ARDH METALS AND ALLOYS PRIVATE LIMITED,MUMBAI V. ASSESSING OFFICER, CIRCLE 5(1)(1), MUMBAI

ITA 5868/MUM/2024

AI Insights

Ardh Metals and Alloys Private Limited appealed against the orders of the Commissioner of Income Tax (Appeals), which confirmed the additions made under section 68 of the Income Tax Act, 1961, regarding unexplained cash credits from share application money. The appeals were consolidated due to identical facts for the assessment years 2008-09 and 2012-13. The primary contention was the failure of the CIT(A) to consider the assessee's submissions adequately, as the notices were sent to a non-functional email, and no physical notices were sent. The Tribunal noted the assessee's non-compliance in previous proceedings but decided to remand the case for a fresh evaluation on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41192 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.R. SUBHASH
• Assessee Lawyers: A N A N D K A N S E
• Keywords: Unexplained cash credit; Principle of natural justice; Search and seizure; Accommodation entries; Bogus
• Section: 148; 143(3); 142(1); 143(2); 143(1); 139(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI. OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA Nos. 5853 & 5868/Mum/2024 (Assessment Year: 2008-09 & 2012-13) Ardh Metals and Alloys Private Limited 205, Dhiraj Bhavan, 175/177, Kika Street, Gulalwadi – 400004. Vs. Assessing Officer, Circle 5(1)(1) Aayakar Bhavan, Mumbai – 400020. PAN/GIR No. AABCA3902F (Assessee) : (Respondent) Assessee by : Shri. Anand Kanse Respondent by : Shri. K. R. Subhash Date of Hearing : 03.03.2025 Date of Pronouncement : 03.03.2025 O R D E R Per Bench: These captioned appeals have been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘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) 2008-09 and 2012-13. 2. As the facts are identical in both the appeals, we hereby pass a consolidated order by taking ITA No. 5853/Mum/2024 as a lead case. ITA No. 5853/Mum/2024; (A.Y. 2008-09) 3. The assessee has raised the following grounds of appeal: ITA No. 5853 & 5868/Mum/2024 (A.Y. 2008-09 & 2012-13) Ardh Metals and Alloys Private Limited 2 “(1) On the facts in law, the learned CIT(A) erred in dismissing the appeal by presuming that the appellant was not interested in pursuing the appeal as no replies or documentary evidences were filed in response to various notices sent on email id mentioned in Form 35, which was not functional, and without taking any effort to send notices on alternate email id available on the income tax portal or send physical notices by Post/Courier on the postal address. (2) On the facts and in law, the learned CIT(A) erred in confirming the addition of share application money of Rs. 3,84,00,000/- made u/s 68 of the Income Tax Act, 1961 on the basis of information received from the investigation wing in the case of Praveen Jain group without appreciating the fact that the identity, genuineness and creditworthiness of the alleged companies were proved by furnishing necessary documentary evidences which were neither rejected nor any defects were found by the learned AO. (3) On the facts and in law, the learned CIT(A) erred in confirming the addition of share application money of Rs. 3,84,00,000/- made u/s 68 of the Income Tax Act, 1961 on the basis of recorded statement of Shri Praveen Jain at the time of search and seizure operations by Investigation wing at their premises without considering the fact that the said recorded statement was retracted by him by filing an affidavit before the DDI which was also filed before the learned AO and also no opportunity was given by the learned AO to cross examine Shri Praveen Jain.” 4. The brief facts are that the assessee is a closely held private limited company engaged in the business of manufacturing and dealing in ferrous and non-ferrous metals. The assessee had e-filed its return of income u/s. 139(1) of the Act, dated 26.08.2008, declaring total income at Rs. 27,75,122/- and the same was processed u/s. 143(1) of the Act. The assessee’s case was reopened based on the information received from Income Tax Department, vide notice u/s. 148, dated 13.02.2015, pursuant to the search and seizure action carried out in the case of Shri. Pravin Kumar Jain Group, dated 01.10.2013, who was alleged to be an accommodation entry provider in which the assessee was said to be one of the beneficiaries of the bogus accommodation entries amounting to Rs. 3,84,00,000/-, by way of share application money, where during the year under consideration, the assessee company has allotted 1,60,000 equity shares of Rs. 10 each at a premium of Rs. 230 per share to eight alleged party for a total ITA No. 5853 & 5868/Mum/2024 (A.Y. 2008-09 & 2012-13) Ardh Metals and Alloys Private Limited 3 consideration of Rs. 3,84,00,000/-, where the payments for the said purchase of shares were made from the current accounts of the company. In response to the same, the assessee company filed a letter dated 02.03.2015 stating that the return filed on 26.08.2008 is to be considered as returns in response to notice u/s. 148 of the Act. Further, notices u/s. 143(2) and 142(1) were duly issued and served upon the assessee. The learned Assessing Officer (ld. A.O. for short) then passed the assessment order dated 23.03.2016, u/s. 143(3) r.w.s. 147 of the Act, thereby determining total income at Rs. 4,11,75,122/-, after making an addition of Rs. 3,84,00,000/- u/s. 68 of the Act as unexplained cash credit. 5. Aggrieved the assessee was in appeal before the first appellate authority, who vide an ex-parte order dated 20.09.2024, upheld the addition made by the ld. AO on the ground that the assessee has failed to substantiate its contentions. 6. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the additions made by the ld. A.O. before the first appellate authority but has been non-compliant throughout the appellate proceeding. 8. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present its case before the ld. CIT(A). ITA No. 5853 & 5868/Mum/2024 (A.Y. 2008-09 & 2012-13) Ardh Metals and Alloys Private Limited 4 9. The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunities by the ld. CIT(A) which was not availed by the assessee. 10. On the above facts of the case, we are of the considered view that the assessee may be given one more opportunity to present its case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation, where the ld. CIT(A) has also failed to decide the issue on the merits. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to comply with the proceedings without any undue delay on its side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law. 11. In the result, the appeal filed by the assessee is allowed for statistical purpose. ITA No. 5868/Mum/2024; (A.Y. 2012-13) 12. The findings recorded in ITA No. 5853/Mum/2024 for A.Y. 2008-09 shall apply mutatis mutandis to this appeal also. 13. In the result, both the appeals filed by the assessee are allowed for statistical purpose. Order pronounced in the open court on 03.03.2025 Sd/- Sd/- (OM PRAKASH KANT) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 03.03.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to: ITA No. 5853 & 5868/Mum/2024 (A.Y. 2008-09 & 2012-13) Ardh Metals and Alloys Private Limited 5 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "