COSMIC INFORMATICS PVT. LTD.,NEW DELHI V. ACIT CENTRAL CIRCLE - 2, NEW DELHI

ITA 2444/DEL/2024

AI Insights

The case involves Cosmic Informatics Pvt. Ltd., which faced scrutiny under sections 153C and 143(3) of the Income Tax Act, 1961, following a search operation that uncovered incriminating documents. The Assessing Officer (AO) made significant additions to the company's income for the assessment years 2013-14 and 2017-18, alleging income from bogus sales and accommodation entries. The assessee appealed these additions, but the CIT(A) dismissed the appeals due to non-compliance by the assessee. The Tribunal found merit in the assessee's request for a fresh hearing due to management changes and remitted the case back to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38194 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: PRANAV YADAV
• Keywords: Opportunity of being heard; Principle of natural justice; Search and seizure; Accommodation entries; Bogus
• Section: 153A; 153C; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA NOS. 2443 & 2444/Del/2024 A.YRS. : 2013-14 & 2017-18 COSMIC INFORMATICS PVT. LTD. 156, FIRST FLORR, MASTER BLOCK, SHAKARPUR, DELHI – 92 (PAN: AAECC3880D) VS. DCIT, CC-2, DELHI 3RD FLOOR, ROOM NO. 363, E-2, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 55 (APPELLANT) (RESPONDENT) Appellant by : Sh. Pranav Yadav, Adv. Respondent by : Shri Rajesh Kumar Dhanesta, Sr. DR. Date of hearing : 31.12.2024 Date of pronouncement : 2.01.2025 ORDER PER SHAMIM YAHYA, AM : These appeals by the assessee are against the respective orders of the Ld. CIT(A-23), New Delhi both dated 20.02.2024 pertaining to assessment years 2013-14 & 2017-18. 2. The grounds raised in AY 2013-14 read as under:- 2 | P a g e 1. On the facts and circumstances of the case and in law the CIT(A) erred in not adjudicating the grounds of appeal on merit. 2. On the facts and circumstances of the case and in law, the order passed by CIT(A) is against the principles of natural justice. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in passing ex parte order. 4. On the facts and circumstances of the case and in law the notice u/s. 153C issued by the AO is bad in law, barred by limitation, without jurisdiction and illegal and therefore the said notice alongwith the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so. 5. On the facts and circumstances of the case and in law, the notice u/s. 153C is illegal and without jurisdiction. The AO has not complied with the provisions of section 153C and other allied provisions for issue of such notice. Accordingly, the notice u/s. 153C alongwith the assessment order passed on the foundation of such notice are liable to be quashed. 6. On the facts and circumstances of the case and in law, the assessment order passed by the AO is bad in law, without jurisdiction and CIT(A) erred in not holding so. 7. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 1,73,79,142/- made by AO on account of alleged commission income. 3 | P a g e 8. On the facts and circumstances of the case and in law, the addition of Rs. 1,73,79,142/- made by the AO on account of alleged commission income is beyond the scope / jurisdiction of provisions of section 153C read with section 153A of the Income Tax Act,. 1861. 9. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition of Rs. 2,05,77,299/- made by AO on account of alleged commission income. 10. On the facts and circumstances of the case and in law, the addition of Rs. 2,05,77,299/- made by the AO on account of alleged commission income is beyond the scope / jurisdiction of provisions of section 153C read with section 153A of the Income Tax Act, 1961. 11. On the facts and circumstances of the case and in law, the assessment order passed by the AO is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so. The aforesaid grounds of appeal are without prejudice to each other. 3. The brief facts of the case are that assessee furnished its return of income (belated) on 31.03.2015 declaring total income of Rs. 61,750/-. During the course of search on 11.11.2024 in case of Apple Group of companies, incriminating documents relating to the assessee was found from the premise of the searched person. Accordingly, proceedings u/s. 153C of the Act were initiated. During the course of search and post search investigations, it was established that the assessee company was engaged in providing accommodation entries in the shape of bogus are sale bills in lieu of commission on the gross value of the bills raised. Subsequently, assessment 4 | P a g e order u/s. 153C/143(3) of the Act was passed on 28.12.2018 assessing income of Rs. 3,80,18,190, wherein following additions were made:- - Rs. 1,73,79,142/- on account of commission earned from the activity of giving ‘adjustment entry’ (2.5% of total turnover of Rs. 69,51,65,713/-) - Rs. 2,05,77,299/- on account of commission earned on bogus sale over and above the figures of sales shown in P&L (2.5% of out of books sale of Rs. 82,30,91,981/-) 4. The grounds raised in AY 2017-18 read as under:- 1. On the facts and circumstances of the case and in law the CIT(A) erred in not adjudicating the grounds of appeal on merit. 2. On the facts and circumstances of the case and in law, the order passed by CIT(A) is against the principles of natural justice. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in passing ex parte order. 4. On the facts and circumstances of the case and in law the assessment order passed by the AO is bad in law, without jurisdiction and CIT(A) erred in not holding so. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 3,02,40,945/- made by AO on account of alleged commission earned on alleged bogus transaction. The aforesaid grounds of appeal are without prejudice to each other. 5. The brief facts relevant to assessment year 2017-18 are that assessee furnished its return of income on 07.11.2017 declaring total loss of Rs. 51,05,16,413/- Later on, 5 | P a g e return of income was revised on 31.3.2018 declaring total loss of Rs. 1,38,801/-. Subsequently, the case was picked up for scrutiny assessment. Further, a search and seizure operation was carried out on 7.12.2018 in Apple Group of cases and the case of the assessee was also covered under survey action u/s. 133A of the Act. During the course of search and post search investigations, it was found that the assessee company was engaged in providing accommodation entries in the shape of share premium, share application money, bogus sale bill etc. in lieu of commission @ 2% on the gross value of the bills raised. Further, as per return of income filed, total turnover of the assessee company was Rs. 151,20,47,261/- in the shape of bogus bill/transactions. Accordingly, AO added an amount of Rs. 3,02,40,945/- to the income of assessee company as commission on providing accommodation entries (being 2% of total turnover of Rs. 1,51,20,47,261/-). 5. Against these orders, the assessee is in appeals before us. 6. We have heard both the parties and perused the records. We note that in both the assessment years, in appeal Ld. CIT(A) noted that despite service of notices, no compliance was made by the assessee, hence he proceeded to dismiss the assessee appeals. Now the assessee is aggrieved that Ld. CIT(A) has not dealt with the issues on merits and that there was some genuine reasons for which the assessee could not represent before the Ld. CIT(A). Ld. Counsel for the assessee informed that there was change in management which lead to non-canvassing of appeal before the Ld. CIT(A). Hence, the prayed that an opportunity may be given to the assessee to properly canvass the appeals. Ld. 6 | P a g e DR did not have any serious objection. However, he submitted that the matter may be remitted back to the AO for fresh adjudication. 7. In view of the aforesaid facts and circumstances of the case and in the interest of justice, we deem it fit and proper to remit back the issues in both the appeals to the file of the Assessing Officer with the directions to decide the same, afresh, after giving adequate opportunity of being heard to the assessee. Assessee is also directed through his Authorised Representative to appear before the AO and fully cooperate with him during the proceedings. We hold and direct accordingly. 8. In the result, both the Assessee’s appeals are allowed for statistical purposes. Order pronounced on 2/01/2025. Sd/- (ANUBHAV SHARMA) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "