Income Tax Appellate Tribunal - Mumbai
Dcit, Central Circle 5.1 Mumbai, Mumbai vs Shah And Parikh, Mumbai on 1 October, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI NARENDRA KUMAR BILLAIYA, AM
AND
MS. KAVITHA RAJAGOPAL, JM
ITA No. 2624/Mum/2023
(Assessment Year: 20 13-14)
DCIT, Central Circle, Mumbai Shah and Parikh
2, Vallabh Niwas, Malviya Road,
Vs.
Mumbai - 400057.
PAN/GIR No. AAJFS4684D
(Appellant) : (Respondent)
Assessee by : Shri Jaiprakash Bairagra
Respondent by : Shri Pravin Salunkhe (SR DR)
Date of Hearing : 26.09.2025
Date of Pronouncement : 01.10.2025
ORDER
Per Kavitha Rajagopal, J M:
The captioned appeal has been filed by the revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) 53, Mumbai ('ld. CIT(A)' for short), pertaining to the Assessment Year ('A.Y.' for short) 2013-14, which was heard by the Tribunal, where there appeared difference of opinion between the learned Members.
Consequent to the same, the Hon'ble President of ITAT, nominated Hon'ble Third Member to adjudicate the dispute which arose between the views of Hon'ble Accountant Member and Hon'ble Judicial Member to resolve the following question of difference arising between the Members constituting the Division Bench:ITA No. 2624/Mum/2023 (A.Y. 2013-14)
Shah and Parikh "Whether on the facts and circumstances of the case and in law, the learned CIT(A) was correct in partly allowing the appeal of the assessee or he is to be directed to readjuicate the appeal de nova?"
2. The Hon'ble Third Member after duly hearing both the parties held as under:
"34. Thus, on overall considerations of the facts and materials on record, I agree with the view expressed by ld. Accountant Member that in the given facts and circumstances of the case, Id. CIT(A) was justified in partly allowing the appeal of the assessee. The question of reference is accordingly decided. The original records may be returned hack to the Registry to place before the Division Bench to pass the confirmatory order as per majority view. Reference is decided as above."
3. Since the Hon'ble Third Member concurred with the view expressed by the Hon'ble Accountant Member vide order dated 18.07.2025.
4. In consequence of the same and in view of the majority opinion, the appeal filed by the revenue in ITA No. 2624/Mum/2023, is hereby dismissed.
Order pronounced in the open court on 01.10.2025
Sd/- Sd/-
(NARENDRA KUMAR BILLAIYA) (KAVITHA RAJAGOPAL)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated: 01.10.2025
Karishma J. Pawar (Stenographer)
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent
3. CIT- concerned
4. DR, ITAT, Mumbai
5. Guard File
BY ORDER,
(Dy./Asstt.Registrar)
ITAT, Mumbai
2
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT
(THIRD MEMBER)
ITA No. 2624/Mum/2023
(Assessment Year: 2013-14)
DCIT, Central Circle 5.1 Shah and Parikh
1928 Air India Building, Vs. 2 Vallabh Niwas, Malviya Road,
Mumbai-400 021 Mumbai-400 057
PAN/GIR No. AAJFS 4684 D
(Assessee) : (Respondent)
Assessee by : Shri Jaiprakash Bairagra
Respondent by : Dr. Kishor Dhule
Date of Hearing : 17.01.2025
Date of Pronouncement : 18.07.2025
ORDER
The Hon'ble President Income Tax Appellate Tribunal (ITAT for short) has nominated the undersigned as Third Member to resolve the following question of difference arising between the Members constituting the Division Bench:
"Whether on the facts and circumstances of the case and in law, the learned CIT(A) was correct in partly allowing the appeal of the assessee or he is to be directed to readjuicate the appeal de nova?"
2. Before, I proceed to answer the question of reference, it is necessary to briefly describe the factual matrix. The assessee, a resident partnership firm, is stated to be engaged in the business of executing civil contract work under Government/Semi Government organizations, such as Municipal Corporation of Greater Mumbai, Mumbai Metropolitan Region Development Authority and various other State and Central Government Agencies. For the assessment year under dispute, the assessee had originally filed its return of income on 30.11.2013, declaring income of Rs.3,15,82,890/-. Assessee's case was selected for scrutiny and assessment was completed u/s. 143(3) vide order dated 2 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 29.02.2016, determining the total income at Rs.3,15,85,470/-. Subsequently, on 06.11.2019, a search and seizure operation u/s. 132(1) of the Act was carried out on the assessee. Based on such search and seizure operation, proceedings u/s. 153A of the Act were initiated for block of six preceding assessment years, i.e., from A.Ys. 2014-15 to 2019-20. Whereas, for A.Y. 2020-21, being the year of search and seizure operation, assessment proceedings were initiated u/s. 143(3) of the Act. Insofar as, A.Y. 2013-14 is concerned, based on the information gathered in course of search and seizure operation, assessment was reopened u/s. 147 of the Act. In the show cause notice issued u/s.148A(b) of the Act, the Assessing Officer (AO), basically, raised the following three issues :
i. Unsecured bogus loans availed from nine parties ii. Bogus purchases from three parties iii. Bogus labour and job work charges paid to two parties
3. In response to the show cause notice, assessee furnished a detailed reply with supporting evidences. After verifying the reply of the assessee and the supporting evidences, the A.O. held that the unsecured loans of Rs.1,15,00,000/- availed during the year from three parties, viz. Raja Antibiotics Ltd., Saffron Gems Pvt. Ltd. and Shikha Diamonds Mfg. Co. Private Limited, are bogus in nature. He, therefore, treated the aggregate loan amount of Rs.1,15,00,000/- as 'unsecured cash credit' u/s. 68 of the Act and added to the income of the assessee. Further, the A.O. held that the interest aggregating to Rs.57,74,334/- paid on unsecured loans taken or availed in the current year as well as in the past assessment years. Proceeding further, the A.O. held that the purchases effected from Pranali Enterprises and Pragati Civil Solutions P Ltd., aggregating to Rs.11,61286/-
are non-genuine. He also held that labour and job work charges aggregating to 3 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh Rs.5,33,426/- paid to Shri Gemsingh Rathod and Md. Afrohosen Idrish are also non genuine and bogus. Accordingly, he disallowed such bogus purchases and bogus labour and job work charges, aggregating to Rs.16,93,712/- u/s. 37(1) of the Act.
4. Contesting the aforesaid additions, the assessee preferred an appeal before the first appellate authority.
5. Before the first appellate authority, the assessee again furnished voluminous documentary evidences to prove the genuineness of the unsecured loans availed not only during the year but in earlier years. The assessee also furnished documentary evidences to prove the genuineness of purchases and payment of labour and job work charges. The assessee also submitted that the factual aspect of the issues were thoroughly examined by the A.O. and the First Appellate Authority in course of appellate proceedings for A.Ys. 2014-15 to 2020-21.
6. After considering the submissions of the assessee, in the context of facts and materials available on record, the First Appellate Authority observed that identical nature of dispute relating to availing unsecured loan from the very same parties except one, purchase made from Pranali Enterprises and Pragati Civil Solutions P Ltd., labour and job work charges paid to Shri Gemsingh Rathod and Md. Afrozhosen Idrish were considered by the First Appellate Authority while deciding assessee's appeals for A.Ys. 2014-15 to 2020-21. He observed, in a consolidated order passed on 08.07.2022, the First Appellate Authority had in great detail not only himself examined the evidences furnished by the assessee, but had also got the evidences verified by the A.O. in remand. He observed that 4 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh after considering the veracity of the evidences and the comments of the A.O. in the remand report, the first appellate authority has treated all the unsecured loans to be genuine as the assessee had proved beyond doubt the identity and creditworthiness of the creditors as also the genuineness of the unsecured loans.
7. Even, with regard to purchases made from Pranali Enterprises and Pragati Civil Solutions P Ltd. as also the labour and job work charges paid to Shri Gemsingh Rathod and Md. Afrozhosen Idrish, the First Appellate Authority after examining the evidences in great detail under identical facts and circumstances had concluded that such transactions are genuine. Thus, following the decision of his predecessor, the First Appellate Authority deleted the additions made u/s. 68 of the Act on account of unsecured loans as well as the additions made on account of alleged bogus purchases and bogus payment of labour and job work charges. Insofar as, payment of interest on unsecured loan, the First Appellate Authority held since the unsecured loans have been accepted as genuine, the interest paid thereon cannot be disallowed. However, insofar as interest paid to M/s. Adeshwar Gems, the first appellate authority observed that this particular issue is not covered by the decision of his predecessor. Hence, he proceeded to examine the issue for recording his independent finding. While doing so, he observed that as per the materials on record, the assessee had not availed any fresh loan from M/s. Adeshwar Gems during the year under consideration. In the year under consideration, the assessee had only paid interest on loan availed earlier. Further, to prove the genuineness of the loan transaction, the assessee had furnished copy of loan confirmation, copy of income tax return of the creditor, bank account statement of the creditor, copy of GST return, Form-16, etc. After verifying the documentary evidences, 5 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh the First Appellate Authority, being satisfied that the assessee has established the genuineness of the transaction had allowed the interest paid to M/s. Adeshwar Gems. Thus, in sum and substance, the first appellate authority deleted all the additions made by the A.O.
8. Being aggrieved with the decision of first appellate authority, the Revenue preferred an appeal before the Tribunal.
9. After conclusion of hearing in appeal, ld. Judicial Member proposed an order setting aside all the issues relating to the additions made back to the file of the First Appellate Authority for de novo adjudication through a speaking order after duly considering the submissions of the assessee and documentary evidences produced before him. The reason for doing so according to ld. Judicial Member was, instead of independently verifying/analyzing the specific facts relating to the disputed additions as may be arising in the impugned assessment year, the first appellate authority has deleted the additions simply relying upon a consolidated order passed by his predecessor. According to the ld. Judicial Member, not only the A.O. but the First Appellate Authority has failed to appreciate the evidences furnished by the assessee and had merely allowed the appeal following his predecessor's order. She further observed that since the principle of res judicata does not apply to income tax proceedings, the first appellate authority could not have decided the issues merely relying upon earlier order passed by his predecessor without considering the issues in the light of the evidences furnished by the assessee. 6
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
10. As it appears on record, ld. Accountant Member, as the then he was, did not agree with the view expressed by the ld. Judicial Member and proposed his own order. In the said order, ld. Accountant Member concurred with the view expressed by the First Appellate Authority. He observed that the First Appellate Authority has not merely followed the decision of his predecessor rendered in assessee's case without proper application of mind or examination of evidences. He observed that it is not the case of the department that the first appellate authority has deleted the additions based on the evidences which were not before the A.O. He observed, even the A.O. had not raised any ground alleging violation of Rule 46A of the Income Tax Rules. He observed, even the department has not raised the plea that the A.O. wanted to make any further enquiry.
11. In the aforesaid context, ld. Accountant Member observed that when the assessee has brought on record all material evidences concerning the disputed issues and such evidences were available before both the A.O. and First Appellate Authority, at the second appellate stage, the matter cannot again be remanded back by adopting a soft course when there is not even any allegation by the Departmental Representative that due to fault of the assessee, proper enquiry could not be made. Thus, the ld. Accountant Member held that without deciding the issues on merits the matter should not be remanded back. Proceeding further, he observed that identical nature of dispute arose in assessee's case for some other assessment years and nature of evidences produced by the assessee qua the issues were also identical. He observed, while in sesein of those appeals, the first appellate authority has called upon the A.O. to examine the evidences and furnish a remand report. He observed, after detailed scrutiny of the evidences, the A.O. had furnished a remand report 7 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh and based on such remand report furnished by the A.O. as well as evidences available on record, the First Appellate Authority has deleted the additions while deciding the issues on merits. The ld. Accountant Member further observed that the decision of ld. CIT(A) was also upheld by the Tribunal. Thus, in these circumstances, according to ld. Accountant Member, there is no justifiable reason in not upholding the decision of first appellate authority merely because he has not called for a fresh remand report while deciding the appeal for the impugned assessment year.
12. He observed, it is the prerogative of the first appellate authority to call for a remand report or not. He observed that the role of the Tribunal is to either confirm or delete the addition based on the information available on record, unless circumstances warrant otherwise. He observed, in the facts of the present appeal, there are no such compelling circumstances. He observed, the evidences/information based on which additions were made in the impugned assessment year are not different, since they are the same set of facts and evidence found as a result of search and seizure operation, based on which, assessments for other assessment years were completed u/s. 143(3) r.w.s. 153A of the Act. Therefore, due to parity of facts, First Appellate Authority was justified in following order of his predecessor. Without prejudice to the aforesaid reasoning, ld. Accountant Member also proceeded to independently examine the issues relating to all the additions on merits and after appreciating the nature of evidences, he concluded that the additions made on unsecured loans, interest paid thereon, bogus purchases and bogus labour and job work charges are not sustainable. Thus, he ultimately concluded that ld. CIT(A) was justified in deleting the additions made by the A.O. 8 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
13. Because of difference in opinion, the issue of difference was, thus, referred to the undersigned as a Third Member for resolution.
14. Having considered rival submissions, perused the respective orders by the learned Members constituting the division bench, the evidences available on record and other facts and materials on record, I record my findings as under:
15. The issue arising for consideration as per the point of difference referred for consideration of the Third Member is - "Whether the order of ld. CIT(A) is to be upheld or is to be set aside with a direction to decide the issues de novo?".
16. As discussed earlier, a search and seizure operation u/s. 132 of the Act was carried out in case of the assessee on 06.11.2019 falling in the financial year 2019-20, corresponding to A.Y. 2020-21. In course of such search and seizure operation, according to the department, certain incriminating materials were found revealing undisclosed income of the assessee. Based on such material, the A.O. initiated proceedings u/s. 153A of the Act for the block of six preceding assessment years, other than the year of search. Insofar as the year of search is concerned, i.e., for A.Y. 2020-21, regular assessment proceedings u/s. 143(3) of the Act was undertaken. Since, the impugned assessment year was outside the block of six preceding assessment years, relying upon the decision of Hon'ble Supreme Court, the A.O. reopened the assessment u/s. 147 of the Act. However, as could be seen from the show cause notice issued u/s. 148A(b) of the Act on 30.05.2022, reproduced in the body of the assessment order passed u/s. 147 of the Act, the assessment was reopened based on the materials found in course of search and seizure operation as 9 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh well as post search investigation. Thus, the materials utilized in assessment proceedings initiated u/s. 153A of the Act as well as the impugned assessment year are more or less identical. As discussed elsewhere in the order, in the impugned assessment order the A.O. has made additions on account of unsecured loans treated as unexplained cash credit u/s. 68 of the Act, disallowance of interest paid on such unsecured loans, disallowance of alleged bogus purchases and bogus labour and job work charges. Insofar as unsecured loans are concerned, the A.O. has referred to loan transactions with the following parties:
Sr. Name of the Lender Interest Amount
no.
1 Badam Trading Pvt. Ltd. 6,69,167/-
2 Bahubali Diamonds Pvt. Ltd. 10,82,833/-
3 Kothari Impex 5,47,500/-
4 Lalita Gems Private Limited 7,05,667/-
5 Raja Antibiotics Ltd. 25,333/-
6 Saffron Gems Pvt. Ltd. 4,71,167/-
7 Shikha Diamonds Mfg. Co. Private 6,66,667/-
Limited
8 Tanman Jewels Private Limited 10,58,500/-
9 Vardhan Diamonds Private Limited 2,43,333/-
17. Out of these 9 parties, since fresh loans availed during the year were only from 3 parties, viz. Raja Antibiotics Ltd., Saffron Gems Pvt. Ltd. and Shikha Diamonds Mfg. Co. Private Limited, the A.O. has considered them for addition u/s. 68 of the Act. Since, in respect of rest of the parties, loans were availed in other assessment years, the A.O. has not considered them for addition. Be that as it may, it further transpires from the assessment order that in course of assessment proceeding, the A.O. has called for evidences for establishing the genuineness of the loans availed from these parties. In response, the assessee has furnished voluminous evidences, which are part of the paper books submitted 10 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh before the Tribunal. However, despite the evidences, the A.O. has treated the loans from aforementioned three parties as non-genuine.
18. When the matter travelled before the First Appellate Authority, after verifying the facts, materials and evidences on record, the First Appellate Authority, found that the entire loan transaction relating to the aforementioned parties were examined in detail by his Predecessor with reference to the documentary evidences available on record, while deciding assessee's appeals for A.Ys. 2014-15 to 2020-21. After verifying the evidences and the remand report of the A.O. wherein he had accepted the genuineness of the loan transactions, his predecessor had accepted the unsecured loans availed from the aforesaid parties as genuine. In the aforesaid context, the issue which requires consideration is -
"Whether the First Appellate Authority is justified in following the decision of his Predecessor?".
19. On a perusal of the order dated 08.07.2022, passed by the First Appellate Authority, while deciding assessee's appeals for A.Ys. 2014-15 to 2020-21, it is observed, similar additions on account of bogus unsecured loans in respect of common creditors were made by the A.O. while framing assessments for A.Ys. 2014-15 to 2020-21. In fact, while deciding the issue of genuineness of the unsecured loans availed by the assessee, the facts relating to A.Ys. 2013-14 were also before the First Appellate Authority. This is very much evident from the following observations of the First Appellate Authority in order dated 08.07.2022, passed for A.Ys. 2014-15 to 2021-22:
9.3.1 The facts of the case of the appellant are that during the A.Y. 2013-14 to A.Y. 2019-20, the appellant had received unsecured loans from the following parties Sr. No. Name Amount 11 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 1 Badam Trading P. Ltd. 1,10,00,000 2 Bahubali Diamonds P. Ltd. 1,68,00,000 3 Kothari Impex 5,23,00,000 4 Lalita Gems P. Ltd. 1,16,00,000 5 Raja Antibiotics Ltd. 80,00,000 6 Saffron Gems P. Ltd. 2,71,50,000 7 Shikha Diamond P. Ltd. 1,76,00,000 8 Tanman Jewels P. Ltd. 1,74,00,000 9 Vardhan Diamond P. Ltd. 60,00,000 10 Kailash Surana HUF 62,60,000 11 Yashwant Surana HUF 60,54,000 12 Yogesh Construction 25,00,000 13 Satish Surana HUF 1,58,40,000 14 Pratap Const. Co. 1,23,00,000 15 Moksh Enterprise 22,50,000 9.3.2 The A.O. has made addition u/s. 68 in respect of unsecured loans received from 15 parties viz. Badam Trading P. Ltd., Bahubali Diamonds P. Ltd., Kothari Impex, Lalita Gems P. Ltd., Raja Antibiotics Ltd., Saffron Gems P. Ltd., Shikha Diamond P. Ltd., Tanman Jewels P. Ltd., Vardhan Diamond P. Ltd., Kailash Surana HUF, Yashwant Surana HUF, Yogesh Constructions, Satish Surana HUF, Pratap Construction Co. and Moksh Enterprise. The addition has been made merely on the ground that the appellant has not proved identity and creditworthiness of the loan party and the genuineness of the transactions. The A.O. has also referred to the profiling of 15 parties done by the Investigation Wing. The general observations about those 15 parties was that some of the entities were not filing return of income tax regularly, they had no high turnover and had low NP ratio, they had high outstanding credits and loan came from different parties through several layers. The A.O. has also referred to statement of Shri Mahabir Thanvi recorded during the search proceedings in which he could not given satisfactory reply regarding unsecured loans taken by the appellant. The A.O. has also relied upon the various judicial decisions.
20. As could be seen from these observations of First Appellate Authority, amongst the 15 lenders appearing in the table, three lenders, viz. Raja Antibiotics Ltd., Saffron Gems P. Ltd. and Shikha Diamond P. Ltd. have been dealt by the A.O. in the impugned assessment year for the purpose of addition u/s. 68 of the Act. As observed by the first appellate authority in para 9.3.2, the addition u/s. 68 of the Act was made merely on the ground that the assessee had not proved the creditworthiness of creditors and genuineness of the transaction. Pertinently, in course of proceedings initiated u/s. 153A of the Act for the above noted assessment years, the assessee had furnished voluminous documentary evidences not only of self but of all the lenders, such as, copy of ledger confirmation, copy of return of income, copies of balance sheet and profit and loss account of the lender parties, 12 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh copy of MCA Master Data showing current status of the lenders, copy of GST data showing GST compliances, copy of bank statement of lenders and various other evidences. These evidences were produced not only before the A.O. but also before the First Appellate Authority.
21. The first appellate authority, being of the view that the evidences require further verification, directed the A.O. to verify the evidences and furnish the remand report. In the remand proceedings, the A.O. had not only verified the evidences but had also issued summons u/s. 131 of the Act and notices u/s. 133(6) of the Act to all the lenders requiring their participation in the enquiry to prove the loan transactions. In response to the summons /notice issued by the A.O., the lenders had not only appeared before the A.O. but had also confirmed the loan transactions with the assessee and furnished the requisite documentary evidences. It is necessary to observe, in the appellate order passed for A.Ys. 2014-15 to 2020-21, the First Appellate Authority has specifically discussed the issue of unsecured loans availed from Saffron Gems P. Ltd, Raja Antibiotics Ltd. and Shikha Diamonds Mfg. Co. P. Ltd., in the following manner:
(vii) In respect of unsecured loan taken from Raja Antibiotics Ltd., the details provided to the A.O. included PAN address, contact no and email id of the lender parties, the confirmation letter, acknowledgement of the ITR, bank statements, balance sheet and P & L Account of the lender parties. MCA Master Data as appearing on ROC and the GST data available in GST website of the lender party. Further, in letter dated 20.09.2021, the representative of Raja Antibiotics Ltd., submitted in the office of the A.O., documents such as confirmation letter, interest received, TDS and repayment of loan along with bank details.
(viii) In respect of unsecured loan taken from Shikha Diamonds Mfg. Co. P. Ltd., the details provided to the A.O. included PAN address, contact no and email id of the lender parties, the confirmation letter, acknowledgement of the ITR, bank statements, balance sheet and P & L Account of the lender parties. MCA Master Data as appearing on ROC and the GST data available in GST website of the lender party. Further, in letter dated 21.09.2021, the representative of Shikha Diamonds Mfg. Co. P. Ltd. submitted in the office of the A.O., documents such as confirmation letter, interest received, TDS and repayment of loan along with bank details.13
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
22. Thus, as could be seen from the above, the genuineness of loan transactions between the assessee and Saffron Gems P. Ltd., Raja Antibiotics Ltd. and Shikha Diamonds Mfg. Co. Ltd. were very much the subject matter of consideration before the First Appellate Authority in the appellate proceedings relating to A.Ys. 2014-15 to 2020-21. It is further relevant to observe, the evidences relating to entire loan transaction of the aforesaid lenders, from the first loan availed till the account was squared off, were furnished before the First Appellate Authority. This would be evident from the observations made in paragraphs 9.3.9 and 9.3.10 which are reproduced as under:
14
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 15 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 16 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 17 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 18 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 19 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 20 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 21 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh 22 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
23. As could be seen from the facts and figures mentioned in the tabulated format, the loan availed from Raja Antibiotics Ltd. in A.Y. 2013-14 was shown as opening balance in A.Y. 2014-15 and continued as such till A.Y. 2017-18, when the loan was repaid and account was settled. After A.Y. 2013-14, the assessee had not availed any fresh loan from Raja Antibiotics Ltd. till A.Y. 2017-18. Again in A.Y. 2018-19, the assessee had availed loan of Rs.6 lacs from Raja Antibiotics Ltd. and repaid it in the very same Assessment year.
24. In respect of Shikha Diamond Pvt. Ltd, the assessee had availed loan of Rs.56 lacs in A.Y. 2013-14, which was shown as opening balance in A.Y 2015-16. No fresh loan was availed from Shikha Diamond Pvt. Ltd. in A.Ys. 2014-15, 2015-16 and 2016-17. Whereas, the assessee had repaid an amount of Rs.24 lacs to Shikha Diamond Pvt. Ltd. in A.Y. 2015- 16 and the loan account was settled in A.Y. 2017-18 on payment of balance Rs.32 lacs. 23
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
25. Insofar as Saffron Gems Pvt. Ltd. is concerned, the assessee had availed loan of Rs.1,09,00,000/- in A.Y. 2013-14, which was shown as opening balance in A.Y. 2014-15. Again in A.Y. 2014-15, the assessee had availed fresh loan of Rs.27,50,000/- and repaid of Rs.35 lacs. Further, repayments were made on A.Ys. 2015-16 and 2016-17. Ultimately, the account was settled in A.Y. 2017-18.
26. Thus, the aforesaid facts clearly reveal that the facts, materials and evidences considered by the First Appellate Authority, while deciding assessee's appeals in A.Ys. 2014-15 to 2020-21 are very much germane for deciding the issue in dispute arising in the impugned assessment year. It is relevant to observe, on perusal of the detailed discussion made by the First Appellate Authority in the appellate order for A.Ys. 2014-15 to 2020-21, it is quite clear that in addition to the evidences furnished by the assessee in course of assessment and first appellate proceedings, even in course of remand proceedings, the A.O. called for fresh evidences to verify the loan transactions. Even, in response to summons/notices issued, the concerned lenders had appeared before the A.O. and confirmed the loan transactions. These facts have been admitted by the A.O. in the remand report. Thus, it is very much clear that having factually examined the issue under reference in the context of evidences available on record, the First Appellate Authority, appeals while deciding for A.Ys. 2014-15 to 2020-21 had concluded that all loan transactions, including the loan transactions with three lenders, which is subject matter of addition in the impugned assessment year, are genuine transactions.
27. Thus, keeping in view the fact that the observations of the First Appellate Authority with regard to the genuineness of the loan transactions as recorded in the appeal order for 24 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh A.Ys. 2014-15 to 2020-21, would apply with all force to the issue in the impugned assessment year, in my considered opinion, the First Appellate Authority was justified in deleting the addition following the observations of his predecessor in the appellate order passed for A.Ys. 2014-15 to 2020-21. This is so because, the facts and evidences based on which the first appellate authority had decided the issue in the other assessment years would also apply to the impugned assessment year.
28. Insofar as the addition made on account of alleged bogus purchases of Rs.11,61,286/- made from two parties, viz. Pranali Enterprises and Pragati Civil Solutions P. Ltd., the facts are no different. This would be evident from the following observations of First Appellate Authority in the appellate order passed for A.Y. 2014-15 to 2020-21 :
7.1 During the assessment proceedings, the AO observed that during the search action in the case of the assessee, the key persons of the company were asked to furnish the list of purchase parties alongwith PAN and complete address of the parties, purchase order, ledgers, invoices, e-
way bills, delivery challans, lorry receipts, consumption register, purchase and consumption reconciliation statement, bank statement etc., to substantiate the genuineness of the purchases from 3 parties. In response to that, the assessee produced the list of purchase parties alongwith PAN, ledgers and some invoices. However, the assessee failed to produce the copies of purchase order, complete set of invoices, e-way bills, delivery challans, lorry receipts, consumption register, purchase and consumption reconciliation statement, bank statement etc. On perusal of the details submitted by the assessee to the search team, it was noticed that the assessee had made purchases from the following 3 parties for the period from F.Y. 2012-13 to F.Y. 2018-19 totalling to Rs.30,57,788/-.
S. Name F.Y. 12- F.Y. F.Y.14- F.Y. 15- F.Y. 16- F.Y. 17- F.Y. Total
No. 13 13- 15 16 17 18 18-
14 19
1 Pranali 2,16,615 2,91,194 3,69,917 5,86,725 1,39,017 16,03,468
Enterprises
2 Kanchan 87,030 44,076 3,78,543 5,09,649
Enterprises
3 Pragati 9,44,671 9,44,671
Civil
Solutions P
Lid.
Total 11,61,286 2,91,194 4,56,947 6,30,801 5,17,560 30,57,788
25
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 )
DCIT vs. Shah and Parikh
Further, the Investigation carried out by the department revealed that certain entities from whom purchases were made had dubious financials or were non-existent. The AO referred to the statements of the partner and inferred that it was confirmed by him that the parties were selected informally and the purchase orders in respect of the purchase parties were not possessed by the assessee. Further, the Inspector of the Investigation Wing had submitted a report that in case of one of the purchase parties, viz. M/s. Pranall Enterprises, no business activity was carried out from its premises. The AO noted that the assessee had made purchases during A.Y. 2015-16 amounting to Rs. 2,91,194/- from Pranali Enterprises. Therefore, the AO issued show cause notice on 13.09.2021 with respect to the claim of purchases made by the assessee and also asked the assessee to produce the party to substantiate the claim of purchases. In response to the show-cause notice, the assessee replied to the AO. However, the AO was not convinced with the submission made by the assessee. Further, the AO noticed that the party was not produced by the assessee for verification. The AO also noted that no business activity was carried out from the premises of the said party. The AO was of the view that mere payment by cheque is not enough to prove the existence of the parties and genuineness of the transaction. The AO relied upon the decisions in the cases of (i) M/s. N.K. Proteins Ltd. (4 taxmann.com 195 & 292 CTR 354 (SC), (ii) Nikunj Eximp Enterprises (in writ petition no. 2860 order dated 18.06.2014) (Bom HC) and (ii) CIT Vs. N.K. Industries (in tax appeal No. 240 of 2009 vide order dated 26.02.2016 [Guj HC] subsequent decision in the case of CIT vs. Simit P. Seth 356 ITR 451 (Guj HC]). The AO also concluded that there was no proof by way of challan/documentary evidences for payment of VAT and it was not possible to verify which goods were sold to which party to whom sales were made. Accordingly, the AO has made disallowance of bogus purchases amounting to Rs. 2,91,194/-
29. As could be seen from the aforesaid observations of First Appellate Authority, the fact of alleged bogus purchase came to the notice of the department as a result of search and seizure operation carried out in case of the assessee. The very same material was used by the A.O. while making the additions in the impugned assessment year. Undisputedly, the assessee is a contractor executing civil contract work under various agencies. In course of execution of such contract work, the assessee uses various construction material, which are purchased from other parties. It transpires from facts on record that the assessee had purchased RCC pipeline, manhole frame from Pranali Enterprises, which were used in execution of the contract work. Pragati Civil Solutions P Ltd. is another entity from whom the assessee had purchased certain other construction related items.
30. In course of search related assessment proceedings as well as the connected appellate proceedings the assessee had furnished all documentary evidences to prove the 26 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh purchases. Even, in course of remand proceeding, not only the evidences available on record were reexamined but further evidences to prove the purchases were also furnished. In fact, the selling parties responded to notices issued u/s. 133(6) of the Act appeared before the A.O. The statements of the concerned parties were recorded by the A.O., wherein they confirmed of having sold the goods to the assessee. Even, in course of proceedings before the departmental authorities in the impugned assessment year all such evidences were available. Considering the body of evidences available before him, the First Appellate Authority, while deciding the appeals for A.Ys. 2014-15 to 2020-21, has held the purchases to be genuine. In fact, he has recorded a factual finding that in the remand report, the A.O. had admitted that the concerned parties had attended the office and statements were recorded on oath. The parties had submitted purchase order, invoices, stock record book and other evidences. The first appellate authority has further observed that the A.O. has not stated anything in the assessment order as to how the parties are not identifiable or are non- existent. Thus, considering the clinching evidences available before him, the First Appellate Authority had deleted similar additions made in A.Ys. 2014-15 to 2020-21. Insofar as payment of bogus labour and job work charges are concerned, facts are identical. In the appellate order referred to above, the First Appellate Authority has examined the facts relating to payment of labour and job work charges to the very same parties, viz. Md. Afrozhosen Idrish, Shri Gemsingh Rathod and another party, namely Parshawa Corporation. In respect of payment of labour and job work charges also all evidences were available before the A.O. in course of remand and the A.O. made necessary enquiry. 27
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
31. After examining the evidences, the First Appellate Authority in A.Ys. 2014-15 to 2020-21, had allowed such payment made to Md. Afrozhosen Idrish and Shri Gemsingh Rathod. The evidences considered by the first appellate authority in the appellate proceedings for A.Ys. 2014-15 to 2020-21 are equally germane for deciding the issue in the impugned assessment year. The First Appellate Authority having verified the evidences has allowed assessee's claim of payment to the concerned parties as genuine. More so, after considering that the A.O. had not made any adverse remark regarding such payments in the remand report. The materials available on record clearly reveal that the very same evidences were furnished by the assessee in course of the reassessment proceeding as well as before the First Appellate Authority in the impugned assessment year. Thus, in my view, the facts relating to the issue being identical in the impugned assessment year and the decision of the First Appellate Authority in the other assessment years, being based on evidences which are equally material for deciding the issue in the impugned assessment year, the First Appellate Authority was justified in following the decision of his predecessor while deciding the issue in the impugned assessment year. It is relevant to observe, in case of interest paid to Adarsh Gems, since, it was not decided in the A.Ys. 2014-15 to 2020-21, the First Appellate Authority, after verifying the issue with reference to the evidences available on record has given his independent finding.
32. Considered in the aforesaid perspective, I do not find any justifiable reason for setting aside the issues to first appellate authority for de novo adjudication. There cannot be two opinions on the observations of learned Judicial Member that the theory of res judicata does not apply to income tax proceedings and the rule of consistency ipso facto 28 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh does not permit lower authorities to decide the issues simply relying on earlier orders as the facts of each assessment year has to be considered in light of the evidences furnished by the assessee. However, it is equally true that rule of consistency has to be followed on account of parity of facts. If facts relating to a particular issue permeating through different assessment years are identical, then consistency has to be maintained. This is simply for the reason that an issue already settled should not be disturbed. Otherwise, it will lead to chaos in justice delivery system. This fundamental principle has to be borne in mind while applying the legal principles. The facts on record reveal that in course of assessment proceedings as well as proceedings before the First Appellate Authority, the assessee had furnished voluminous documentary evidences. The First Appellate Authority having found parity in facts and applicability of evidences to the impugned assessment year has decided the issues following the order of his predecessor. Thus, no fault can be found with him.
33. Even, otherwise also, having carefully gone through the order framed by ld. Accountant Member, it is discernible that he has independently decided the issues on merits after appreciating the evidences available on record. Thus, it is not a case where the Accountant Member has simply endorsed the finding of the first appellate authority. The Tribunal, being the last fact-finding authority, it is expected of the Tribunal to decide the appeals before it on merits after verifying all evidences. Therefore, I fully concur with the view expressed by the ld. Accountant Member that sincere and honest effort has to be made to decide the issues on merits, either way, rather than restoring them to the original forum. In my view, this is the right approach to resolve the dispute between the parties. Restoration of issues to the original authority, rather than helping in resolution of disputes leads to 29 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh multiple rounds of litigations, thereby causing harassment and financial loss to the parties, hence, should be avoided at all cost, unless, there are compelling circumstances for restoration of the issues to the original forum.
34. Thus, on overall considerations of the facts and materials on record, I agree with the view expressed by ld. Accountant Member that in the given facts and circumstances of the case, ld. CIT(A) was justified in partly allowing the appeal of the assessee. The question of reference is accordingly decided. The original records may be returned back to the Registry to place before the Division Bench to pass the confirmatory order as per majority view. Reference is decided as above.
Sd/-
Saktijit Dey (Vice President) Mumbai; Dated : 18.07.2025 Roshani, Sr. PS Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. CIT - concerned
4. DR, ITAT, Mumbai
5. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2624/Mum/2023 (Assessment Year: 2013-14) DCIT, Central Circle 5.1 Shah and Parikh 1928 Air India Building, Vs. 2 Vallabh Niwas, Malviya Road, Mumbai-400 021 Mumbai-400 057 PAN/GIR No. AAJFS 4684 D (Assessee) : (Respondent) Assessee by : Shri Jaiprakash Bairagra/ Ms. Rupa Nanda Respondent by : Dr. Kishor Dhule Date of Hearing : 27.03.2024 Date of Pronouncement : .2024 ORDER Per Kavitha Rajagopal, J M:
This appeal has been filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) ('ld.CIT(A) for short), National Faceless Appeal Centre ('NFAC' for short) passed u/s.250 of the Income Tax Act, 1961 ('the Act'), pertaining to the Assessment Year ('A.Y.' for short) 2013-14.
2. The Revenue has challenged the order of the ld. CIT(A) in deleting the addition of Rs.11,61,286/- on account of bogus purchases, addition of Rs.5,33,426/- on account of labour and job work expenses, Rs.1,15,00,000/- towards unsecured loans u/s. 68 of the Act and Rs.57,74,337/- being interest expenses on unsecured loans.
3. The brief facts are that the assessee firm is engaged in the business of construction of roads and bridges and has filed its return of income dated 30.11.2013, declaring total 2 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh income at Rs.3,15,82,890/-. The same was processed u/s. 143(1) of the Act. The assessee's case was selected for scrutiny and assessment order dated 27.03.2023 was passed u/s. 143(3) of the Act where the learned Assessing Officer (ld. A.O. for short) determined the total income of the assessee at Rs.3,15,85,470/-. The assessee's case was then reopened vide notice dated 21.04.2021 u/s. 148 of the Act for the reason that the information from DDIT was received by the ld. A.O. that the assessee was one of the beneficiary of accommodation entries in the form of bogus loans, bogus sub contract, bogus labour charges which was unearthed during the search and seizure action conducted u/s. 132(1) of the Act. The ld. A.O. after duly considering the submission of the assessee passed the assessment order dated 27.03.2023 u/s. 147 of the Act determining the total income at Rs.5,05,53,520/- after making the following additions:
Particulars Amount (in Rs.)
Total income assessed as per order u/s. 143(3) dated 3,15,85,470
29.02.2016
Add: Bogus loan u/s. 68 1,15,00,000
Add: Interest expense on bogus loan u/s. 37(1) 57,74,334
Add: Bogus purchase and bogus labor & job work u/s. 37(1) 16,93,712
Total income 5,05,53,516
Rounded off u/s. 288A 5,05,53,520
4. The assessee was in appeal before the first appellate authority, challenging the reopening of the assessment and the impugned additions made by the ld. A.O.
5. The ld. CIT(A) vide order dated 29.05.2023 had partly allowed the appeal filed by the assessee, by deleting the impugned additions made by the ld. A.O. and by upholding the reopening of the assessment.
6. Aggrieved, the Revenue is in appeal before us, challenging the deletion of the impugned additions made by the ld. A.O. 3 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh
7. The learned Departmental Representative (ld. DR for short) for the Revenue contended that the ld. CIT(A) has erred in deleting the impugned additions merely by following the order of his predecessor for other years without considering the fact that the transaction for each year has to be considered in the light of the evidences pertaining to the alleged bogus purchases, bogus job work and labour charges and interest expenses on bogus loans. The ld. DR further contended that the assessee has failed to discharge the onus casted upon it to prove the identity and the creditworthiness of the parties and the genuineness of the transaction as warranted in the provisions of the Act. The ld. DR relied on the order of the ld. A.O.
8. Per contra, the learned Authorised Representative (ld. AR for short) for the assessee contended that on identical facts, the ld. CIT(A) had passed a consolidated order for A.Ys. 2014-15 to 2020-21, deleting the additions made on account of similar transactions pertaining to this year, which was further upheld by the Tribunal in the appeal filed by the Revenue for A.Y. 2015-16 as the other years were falling under the low tax effect. The ld. AR further contended that in the case of group company M/s. RPS Infra Projects Pvt. Ltd., pertaining to A.Y. 2019-20, on identical facts, was also decided by the co-ordinate bench in favour of the assessee and also in the same assessee for A.Y. 2013-14, the co-ordinate bench has decided the issue in favour of the assessee. The ld.
AR relied on various other decisions where the Tribunal has deleted the impugned additions on identical facts.
9. We have heard the rival submissions and perused the materials available on record. It is observed that the pursuant to a search and seizure action conducted in the 4 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh case of the assessee dated 06.11.2019, relevant to A.Y. 2020-21, the assessment was made for A.Y. 2014-15 to 2020-21 u/s. 143(3) r.w.s. 153A of the Act where the ld. A.O. made disallowance on:
1. Bogus purchases
2. Bogus job work and labour charges
3. Subcontract payments
4. Unexplained cash credit on account of loan and interest paid thereon.
10. The ld. CIT(A) vide a consolidated order dated 08.07.2022 had deleted the impugned addition made by the ld. A.O. which in an appeal filed by the Revenue for A.Y. 2015-16 was dismissed by the Tribunal. The year under consideration was not covered as per the provisions of section 153A of the Act and hence, the ld. A.O. reopened the impugned year u/s. 147 of the Act where the impugned additions were made. During the assessment proceeding, the ld. A.O. observed that as per the information received from DDIT(Investigation)-4(4), Mumbai, ADIT(Investigation Unit-3, Surat), that the assessee has been one of the beneficiaries of unsecured loan availed from M/s. Adeshwar Gems run by Shri Sanjiv C Lodha who is found to be an accommodation entry provider and also from various other entities. The assessee is said to have paid an interest of Rs.6,08,334/- and had also availed bogus loans, bogus sub contract, bogus labor charges and interest paid on bogus loans which aggregates to Rs.6,28,35,917/- from various shell entities. The ld. A.O. issued notice to the alleged parties u/s. 133(6) of the Act who is said to have partly complied to the notice. The ld. A.O. after duly considering the submission of the assessee made an addition of Rs.1,15,00,000/- towards bogus loan received from various parties as 'unexplained income' u/s. 68 of the Act, disallowing the interest expense towards the said loan amounting to Rs.57,74,334/- u/s. 37(1) of the Act and Rs.16,93,712/- towards labour and job expenses claimed by the assessee and made a total 5 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh disallowance of Rs.1,89,68,046/- on the ground that the assessee has failed to substantiate its claim by discharging the onus of proving the identity, creditworthiness of the parties and genuineness of the transaction.
11. The first appellate authority, on the other hand, has merely followed the other years order of the ld. CIT(A) and had deleted the impugned addition without examining the documentary evidence of the assessee, pertaining to the year under consideration. The ld. CIT(A) has only dealt with the interest paid to M/s. Adeshwar Gems which was not before his predecessor and held that the loan pertaining to the said entity was a loan availed in the previous years for which no addition can be made on the loan or the interest paid by the assessee. Apart from this, we do not find any discussion in the order of the ld. CIT(A) with regard to the impugned additions made during the year under consideration.
12. In the above factual matrix of the case, it is pertinent to point out that the assessee in its submission has stated that inspite of all the details pertaining to the said transaction has been filed before the lower authorities, the ld. A.O. has failed to appreciate the said evidences. From the order of the ld. CIT(A), it is evident that the ld. CIT(A) has also failed to appreciate the evidences filed by the assessee and had merely allowed the appeal of the assessee by following his predecessors order. We are of the considered view that in case of bogus transactions, the documents pertaining to the said transactions have to be looked upon by us with regard to that particular year and there can be no precedence where the transactions are separate and distinct to each year. Notably, the ld. A.O. in the assessment order at pg. nos. 4 & 5 have tabulated the parties to whom the assessee has 6 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh transacted along with the details of the documents which were not submitted by the assessee for the purpose of proving the genuineness of the transactions. It is also to be noted that whether the assessee has furnished the said details before the ld. CIT(A), is not evident as the order of the ld. CIT(A) has not dealt with the evidences furnished by the assessee in support of its claim. Neither has the ld. CIT(A) sought for the remand report from the ld. A.O., if in case, the assessee has submitted additional evidences during the first appellate proceeding. The ld. DR during the appellate proceeding had also elaborated on the distinguishing factors of this appeal with that of the other assessment years which has been solely relied upon by the ld. CIT(A).
13. As we are aware that there is no res judicata in income tax proceedings and the Rule of consistency merely ipso facto does not provide the lower authorities to decide issues relying on earlier orders where the facts of this year has not been considered in the light of the evidences produced by the assessee. If rule of consistency should prevail in all cases then there would be no necessity for us to adjudicate any of the matter which is before us and just by merely stating that the appeal is decided as per the earlier order could the case be disposed off, whether the decision is right or wrong. There would be then no application of mind by the adjudicating authority. In clear terms there is no estoppel against law. We would like to place reliance on the decision of the Hon'ble High Court of Rajasthan in the case of Cosmopolitan Education Society v. Commissioner of Income-tax, Jaipur [2007] 162 Taxman 416 (Raj.) which has categorically held that the res judicata does not apply 7 ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 ) DCIT vs. Shah and Parikh to matter pertaining to tax when each assessment year has a distinct cause of action. The relevant extract is cited hereunder for ease of reference:
8. The Assessing Authority for assessment year 1996-97 in question had discussed in details as to why he was disallowing the exemption under section 10(22) of the Act. A cursory look of the said assessment order would show that a sum of Rs. 6,15,115 was even found to be diverted in the shape of construction material to be used in the residential building of Shri B.D. Singh, the trustee of the said Society. Various other disallowances were made by the Assessing Authority and it was found that they are not expenditure incurred for the purposes of school or the educational institution. The said findings of the Assessing Authority were set aside by the short and cryptic order of the CIT (Appeals) directing the Assessing Authority to exempt the income of the assessee under section 10(22) of the Act. That was not found to be justified by the learned ITAT and, therefore, the Tribunal has remanded the case back to the CIT (Appeals) for re-
deciding the issue and give appropriate findings of fact. Without comparing the facts of assessment year 1996-97 with the facts of the previous assessment year 1995-96 the learned CIT (Appeals) could not have mechanically observed that the facts were identical to those obtaining in the previous assessment year. Since the mis-utilisation of funds is a question of fact which may be different in different assessment years this exercise of enquiry for giving findings of facts was necessary at the end of the CIT (Appeals) before bluntly setting aside the findings of the Assessing Authority. Having not done so, we find that the learned Tribunal was only justified in remanding the case back to the learned CIT (Appeals) for fresh enquiry.
14. From the above observation, we are of the considered view that all these issues raised on the additions made by the ld. A.O. and deleted by the ld. CIT(A) requires to be readjudicated de nova by the ld. CIT(A) by a speaking order, after duly considering the submission of the assessee and on perusal of the documentary evidences produced by the assessee. For this purpose, we remand all these issues back to the file of the ld. CIT(A) who is directed to decide the issue on the merits of the case and in accordance with the provisions of the law.
15. In the result, the appeal filed by the Revenue is allowed for statistical purpose.
Order pronounced in the open court on ..............
(Prashant Maharishi) (Kavitha Rajagopal)
Accountant Member Judicial Member
Mumbai; Dated :
8
ITA No. 2 6 2 4 /Mu m/2 0 2 3 ( A.Y. 2 0 1 3 - 1 4 )
DCIT vs. Shah and Parikh
Roshani, Sr. PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. CIT - concerned
4. DR, ITAT, Mumbai
5. Guard File
BY ORDER,
(Dy./Asstt. Registrar)
ITAT, Mumbai