DCIT-2(1)(1), MUMBAI V. KOLAR PAPER MILLS LTD, MUMBAI

ITA 1978/MUM/2025

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle 2(1)(1), Mumbai as the appellant and M/s. Kolar Paper Mills Ltd. as the respondent. The dispute arose from an assessment for the Assessment Year 2020-2021 following a search and seizure operation under section 132 of the Income Tax Act, 1961, which revealed alleged bogus donations made by the assessee to M/s. Aadhar Foundation. The Assessing Officer (AO) made additions to the assessee's income under sections 69A and 69C, which were contested and partially allowed by the CIT(A). The revenue appealed to the Tribunal, challenging the CIT(A)'s decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793189 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2020-2021
• Appeal Filed On: 24-03-2025
• Other Referred Cases: P. Mohan Kala & Others (291 ITR 278), CIT vs Odeon Builders (P) Ltd (2019) 110 Taxmann.com 64 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRA
• Assessee Lawyers: ASHOK MAJETIA
• Keywords: Tax effect; Search and seizure; Opportunity of cross examination; Bogus
• Section: 143(3); 132; 69C; 80G

Judgement Text

"आयकर अपीलीय न्यायाधिकरण न्यायपीठ, म ुंबई| IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सुं./ITA No.1978/MUM/2025 (धििाारण वर्ा / Assessment Year: 2020-2021) Dy. Commissioner of Income Tax, Circle 2(1)(1), Mumbai Room No. 575, 5th Floor, Aayakar Bhavan, M.K. Road, Mumbai 400020 v/s. बिाम M/s. Kolar Paper Mills Ltd. A 404, Twin Tower CHS Ltd, Lokhandwala, 2nd Cross Lane, Near, Apna Ghar Andheri West, Mumbai 400053 स्थायी लेखा सुं./जीआइआर सुं./PAN/GIR No: AADCK8381N Appellant/अपीलाथी .. Respondent/प्रधिवादी धििााररिी की ओर से /Assessee by: Shri Ashok Majetia, CA राजस्व की ओर से /Revenue by: Shri Ritesh Misra, CIT DR स िवाई की िारीख / Date of Hearing 26.08.2025 घोर्णा की िारीख/Date of Pronouncement 23.09.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the revenue against the order of the Commissioner of Income Tax, (Appeals)-48, Mumbai [CIT(A)] dated 23.12.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year 2020-2021. 2. The revenue has raised the following grounds in this appeal. “1. On the facts and circumstances of the case and in law the Ld. CIT(A) failed to appreciate that the transaction through banking channel is not always genuine as held by Hon'ble Supreme Court in P. Mohan Kala & Others (291 ITR 278). Printed from counselvise.com P a g e | 2 ITA No 1978/MUM/2025 A.Y. 2020-21 M/s. Kolar Paper Mills LTd. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) failed to appreciate that the transaction through bank is executed to make the otherwise colourable transaction appear genuine. 3. On the facts and circumstances of the case and in law the Ld. CIT(A) failed to appreciate that Saumil Bhadiadra, Trustee of Aadhar Foundation had admitted in statement u/s 132(4) taken under oath that after receipt of donations the amount are returned to the donours in cash (or RTGS in few cases) with commission of 0.25% on an average. 4. The appellant craves the leave to add, amend, alter and/or delete any of the grounds of appeal as above.” 3. Brief facts of the case are that the assessee filed its return declaring total income of Rs. 38,56,52,750/- for AY 2020-21 on 28.11.2020. Subsequently, a search and seizure action u/s. 132 of the Act, was carried out on 02.02.2021 in cases of several charitable organizations. During the search, it was seen that the assessee had provided bogus donation to one trust viz. M/s. Aadhar Foundation and this fact was also admitted by its trustee in his statement recorded u/s. 132(4) of the Act. Accordingly, a notice u/s. 153C was issued to the assessee in response to which assessee filed return declaring same income as in the original return. The assessment was completed u/s. 143(3) r.w.s. 153C of the Act after making the following additions: “i. Rs. 49,00,000 on account of Bogus donation u/s. 69A r.w.s. 115BBE of the IT Act, 1961. ii. Rs. 12,250/- on account of Bogus Commission u/s. 69C r.w.s. 115BBE of the IT Act, 1961.” 4. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Vide order dated 23.12.2024, Ld. CIT(A) has partly allowed the assessee’s appeal. Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before the Tribunal. Printed from counselvise.com P a g e | 3 ITA No 1978/MUM/2025 A.Y. 2020-21 M/s. Kolar Paper Mills LTd. 5. Before us, Ld. DR has strongly relied on the order of Ld. AO and argued that since the assessee had given bogus donation, therefore, the AO was justified in treating the same as unexplained money u/s. 69A r.w.s. 115BBE of the Act. On the other hand, Ld. AR has argued that the sum of Rs. 49 lacs was disallowed by assessee itself at the time of filing return, since the same was shown as the CSR expenditure and no further claim was made in respect of this amount u/s. 80G of the Act. The result of the addition made by the Ld. AO is that the same amount has been added twice to the assessee’s income. Ld. AR has further pointed out that the appeal of the department is also not maintainable in view of the fact that the tax effect involved is less than Rs. 50 lacs and, therefore, in terms of CBDT circular dated 17.09.2024, the appeal is not maintainable and hence liable to be dismissed. 6. We have heard the rival submissions and perused the material available on record. We find that the assessee has not claimed any deduction in respect of the amount of Rs. 49 lacs shown as donation to M/s. Aadhar Foundation. At the time of computing taxable income, the assessee has already added back the impugned sum of Rs. 49 lacs on account of CSR expenditure and has not claimed any further deduction u/s. 80G of the Act. In view of these facts, Ld. CIT(A) has allowed the assesses appeal with the following observations: “6.5 During appellate proceedings as well as assessment proceedings, the appellant has submitted that donation paid to M/s. Aadhar Foundation is genuine in nature and the said amount was paid in lieu of CSR which is the requirement under the Companies Act 2013. The appellant further mentioned that they have already disallowed the amount of Rs. 49,00,000/-as deduction from taxable income and they had not claimed the said amount u/s, 80G as deduction. The amount added by assessee effect in double taxation in support of donation made, the appellant company has submitted copy of computation of income, bank statement which shows Printed from counselvise.com P a g e | 4 ITA No 1978/MUM/2025 A.Y. 2020-21 M/s. Kolar Paper Mills LTd. that donation amount of Rs. 49,00,000/- paid through banking channel, copy of receipt of donation issued by M/s. Aadhar Foundation. All the related documents submitted by appellants proves that the donation amount paid of Rs. 49,00,000/- is genuine in nature. it is also found from the assessment order that the AO merely relied on information of Investigation Wing. The AO did not bring out on record that donation amount paid by appellant were returned back by M/s. Aadhar Foundation to it in the form of cash. It shows that disallowances of donation paid has been made by AO merely on presumption and suspicion. 6.6 My attention is invited to the Hon'ble Apex Court in the case of CIT vs Odeon Builders (P) Ltd (2019) 110 Taxmann.com 64 (SC) wherein it was held that no addition can be made on the basis of third-party information gathered by the Investigation Wing of the Department. The Hon'ble Apex Court has observed as under: \"Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO who has not provided the copy of such statements to the appellant, thus denying opportunity of cross examination to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques, & VAT Registration of the sellers & their Income Tax Return. In view of the above discussion in totality, the purchases made by the appellant from M/s Padmesh Realtors Pvt. Ltd. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs. 19,39,60,866, is directed to be deleted.\" 6.7 Further, my attention is invited to the fact that section 69A of the Income Tax Act mentions as: \"Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery, or other valuable article and such money, bullion, jewellery, or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery, or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery, or other valuable article may be deemed to be the income of the assessee for such financial year The section 69A can be invoked only in cases where the assessee did not explain the source of money, however in the present case, undisputedly, the appellant has paid donation of Rs. 49,00,000/- from its bank account. Therefore, there is no question of any unexplained money. Accordingly, the addition u/s, 69A of the Act is also unwarranted on the said basis. Further. The AO did not bring out on record that donation amount paid by appellant were returned back by M/s. Aadhar Foundation to it in the form of cash. It shows that disallowances of donation paid has been made by AO merely on presumption and suspicion. 6.8 In view of the facts and circumstances of the case, I find that there is no justification whatsoever for making addition of Rs. 49,00,000/- u/s. 69A of the Act and bogus commission of Rs. 12.250/- paid u/s. 69C of the Act Hence, the A.O, is Printed from counselvise.com P a g e | 5 ITA No 1978/MUM/2025 A.Y. 2020-21 M/s. Kolar Paper Mills LTd. directed to delete the addition of Rs. 49,00,000/- and Rs. 12,250/- made u/s. 69A and 69C of the Act respectively. Thus, the ground nos. 1 to 4 of appeal are allowed.” 7. After considering the facts and circumstances, we are of the considered opinion that there is no infirmity in the order of Ld. CIT(A) who has rightly allowed relief to the assessee with regard to addition made u/s. 69A in respect of Rs. 49,00,000/- as well as consequent addition of Rs. 12,250/- made u/s. 69C on account of commission. 8. In the result, revenue’s appeal is dismissed. Order is pronounced in the open court on 23.09.2025 Sd/- Sd/- PAWAN SINGH RENU JAUHRI (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Place: Mumbai Dated: 23.09.2025 Divya R. Nandgaonkar Stenographer आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to: 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण DR, ITAT, Mumbai 5. गार्ड फाईि / Guard file. सत्यातिि प्रति //True Copy// आदेशािुसार / BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीिीय अतिकरण / ITAT, Bench, Mumbai. Printed from counselvise.com "