ACIT, CIRCLE 10(1), NEW DELHI V. JINDAL POLY FILMS LTD, BULANDSHAHR

ITA 1611/DEL/2023

AI Insights

The case involves the Assistant Commissioner of Income Tax, Circle 10(1) as the appellant and Jindal Poly Films Limited as the respondent. The dispute centered on the reopening of the assessment for the assessment year 2012-13 and the subsequent addition of Rs. 8,92,33,191 under section 68 of the Income Tax Act, 1961, which was considered as unexplained credit. The Assessing Officer reopened the assessment based on suspicious transactions observed in the bank account of M/s. Karthik Enterprises, which allegedly involved the transfer of unexplained cash to the account of Jindal Poly Films Limited. The CIT(A) found the transactions to be genuine, a decision which the Revenue challenged in the Tribunal. The Tribunal dismissed the Revenue's appeal, supporting the CIT(A)'s decision.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839849 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 25-05-2023
• Other Referred Cases: CIT vs. Fancy International, 166 taxmann.com 183 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: S ROHIT JAIN; SHIVAM GUPTA
• Keywords: Unexplained cash credit; Reopening of assessment; Bogus
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अधिकरण धिल्ली पीठ “सी”, धिल्ली श्री धिकास अिस्थी, न्याधयक सिस्य एिं श्री ब्रजेश क ुमार स िंह, लेखाकार सिस्य क े समक्ष IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER आअसं.1611/धिल्ली/2023(नि.व. 2012-13) ITA No.1611/DEL/2023 (A.Y.2012-13) Assistant Commissioner of Income Tax, Circle 10(1), R. No. 389A, 3rd Floor, CR Building, IP Estate, Delhi 110001 ...... अपीलार्थी/Appellant बिाम Vs. Jindal Poly Films Limited, 19th K.M. Hapur, Bulandshahar Road, P.O. Gulaothi, Bulandshahar, Uttar Pradesh 203408 PAN:AAACJ-7650-E .....प्रनिवादी/Respondent सी.ओ.सं. 70/धिल्ली/2023(नि.व. 2012-13) CO No.70/DEL/2023 (A.Y.2012-13) Jindal Poly Films Limited, 19th K.M. Hapur, Bulandshahar Road, P.O. Gulaothi, Bulandshahar, Uttar Pradesh 203408 PAN:AAACJ-7650-E ..... क्रॉस आपत्तिकिाा/Cross Objector बिाम Vs. Assistant Commissioner of Income Tax, Circle 10(1), R. No. 389A, 3rd Floor, CR Building, IP Estate, Delhi 110001 .....प्रनिवादी/Respondent अपीलार्थी द्वारा/ Appellant by: Shri Manoj Kumar, Sr. DR प्रधििािीद्वारा/Respondent by: S/Shri Rohit Jain, Advocate & Shivam Gupta, Chartered Accountant सुिवाई की निथर्थ/ Date of hearing : 25/02/2026 घोषणा की निथर्थ/ Date of pronouncement : 25/02/2026 Printed from counselvise.com 2 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) आदेश/ORDER PER VIKAS AWASTHY, JM: The appeal has been filed the Revenue assailing the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 06.04.2023, for AY 2012-13. The assessee has filed cross objections in the appeal filed by the Revenue raising legal grounds, challenging validity of reopening of assessment. 2. Facts of the case in brief as emanating from records are: The assessee/respondent is engaged in the business of manufacturing Polyester chips, Biaxially Oriented Polyester Film, Biaxially Oriented Poly Propylene Film, Metalized Film and PVDC Films. The assessee filed its return of income for AY 2012-13 on 30.11.2012 decaling total income of Rs.168,20,73,060/-. The return of income was subject to scrutiny assessment proceedings u/s.143(3) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), the Assessing Officer vide order dated 27.03.2014 assessed total income of the assessee at Rs.178,91,27,803/-. Thereafter, assessment for AY 2012-13 was reopened at the fag end of limitation of six years vide notice dated 30.03.2019 issued u/s.148 of the Act. The assessment was reopened in the case of assessee consequent to information received by the AO regarding transactions in the bank account of M/s. Karthik Enterprises proprietor Shri Rajiv Kumar. During analyses of the bank statement of M/s. Karthik Enterprises it was found that cash deposits in the bank account of M/s. Karthik Enterprises were transferred to the bank account of assessee shortly after deposit of cash. The AO in the reasons for reopening recorded that the transactions in the Printed from counselvise.com 3 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) bank statement of M/s. Karthik Enterprises shows cash deposits and thereafter transfer of said amount to bank account of the assessee. Therefore, verification and genuineness of the transactions is required. The AO thereafter completed the assessment u/s.147 r.w.s 143(3) of the Act vide order dated 21.12.2019 making addition of Rs.8,92,33191/- u/s. 68 of the Act holding the amounts received by the assessee from M/s. Karthik Enterprises as unexplained credit. 2.1. Aggrieved by the said assessment order, the assessee carried the issue in appeal before the CIT(A). The assessee in appeal before the First Appellate Authority assailed addition on merits, as well as, raised legal issue challenging validity of reopening. The assessee furnished various documents before the CIT(A) in order to prove genuineness of the transactions. The CIT(A) after examining the same deleted the addition on merits. However, legal issue raised by the assessee, the CIT(A) dismissed the grounds raised by the assessee. Thus, the Revenue and the assessee are before the Tribunal in appeal and CO, respectively assailing findings of the CIT(A). 3. Per contra, Shri Manoj Kumar representing the department vehemently supporting the assessment order submitted, that the AO in a well-reasoned order has been able to co-relate the cash deposits in the bank account of M/s. Karthik Enterprises and immediately transfer of said amount to the bank account of the assessee. The assessee was unable to explain the transaction of transfer of cash deposits in bank account of M/s. Karthik Enterprises and thereafter transfer of said amount by way banking channel to the account of assessee immediately. The AO has established back-to-back transaction of cash deposits in the bank of account of M/s. Karthik Enterprises and simultaneously transfer of that amount to the account Printed from counselvise.com 4 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) of assessee. He submitted that the CIT(A) has erred in not appreciating the modus operandi of transferring unexplained cash deposit in the bank account of M/s. Karthik Enterprises to the bank account of assessee. M/s. Karthik Enterprises was merely conduit for transferring unexplained cash in the account of assessee. He thus, prayed for reversing findings of the CIT(A) on merits of addition and upholding the addition made by the AO. 4. Shri Rohit Jain, appearing on behalf of the assessee/respondent strongly supported the impugned order and prayed for dismissing appeal of the Revenue. The ld. Counsel for the assessee pointed that the assessee had furnished various documents to show the transaction of sale of BOPP Films by the assessee to M/s. Karthik Enterprises during FY 2011-12. He referred to the tabular chart at pages 9 to 27 of the CIT(A) order which gives details of invoice no., quantity, sale amount, excise duty and CST paid on the transaction and the total value of invoice. He further submitted that apart from above details of the invoices the assessee had also furnished copy of sales invoices, copy of lorry receipts to substantiate delivery of products, copy of Form C received by the assessee and bank statement in support of consideration received through normal banking channel for sale of BOPP films. 4.1. The ld. Counsel submits that one of the allegations of the Assessing Officer for holding the transaction as bogus is that the notice/summon issued by the Investigation Wing could not be served on M/s. Karthik Enterprises and no return of income was filed by the said entity for AY 2012-13. He asserted that merely for the reason that notice/summons could not be served on M/s. Karthik Enterprises by the Revenue cannot be the basis to draw any adverse inference against the Printed from counselvise.com 5 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) assessee and that to after more than six to seven years from the date of transaction. Further, no details of the notices sent i.e. date, mode, etc. were brought on record by the Assessing Officer. Non furnishing of reply by the third party cannot be the sole reason for doubting veracity of transactions undertaken by the assessee. To support his argument, the ld. Counsel placed reliance on the decision rendered in the case of CIT vs. Fancy International, 166 taxmann.com 183 (Delhi). The ld. Counsel further submitted that in any case ex-parte enquiries conducting by the AO would not bind the assessee as neither the assessee was part of the enquiry proceedings nor the assessee was confronted with the material, report of the inspector. 5. Both sides heard, orders of the authorities below examined. The addition has been made by the AO in the hands of assessee in respect of amount credited in the bank account of assessee by M/s. Karthik Enterprises. It is alleged that before transmitting the amount to the account of assessee, M/s. Karthik Enterprises had deposited huge cash and immediately, thereafter, the said amount was transferred to assessee through banking channel. The contention of the assessee is that the amounts received from M/s. Karthik Enterprises was in the normal course of business against supply of BOPP Films. Thus, it was purely a business transaction. In order to prove genuineness of the transaction the assessee has furnished various documents including copy of sale invoices, a detailed tabular chart giving details of invoice viz. quantity, sales amount, Excise duty, CST and the value of each invoice during the FY 2011-12 relevant to AY 2012-13. Further, the assessee in order to prove movement of goods has furnished copy of lorry receipts and copy of Form C. The CIT(A) after examining the documents furnished by the assessee came to the conclusion that the transactions between M/s. Karthik Enterprises and the assessee Printed from counselvise.com 6 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) are genuine. The relevant excerpts from findings of the CIT(A) are reproduced herein below: “6.3 On Genuineness of transactions: The AO did not make any contention that the impugned transactions of sales to M/s Karthik Enterprises are not genuine for the following reasons: The Assessee's closing stock is excessive to the extent of the cost of sale of the impugned transactions with M/s Karthik Enterprises; The Assessee gross profit has gone up significantly in comparison to the gross profit of the immediate previous year or the later previous year; In the absence of any other evidence to the contrary, the appellant having filed all the requisite details in support of the transaction of sale in the normal course of business, the existence of the counter party being doubtful cannot be the sole reason for treating the same as non-genuine transaction of sale. The transaction at the counter party's end by way of cash deposits into the bank account and immediate transfer in favour of appellant cannot discredit the transaction of sale, for the appellant cannot be faulted for the absence of the counter party after a time frame and cannot vicariously be held responsible for the cash deposits in the bank account of the third party in the absence of any clinching evidence thereof. Therefore, the addition made treating the same as unexplained cash credit is not warranted for the said credit already forms part of the revenue of the appellant for the impugned assessment year. Therefore, the grounds related to the addition is allowed merits.” 5.1. The Revenue has not been able to controvert findings of the CIT(A) or has been able to substantiate from the documents furnished by the assessee before the CIT(A) that the transaction carried by the assessee with M/s. Karthik Enterprises were in any manner bogus. We concur with findings of the CIT(A) in deleting the addition on merits. 6. In the result, appeal of the Revenue is dismissed. Printed from counselvise.com 7 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) CO No. 70/Del/2023 7. The ld. Counsel for the assessee submitted that the assessee in CO has raised legal ground challenging findings of the CIT(A) in upholding validity of reopening of assessment. The ld. Counsel submits that if appeal of the Revenue is dismissed, the assessee would not press the legal issue at this stage. Nevertheless, liberty may be granted to the asseseee to raise this legal issue as and when the situation arises. 8. Since, appeal of the Revenue has been dismissed, in light of statement made by the ld. Counsel for the assessee, CO has become infructuous at this stage. Liberty as prayed is allowed. In the result, CO is dismissed as infructuous. Order pronounced in the open court on Wednesday the 25th day of February, 2026. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIKAS AWASTHY) लेखाकार सदस्य/ACCOUNTANT MEMBER न्यानयक सदस्य/JUDICIAL MEMBER धिल्ली / Delhi, ददिांक/Dated 27/02/2026 NV/- Printed from counselvise.com 8 ITA No. 1611/Del/2023 CO No.70/DEL/2023 (A.Y.2012-13) प्रतिलिपि अग्रेपििCopy of the Order forwarded to : 1. अपीलार्थी/The Appellant , 2. प्रनिवादी/ The Respondent. 3. The PCIT 4. त्तवभागीय प्रनिनिथि, आय.अपी.अथि., सिल्ली /DR, ITAT, धिल्ली 5. गार्ा फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, DELHI Printed from counselvise.com "