Ganesh Plantations Ltd., Ahmedabad V. The DCIT, Central Circle-1(3), Ahmedabad

CO 33/AHD/2020

AI Insights

The case involves an appeal by the Department against the order of the Ld. CIT(Appeals), which had granted relief to the assessee, Ganesh Plantations Ltd., by deleting an addition of Rs. 4,73,30,000 made under Section 68 of the Income Tax Act. The addition was initially made by the Assessing Officer, who suspected the credits in the assessee's account to be of dubious nature and questioned the creditworthiness and genuineness of the transactions. The Ld. CIT(Appeals) found that the transactions were through banking channels and the source of the receipts was explained as repayments of loans. The Department challenged this decision, leading to the current appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125366 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2020
• Other Referred Cases: CIT Delhi vs. M/s. Kelvinator of India Ltd, ACIT vs. ICICI Securities Primary Dealership Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Tangible material; Corroborative evidences; Assessment record; Reassessment proceedings
• Section: 68; 148; 271(1)(c); 143(3); 133(6); 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o . 12 70 /A h d /2 01 9 Wit h C . O. N o. 3 3/ A h d/ 2 0 2 0 ( A s se ss m e nt Y e a r : 20 11- 12 ) D e pu t y C o m mi s s io ne r o f I nc o me Tax , C e n tr a l C ir c le - 1 (3 ) , A h me da ba d Vs . G a ne s h Pl a n ta ti o n s Ltd ., G a ne s h C o r p o r a t e H o u s e , 10 0 f t. , H e ba t pu r, Th a lt e j , N r. So la B r id ge , Of f . S . G . H i gh wa y R o a d, A h m ed a b a d-38 7 0 54 [ P A N N o. A A AC G 7 0 0 4R ] (Appellant/Respondent) .. (Respondent/Cross Objector) Appellant by : Shri Dhiren Shah & Ms. Nupur Shah, A.Rs. Respondent by: Shri Ashok Kumar Suthar, Sr. D.R. D a t e of H ea r i ng 24.08.2023 D a t e of P r o no u n ce me nt 19.09.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: The appeal has been filed by the Department and Cross Objection filed by the assessee against the orders passed by the Ld. Commissioner of Income Tax (Appeals)-11 (in short “Ld. CIT(A)”), Ahmedabad vide different order dated 14.05.2019 passed for the Assessment Year 2011-12. 2. The Department has taken the following grounds of appeal:- “1. Whether on facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in deleting the addition of Rs.4,73,30,000/- made u/s.68 of the Act by the AO. 2. Whether on facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in granting relief to the assessee by concluding that the source of money of Rs.4,73,30,000/- paid by M/s. Mahendrakumar H. Trivedi (Prop. Rajeev Bharatbhai Agrawal) to the assessee company was Rs. 5,00,00,000/- paid by the assessee company to M/s. Mahendrakumar H. ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 2 - Trivedi (Prop. Rajeev Bharatbhai Agrawal) in June 2010 when there was no supporting evidence to prove the same. 3. Whether on facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in ignoring the fact that the source of credits of Rs.4,73,30,000/- in the hands of M/s. Mahendrakumar H. Trivedi were dubious funds credited the accounts of multiple parties like Red Rose Tradeline Pvt. Ltd. etc. and not the amount of Rs. 5,00,00,000/- paid by assessee company to M/s. Mahendrakumar H. Trivedi (Prop. Rajeev Bharatbhai Agrawal) in June 2010, as the amount of Rs. 5,00,00,000/- was credited in M/s. Mahendrakumar H. Trivedi's account on 04.06.2010 (Rs. 2.4 cr.) & 07.06.2010 (Rs. 2.6 cr.) whereas the amount of Rs. 4,73,30,000/- was repaid from 17.07.2010 to 22.07.2010 and closing balance as on 14.07.2010 was Rs. 4.88 lakhs only. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. The assessee has raised the following grounds of appeal in Cross Objection:- “1(i). The Ld. CIT(A) after carefully considering the assessment order, facts of the case, submission of the Respondent as well as various judicial pronouncements relied upon by the Respondent held that the recovery of loans and advances of Rs. 4,73,30,000/- received from the bank account of the borrower out of Rs. 5 Crore being loans and advances given to M/s. Mahendrakumar H. Trivedi, Prop: Rajeev Bharatbhai Agarwal, the provisions of section 68 of the Act cannot be applicable in the case of the Respondent as the Respondent has not received any unexplained credit or unsecured loan from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bnaratbhai Agarwal, in fact given the loans and advances which fall outside the ambit of section 68 of the Act and thus the litmus test of identity, creditworthiness and genuineness is not required to be fulfilled. (ii) The Ld. CIT(A) further held that “from verification of the facts and evidences available on record, it is an undisputed fact that the appellant company has recovered the amount of Rs. 4,74,30,000/- from M/s. Mahendrakumar H. Trivedi, Prop :Rajeev Bharatbhai Agarwal, out of the loans and advances given by the appellant company of Rs. 5 Crore in the ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 3 - month of June, 2010 from the regular bank account out of the explained source of funds of the appellant company duly reflected in the books of accounts of the appellant company as it was a repayment of the loan given” and the Ld. CIT(A) has rightly deleted the addition of Rs. 4,73,30,000/- made by the AO on account of unexplained cash credit u/s. 68 of the Act. (iii) Once the Respondent company has given the loans and advances to M/s. Mahendrakumar H. Trivedi, Prop. Rajee Bhartbhai Agrawal, the Respondent company could not have any knowledge about the transactions carried out by the said party in his bank account as it is the transaction being carried out by the borrower party and the Respondent company being lender company, is only concerned with the loan funds given which are to be recovered from the borrower and to charge the interest on the loans and advances given to the borrower and Respondent company is not concerned about the transactions carried out by M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agrawal after receipt of the said loan funds from Respondent company. Further, the Respondent company is not a party to the said transactions and thus by no stretch of imagination can the Respondent company have any knowledge regarding the same and hence no adverse inference can be drawn on the Respondent Company on the basis of the transactions entered into by the borrower i.e Mahendra kumar H. Trivedi, Prop. Rajeev Bharatbhai Agrawal and a third party. 2(i). The Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O in issuing the notice u/s. 148 of the Act and reassessment proceedings u/s. 143(3) r.w.s. 147 of the Act which is based on change of opinion as all the relevant details were already submitted before the then AO during the course of original assessment proceedings u/s. 143(3) and also in the reassessment proceedings u/s. 143(3) r.w.s. 147 of the Act dated 29.12.2017 and the reopening of the case again while issuing the notice u/s. 148 of the Act is merely on the basis of change of opinion though no incriminating material and/or any new tangible material has been brought on record against the Respondent company and the reopening of the case of Respondent company u/s. 147 of the Act beyond a period of 4 years by the AO by issuing the notice u/s. 148 of the Act tantamount to change of opinion which is not permissible as per the decision of the Hon'ble Supreme Court in the case of CIT Delhi vs. M/s. Kelvinator of India Ltd (320 ITR 561 (SC) and in view of the decision of Hon'ble Supreme Court in the case of ACIT vs. ICICI Securities Primary Dealership Ltd (2012) 348 ITR 299 (SC) as the case of for A. Y, 2011-12 is beyond Four Years. 3. The Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of the above grounds of cross objection.” ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 4 - We shall first discuss the Department’s appeal for A.Y. 2011-12 (ITA No. 1270/Ahd/2019) 4. The brief facts of the case are that the return of income was filed by the assessee for the impugned assessment year under consideration declaring income of Rs. 6,54,22,430/-. The assessment under Section 143(3) of the Act was completed on 18.03.2014 and the Assessing Officer assessed the total income at Rs. 6,67,58,012/-. Thereafter, the Assessing Officer received information in the form of enquiry report regarding the receipt of Rs. 4,73,00,000/- by the assessee from bank account at ICICI bank, held by M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal). Accordingly, on the basis of the aforesaid information, the Assessing Officer initiated 147 proceedings against the assessee. The assessee filed objections against the reasons recorded for reopening of assessment under Section 147 of the Act and the same were disposed of by the Assessing Officer on 20.09.2018, wherein the challenge to reopening was dismissed. Thereafter, after taking the submissions of the assessee on record, the Assessing Officer was of the view that identity, genuineness and creditworthiness of M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) has not been established by the assessee. The assessee issued notice to M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) under Section 133(6) of the Act, which was not complied with. Further, the Assessing Officer observed that from the return of income filed by Shri Rajeev Bharatbhai Agrawal, in which he had declared nil / miniscule income, it is evident that the creditworthiness of such person is questionable looking at the quantum of the credit entries of Rs. 4.73 crores. During the course of assessment, the assessee submitted that the source of receipt of Rs. 4.73 crores from Shri Rajeev Bharatbhai Agrawal has ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 5 - been duly explained since it was the assessee himself who had given this amount to Rajeev Bharatbhai Agrawal (Rs. 5 crores had been earlier advanced during the course business transaction with such person) through banking channels and the aforesaid amount was returned back to the assessee, again through banking channels. However, the Assessing Officer observed that the explanation of the assessee that the assessee had advanced an amount of Rs. 5 crores to Rajeev Bharatbhai Agrawal as part of business transactions with such party is not acceptable for the reason that there was no transactions before the deposit dates on 04.06.2010 and 07.06.2010 and there was hardly any transaction after with the withdrawal date i.e. 22.07.2010 between the assessee and Shri Rajeev Bharatbhai Agrawal. Therefore, from the bank entries, it is evident that assessee did not transact regularly with M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal). Further, the Assessing Officer observed that there are multiple transactions between deposit date and withdrawal dates in the bank account of M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) like cash deposits, transactions with established entry providers like Jalaram Finvest Ltd, transaction with Red Rose Private Ltd, which are suspicious in nature and completely proves the falsity of claim of the assessee. Accordingly, the Assessing Officer added a sum of Rs. 4,73,00,000/- to the income of the assessee, with the following observations in the assessment order:- “It is clear that the creditworthiness is truly questionable looking at the quantum of the credit entry i.e. Rs. 4,73,00,000/-. E. It may kindly be noted that there are multiple transactions in the bank account of Mahendra Kumar h Trivedi between Deposit dates (04.06.2010 (Rs. 2,40,00,000/-. Deposit) and 07.06.2010 (Rs. 2,60,00,000/- deposit)) and withdrawal dates (starting from 17.07.2018 and subsequent dates). ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 6 - • The important to note that there are hardly any transaction before deposit dates i.e. 04.06.2010 & 07.06.2010 and there are hardly any transaction after withdrawal dates i.e. 22.07.2010 with the assessee. It proves that assessee does not transact regularly with the M/s. Mahendrakumar H. Trivedi. It is one of the entries, pattern of which is similar to route funds through the pre- determined web of entities. • The multiple transactions are seen between deposite date and withdrawal dates in the bank account of M/s. Mahendrakumar H. Trivedi include cash deposits, transactions with established entry provider like Jalaram Finvest Ltd., transaction with red rose pvt. Ltd. Which are suspicious in nature & completely proves the falsity of the claim of the assessee that the said withdrawals are pm the funds which were deposited. Also, minimum balance was less than Rs. 10,000/- few days before M/s. Mahendrakumar H. Trivedi provided the entry of Rs. 4,73,00,000/-. It is seen that funds are received from M/s red rose tradelink pvt. Ltd on the very same day or before few days of M/s. Mahendrakumar H. Trivedi providing entry to the assessee. Based on independent inquiry, It is clear from bank statement of red rose tradelink pvt. Ltd (A/c No. 258111101002764 of Shri Vinayak Sahakari bank Ltd.) that there are back to back entries showing trail of funds moving through predetermined web designed to evade tax in garb of credit entries eventually entering into the books of account of the assessee. The screen shot of relevant bank statement of the same time-period of M/s. Ganesh Palantation Ltd. (A/c. no. 113150050335048, Tamilnadu Mercantile Bank ltd.), M/s. Mahendrakumar H. Trivedi (A/c. No. 029405500230, ICICI Bank) & M/s. Red Rose Pvt. Ltd.(A/c. No. 258111101002764, Shri Vinayak Sahakari Bank Ltd.). ... • Further, assessee failed to provide any documentary evidence along with detailed explanation regarding any business transaction or other transaction which was responsible for such bank transaction. It means assessee could not provide any documents showing loan related paper work, relevant signature of the concern parties, guarantee or mortgage provided by the loan taker or any other document justifying such huge amount of loan given/ taken by M/s. Mahendrakumar H. Trivedi. It is beyond the understanding of a sane person to accept or repay advances to the tune of few crores being given or taken without any paper work. Assesee also failed to produce any credentials of the person and replied that KYC requirement of the bank for opening a account is ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 7 - sufficient to establish the identity. Assessee or did not produce to person in support of its claim. Hence, the claim of the assessee is unacceptable. F. In reply dated 28.11.2018, assessee submitted copies of ledger and bank statement which was already in the possession of the department. Assessee claimed that necessity to have KYC for opening a bank account is sufficient to prove the identity, creditworthiness etc is a baseless claim and hence, not acceptable. G. Assessee's clam that advance was given which was taken back is devoid of merit because - assessee failed to prove the reason why advance was given, assessee failed to submit any documentary evidence like MOU or other documents showing signature of the parties, assessee failed to notice that the balance in the bank account of Mahendra Kumar H Trivedi was way below the levels of so-called advance given and so-called advance taken back. Assessee failed to provide cogent explanation why there are entries in the bank account of MahendraKumar H Trivedi with Jalaram Ffnvest lid which is the known provider between advance given and receipt date. H. Based on independent verification with bank details, it was noticed that there were back-to-back entries to and from red rose and Kinjal almost on the same dates or nearer dates when such repayments are given which shows pre-determined web of accounts to route the unaccounted funds back to the system. I. Assessee's submission failed to provide details called for in the notices and in the final show cause notice dated 22.11.2018. 5.1.4 In view of the above discussion of the case, the credits entries of Rs. 4,73,00,000/- received from M/s. Mahendrakumar H. Trivedi remains unexplained. Therefore, the same is added to the total income of the assessee for A.Y. 2011-12. Penalty proceedings u/s. 271(1)(c) r.w.s. 274 of the IT. Act are initiated for furnishing inaccurate particulars of income.” 5. In appeal, the Ld. CIT(Appeals) allowed the appeal of the assessee by primarily holding that the assessee had initially transferred a sum of Rs. 5 crores to M/s. Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal), out of which a sum of Rs. 4.73 crores was returned back to the assessee. Ld. CIT(Appeals) held that since both the above transactions were carried out through banking channels, the source of receipt by the assessee has ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 8 - been duly explained. Accordingly, the addition made on account of unexplained income is liable to be deleted. While passing the order, Ld. CIT(Appeals) made the following observations: “From verification of the reason recorded for reopening of the case by the AO and the entire assessment order, it is an undisputed fact by the AO that the appellant company had given loans and advances of Rs. 5 Crores in the month of June, 2010 to M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal and also received back Rs. 4,73,30,000/- within a period of one and half month and the amount of Rs. 26,70,000/- is still outstanding. As per the enquiry report forwarded by the ADIT (Invn.) Unit 2(1), Ahmedabad vide letter dated 27.03.2018 to the AO which has been reproduced by the AO in the reason recorded for reopening of the case in Para 2 on Page 3 & 4 of the assessment order, the Investigation department has only found large value of non-cash transaction in bank account of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal. In the assessment order, the AO has reproduced the bank statement of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal, vide Account No. 029405500230 with ICICI Bank for the period 01.07.2010 to 31.07.2010 on Page 20 & 21 of the assessment order and from verification of the same, all the transactions are only by account payee cheques and name of the parties are also mentioned along with cheque number and there is no cash transaction in the bank account of M/s. M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal. Therefore, from verification of the bank statement of M7s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal and the assessment order, the AO nowhere brought on record that there was any cash deposits into the bank account of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal in its bank account with ICICI Bank. The appellant has given the loans and advances during the year of Rs. 5 Crores to M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal from its regular bank account reflected in the books of accounts of the appellant company from explained sources of funds which facts is also not disputed by the AO in the assessment order. The AO in the entire reassessment proceedings and in the reassessment order has merely made an allegation in respect of loans and advances of Rs. 4,73,30,000/- recovered back by the appellant from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal as an unexplained cash credit and given the show cause to the appellant company during course of reassessment proceedings to the appellant company while mentioning of section 68 of the Act in respect of recovery of loans and advances of Rs. 4,73,30,000/- by the appellant company from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal and justify the conditions laid down for the assessee to fulfill as regards to the ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 9 - identity, creditworthiness and genuineness of transactions for the recovery of the loans and advances of Rs. 4,73,30,000/- by the appellant company from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal. The appellant company's contention before the AO in the reassessment proceedings was that in respect of recovery of loans and advances of Rs. 4,73,30,000/- out of Rs. 5 Crores being loans and advances given to M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal, the provisions of section 68 of the Act cannot be applicable in the case of the appellant company as the appellant company has not received any unexplained credit or unsecured loan from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal. The provisions of section 68 of the Act is not applicable in the case of the appellant company in respect of recovery of loans and advances given by the appellant company to the said party for an amount of Rs. 4,73,30,000/-. The appellant company also took a contention before the AO that the identity of the borrower party M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal is already available on the record of the AO as the AO himself mentioned the PAN of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal, details of his bank account with ICICI Bank and return of income filed by the said party M/s. Mahendrakumar H. Trivedi, for A.Y. 2010-11 and A.Y. 2016-17. Therefore, on the record of the Income Tax department, the identity of the borrower about M/s. Mahendrakumar H. Trivedi, is established and it cannot be doubted as the said borrower party is having the PAN No. and also filing return of income. The bank account of the said party is also available on the assessment records of the AO and as per the KYC Norms of Banking Regulation Act, the identity of the party is verifiable as per the bank records. Therefore, doubting the identity of the party is unquestionable. As far as questioning the appellant by the AO about the creditworthiness of the borrower party, the appellant company has submitted before the AO in his submission in the reassessment proceedings that the appellant company in the normal course of business has given loans and advances of Rs. 5 Crores to M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal out of explained source of funds available with the appellant company duly reflected in the books of accounts and regular bank account of the appellant company and the said fact is also accepted by the AO in the assessment order the availability of loan funds given by the appellant to the borrower party to the extent of Rs. 5 Crores which was deposited by the borrower party in his bank account and thereafter the said loans funds available with borrower party is explained funds with the borrower party being the loans and advances received from the appellant company. The A.R of the appellant company during the course of appeal hearing also brought to my notice about the bank statement of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal reproduced by the AO for the period 01.07.2010 to 31.07.2010 on Page 20 & 21 of the assessment order during the period when the borrower party has repaid loans ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 10 - and advances of Rs. 4,73,30,000/- to the appellant company, the bank balance and transactions reflected in the month of July 2010 of the bank statement of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal on any single day does not exceed Rs. 5 Crores and there is no cash deposit intothe bank account of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal. Therefore, the creditworthiness of the borrower party M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal is also unquestionable on the basis of the details of the bank transactions of the borrower party M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal for the month of June, 2010. As far as the nature of transaction of giving loans and advances by the appellant to the borrower party M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal, the appellant company has already submitted to the AO that it was in the normal course of business activity of the appellant company of giving loans and advances to the parties and the appellant company has also given the loans and advances to other parties and the AO has not doubted the genuineness of such transactions of the appellant company of giving loans and advances to parties in the reassessment proceedings and even on earlier occasion in the regular assessment proceedings u/s. 143(3) of the Act, in the regular assessment order rendered u/s. 143(3) of the Act dated 18.03.2014 and also in the earlier reassessment proceedings u/s. 143(3) of the Act and in the reassessment order rendered u/s. 143(3) r.w.s. 147 of the Act dated 29.12.2017. I have also verified the bank statement of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal reproduced by the AO in the assessment order on Page 20 & 21 of the assessment order and I agree with the arguments of the A.R of the appellant company that there is no cash deposit into the bank account of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal and the transactions in the bank account of M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal for the period 01.07.2010 to 31.07.2010 and the balance in his bank account is not more than Rs. 5 Crores and the AO has also not doubted the loans and advances given by the appellant company of Rs. 5 Crores to M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal in the month of June, 2010. From Verification of the facts and evidences available on record, it is an undisputed fact that the appellant company has recovered the amount of Rs. 4,73,30,000/- from M/s. Mahendrakumar H. Trivedi, Prop. Rajeev Bharatbhai Agarwal out of the loans and advances given by the appellant company of Rs. 5 Crores in the month of June, 2010. As it was repayment of loan given, additions made by the AO are not justified, hence, deleted. This ground of appeal is allowed. 5. The appellant has taken legal ground challenging the notice issued u/s. 148 of the Act & making assessment u/s. 147 of the Act. As the issue has been decided on merit in favour of the appellant, this legal ground remains ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 11 - merely academic, hence, it does not require adjudication, thus, it is dismissed for statistical purposes.” 6. The Department is in appeal before us against the order passed by Ld. CIT(Appeals) granting relief to the assessee. On going to the facts of the instant case, and in light of the arguments placed before us by the Department and the Ld. Counsel for the assessee, we observe that Ld. CIT(Appeals) while passing the order has simply accepted the version of the assessee that the immediate source of receipt of Rs. 4.73 crores has been duly explained by the assessee since the assessee itself had advanced a sum of Rs. 5 crores to the said party i.e. M/s. Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) through banking channels during the course of business transactions with such party. However, we observe that the aforesaid party was filing “Nil/minuscule” return of income and the Assessing Officer has made a specific observation that the assessee was not having any business transactions with the aforesaid party either prior to date of deposit or after the date of withdrawal. Accordingly, there seems to be no plausible explanation that why a sum of Rs. 5 crores was advanced by the assessee to such party i.e. M/s. Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) and why the same was returned back to the assessee. Further, the Assessing Officer had made a specific noting that on perusal of the bank account of M/s. Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) it is seen that he was having a series of transactions with established credit entry operators, for which no explanation was furnished by the assessee. Further, the assessee has provided no reason as to why a sum of Rs. 5 crores was advanced to the said party i.e. M/s. Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) who was having little financial means, and was filing a Nil/ minuscule return of income, and with whom the assessee was having no prior ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 12 - business transactions. However, while allowing the appeal of the assessee, we observe that none of these aspects were discussed/dealt with by the Ld. CIT(Appeals) in the appellate order and he simply accepted the version of the assessee that since both the advancing of the amount of Rs. 5 crores and receipt of Rs. 4.73 crores between the assessee and M/s Mahendrakumar Trivedi (Proprietor Rajeev Bharatbhai Agrawal) were through banking channels, the source of deposit has been duly explained. However, considering the specific observations made by the Assessing Officer in the assessment order (which have been reproduced by us in the preceding part of the judgement), we are of the considered view that Ld. CIT(Appeals) has erred in facts and in law in passing an order allowing relief to the assessee, without making any specific observations with respect to the findings of the Assessing Officer as mentioned in the assessment order. Accordingly, looking into the facts of the instant case and the observations made by the Assessing Officer in the assessment order, the matter is being restored to the file of Ld. CIT(Appeals) for de novo consideration to consider all aspects of the matter and give a specific finding on the observations made by the Assessing Officer in the assessment order passed by him, and thereafter pass an order in accordance with law. 7. In the result, the appeal of the Department is allowed for statistical purposes. 8. The assessee has filed cross objection before us challenging the validity of reopening of assessment under Section 147/148 of the Act. We observe that looking into the instant facts, and the findings made by the Assessing Officer in the assessment order, the Assessing Officer had substantial material to form a reasonable belief that income had escaped assessment. The Ld. Assessing Officer has given specific findings in the body of assessment order, wherein he ITA No. 1270/Ahd/2019 with C.O. No. 33/A/2020 DCIT vs. Ganesh Plantations Ltd. Asst. Year –2011-12 - 13 - stated that he has received specific information about the source of such receipt of Rs. 4.73 crores being of dubious nature. Accordingly, we are of the considered view that the Assessing Officer had substantial material with him to form a reasonable belief that income had escaped assessment. Therefore, in our considered view, the reassessment proceedings had been validly initiated by the Assessing Officer. Accordingly, the cross objections filed by the assessee are hereby dismissed. 9. In the result, the cross objection is filed by the assessee are dismissed. 10. In the combined result, the appeal of the Department is allowed for statistical purposes and the cross objections filed by the assessee are dismissed. This Order pronounced in Open Court on 19/09/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 19/09/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad