BLUE MOON HOUSING 7 DEVELOPMENT PVT LTD,MUMBAI V. INCOME TAX OFFICER, MUMBAI

MA 139/MUM/2025

AI Insights

The case involves Blue Moon Housing & Development Pvt. Ltd., which filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, against an order that upheld the additions made by the Assessing Officer regarding certain financial transactions. These transactions were linked to Mr. Vipul Vidur Bhatt, identified as an entry provider through bogus entities. The Tribunal's earlier decision had dismissed the assessee's objections and sustained the additions, leading to the filing of the Miscellaneous Application. The Tribunal reviewed the contentions raised in the application and found them to be reiterations of arguments already considered, leading to the dismissal of the application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783351 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 29-05-2025
• Other Referred Cases: CIT vs Reliance Telecom Ltd., PCIT Vs. Merrygold Gems (P.) Ltd., Arjun Manoj Purohit Vs. ITO, ITO Vs. M/s Celebrity Lifespace Pvt. Ltd., Konark Fixtures Ltd Vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA MAHAJAN
• Assessee Lawyers: JAY BHANSALI
• Keywords: Reassessment proceedings; Retraction; Search and seizure; Accommodation entries; Bogus
• Section: 147; 148; 68; 69; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER MA No.139/MUM/2025 (Arising out of ITA No.4849/MUM/2024) (Assessment Year : 2013–14) Blue Moon Housing & Development Pvt. Ltd. Building No.44/220, Gandhi Nagar, Bandra East Mumbai - 400056 PAN : AABCB7943F ……………. Applicant (Original Respondent) v/s Income Tax Officer, Ward – 12(1)(1), Room No. 129, 1st Floor, Aaykar Bhawan, Mumbai - 400020 …………….Respondent (Original Appellant) Assessee by : Mr. Jay Bhansali Revenue by : Shri Virabhadra Mahajan, Sr. DR Date of Hearing – 08/08/2025 Date of Order – 04/11/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present Miscellaneous Application under section 254(2) of the Income Tax Act, 1961 (“the Act”), seeking rectification/recall of the order dated 21/03/2025 passed by the coordinate bench of the Tribunal in Revenue’s appeal being ITA No. 4849/Mum./2024, for the assessment year 2013-14. Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 2 2. Before dealing with the contentions of the assessee in the present Miscellaneous Application, it is pertinent to note the provisions of section 254(2) of the Act, which provides that the appellate tribunal may, with a view to rectify any “mistake apparent from the record”, amend the order passed under section 254(1) of the Act. The term “mistake apparent from the record” has been the subject matter of interpretation before various courts, including the Hon’ble Supreme Court. We find that the Hon’ble Supreme Court in CIT vs Reliance Telecom Ltd., reported in [2022] 440 ITR 1 (SC), observed as follows: - “In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record.” (emphasis supplied) 3. The Hon’ble Supreme Court further held that if the assessee was of the opinion that the order passed by the Tribunal was erroneous, either on facts or in law, in that case, the only remedy available to the assessee was to prefer the appeal before the High Court. 4. The brief facts of the case are that on the basis of the information received from the DDIT (Investigation), Unit-7(4), Mumbai, pertaining to the search and seizure action carried out in the case of Mr. Vipul Vidur Bhatt and his other related entities, during which it was found that Mr. Vipul Vidur Bhatt is an entry provider to various beneficiaries through 347 bogus entities and the assessee is one of the beneficiaries, notice under section 148 of the Act was issued and reassessment proceedings were initiated in the case of Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 3 assessee. During the reassessment proceedings, the assessee was asked to prove the identity and creditworthiness of the loan lender and genuineness of the transaction in respect of unsecured loan received by the assessee from P. Saji Textiles Ltd. Further, the assessee was also asked to justify the payment made to Jagvi Developers. After not being satisfied with the explanation of the assessee regarding the aforesaid transactions, the AO not only made the addition under section 68 of the Act in respect of the loan received by the assessee but also disallowed the amount paid by the assessee to the lender under section 69 of the Act. In further appeal, the learned CIT(A) allowed the appeal of the assessee on merits and deleted the addition made under section 68 as well as under section 69 of the Act. However, the learned CIT(A) upheld the initiation of reassessment proceedings under section 147 of the Act. Being aggrieved, the Revenue filed the appeal against the relief granted to the assessee on merits. On the other hand, the assessee filed a cross objection raising the grounds challenging the initiation of reassessment proceedings under section 147 of the Act. 5. Vide order dated 21/03/2025, the coordinate bench of the Tribunal, after considering the submissions of both sides, dismissed the cross objection filed by the assessee and upheld the initiation of reassessment proceedings under section 147 of the Act. Furthermore, the coordinate bench quashed the order passed by the learned CIT(A) on merits and sustained the additions made by the AO in the hands of the assessee. Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 4 6. In the present Miscellaneous Application, the assessee raises the following contentions and submits that the same constitute a mistake apparent on record which needs rectification: – “12. In light of the facts, we are filing the Miscellaneous Application submitting as under: a. In so far as advance given to Jagvi Developers is concerned, the Hon'ble Tribunal held that the applicant did not have the requisite creditworthiness to advance the amount of Rs. 34 Lakhs. With utmost respect, the Hon'ble Tribunal failed to appreciate that the assessee had advanced the aforesaid sum out of monies received from Parasrampuria Plantations Limited and Gokuldhma & Yashodham Dev. Pvt. Ltd. The assessee had therefore proved the source of such advance. The Hon'ble Tribunal, with utmost respect failed to appreciate that the applicant is not required to prove source of source and that it is nobody's case that the applicant's own cash was routed through these entities and advanced to Jagvi Developers. Accordingly, it is submitted that the addition under section 69 in respect of advance given to Jagvi Developers has rightly been deleted by the CIT(A). b. In so far as loan received and repaid to P. Saji is concerned: The Hon'ble Tribunal, with utmost respect, failed to appreciate that the Applicant has taken a loan from P. Saji Textiles Ltd (including 25,00,000/- received from Dolex Commercial Pvt Ltd on behalf of P. Saji Textiles Ltd). The sum of Rs. 25,00,000/- received from Dolex Commercial Pvt Ltd is on behalf of P. Saji Textiles Ltd based on their internal arrangement. The entire loan of Rs. 85,00,000/- to P. Saji Textiles Ltd (including the sum of Rs. 25,00,000/- received from Dolex Commercial Pvt Ltd) was repaid in the same year. The applicant has proved the nature and source of such transaction in respect of the necessary parameters being identity of the lender, creditworthiness of the lender and genuineness of the transaction. c. The Hon'ble Tribunal erred in making the addition solely on the basis P. Saji merely because it had a huge turnover and correspondingly had tangible assets of only Rs. 1,15,000/- and no rental expenditure. The applicant submits that the assessee is not privy to the business model and that it cannot be expected to have such knowledge of another party. Once the applicant has discharged its onus with respect to identity, creditworthiness and genuineness, without disputing the same, there is no reason to doubt the nature and source of the transaction. These allegations were never part of the AO's order and that the Hon'ble Tribunal has gone beyond the AO's order without putting the applicant to notice in respect of such allegations. The AO has also issued notice under section 133(6) to P. Saji Textiles Ltd. Who in turn has confirmed the transaction. There is no material to show that the turnover earned by the company is bogus and in absence of anything contrary the same should be accepted as genuine. The Hon'ble Tribunal, with utmost respect, failed to appreciate that addition cannot be made on doubts but on conclusive evidence. d. The Hon'ble Tribunal failed to appreciate that the entire loan of Rs. 85,00,000/- taken from P. Saji Textiles Ltd (including the sum of Rs. 25,00,000/- received from Dolex Commercial Pvt Ltd) was repaid in the same Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 5 year. The Hon'ble Gujarat High Court in the case of PCIT Vs, Merrygold Gems (P.) Ltd. (164 taxmann.com 764) held that where amount of loan received by assessee was returned within same financial year, appellate authorities had rightly deleted addition made under section 68 in respect of such loan. e. The Hon'ble Tribunal with utmost respect failed to appreciate that none of entities i.e. P. Saji Textiles Ltd, Dolex Commercial Pvt Ltd or Jagvi Developers Pvt. Ltd are controlled or managed by Vipul Bhatt at the time the transaction was undertaken. Further, the Mr. Vipul Bhatt has retracted his statement. The Hon'ble Tribunal, with utmost respect failed to appreciate that there is no evidence to show that Vipul Bhatt controlled /operated the said entities and in the absence of any contrary evidence it cannot be assumed that he controlled such entities. Accordingly, the entire basis of the addition as also the reopening is unfounded. f. The Hon'ble Tribunal held that Mr. Deepak Raval whose name was mentioned in the key management personnel was also the dummy director of Vipul Bhatt. The Hon'ble Tribunal, with utmost respect, failed to appreciate that there is no evidence of the said allegation. This fact has been considered in the decision of Arjun Manoj Purohit Vs. ITO (ITA 3655/Mum/2023) (Mum. Tri) which in similar facts has deleted the addition. g. The Hon'ble Tribunal failed to appreciate that Vipul Bhatt has subsequently retracted his statement accordingly, no addition can be sustained on such statement. The Co-ordinates benches of this Hon'ble Tribunal in the case of Arjun Manoj Purohit Vs. ITO (ITA No 3655/Mum/2023) (Mum. Tri), ITO Vs. M/s Celebrity Lifespace Pvt. Ltd. (ITA 6301/Mum/2017) (Mum. Trib) and Konark Fixtures Ltd Vs. DCIT (ITA 2028/Mum/2024) (Mum. Tri) have taken cognisance of such retraction and deleted similar additions. The Hon'ble Tribunal, with utmost respect, erred in not taking cognizance of the aforesaid retraction by Vipul Bhatt as taken by Coordinate benches in similar facts. h. The Hon'ble Tribunal, with utmost respect, failed to appreciate that the Co- ordinate benches of this Hon'ble Tribunal in the case of ITO Vs. M/s Celebrity Lifespace Pvt. Ltd. (ITA 6301/Mum/2017) (Mum.) and Konark Fixtures Ltd Vs. DCIT (ITA 2028/Mum/2024) (Mum.) have deleted the addition in similar facts in respect of loan from P. Saji Textiles Ltd. which was made on the basis of statement of Vipul Vidhur Bhatt. Non-consideration of the said decision of the Co-ordinate bench would constitute a mistake apparent on record. i. The Hon'ble Tribunal, with utmost respect, failed to appreciate that the purported investigation report forming the basis of addition was never brought on record either by the AO or the Departmental Representative for rebuttal. At the time of hearing, the Departmental Representative was requested to bring on record the investigation report, if any, and provide a copy of the same to the assessee for rebuttal. However, no such investigation report was brought on record by the Departmental Representative. Accordingly, the department has no material to show that the aforesaid transactions are accommodation entries. The Hon'ble Tribunal, with utmost respect has therefore erred in observing that there was other material to justify the reopening / addition is incorrect. Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 6 j. The Hon'ble Tribunal, with utmost respect, failed to appreciate that the Assessing Officer has already made an addition under section 68 of the Act of Rs 85,00,000/- being loan money received from P. Saji Textiles Ltd and Dolex Commercial Pvt Ltd and accordingly making an addition of Rs. 85,00,000/- again under section 69 of the Act being repayment of loan to P. Saji Textiles Ltd will lead to double taxation. k. Assuming without admitting, the role of & transaction with Dolex Commercial Pvt Ltd is unexplained, the addition ought to be restricted to Rs. 25,00,000/- paid by Dolex Commercial Pvt Ltd on behalf of P. Saji Textiles Ltd and not entire amount of Rs. 85,00,000/-. l. The aforesaid constitute a mistake apparent on record and ought to be rectified.” 7. During the hearing, the learned Departmental Representative (“learned DR”) vehemently objected to the present Miscellaneous Application and prayed for its dismissal. 8. Having considered the submissions of both sides and perusal of the contentions of the assessee in the present Miscellaneous Application, we, at the outset, are of the considered view that the assessee nowhere points out any mistake apparent from the record in the order dated 21/03/2025 passed by the coordinate bench. The factual contentions of the assessee, as noted in paragraphs (a), (b), (c), and (e), have already been dealt with by the coordinate bench in detail in paragraph 16 of its order and found the explanation of the assessee to be not satisfactory as the assessee failed to prove the creditworthiness of the loan lender and genuineness of the transaction qua the loan received from P .Saji Textiles Ltd. Further, the coordinate bench also noted that the assessee has not provided any evidence to show the financial capacity of Dolex Commercial Private Limited, from whom the assessee received a sum of INR 25 lakh. Furthermore, regarding the payment of INR 34,00,000 to Jagvi Developers Ltd, the coordinate bench Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 7 recorded detailed findings in paragraph 20 of its order and sustained the addition made by the AO. Insofar as the contentions of the assessee in paragraph (e), (f) and (g), we find that the coordinate bench recorded the finding in paragraph-16 of its order that the mere fact that Mr. Vipul Vidur Bhatt became director of P . Saji Textiles Ltd only with effect from 28/02/2013 does not in any way lead to the conclusion that prior to the said date he was not having any control over the affairs of the said company. In this regard, it is also pertinent to note that the statement of Mr Vipul Vidur Bhatt was not the sole basis for making the impugned addition, as the AO was also not satisfied with the explanation of the assessee regarding the creditworthiness of the loan lender and genuineness of the transaction. Thus, mere retraction of the statement recorded during the search does not prove the contrary, as the financials of P . Saji Textiles Ltd do not support the contention of the assessee. 9. As regards the contention of the assessee in paragraphs (f), (g), and (h) of the present Miscellaneous Application, we find that the coordinate bench duly took into consideration the reliance placed by the learned AR on these decisions and observed as follows: – “18. ……………..As regards the various decisions relied upon by the learned AR in support of its claim that the amount received as a loan from entities controlled by Mr. Vipul Vidur Bhat have been found to be genuine, we find from the perusal of these decisions that same have been rendered in their own facts and each case needs to be examined qua the facts involved. Accordingly, we are of the considered view that all the decisions relied upon by the learned AR do not apply to the facts of the present case, as, in the present case, the assessee has failed to prove the creditworthiness of the loan lender and genuineness of the transaction.” Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 8 10. As regards the contention of the assessee in paragraph (i) of the present Miscellaneous Application, from the perusal of the record, we do not find any direction to the learned DR/Revenue to bring on record the investigation report. Furthermore, we also do not find any application by the assessee to the AO seeking a copy of the investigation report. 11. We find that the contentions of the assessee in paragraph (j) of the present Miscellaneous Application have been dealt with in detail in paragraph 19 of the order by the coordinate bench of the Tribunal. 12. Therefore, we do not find any merit in the various contentions of the assessee, as no material has been pointed out to prove that there is a mistake apparent from the record in the order passed by the coordinate bench on 21/03/2025. We are of the considered view that by way of various contentions raised in the present Miscellaneous Application, the assessee is merely seeking the review of the order passed under section 254(1) of the Act, which is completely impermissible. 13. As regards the decision of the Hon’ble Gujarat High Court in PCIT v/s Merrygold Gems Private Limited, reported in [2024] 164 Taxmann.com 764, we find from the record that the said decision was not relied upon by the assessee during the hearing of the main appeal. Further, there is also no reference to the same in the written submission dated 14/02/2025 filed by the assessee. Be that as it may, from the perusal of the aforesaid decision, we find that after considering the facts and circumstances of the case, the Hon’ble Court was also satisfied with the identity and creditworthiness of the Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 9 loan lender and genuineness of the transaction. However, in the present case, in light of the detailed findings of the coordinate bench vide its order dated 21/03/2025, we find that the requirements of section 68 and section 69 of the Act were not fulfilled by the assessee, and the creditworthiness of the lender and genuineness of the transaction were not proved in the present case. Accordingly, we are of the considered view that the said decision is factually distinguishable, and thus, it is not applicable to the present case. 14. The submissions of the assessee in paragraph (k) of the present Miscellaneous Application are a without prejudice submission of the assessee and therefore do not require any separate adjudication. 15. As noted in the foregoing paragraphs, the assessee in the present Miscellaneous Application before us has raised contentions, which have already been dealt with in detail by the coordinate bench vide its order dated 21/03/2025 passed in Revenue’s appeal. Thus, having considered various submissions of the assessee in the present Miscellaneous Application, it is sufficiently evident that in the guise of seeking rectification of the order, the assessee has sought a review of the order passed by the coordinate bench on 21/03/2025 in Revenue’s appeal being ITA no.4849/Mum./2024, which is completely impermissible under section 254(2) of the Act. Accordingly, in view of the facts and circumstances of the present case, legal position and judicial pronouncements as noted above, the present Miscellaneous Application filed by the assessee is dismissed. Printed from counselvise.com MA No.139/MUM/2025 (A.Y. 2013-14) 10 16. In the result, the present Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open Court on 04/11/2025 Sd/- OM PRAKASH KANT ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 04/11/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. Copy By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "