said company is a shell entity and transactions of shell entity have been held to be non-genuine transaction. Reliance is placed on the decision of ITAT, Mumbai Bench, Mumbai ITA No. 1313/Mum/20 in the case of DCIT, Circle 15(1)(2) Mumbai Vs. Leena Power Tech Engineer Pvt. Ltd.
2. On receipt of notice of appeal by revenue, the assessee has filed its cross objection (C.O.) by raising following grounds;-
i. Notice is issued u/s 148 of I.T. Act 1961 is illegal, invalid and bad in law.
Consequent reassessment framed is liable to be cancelled. ii. The learned CIT(A) erred in holding that notice issued u/s 148 is in accordance with law.
iii. The learned CIT(A) ought to have held on the facts and evidence on record that notice issued u/s 148 is bad in law and consequent reassessment framed is liable to be cancelled.
iv. Reassessment framed without providing complete reasons recorded for issue of notice u/s 148 inspite of specific request made is bad in law and liable to be cancelled.
v. Reason to believe for escapement of income on the basis of information received from Investigation Wing without making independent inquiry is no valid belief of escapement and consequent notice issued u/s 148 is bad in law.
3. Brief facts of the case are that the assessee is a company engaged in the business of trading in Iron and Steel and investment in share and securities. The assessee filed its return of income for AY 2013-14 declaring income of Rs. 1980/-. Initially, scrutiny assessment was completed under section 143(3) on 24.03.2015. Subsequently, the case of assessee was reopened under Section 2 147 on the basis of information that DDIT (Inv) Unit 4(2) Kolkata that they conducted inquiry in respect of bank account of Raj Kumar Singh in IndusInd Bank. As per information of DDIT (Inv) Unit 4(2) Kolkata, there was high value of cash deposits in the bank account of RajKumarSingh, which were immediately transferred or withdrawn. Credit entry mainly by cash deposits and were transferred to several entity including to Shubhbijay Properties Advisory P Limited. The assessee company is one of the beneficiaries of fund transferred from the bank account of Raj Kumar Singh of Rs. 45.00 Lakhs during financial year 2012-13 relevant to assessment year under consideration. On the basis of such information, the Assessing Officer (in short 'AO') formed his opinion that the income to the extent of Rs. 45.00 Lakhs had escaped assessment. Notice under Section 148 dated 31.03.2021 was issued to assessee after obtaining prior approval from competent authority. In response to notice under Section 148, the assessee filed its return of income on 13.04.2021. The AO after serving reasons recorded proceeded for reassessment. The AO asked the assessee to furnish detail of statement of bank account, financial statement and audit report along with all details of business activities. As per direction of assessee, the assessee furnished complete details. The AO noted that there was credit entry in the bank account of assessee from the account of Shubhbijay properties Advisory Pvt Limited aggregating of Rs. 2.35 Crore. The AO recorded such detail in para 3.1 of the assessment order. The AO in para 5.1 to 5.4 recorded modus operandi of entry provider and the role of Income Tax Authorities. The AO in para 6 of 3 assessment order recorded that the submission made by assessee is not in conformity with facts available on record. Thus, the credit entry in the bank account of assessee of Rs. 2.35 Crore was treated as unexplained credit under Section 68. The AO further noted that there were other transactions in the Lakshmi Vilas Bank account of assessee aggregating to Rs. 192.67 Crore from various entities, details of which are recorded in para 7 of the assessment order. The assessee was asked to furnish details about the genuineness of such transaction. The AO in para 7.1 of his order recorded that to verify the genuineness and creditworthiness of various loans and advances, notice under Section 133(6) were issued to 15 such entities requiring certain details with regard to nature of business, return of income and transaction with assessee company during relevant financial year with ledger account with the assessee. The AO noted that no compliance /response is received from all such parties. Due to non-compliance, the AO took his view that it is not ascertainable whether such entities are actually genuine or exist on paper. The assessee was asked to submit his explanation regarding huge amount of credit and entries appearing in such bank account. The assessee filed its reply on 09.03.2022. The part of assesses reply are recorded on page 18 of assessment order. The assessee in his reply stated that the transaction does not relate to any sale or purchases or booking of services. The assessee company accepted intercorporate deposits from various companies. Similarly, the assessee company advanced intercorporate deposits to various other companies. The assessee accepted 4 intercorporate deposit from various companies aggregating to Rs. 122.37 Crore. The assessee received Rs. 71.72 Crore out of intercorporate deposit from various companies. This has resulted into credit in the bank account maintained with Lakshmi Vilas Bank Ltd. aggregating to Rs. 195.16 Crore. The reply of assessee was not accepted by AO on the ground that the assessee has shown very nominal return of income. Loan and current investments are huge. The AO further noted that the assessee has shown purchases of very less amount and has shown business only on 07.03.2013. No steel trading is visible from the bank account and other details furnished by assessee. No interest income is shown from such intercorporate deposits nor any interest is paid. Thus, the source of such huge amount credited in the bank account of the assessee throughout the year remains unexplained. The amount credited in the account of assessee was immediately transferred on the same day or on very next date to some other entity. The AO presumed that probably the assessee is using its own fund for layering of transaction and accommodation entry activities, cannot be ruled out. The AO held that that confirmation of accounts or use of any banking channel for any payment cannot provide legitimacy to such payment unless and until the creditworthiness of the business to lend the money is proved. The AO treated the credit entry aggregating of Rs. 192.67 Crore as unexplained credit while passing the assessment order on 29.03.2022.
4. Aggrieved by the additions in the assessment order, the assessee filed appeal before Ld. CIT(A). Before ld CIT(A), the assessee in its detailed written 5 submissions submitted that addition made by A.O. at Rs.195.02 crores is unjustified, unwarranted and bad in law. The submissions of the assessee is summarized in the following ways.
(i) The additionsconsist of two sums being Rs.235.50 lacs as discussed in para 6 of the assessment order and Rs. 192.67 crores discussed in para 7 of assessment order. The A.O. has concluded at para 6 that Rs.235.50 lacs is accommodation entry received from Shubhbijay Properties Advisory Pvt.
Ltd. The A.O. in para 7 has also stated that on perusal of bank statement of assessee credit entries appearing in Bank account, details of which have been tabulated are at Rs. 192.67 crores. In fact, the total of tabulated entries comes to Rs. 181.72 crores. Such mistake resulted in excessive addition of Rs. 10.95 crores. In the tabulation prepared at para 7 aggregated amount of various credits appearing in the bank account is incorrectly taken at Rs. 192.67 crores, which has been concluded to be unexplained credit entries liable to be assessed under section 68 of the Act. In tabulation it is noted that Rs. 115 lacs on 20-07-2012 on page No.12 of the assessment order in the name of Gautam Iron & Steel Trading Co. is taken again at the same at the end of page and in bank statement no such entry is appearing on the date. Thus, assessment order the figure of Rs. 115 lacs is taken twice. Further at page 12 on 24-05- 2012 Rs. 20.00 lacs is taken without mentioning any name of party. In bank statement no such entry is appearing on the said date. Amount 6 taken in tabulation appears to be mistake resulting in taking aggregate amount in excess by Rs. 20.00 lacs. Above mentioned mistakes resulted in to excessive addition of Rs. 12.31 crores being (10.95+1.15+0.20 crores). The assessee furnished a list indicating name of parties' credits in respect to which addition is made at the hands of assessee. The list show that total numbers of parties are 26 and correct amount of credit entries of such parties is Rs. 180.36 crores only.
(ii) It was contended that sum of Rs. 300 lack was amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. during AY 2012-13. The aforesaid amount receivable by Assessee Company from the said corporate entity was as per regular books of account of assessee. Amount receivable was shown in the balance sheet of assessee for AY 2012-13. Regular assessment has been completed in the case of assessee under section 143(3) of the Act, wherein books of account and documents have been examined. The amount receivable shown in the balance sheet in respect to Shubhbijay Properties Advisory Pvt. Ltd. has been accepted without inviting any adverse observation in the regular assessment for AY 2012-
13.
(iii) The amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. in AY 2012-13 at Rs. 300 lacs have been received back through proper banking channel during the AY 2013-14 and the part receipt of amount received at Rs. 235.50 lacs which have been concluded by AO as accommodation 7 entry. It was submitted that refund of amount payable to assessee which has been accepted by department in the case of assessee in past assessment year in no manner of consideration can be construed as accommodation entry. Thus, addition made by A.O is unjustified and unsustainable.
(iv) The AO in para 3.2 has noted that Shubhbijay Properties Advisory Pvt.
Ltd. is not reflected in details of loan, advance & investment made during the F.Y. 2012-13. The above finding is in consonance with claim of assessee. It is refund of amount receivable by assessee on the opening day of accounting year. Copy of account submitted by assessee in respect to transaction of Shubhbijay Properties Advisory Pvt.Ltd. and noting of AO at para 3.2 corroborates the submission of assessee that the amount has been received as refund from such company. Thus, there remains nothing and in fact there is no adverse evidence on record to conclude that any amount received from such company is in the nature of accommodation entry. It is not credit entry as envisaged under section 68. Addition made by AO is unjustified and unsustainable.
(v) The assessee also filed confirmation of account of Shubhbijay Properties Advisory Pvt. Ltd. indicating PAN and detailed address of the aforesaid company. Confirmed copy of account clearly indicates amount received from such company in respect of refund of amount receivable on opening day of accounting year. Refund of amount receivable in no manner of 8 consideration can be termed as accommodation entry as has been concluded by AO to make addition in the case of assessee. The AO has accepted receipt of Rs. 10.00 lacs on 30-01-2013 and Rs. 54.50 lacs on 07-02-2013 from very same company without inviting any adverse observation. Thus, there is no justification / basis to make addition at Rs. 235.50 lacs by holding it as accommodation entry. Addition made by AO is clearly unjustified.The AO at para 4 of the assessment order has observed that it is established that Shubhbijay Properties Advisory Pvt. Ltd. is company used by Raj Kumar Singh for layering of funds. The aforesaid observation in the assessment order is not based on any evidence on record. It is specifically asserted that no such evidence demonstrating the noting as made at para 4 has been confronted to assessee before taking any adverse view in the case of assessee. It is settled position of law that evidence collected behind back of assessee cannot be used against the assessee. In absence having been confronted to assessee and also not allowing opportunity of cross examination for evidence relied upon while making addition is not justified. To support such view relied on law laid down by Hon'ble Apex Court in the case of CCE Vs Andaman Timber Industries reported viz; (2016) 281 CTR 241(SC).
(vi) It was submitted that at para 5, the AO has merely discussed the provisions of Act and modus operandi which is of general nature and is not based on any evidence on record in the case of assessee. Modus 9 operandi discussed is not in respect to any transaction of assessee. Thus, there is nothing adverse which can be drawn from the general modus operandi discussed, which has no relation to any transaction of the assessee for the year under consideration. The assessee prayed that noting at para 5 of assessment order deserve no consideration.
5. Against the addition of Rs. 192.67 crores, the assessee has submitted list of parties and amount in respect to each individual party aggregate of which is Rs.180.36 crores and explained the mistakes committed by AO. It was stated that the assessee in the course of assessment proceedings had filed complete evidence to explain various credit entries appearing in the bank account. The AO at para 7.1 has noted that notice under section 133(6) was issued to various parties giving name wise list for credit entries found in the bank account. The AO at para 7.1 on page 18 has observed that no compliance has been received in response to any of above parties' names of which are indicated at para 7.1 of the assessment order. The assessee contended that finding of the AO that no compliance received from any of above parties is factually incorrect. In fact, many parties have submitted response to notice issued under section 133(6) of the Act. The assesseefiled various acknowledgement of responses submitted in response to notice issued under section 133(6) by six parties to demonstrate that observation of AO in the assessment order at page-18 is factually incorrect. The names of parties who have submitted response to notice under section 133(6) were furnished. The assessee submitted that persons namely (i) Baba Ramdeo 10 Commercials Private Limited, (ii) Tanushree Impex Private Limited,(iii) Sandhyalaxmi Trading Private Limited, (iv) Vedika Trading & Consultancy Private Limited, (v) Bhakti Sales & Services Private Limited and (vi) Sri Abhishek Steel & Power Limited filed their responses.
6. The assessee also furnished explanation in respect to each of the amount for which addition has been made by AO in the assessment order showing correct amount of credit / debit entries at Rs. 180.36 crores which is as per the list below:
Sr. Particulars As per A.O. Remarks
(Rs.)
1 Vaidhi Fiscal Private Limited 15,00,00,000
2 Bhakti Investment Pvt. Ltd. 46,93,000
3 Feline Financial Services Pvt.Ltd. 5,00,000
4 Silver Crest Investors & Builder Pvt. Ltd. 27,35,00,000
5 Suraburdi Infrastructures Pvt.Ltd. 47,00,000
6 Surendra Fiscal Services Pvt.Ltd. 31,00,000
7 Raheja Exports Pvt. Ltd. 8,90,87,000
8 Blossom Constructions Pvt. Ltd. 13,05,73,000
9 Gautam Iron & Steel Trading Co. 4,45,00,000 (1,15,00,000)
Double entry
10 Nine Star Plastic Packaging Services 2,00,00,000
Pvt.Ltd.
11 Tanushree Impex Pvt.Ltd. 2,44,33,000
12 Deify Infrastructure Limited 71,50,00,000
13 Bhakti Sales& Services Pvt.Ltd. 12,20,000
14 AnjaniputraInfraconPvt.Ltd. 15,00,000
15 Baba Ramdeo Commercials Pvt.Ltd. 51,03,000
16 Shree Girivar Enterprises Pvt. Ltd. 15,00,000
17 Sandhya Laxmi Trading Pvt. Ltd. 1,82,00,000
18 Bestvision Traders Pvt.Ltd. 5,62,00,000
19 Efficient Structure Pvt.Ltd. 4,00,00,000
20 Costal Multitrading Pvt. Ltd. 6,00,00,000
21 Rajvardhan Trade Zone Pvt. Ltd. 5,00,00,000
22 LingrajCommotrade Pvt. Ltd. 26,00,000
23 Mohan Infra Reality Pvt. Ltd. 11,50,000
24 ShivanganTracom Pvt. Ltd. 71,00,000
25 Vedika Trading & Consultancy Pvt. Ltd. 9,50,00,000
26 Vena Agritech Pvt. Ltd. 1,55,03,876
11
27 Particulars of party not mentioned 20,00,000 (20,00,000)Amount
not received by
assessee
Total before deductions 1,81,71,62,876
Less: Double entry (Sr. no. 11) (1,15,00,000)
Less: Amount not received (Sr. no. 27) (20,00,000)
Final Total 1,80,36,62,876
7. The detailed submissions in respect of each of the amount, the assessee filed detailed explanation with supporting evidences. Such details are recorded by ld CIT(A) at page No. 27 to 49 in his order.
(1) With respect to transaction with Vaidehi Fiscal Private Limited shown at Serial (Sr) No. 1 in the above list, the assessee stated that Rs. 15.00 crore was receivable as on 01.04.2012 from the said company. This fact was accepted in the regular assessment completed under section 143(3) dated 24.03.2015. This said sum of Rs. 15.00 crore is refund of amount receivable by assessee- company on the opening day of accounting year. Complete financial statement, ITR of said company was furnished during the assessment proceeding, thus, assessee has discharged its primary onus as per decision of Hon'ble Apex Court in CIT vs Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC). The amount receivable from such company through banking channel is not cash credit as envisaged under section 68. The assessee has discharged his primary onus. The assessee cannot be called to prove source of source. The assessee submitted that they have discharged its onus to establish identity, genuineness and creditworthiness.
12 (2) For transaction with Bhakti Investment Pvt. Ltd., of Rs. 46,93,000/-, which is shown at Sr. No. 2 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 14.45 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 46,93,000/- on account of existing transaction which has been accepted in the regular assessment of assessee.
(3) For transaction with Feline Financial Services Pvt. Ltd. of Rs. 5,00,000/-, which is shown at Sr. No. 3 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 40.37 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 5,00,000/- on account of existing transaction which has been accepted in the regular assessment of assessee. (4) For transaction with Silver Crest Investors & Builder Pvt. Ltd.., of Rs. 27.35 crore which is shown at Sr. No. 4 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 42.85 crore was receivable as on 01.04.2012 from the said company. The assessee received Rs. 28.14 crore, but the AO has taken credit of only Rs. 27.35 crore. The AO has accepted amount of Rs. 79.10 lacs received on 12.02.2013. The amount of Rs. 27.35 crore from the said company had existing transaction. Rs. 27.35 crore is refund from the amount of 42.85 crore receivable by assessee on the opening day of accounting year which cannot be treated as cash credit.
13 (5) For transaction with Suraburdi Infrastructures Pvt. Ltd., of Rs. 47,00,000/-, which is shown at Sr. No. 5 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 2.90 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 47,00,000/- on account of part refund. Complete details of said company were furnished.
(6) For transaction with Surendra Fiscal Services Pvt. Ltd., of Rs. 31,00,000/-, which is shown at Sr. No. 6 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 50.00 lacs was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 31,00,000/- on account of existing transaction which has been accepted in the regular assessment of assessee. The assessee furnished complete details to discharge its onus. (7) For transaction with Raheja Exports Pvt. Ltd., of Rs. 8.90 crore, which is shown at Sr. No. 7 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 2.74 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 8.90 crore on account of existing transaction which has been accepted in the regular assessment of assessee. The sum of Rs. 8.90 crore includes refund of amount receivable by assessee of Rs. 2.45 crore on the opening day of accounting year as well as Rs. 10.45 crore amount given to said company during the year. At the close of accounting year, the assessee 14 had to receive Rs. 4.00 crore from the said company. The AO accepted amount given to such company without inviting any adverse observation. The assessee furnished complete details to discharge its onus. (8) For transaction with Blossom Constructions Pvt. Ltd., of Rs. 13.05 crore, which is shown at Sr. No. 8 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 51.40 lacs was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 17.37 crore on various dates. The amount of Rs. 13.05 crore is from the company with whom assessee had existing transaction which has been accepted in the regular assessment of assessee. Rs. 13.05 crore includes refund of amount receivable at Rs. 51.50 lacs on the opening day of the accounting year as well as Rs. 17.37 crore given to the assessee-company during the year. At close of the accounting year, the assessee had to receive 4.82 crore from such company. The AO accepted amount given to such company without any adverse observation. The assessee furnished complete details to discharge their onus. (9) For transaction with Gautam Iron & Steel Trading Co. of Rs. 4.45 crore, which is shown at Sr. No. 9 of the above list, the assessee submitted that this amount includes Rs. 1.15 crore taken twice as can be seen from page no. 12 of assessment order. Actual amount received is Rs. 3.30 crore. During the year 4.97 crore was given to the said party. At the close of the accounting year, the assessee had to receive 1.6 crore from the said party which is 15 reflected in the financial statement of assessee-company. The amount received has in fact repaid before close of accounting year and no addition was to be made under section 68. The assessee has given name, address, PAN, ITR and other details of this company to discharge onus as per section
68. (10) For transaction with Nine Star Plastic Packaging Services Pvt. Ltd. of Rs. 2.00 crore, which is shown at Sr. No. 10 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 1.21 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 2.00 crore on account of existing transaction which has been accepted in the regular assessment of assessee. Rs. 2.00 crore includes refund of amount receivable by assessee at Rs. 1.21 crore on the opening day of accounting year as well as Rs. 26.00 crore given to the said company during the year. At the end of accounting year, the assessee had to receive Rs. 25.21 crore. The assessee furnished complete details in discharge of its onus.
(11) For transaction with Tanushree Impex Pvt. Ltd., of Rs. 2.44 crore, which is shown at Sr. No. 11 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 2.29 crore was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 2.44 crore on account of existing transaction which has been accepted in the regular assessment of assessee. Rs. 2.49 crore includes 16 refund of amount receivable by assessee at Rs. 2.29 crore on the opening date of accounting year as well as Rs. 15.00 lacs given to said company during the year and at the end of the year, there was a credit balance of Rs. 5.10 lacs. Though the assessee has received total sum of Rs. 2.49 crore but the AO considered Rs. 2.44 crore, thus, accepted Rs. 5.00 lacs as received from 07.12.2012. The assessee furnished complete details to discharge its onus under section 68.
(12) For transaction with Deify Infrastructure Limited of Rs. 71.50 crorewhich is shown at Sr. No. 12 of the above list, the assessee submitted that actual amount received by the assessee from said party is Rs. 82.00 crore. Thus, the AO has accepted Rs. 10.50 crore from such party. The assessee furnished complete details which include PAN, address, ITR as well as other financial details. All such transactions were through banking channel. Thus, the assessee discharged its onus under section 68.
(13) For transaction with Bhakti Sales & Services Pvt. Ltd. of Rs. 12.20 lacs which is shown at Sr. No. 13 of the above list, the assessee submitted that confirmation of ledger account of this company shows that a sum of Rs. 3.49 lacs was receivable as on 01.04.2012 from the said company. The assessee received only Rs. 12.20 lacs on account of existing transaction which has been accepted in the regular assessment of assessee. The said sum of Rs. 12.20 lacs include refund of amount receivable by assessee of Rs. 3.49 lacs on the opening date. Complete details including confirmation of account and 17 other details were furnished. The said party filed its response in response to notice under section 133(6). Thus, the assessee discharged its onus. (14) For transaction with Anjainputra Infracon Pvt. Ltd. of Rs. 15.00 lacs which is shown at Sr. No. 14, Rs. 51.00 lacs from Baba Ramdeo commercials Pvt. Ltd., at Sr. No. 15, Shree Grivar Enterprises Pvt. Ltd. at Sr. No. 16 of Rs. 15.00 lacs, from Sandhya Laxmi Trading Pvt. Ltd. at Sr. No. 17 of Rs. 1.82 crore, the assessee made similar submission and also furnished all required evidences to discharge onus under section68.
(15) For transaction with Bestavision Traders Pvt. Ltd. shown at Sr. No. 18 of Rs. 5.62 crore, the assessee furnished confirmation of account, financial statement of said company. The copy of confirmation of account shows Rs. 8.00 lacs as opening balance of said company. The assessee discharged its onus. The assessee has paid closing balance at the year end at Rs. 5.70 crore in subsequent assessment years. Rs. 3.00 crore was repaid in F.Y. 2013-14 & Rs. 2.70 crore was repaid in F.Y. 2014-15. All such transactions were through banking channel. Gujarat High Court in Ayachi Chandrashekhar Narsangji reported at 221 Taxman 146 (Gujarat) held that where department has accepted repayment of loan no additions can be made under section 68. (16) For transaction with Efficient Structure Pvt. Ltd. of Rs. 4.00 crorewhich is shown at Sr. No. 19 of the above list, for transaction with Costal Multitrading Pvt. Ltd. of Rs. 6.00 crore shown at Sr. No. 20, with Rajvardhan Trade Zone Pvt. Ltd. of Rs. 5.00 crore at Sl. No. 21, for Vedika Trading & Consultancy Pvt. 18 Ltd. of Rs. 9.50 crore shown at Sl. No. 25, the assessee submitted that completed details, including confirmation of ledger account of those companies and other financial details were furnished. The amounts were repaid subsequently in January, 2014, which has been accepted by department and, therefore, no addition can be made under section 68. (17) For transaction with Lingraj Commotrade Pvt. Ltd. shown at Sr. No. 22 for Rs. 26.00 lacs, the assessee submitted that amount was received on 01.03.2013 by RTGS, the assessee was holding investment in Bajaj Polyblends Pvt. Ltd. as on 31.03.2012 at Rs. 97.00 lacs. Part of the investment in shares held in such company was liquidated at cost for sum of Rs. 26.00 lacs. Confirmation of Bajaj Polyblends Pvt. Ltd. was furnished to substantiate the sale of shares by assessee company. The amount of credit is sale of shares at cost and not cash credit. The sale of investment is reflected in the financial statement. Such amount cannot be added under section 68.
(18) For transaction with Mohan Infra Reality Pvt. Ltd. shown at Sr. No. 23 of Rs. 11.50 lacs, the accounts of said company indicates that such amount was receivable from said company on 01.04.2022 which was received. The assessee furnished complete details to discharge its onus under section 68. (19) For transaction with Shivangan Tracom Pvt. Ltd. shown at Sr. No. 24 of list, of Rs. 71.00 lacs, the assessee submitted that amount was received on 01.03.2013 by RTGS, the assessee was holding investment in Bajaj Polyblends Pvt. Ltd. as on 31.03.2012 at Rs. 97.00 lacs. Part of the 19 investment in shares held in such company was liquidated at cost for sum of Rs. 71.00 lacs. Confirmation of Bajaj Polyblends Pvt. Ltd. was furnished to substantiate the sale of shares by assessee company. The amount of credit is sale of shares at cost and not cash credit. The sale of investment is reflected in the financial statement. Such amount cannot be added under section 68. (20) For transaction with Vena Agritech Pvt. Ltd. shown at Sl. No. 26, the assessee submitted that as per confirmation of account a sum of Rs. 1.55 crore was receivable on 01.04.2012 from the said company. The amount was received on account of existing transaction. The assessee furnished complete details to prove identity, creditworthiness and genuineness of transaction and submitted that they have discharged its onus.
(21) For transaction shown at Sl. No. 27 of the above list of Rs. 20.00 lacs, the assessee submitted that AO has not mentioned the name of party. There is no such entry in the bank statement. The AO was not justified in making such addition.
8. The assessee after explained the aforesaid transaction submitted that they have discharged primary onus in furnishing complete details and relied upon the decision of Hon'ble Apex Court in Orissa Corporation Pvt. Ltd. (supra) and Jurisdictional High Court in Orient Trading Co. Ltd. vs CIT 49 ITR 723 (Bom), Punjab & Haryana High Court in CIT vs Varinder Rawlley (363 ITR 232) (P&H). CIT vs Orchid Industries (P) Ltd. 397 ITR 136 (Bom), Gaurav Triyugi Singh vs ITO 423 ITR 531 (Bom), DCIT vs Rohini Builders 256 ITR 360 (Guj). The 20 assessee also relied upon the decision of Apex Court in Excel Industries Ltd. 358 ITR 295 (SC) wherein it was held that only real income for previous year can be brought to tax at the hands of assessee.
9. The assessee while challenging the validity of reopening and addition made therein also relied upon the decision of Bombay High Court Jet Airways (I) Ltd. 331 ITR 236 (Bom) by taking objection that assessment was reopened for verification of Rs. 45.00 lacs which were allegedly transferred from the account of Raj Kumar Singh, but no addition was made in respect of such reasons recorded, therefore, other additions were impermissible, when no such addition as per reasons recorded were made. The reopening is based on third party information. No independent verification of facts was carried out by AO. The AO has not brought any evidence on record that withdrawal of Rs. 45.00 Lakhs by Raj Kumar Singh has any nexus with the assessee. The amount received from Shubhbijay Properties was towards amount receivable by the assessee on the opening day of the accounting year, which can never be concluded as accommodation entry. Amount of Rs. 3.00 crore receivable by assessee is verifiable from the ledger account of Shubhbijay Properties. The AO has not examined the books of account during the course of assessment proceedings. It is settled law that credit in the bank account is not credit entry in the books of account to which provisions of section 68 could be invoked. To support such view, the assessee relied on the decision of Bombay High Court in Bhaichand H. Gandhi 141 ITR 67 (Bom). The AO totally ignored the various withdrawals out of 21 such deposits, otherwise all the deposits were explained. The assessee also raised objection that in the investigation report as well as in reasons recorded no date is mentioned with regard to assessee being beneficiary of Rs. 45.00 lacs transferred from the account of Raj Kumar Singh. The entry of Rs. 45.00 lacs received in the bank account of assessee is on 01/02/2013. Such amount is not transferred from the account of Raj Kumar Singh. The assessee company has small turnover and the same is recorded in the books of accounts various inter corporate deposits are received and given to related parties and associates. All transactions are through banking channel and all parties are assessed to tax. All transactions are recorded in the books of accounts of all related parties and associates. All deposits received are repaid in entirety during the year and in subsequent years. The deposits and withdrawals are not unexplained transactions and have no bearing on the taxable income at the hands of the assessee considering the evidence on record.The assessee prayed to delete entire additions.
10. The ld CIT(A) after considering the submissions of the assessee and the assessment record deleted the both the additions. In para 8.3 of his order the ld CIT(A) recorded that additions under section 68 consist of two additions, first relates to addition of Rs. 2.35 Crore received from Shubhbijay Properties Advisory Pvt Ltd and second of Rs. 192.67 Crore in respect of various credits. While considering the addition of Rs. 2.35 crore pertaining to the entry of Shubhbijay Properties Advisory Pvt. Ltd., the ld. CIT(A) noted that AO made 22 addition on the basis of information received from Investigation Unit, Kolkata in regard to Raj Kumar Singh and his bank account. The AO while making addition noted that cash deposit in the account of Raj Kumar Singh was transferred to Shubhbijay Properties Advisory Pvt. Ltd. and other companies and ultimately transferred to the account of beneficiaries. One of the beneficiaries was assessee-company. On the basis of such observation, as recorded in para 2 of assessment order that sum of Rs. 45.00 lacs were the basis of reasons recorded. However, in the order, there is no reference of any date for transfer of Rs. 45. 00 lacs from the account of Raj Kumar Singh to Shubhbijay Properties Advisory Pvt. Ltd. The assessee in its reply before AO, contents of which are reproduced at page no. 2 to 4 in para 8, the assessee clearly stated that assessee- company has not made any transaction with Raj Kumar Singh. The assessee also requested for furnishing detail of transaction with them. No response was made by AO before taking adverse view and make addition in respect of credit entries in the account of Shubhbijay Properties Advisory Pvt. Ltd. No details or evidence are available in the assessment record to indicate that Rs. 45,00,000/- was transferred from the account of Raj Kumar Singh to Shubhbijay Properties Advisory Pvt. Ltd. No evidence was brought on record to show that how alleged cash deposit in the account of Raj Kumar Singh is connected with the assessee in absence of any transaction with Raj Kumar Singh. There is no evidence on record that how Rs. 2.35 crore received by Shubhbijay Properties Advisory Pvt. Ltd. can be considered as accommodation entry or unexplained credit. As per report of 23 Investigation Wing, the cash and other deposits in the account of Raj Kumar Singh is of Rs. 1.40 crore, whereas the value of beneficiaries is computed at Rs. 3.59 crore, which is inconceivable conclusion and thus, investigation report is not credible evidence for making addition in the hand of assessee. Further, from the bank account of Shubhbijay Properties Advisory Pvt. Ltd. that Rs. 45.00 lacs alleged to be accommodation entry in the reasons recorded and the assessment order are not flown from any such fund transferred from the account of Raj Kumar Singh. Basic allegation as noted in the report of Investigation Wing and the assessment order does not survive on the facts and evidence on record.Nothing adverse material on record to make addition of Rs. 2.35 crore in the hands of assessee. The ld. CIT(A) further noted that ledger account copy of Shubhbijay Properties Advisory Pvt. Ltd. is on record, which shows that such companies is assessed to tax. Further, name and PAN of such company is also on record. From the ledger account of assessee-company and the amount receivable from such company at Rs. 3.00 crore as on 01.04.2012. The aforesaid opening balance has been accepted as amount receivable in case of assessee in A.Y. 2012-13 completed under section 143(3). Assessment was completed by ACIT, Circle -1, Nagpur in accepting the return income in order dated 24.03.2015 passed under section 143(3). In the earlier year, Rs. 3.00 crore was received from banking channel and were credit in the bank account of assessee. All credits entry of Rs. 3.00 crore received from Shubhbijay Properties Advisory Pvt. Ltd. are verifiable from bank account of assessee with Lakshmivilas Bank Nagpur. 24 The AO in assessment order noted credit entry of Rs. 2.35 crore on various dates as recorded in para 3.1. But the AO has not disputed (accepted) the receipt of Rs. 10.00 lacs from same company as on 30.01.2013 and Rs. 54.50 lacs on 07.02.2013. The amount received from such company is in respect of amount receivable from such company, which has been accepted in the assessment framed for A.Y. 2012-13. The ld. CIT(A) held that amount receivable is not in the nature of loan or cash credit for which the assessee was liable to explain in term of section 68. Hence, the amount given by assessee is beyond the scope of consideration for the purpose of section 68. The sum of Rs. 2.35 crore received by assessee is the amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. and cannot be treated as accommodation entry nor assessee can be considered as beneficiary of accommodation entry. On the basis of such finding, the ld. CIT(A) deleted the addition of Rs. 2.35 crore under section 68.
11. The ld CIT(A) while considering second addition of Rs. 180.36 Crore noted that as per submissions of the assessee and in order to appreciate the facts all transaction can be bifurcated in to four segments;
(A) Refund out of opening balances and amount given during the year;
Name of entities Amount in Rs. 000/-
1 Tanushree Impex Private Limited 2,44,33,000
2 Bhakti Investments Pvt. Ltd. 46,93,000
3 Blossom Construction Pvt. Ltd. 13,05,73,000
4 Feline Financial Services Pvt. Ltd. 5,00,000
5 Nine Star Plastics Packaging Services Pvt. Ltd. 2,00,00,000
6 Raheja Exports Pvt. Ltd. 8,90,87,000
7 Silver Crest Investors & Builders Pvt. Ltd. 27,35,00,000
8 Surendra Fiscal Services Pvt. Ltd. 31,00,000
9 Vaidehi Fiscal Pvt. Ltd. 15,00,00,000
10 Mohan Infra Reality PVt. Ltd. 11,50,000
25
11 Vena Agri-tech Pvt. Ltd. 1,55,03,876
12 Suraburdi Infrastructures Pvt. Ltd. 47,00,000
Total 71,72,39,876
(B) Opening payable / receivable with fresh credit;
1 Baba Ramdeo Commercials Pvt. Ltd. 51,03,000
2 Bestavision Traders Pvt. Ltd. 5,62,00,000
3 Bhakti Sales & Services Pvt. Ltd. 12,20,000
4 Shree Girivar Enterprises Pvt. Ltd. 15,00,000
5 Vedika Trading & Consultancy Pvt. Ltd. 9,50,00,000
Total 15,90,23,000
(C) Fresh advances received during the year;
1 Anjaniputra Infracon Pvt. Ltd. 15,00,000
2 Costal Multitrading Pvt. Ltd. 6,00,00,000
3 Deify Infrastructures Ltd. 71,50,00,000
4 Efficient Structure Pvt. Ltd. 4,00,00,000
5 Rajvardhan Trade Zone Pvt. Ltd. 5,00,00,000
6 Sandhya Laxmi Trading Pvt. Ltd. 1,82,00,000
7 Gautam Iron & Steel Trading Co. 3,30,00,000
total 91,77,00,000
(D) Proceeds of sale investments;
1 Lingraj Commotrade Pvt Ltd 26,00,000/-
2 ShivanganTracon Pvt Ltd 71,00,000/-
total 97,00,000/-
12. The ld. CIT(A) noted that confirmation and ledger account of credit entry in bank account, in respect of segment A (Table above) indicates that sum of Rs. 71.72 crore is received by assessee-company from various companies out of opening balance or amount given the year under consideration. The aforesaid sums are not credit entry as prescribed in section 68 of the Act. The assessee furnished sufficient evidence in the form of confirmation, address and PAN of all parties with ITR and balance sheets. So far as credit shown in segment B (table above) it is seen that credit balance received in earlier financial year is accepted by AO in assessment order passed under section 143(3). The amount received during the year is from the parties, which were accepted as a genuine creditor in the 26 earlier assessment year. For amount shown in segment C (table above), the ld. CIT(A) noted that assessee received fresh credit from the companies aggregating Rs. 91.77 crore. The confirmations, PAN, address, ITRs and balance sheets are filed in respect of all such parties. The amounts were received through banking channel. Credit received in respect of two parties which is shown in segment D (table above), are sale proceeds of investments which are evident from the ledger accounts. The sale of investments is not disputed by AO in the assessment order. The ld. CIT(A) at page no. 84 to 89 of his order recorded accepted the filing of various documentary evidences in respect of each credit entry which is available on record, e.g. confirmation of parties, balance sheets, ITR, PAN and address along with the details whether it is refund out of opening balance or part refund as the case may be.
13. The ld. CIT(A) on the basis of aforesaid evidences further noted that reassessment proceeding was commenced on the basis of report of Investigation Wing, Kolkata. Perusal of reasons recorded and discussion in the assessment order does not indicate any independent enquiry carried out by AO with regard to transactions recorded in the books of account of assessee. No evidence is brought on record to show any nexus or connection with Raj Kumar Singh with credit entry of corporate entities received in the bank account of assessee. There is no allegation in the assessment order that credit entries in the bank account of assessee with the bank account of Raj Kumar Singh. The assessee has placed sufficient documentary evidence to explain the credit entry in their books of 27 account. The AO made addition with his flight of fantasies and the same is not based on evidence on record. The ld. CIT(A) also referred and relied on the decision of Gujarat High Court in CIT vs Ranchhod Jivabhai Nakhava 208 taxmann.com 35 (Guj) wherein it was held that once the assessee has discharged primary onus, under section 68, the onus shifts on the AO to further investigate the matter. The ld. CIT(A) also referred the decision of Gujarat High Court in DCIT vs Rohini Builder (2002) 256 ITR 360 (Guj) and CIT vs Dharamdev Finance Pvt. Ltd. 43 taxmann.com 395 (Guj) and CIT vs Orissa Corporation (P) Ltd. 159 ITR 78 (SC).
14. The ld. CIT(A) also held that assessee has no obligation to prove source of source as has been held by Jurisdictional High Court in PCIT vs Veedhata Tower Pvt. Ltd. (2018) 403 ITR 415 (Bom). The assessee satisfactorily discharged their primary onus by proving identity, genuineness and creditworthiness of creditors. The observation of AO in assessment order is not based on legal evidence on record and deserves no consideration and deleted the remaining addition of Rs. 180.36 crore (it was wrongly treated as Rs. 192.67 crore). Aggrieved by the order of ld. CIT(A), the Revenue has filed present appeal before Tribunal. The assessee has filed its CO raising various grounds which we have recorded above.
15. We have heard the submissions of ld. Commissioner of Income Tax - Departmental Representative (CIT-DR) for the Revenue and the ld. Authorised Representative (ld. AR) of the assessee. Both the parties have also filed their written synopsis. The ld. CIT-DR for the Revenue submits that in case of 28 assessee information was received from Investigation Wing, Kolkata that Raj Kumar Singh maintains Savings Bank Account with IndusInd Bank wherein cash was deposited which was transferred to various other shell companies in a layered transaction. On verification of fact it was found that assessee-company received Rs. 2.35 crore in its bank account in Laxmi Vilas Bank, Nagpur. During assessee, the assessee claimed that it was on account of loan/advances or investment. No satisfactory explanation with documentary evidences were furnished by assessee. On further perusal of bank account of assessee with Laxmi Vilas Bank there were various credit entries aggregating to Rs. 192.67 crore. The assessee was asked to explain and substantiate such transaction. The AO also issued notice under section 133(6) to 15 parties. No compliance was received from any of the parties as recorded in the assessment order. Therefore, identity, creditworthiness and genuineness of the transaction could not be verified. Accordingly, the AO made addition of Rs. 192.67 crore under section 68. It has been established by the department that Shubhbijay Properties Advisory (P) Ltd. is a shell company used by Raj Kumar Singh for layering funds and ultimately sending to various accounts to concerned beneficiary. The assessee has shown its business activity in Iron &Steel and investment in shares. The assessee has shown a small income. The ld. CIT(A) allowed relief to the assessee on both the addition, despite the fact that assessee failed to prove identity, creditworthiness and genuineness of the transaction. During assessment sufficient opportunity was given to the assessee to discharge its onus but the 29 assessee failed to discharge its onus. To support his submissions, the ld. CIT-DR relied upon the following decision:
(i) A Govindarajulu Mudaliar (1985) 34 ITR 807 (SC),
(ii) Independent Media Pvt. Ltd. (2012) 25 taxmann.com 276 (Delhi),
(iii) N.R. Portfolio (P) Ltd. (2014) 42 taxmann.com 339 (Delhi),
(iv) Vinaylene Textile Industries (2018) ITA No. 3240/Mum/2017,
(v) NRA Iron & Steel Pvt. Ltd. (2019) 103 taxmann.com 48 (SC),
(vi) Pavankumar M Sanghvi vs ITO in ITA No. 2447/Ahd/2016, confirmed by
Gujarat High Court,
(vii) PCIT vs Mundhra Construction (P) Ltd. (2025) 173 taxmann.com 361
(Calcutta),
(viii) ITO vs Sai Everest Building & Developers (2022) 142 taxmann.com 383 (Mumbai),
(ix) Kale Khan Mohammad Hanif vs CIT (1963) 50 ITR 1 (SC),
(x) CIT vs Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Delhi),
16. On the various grounds raised in C.O. by assessee, the ld. CIT-DR for the revenue submits that AO reopened the case on the basis of information from Investigation Wing regarding transfer of fund of Rs. 45.00 lac to the bank account of assessee. On his satisfaction, the AO recorded reasons and found the case fit for reopening. Proper approval under section 151 was obtained and notice under section 148 was issued. During assessment, the assessee was given full opportunity, the reopening is valid. The addition in the assessment order clearly established the nexus of information which leads to reopening. Thus, various grounds raised in CO are liable to be rejected. The ld. CIT-DR for the Revenue submits that addition made by AO may be restored and the C.O. filed by assessee may be dismissed.
30
17. On the other hand, the ld AR of the assessee supported the order of ld CIT(A). Against ground No. 1, the ld AR of the assessee submits that the AO made additions without any basis. There is no evidence on record to support the additions made by AO. In fact, an amount of Rs.3.00 crore was receivable from Shubhbijay Properties Advisory Pvt. Ltd. as on 31/03/2012 and was outstanding balance on the opening day of accounting year in books of account, copy of which is filed at page No. 6 of [Vol. - II of paper book]. The aforesaid amount was received during the previous year under consideration through proper banking channel and recorded in books of account on day-to-day basis.The AO has concluded that sum of Rs.235.50 lacs out of Rs.300 lacs received as unexplained credit under section 68. Receipt of amount through proper banking channel owned by assessee in no manner of consideration can be held as unexplained credit under section 68. The assessee has submitted confirmation of account indicating PAN and address of Shubhbijay Properties Advisory Pvt. Ltd. The AO has accepted receipt of Rs.10.00 lacs on 30/01/2013 and Rs.54.50 lacs on 07/02/2013 from very same company without inviting any adverse observation. On above facts there is no justification/basis to make addition of Rs.2.35crore by holding it as unexplained credit. Section 68 cannot be invoked on piece meal basis.The assessee has money receivable from Shubhbijay Properties Advisory Pvt. Ltd. on opening day of accounting year and same is received through proper banking channel. It could not be regarded as shell company 31 as alleged in the assessment framed or it is company used by Rajkumar Singh for layering as noted at para 4 of assessment order. No evidence on record to indicate Rajkumar Singh as shareholder/director of such company. The AO has made addition of above sum relying on report and information received from Investigation Wing of Kolkata. Information/evidence referred to in assessment order was collected behind the back of assessee and has not been confronted before using the same for making addition in the case of assessee. Addition made on the basis of such information/evidence collected behind the back of assessee and not confronted to assessee and used thereof, is in violation of principles of natural justice. The addition made is on the basis of report of investigation wing, wherein assessee-company was alleged to be beneficiary of cash deposit in account of Shri Raj Kumar Singh. Factual findings on evidence on record by CIT(A) at page 74 to 78 of appellate order clearly explain that report of investigation is no credible evidence to make any addition at the hands of assessee. Regular assessment completed under section 143(3) for AY 2012-13 on 24/03/2015 by ACIT Circle-1, Nagpur, copy of which is place on record. Amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. as on 31/03/2012 stood accepted in regular assessment. Receipt of own money in no manner can be treated as accommodation entry. Receipt of own money is beyond the scope of Sec.68 as it is not claimed as loan or cash credit. To support his submissions, the ld AR of the assessee relied on decision of Nagpur Tribunal in Data Meghe Institute of Medical Science vs DCIT in ITA No. 32 07/Nag/2007 dated16.03.2007, JCIT vs Radhe Developers (India) Ltd. in ITA No. 1226/Ahd/2018 with C.O. No. 96/Ahd/2019 dated 22.02.2021 and ACIT vs Andin Sunder Deep Construction in ITA No. 380/Ind/2017 dated 25.03.2021.
18. The ld AR of the assessee submits that the assessee has no transaction with Raj Kumar Singh directly/indirectly. No money flown in to account of assessee company, is out of cash deposit in account of Raj Kumar Singh as alleged in reasons recorded. This fact is evident from bank account of Raj Kumar Singh and Shubhbijay Properties Advisory Pvt. Ltd. on record. The evidence was collected behind the back of assessee; it was never confronted and subject to cross examination. Addition made is unsustainable. Reliance is made on the decision of CCE Vs Andaman Timber Industries281 CTR 241 (SC). The AO on the basis of report of Investigation Wing has inferred that Rs.45.00lacs out of cash deposit are flown to Shubhbijay Properties Advisory Pvt. Ltd. and onwards to assessee company. It is for these reasons other credits received from such company are treated as unexplained. Rs.45.00 lacs given by Shubhbijay Properties Advisory Pvt. Ltd. to assessee company has no nexus with money received by such company from Rajkumar Singh. Thus, entire adverse inference drawn by AO is on incorrect understanding of facts and evidence on record. The basis of adverse inference is factually not correct, consequent addition is arbitrary and unjustified. The AO made no inquiry or investigation either before the reasons recorded or during assessment proceedings before making addition. In fact, legal evidence placed on record 33 is ignored/brushed aside without indicating any valid justification. Addition made is arbitrary and unjustified. The AO has not provided any details before drawing adverse inference and making addition in respect to amount received from Shubhbijay Properties Advisory Pvt. Ltd. on assumption and surmises. Nothing adverse can be drawn as primary issue/facts distinguishable and inapplicable to the facts in the case of assessee.
19. Against the additions, which are the subject matter of ground No.2 in revenues appeal, the ld AR of the assessee submits that the AO at para-7 has tabulated the entries in the bank account for aggregate sum of Rs.192.67 crores. At para 7.3 AO has noted that on preponderance of probability assessee is using own fund for layering cannot be ruled out. Thus, the conclusion drawn by AO is based on presumptions. No addition can be made merely on such presumption. The assessee in his written submission to ld CIT(A) pointed out factual mistake of totaling and duplication of entry is explained to show that Rs.12.31 crores is excess addition. Correct amount for credit entries recorded in assessment order is Rs.180.36 crores only.Confirmation of all parties from whom deposit is received in bank account indicating address & PAN and all other details were furnished. Factual mistake accepted by CIT(A) is not specifically disputed in grounds of appeal of revenue. Confirmation indicating PAN and address along with bank statement of all corporate entities is submitted in assessment proceedings. The ldCIT(A) at page 84 to 89 has specifically recorded about the documentary evidence on record to explain credits. Legal 34 evidence placed on record has not been found to be incorrect or false. Onus to explain credit is satisfactorily discharged on placing legal evidence on record. The AO has noted confirmation of accounts and receipt of money through proper banking channel at para 7.4 of assessment order. Address, PAN of parties and financial statements of lenders is matter of record. The AO has made addition merely on the basis of modus operandi, without finding any fault with specific credit entries in books of account, which stood explained by placing sufficient evidence on record.No independent inquiry is made after assessee has discharged its onus to explain credits in bank account. Onus to explain the credit entries under section 68 stands discharged in terms of law laid down by Hon'ble Apex Court in the case of Orissa Corporation Pvt. Ltd. reported at 159 ITR 78 (SC).
20. The addition made by the AO includes sum of Rs.71.72 crores received in bank account from various corporate entities, which is refund of opening balance receivable from such corporate entities as well as amount given during the year and refunded to assessee-company. Such amount is not loan or cash credit as envisaged under section 68. Thus, the addition made by AO in respect to such sum under section 68 is not in accordance with law. Credit of Rs.79.10 lacs from Silver Crest Investor & Builder Pvt. Ltd. accepted by AO while making addition of Rs.27.35 crores. Amount received is out of amount receivable credit of Rs.10.50 crores from Deify Infrastructure Ltd. is accepted by AO while making addition of Rs.71.50 crores. The addition made by AO in respect to various credit entries is 35 on suspicion and inference without there being any adverse legal evidence on record. Nothing adverse is on record to hold credits in bank account of assessee company to be in the nature of unexplained credit liable to be brought to tax under section 68. The AO despite recording the facts that it is not the responsibility of assessee to prove source of source, which is in line with law laid down by Hon'ble Jurisdictional High Court in the Case of Gaurav Triyugi Singh vs ITO reported at 423 ITR 531 (Bom.), still the additions were made. All fresh credit entries received by assessee-company are partly repaid during the previous year and in entirety in subsequent assessment years. Addition in respect to such amount under section 68 is contrary to law laid down by Hon'ble Gujarat High Court in the case of PCIT Vs Ambe Trade Corp. Pvt. Ltd. reported at 290 Taxman 471 (Guj.) Further, Rs.97.00 lacs is received from companies towards sale of investment of share and is not cash credit as envisaged under section 68. Investment in shares held in earlier years is undisputed fact on record. Sale of such investment has not invited any adverse observation in assessment order and has been accepted in assessment framed. Addition in respect to such sum is unjustified. The assessment order indicates that reassessment has been initiated on the basis of information received from Investigation Wing, Kolkata as to assessee being beneficiary of cash deposits in account of Raj Kumar Singh. It was explained that assessee company has no transaction with Shri Raj Kumar Singh directly/indirectly. No amount of cash deposit in account of Shri Raj Kumar Singh has flown to the account of assessee 36 is undisputed fact on record. Shri Raj Kumar Singh has no connection/nexus with any of corporate entities from whom assessee is in receipt of money through proper banking channel. In assessment order it is not even alleged that Shri Raj Kumar Singh has any connection/nexus with various credits of corporate entities in bank account of assessee-company. The assessee submitted confirmation in respect to credit entries indicating address and PAN has discharged its onus to explain the credit entries. AO has made no enquiry in respect to legal evidence placed on record. Addition made by A.O. is contrary to law laid down by Hon'ble Gujarat High Court in the case of CIT vs Ranchhod Jivabhai Nakhava reported at 208 Taxman 35 (Guj.). Perusal of tabulation made in assessment order at pages 11 to 17 indicate that in respect to various entries name and date of credit entry is not available. Addition in respect to such entries is not in compliance to statutory provisions of section 68.In assessment order, the AO at para 7.1 noted the names of various companies to whom notice under section 133(6) were issued. At page 18 it has been noted that no compliance is received from any of above parties. Evidence on record indicates that in respect to six companies' response was submitted under section 133(6) before the date of completion of assessment. In respect to two parties namely NSSL Pvt. Ltd. and Bahubali Properties Ltd. there is no credit received during the year under consideration. In respect to Path Breaking Project Pvt. Ltd. assessee company has no transaction. The facts explained hereinabove indicate no proper application of mind by AO before making addition. Various credit entries in bank 37 account given and taken are with related parties and its associates. The transaction made with various corporate entities is through proper banking channel and all the entities are assessed to tax. All the transactions are recorded in books of account of assessee company as well as in the accounts of various entities with whom transactions are made. PAN and address of corporate entities is matter of record. All deposits received are repaid in entirety during the year and in subsequent years. Documentary evidence placed on record substantiates the bonafide and genuineness of transactions. To support his view the ld AR of the assessee made reliance on the following decision, CIT vs Ayachi Chandrasekhar Narsangji, 221 Taxman 146 (Guj.), PCIT vs. Merigold Gems Pvt. Ltd.,164 taxmann.com 764 (Guj.), DCIT vs. Vibrant Global Capital Ltd. in ITA No.229/Nag/2022.
21. It was argued by ld AR that draft assessment order is digitally signed on 26/03/2022 (Saturday) at 18.35 PM and assessee was asked to respond by 28/03/2022 up to 23.59 PM. 27/03/2022 was holiday on account of Sunday. Reply was submitted on 28/03/2022 seeking video conferencing and granting two days' time to make further compliance. The AO without assigning any reason noted at page 20 that reply of assessee is perused and not found tenable. Assessment order is passed on 28/03/2022 at 15.54 PM as per digital signature at page 22 much before time granted in show cause notice. No video conferencing is granted as requested. Order passed is in violation of principles of natural justice and is nullity. Reliance is made on the following decisions, 38 Kanwarjeet Singh Nanda in ITA No.361/Ind/2022 vide order dated 20/11/2023.
Orient Trading Co. Ltd. vs. CIT,49 ITR 723 (Bom.), CIT vs. Varinder Rawlley366 ITR 0232 (P & H), CIT vs. Orchid Industries Pvt. Ltd. 397 ITR 136 (Bom.), PCIT vs. Ami Industries (India) P. Ltd.ITA No.1231 of 2017 dated 29/01/2020 (Mumbai HC), DCIT vs. Rohini Builders 256 ITR 0360 (Guj.), CIT vs. Excell Industries Ltd.358 ITR 295 (SC), CIT vs. Metachem Industries 245 ITR 0160 (MP), CIT vs. Dharamdev Finance (P) Ltd.43 taxmann.com 395 (Guj.), CIT vs. Sanjay J. Thakkar in Tax appeal No.524 of 2004 (Guj.), CIT vs. Jet Airways (I) Ltd. 331 ITR 0236 (Bom.), CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.), Ranbaxy Laboratories Ltd. vs. CIT, 336 ITR 136 (Del.)
22. No addition can be made for mere noncompliance of notice under section 133(6), reliance is made on, Prabhat Gupta vs. ITOin ITA Nos.277/M/2017 and 797/M/2017, Ashwin P. Bajaj vs. ITO in ITA No.4736/Mum/2014
23. In support of grounds raised in C.O., the ld. AR of the assessee submits that as per information from Investigation Wing, the assessee is beneficiary of Rs. 45.00 lacs received from the account of Raj Kumar Singh. The assessee has no transaction with Raj Kumar Singh. He is not director / shareholder in Shubhbijay Properties Advisory Private Limited. Further, investigation report dated 10.02.2020 indicates cash deposit of Rs. 1.25 crore and value of beneficiaries Rs. 3.49 crore. Thus, information noted indicates no proper application of mind and it losses credibility. Bare perusal of reasons recorded 39 indicates that no enquiries were conducted by AO before issuing notice under section 148. The ld. CIT(A) in para 8.2 of his order has clearly recorded inconsistency / factual mistake in the reasons recorded. The ld. CIT(A) highlighted the factual mistake and concluded that reasons recorded are perverse and untenable in the eyes of law. In absence of any evidence on record about cash deposit in the account of Raj Kumar Singh is flown to assessee-company case build by AO collapses. Thus, the reasons recorded are not valid reasons. There is no live link or nexus between the belief and escapement and material on record. Reassessment was initiated on the basis of investigation report without recording independent satisfaction about escapement of income which are not in accordance with law. The satisfaction / approval under section 151, copy of which was provided during hearing before ld. CIT(A), discloses that proposal for approval was initiated by AO on 30.03.2021 and it was approved by PCIT - 1, Nagpur on the same date. Remark on the approval does not show any valid application of mind as required in terms of provision of section 151. To support his various submissions, the ld. AR of the assessee relied upon the various following decision:
(i) Ganga Saran & Sons Pvt. Ltd. vs ITO (130 ITR 1 (SC),
(ii) ITO vs Lakhmani Mewaldas 103 ITR 437 (SC),
(iii) PCIT vs V. Ramaiah 409 ITR 580 (Kar),
(iv) CIT vs Shodiman Investments Pvt. Ltd. 422 ITR 337 (Bom),
(v) South Yarra Holdings vs ITO (2019) 104 taxmann.com 216 (Bom),
(vi) CIT vs Videsh Sanchar Nigam Ltd. 340 ITR 66 (Bom),
40
(vii) CIT vs Trend Electronics 379 ITR 456 (Bom),
(viii) Saraswat Co-operative Bank Ltd. vs ACIT (2024) 166 taxmann.com 360 (Bom)
24. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. We have also deliberated on various documentary evidences filed on record in the form of various factual paper books. We have also deliberated on various case laws referred and relied by lower authorities as well as by both the parties before us. The basis of reasons recorded for reopening and the addition made pursuant thereto by AO, has been discussed by us in earlier paras of this order. The ld CIT(A) deleted both the additions under section 68 and also held that the reopening was not valid. The finding of ld CIT(A) is also discussed in earlier paras of this order. Therefore, the finding of AO and ld CIT(A) is not repeated here for the sake of brevity.
25. We have independently examined and considered the facts of the case vis-à-vis various grounds of appeal raised by the revenue and the grounds raised in CO by assessee. Firstly, we are considering various grounds of appeal raised by revenue. First ground of appeal relates to deleting the addition of Rs. 2.35 Crore. We find that during re-assessment the AO asked the assessee assessee to furnish detail of statement of bank account, financial statement and audit report along with all details of business activities. In response to the direction of AO, the assessee furnished complete required details. From the details furnished by assessee, the AO noted that there was credit entry in the bank account of assessee from the account of Shubhbijay properties Advisory Pvt Limited 41 aggregating of Rs. 2.35 Crorein para 3.1 of the assessment order. The AO instead of discussing the nature of entry in the bank account of assessee, in para 5.1 to 5.4 recorded modus operandi of entry provider and the role of Income Tax Authorities. The AO straightway in para 6 of assessment order recorded that the submission made by assessee is not in conformity with facts available on record. No finding is given by the AO on various evidences furnished by assessee in support of various credit entry vis-à-vis books of account. The credit entry in the bank account alone cannot be the basis of additions, when such entry has been explained with corroborative evidence. We find that before ld CIT(A) the assessee again explained that a sum of Rs. 3.00 Crore was receivable from Shubhbijay Properties Advisors Pvt Limited and that such sum receivable was accepted in the balance sheet in regular assessment completed under section 143(3) in AY 2012-13. Thus, out of such sum receivable the assessee received Rs. 2.35 Crore as a part payment. We find that the finding of AO in making addition of Rs. 2.35 Crore is factually no tenable. On perusal of the ledger account of assessee-company and from Shubhbijay Properties Advisory Pvt. Ltd, we find that Rs. 3.00 crore was receivable as on 01.04.2012. The aforesaid opening balance has been accepted as amount receivable in case of assessee in A.Y. 2012-13 completed under section 143(3). Further, assessment for AY 2012- 13 was completed by ACIT, Circle -1, Nagpur in accepting the return income in order dated 24.03.2015 passed under section 143(3). In the earlier year, Rs. 3.00 crore was received from banking channel and were credit in the bank account of 42 assessee. All credits entry of Rs. 3.00 crore received from Shubhbijay Properties Advisory Pvt. Ltd. are verifiable from bank account of assessee with Lakshmivilas Bank Nagpur. We also find that the AO in assessment order noted credit entry of Rs. 2.35 crore on various dates as recorded in para 3.1. However, the AO has not disputed the receipt of Rs. 10.00 lacs from same company as on 30.01.2013 and Rs. 54.50 lacs on 07.02.2013. The amount received from such company is in respect of amount receivable from such company, which has been accepted in the assessment framed for A.Y. 2012-13. Thus, we are in agreement with the finding of ld. CIT(A) held that amount receivable is not in the nature of loan or cash credit for which the assessee required to explain in term of section 68. Hence, the amount given by assessee is beyond the scope of consideration for the purpose of section 68. The sum of Rs. 2.35 crore received by assessee is the amount receivable from Shubhbijay Properties Advisory Pvt. Ltd. and cannot be treated as accommodation entry nor assessee can be considered as beneficiary of accommodation entry.Hence, we affirm the order of ld CIT(A) with our additional observation. In the result, the ground No 1 of the appeal is dismissed.
26. Ground No. 2 & 3 relates to deleting other addition of Rs. 192.67 crore. We find that during assessment the AO noted that there were huge transactions in the Lakshmi Vilas Bank account of assessee aggregating to Rs. 192.67 Crore from various entities. Notice under Section 133(6) were issued to 15 such entities requiring nature of business, return of income and transaction with assessee company during relevant financial year with ledger account with the assessee. It 43 was recorded by the AO noted that no compliance /response is received from all such parties. Due to non-compliance, the AO took of the view that it is not ascertainable whether such entities are actually genuine or exist on paper. And that on show cause, the assessee in his reply stated that the transaction does not relate to any sale or purchases or booking of services. It was explained by assessee that they have accepted intercorporate deposits from various companies. The assessee company also given advance on account of intercorporate deposits to various companies aggregating to Rs. 122.37 Crore. The assessee received Rs. 71.72 Crore out of intercorporate deposit from various companies. This has resulted into credit in the bank account maintained with Lakshmi Vilas Bank Ltd. aggregating to Rs. 195.16 Crore. The reply of assessee was not accepted by AO by holding that the assessee has shown very nominal return of income. Loan and current investments are huge. No interest income is shown from such intercorporate deposits nor is any interest paid. The AO specifically recorded that he presumed that probably the assessee is using its own fund for layering of transaction for accommodation entry activities. The AO finally held that that confirmation of accounts or use of any banking channel for any payment cannot provide legitimacy to such payment unless and until the creditworthiness of the business to lend the money is proved. The AO made addition of credit entry aggregating of Rs. 192.67 Crore.
27. We find that before ld CIT(A) the assessee filed a very detailed written submissions, which we have recorded in para-5 of this order. The assessee in its 44 submissions explained all the transaction in detail and submitted that that correct amount of credit entry in assesses bank account is of Rs. 180.36 crore. The assessee also explained about all 27 credit entries, which we have recorded in para-6 of this order. The assessee stated that they have discharged its primary onus as per law declared by Higher Courts on the issue of section 68. We find that the AO has not examined the books of account during the course of assessment proceedings. It is settled law that credit in the bank account is not credit entry in the books of account against which section 68 could be invoked. Such view is supported by the decision of Bombay High Court in Bhaichand H. Gandhi (supra). We also find that all transactions are recorded in the books of accounts of all related parties and associates. All deposits received are repaid in entirety during the year and in subsequent years. The deposits and withdrawals are not unexplained transactions and have no bearing on the taxable income at the hands of the assessee considering the evidence on record.
28. We further find that the ld CIT(A) while considering the explanation, which were supported with the evidence held that in order to appreciate the facts all the transaction can be bifurcated in four segments. Such bifurcation is recorded by us in para-11 of this order. In first segment, we find that Rs. 71.72 Crore was given by the assessee to various companies. As per second segment, the assessee has opening payable / receivable credit of Rs. 15.90 crore. In third segment the assessee received advances of Rs. 91.77 crore. And forth segment relates to proceeds of sale investment. We find that the confirmation and ledger 45 account of credit entry in bank account, in respect of firs segment clearly indicate that sum of Rs. 71.72 crore is received by assessee-company from various companies out of opening balance or amount given the year under consideration. The aforesaid sums cannot be considered as credit for section 68 of the Act. There is sufficient evidence in the form of confirmation, address and PAN of all parties with ITR and balance sheets of all such parties. So far as credit shown in second segment the credit balance received in earlier financial year is accepted by AO in assessment order passed under section 143(3). The amount received during the year is from the parties, which were accepted as a genuine creditor in the earlier assessment year. For amount shown in third segment the assessee received fresh credit from the companies aggregating Rs. 91.77 crore. The confirmations, PAN, address, ITRs and balance sheets of all such parties are filed. The amounts were received through banking channel. Credit received in respect of two parties which is shown in for the segment, are sale proceeds of investments which are evident from the ledger accounts. The sale of investments is not disputed by AO in the assessment order. We also find that the ld. CIT(A) while allowing relief to the assessee also accepted the filing of various documentary evidences in respect of each credit entry which is available on record, e.g. confirmation of parties, balance sheets, ITR, PAN and address along.
29. We find that the assessee has filed following documents in respect of various credits of parties;
46
Name of party Amount Documentary evidences
Anjaniputra Infracon Pvt. Ltd. 15,00,000 PAN, Address, Confirmation, Balance
sheet & ITR,
Baba Ramdeo Commercials Pvt. 51,00,000 PAN, Address, Confirmation, Balance
Ltd. sheet & ITR,
Besta Vision Traders Private 5,62,00,000 PAN, Address, Confirmation, Balance
Limited sheet & ITR,
Bhakti Investment Private Limited 46,93,000 PAN, Address, Confirmation, Balance
sheet & ITR,
Refund out of opening balance
receivable as on 01.04.2012 at Rs.
14,45,10,000/-
Bhakti Sales And Services Private 12,20,000 PAN, Address, Confirmation, Balance
Limited sheet & ITR,
It include part refund of opening
receivable as at Rs. 3,49,000/-
Blossom Constructions Private 13,05,73,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 51,40,000 and Rs. 125,43,30,000/- out of amount given during the year Costal Multitrading Private Limited 6,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Deify Infrastructure Limted 71,50,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Efficient Structure Private Limited 4,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Feline Financial Services Private 5,00,000 PAN, Address, Confirmation, Balance Limited sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 40,37,37,000/-
Gautam Iron & Steel Trading Co. 3,30,00,000 PAN, Address, Confirmation, Balance
sheet & ITR,
Nine Star Plastic Packaging 2,00,00,000 PAN, Address, Confirmation, Balance
Services Pvt. Ltd. sheet & ITR,
Refund out of opening receivable as
on 01.04.2012 amount given during
the year
Raheja Exports Private Limited 8,90,87,000 PAN, Address, Confirmation, Balance
sheet & ITR,
Refund out of opening receivable as
on 01.04.2012 at Rs. 2,45,77,000
and Rs. 6,45,10,000/- out of amount
given during the year
Rajvardhan Tradezone Private 5,00,00,000 PAN, Address, Confirmation, Balance
Limited sheet & ITR,
Sandhaya Laxmi Trading Privates 1,82,00,000 PAN, Address, Confirmation, Balance
47
Limited sheet & ITR,
Silver Crest Investors & Builders 27,35,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 42,85,11,000/ Suraburdi Infrastructures Pvt. Ltd. 47,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of amount given during the year Surendra Fiscal Services Pvt. Ltd. 31,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 50,00,000/-
Tanushree impex Pvt. Ltd. 2,44,33,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 2,29,23,000/-
and at Rs. 15,00,000/- amount given during the year Vadehi Fiscal Pvt. Ltd. 15,00,00,000 PAN, Address, Confirmation, Balance sheet & ITR, Refund out of opening receivable as on 01.04.2012 at Rs. 15,00,00,000/-
Vedika Trading & Consultancy Pvt. 9,50,00,000 PAN, Address, Confirmation, Balance Ltd. sheet & ITR,
30. We find that once the assessee furnished all aforesaid documentary evidence and discharged its primary onus, the AO was required to investigate the matter further. The AO has not investigated the matter further. The Hon'ble Apex Court in CIT vs Orissa Corporation (P) Ltd. (supra) held that once the assessee has given name and address of the alleged creditors. It was in the knowledge of the revenue that the said creditors were income tax assessee. The revenue did not pursue the matter nor examined the source of income of alleged creditors. And if the Tribunal came to the conclusion that assessee has discharged burden on him, then the conclusion drawn was not unreasonable which was based on evidence. We find that the Hon'ble Gujarat High Court in CIT Vs. Amber Tradecorp (P) ltd. (2022) 145 taxmann.com 27 (Guj) held that where the assessee took loan from two parties and 48 assessee has furnished requisite material showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition under Section 68 could be made on account of such loan. The Hon'ble Gujarat High Court in the case of DCIT Vs Rohini Builders (supra) and in CIT Vs Ranchod Jivabhai Nakahava (supra) also held that when the assessee has discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers, PAN and copy of assessment orders wherever readily available and proved the capacity of creditors that amounts were paid through cheques, no addition is to be made. Similar view was taken by Hon'ble Bombay High Court in Orient Trading Co. Ltd. vs CIT 49 ITR 723 (Bombay). Hon'ble Gujarat High Court in Hon'ble Gujarat High Court in case of CIT vs. Ayachi Chandrasekhar Narsangji (2024) 41 taxmann.com 250 (Guj) held that when repayment of loan in subsequent year has not been disputed by revenue authorities, the addition of unsecured loan is not sustainable. Similar view was taken by Hon'ble Jurisdictional High Court in PCIT vs Bhupendra Champaklal Dalal (2024) 160 taxmann.com 560 (Bombay) wherein it was held that where the assessee received loan from its creditors and repaid the same and all transactions were routed through banking system the additions is not justified.
31. We further find that Hon'ble Jurisdictional High Court in PCIT vs Veedhata Tower Pvt. Ltd. (2018) 403 ITR 415 also held that assessee is only required to explain the source of credit and there is no requirement under law to explain the source of the source. Further Hon'ble Supreme Court in CIT vs P.K. Noorjahan (supra) also concluded that provision of section 69 confers discretion in the matter of treating the source of investment which has not been satisfactory explaining to be income. The AO is not obliged to treat such source of investment as income in every case where explanation offered by assessee is 49 found to be not satisfactory. The same principle was followed by Hon'ble Supreme Court in CIT vs Mohanakala & Ors.(2007) 291 ITR 278 (SC) would be equally applicable to interpret the provision of section 68. Thus, in view of aforesaid factual and legal discussion, we do not find any infirmity in the order of ld. CIT(A) for our interference, which we affirmed with our additional finding recorded above. The ratio of various decisions relied by ld. CIT-DR for Revenue in his submissions are not applicable on the peculiar facts of the case. In the present case, the assessee has explained all the credits as well as debit entry in its books of account with documentary evidence. The documentary evidence has not been rebutted by assessing officer. The assessee has discharged its onus in substantiating all the transactions. In the result, various grounds of appeal raised by Revenue are dismissed.
32. In the result, appeal of Revenue in ITA No. 312/Nag/2023 is dismissed.
33. So far as various grounds raised in C.O. is concerned, we find that while recording reasons for reopening, the AO recorded that assessee is beneficiary of Rs. 45.00 lacs from the account of Raj Kumar Singh. No date of such transaction is recorded either in the reasons recorded or in assessment order. In fact, no addition is made in respect of alleged entry of Rs. 45.00 lacs from the account of Raj Kumar Singh. The AO made other additions which were not forming part of reasons recorded. Thus, conclusion drawn by AO that assessee is beneficiary of Rs. 45.00 lacs from the account of Raj Kumar Singh is factually incorrect. We also find that ld. CIT(A) in para 8.2 on page no. 74 & 75 of his order also recorded in consistency and factual mistake in the reasons recorded. Thus, reasons recorded are not valid reasons being factually incorrect. There is no live link between the 50 belief of escapement of income, vis-à-vis material on record. The Hon'ble Apex Court in Ganga Saran & Sons Pvt. Ltd. vs ITO (supra) held that if there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the ITO could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid. Further, the Hon'ble Supreme Court in ITO vs Lakhmani Mewaldas (supra) also held that reason to believe must have a material bearing on the question of escapement of income the reason must be held in good faith. It cannot be merely pretence. We find that no addition was made on the reasons recorded rather the assessing officer made addition on the basis of various details furnished by assessee, which were furnished in response to show cause notice for furnishing statement of bank account, financial statement and audit report. The assessee furnished all such required detail. All such required details were already available with AO during original assessment. There is no satisfaction of assessing officer that any income escaped from assessment due to failure on the part of assessee in not disclosing fully and truly material necessary for assessment. The Hon'ble Jurisdictional High Court Jet Airways 331 ITR 236 (Bombay) held that wherein it was held that if after issuing notice under Section 148, the AO does not assess or 51 re-assess such income for which he had formed reason to believe that it had escaped assessment, it is not open to him to independently assess or re-assess any other income which came to his notice subsequently during the re- assessment proceeding. Similar view was taken by Rajasthan High Court in CIT Vs Shri Ram Singh (306 ITR 343 Raj), Delhi High Court in Ranbaxy Laboratory Ltd Vs CIT (336 ITR 136 Delhi), and Mumbai Tribunal in Tata Communication Transformation Services Ltd Vs ACIT (ITA No. 358/ Mum/2022. Hence, we conclude the reasons recorded are not correct nor the additions made pursuant to reasons recorded are justified when no addition qua the reasons recorded were made. Hence, the assessee also succeeded in its C.O.In the result, various grounds of appeal raised by assessee in its C.O. are allowed.
34. In the result, appeal of Revenue is dismissed. The C.O. filed by assesses is allowed.
Order was pronounced on 24/04/2026 as per Rule 34 of Income Tax (Appellate Tribunal) Rule-1963 Sd/-
Sd/-
KHETTRA MOHAN ROY PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Nagpur: Dated: 24/04/2026 Biswajit 52 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By Order Assistant Registrar, ITAT Nagpur 53