DCIT, CENTRAL CIRCLE-1(2), ABAD, INCOME TAX DEPARTMENT AHMEDABAD V. SURESHKUMAR PERIWAL, AHMEDABAD

ITSSA 153/AHD/2023

AI Insights

The case involves two appeals by the Deputy Commissioner of Income-tax against Sureshkumar Periwal, the proprietor of M/s. Shyam Bullion, concerning the assessment year 2017-18. The appeals were directed against the orders of the CIT(A), which had reduced the additions made by the Assessing Officer under Section 68 of the Income Tax Act from substantial amounts to 5% of the total additions. The Revenue challenged the CIT(A)'s decision, arguing that the CIT(A) erred in accepting the assessee's explanations and documents which purportedly showed that the transactions in question were legitimate business transactions and not mere accommodation entries. The Tribunal, after reviewing the facts and the legal provisions, upheld the CIT(A)'s decision, emphasizing that the assessee had maintained proper records and complied with tax laws, thereby legitimizing the transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126531 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Shri Ankesh Kumar Bachubhai Gandhi vs. ITO, Shri Sanand Textile Industries Limited vs DCIT, Vishal Exports vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR; KAVAN LIMBASIYA
• Assessee Lawyers: BIREN SHAH
• Keywords: Unexplained cash credit; Accommodation entries; Bogus; Grounds of appeal; Dismissed; Commissioner; Purchases; Transfer; 153C; Affirmed; Section 68 of the Act; Assessment u/s 143(3) r.w.s. 147; Explanation; Section 143(2)
• Section: 148; 143(3); 143(2); 132; 68; 153C; 80HHC; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER IT(SS)A No. 153/Ahd/2023 (Assessment Year: 2017-18) Deputy Commissioner of Income-tax, Central Circle-1(2), Ahmedabad Vs. Sureshkumar Periwal Prop. Of M/s. Shyam Bullion, 113, First Floor, National Plaza, Opp. Lal Bungalows, CG Road, Ahmedabad [PAN : AFTPP 6547 D] (Appellant) .. (Respondent) ITA No. 1116/Ahd/2023 (Assessment Year: 2017-18) Deputy Commissioner of Income-tax, Central Circle-1(2), Ahmedabad Vs. Sureshkumar Periwal Prop. Of M/s. Shyam Bullion, 113, First Floor, National Plaza, Opp. Lal Bungalows, CG Road, Ahmedabad [PAN : AFTPP 6547 D] (Appellant) .. (Respondent) Appellant by: Shri V. Nandakumar, CIT-DR & Shri Kavan Limbasiya, Sr. DR Respondent by : Shri Biren Shah, AR Date of Hearing 12.03.2025 Date of Pronouncement 22.04.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- These two appeals have been filed by the Revenue, one against the order of the learned Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as \"CIT(A)\" for short) dated 19.10.2023 arising out of order dated 31.12.2019 passed by the IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 2– Assessing Officer u/s 143(3) r.w.s. 147 r.w.s. 153C of the Act and another against the order of the learned CIT(A) dated 19.10.2023 arising out of order dated 31.03.2022 passed by the Assessing Officer u/s 143(3) r.w.s. 147 of the Act, both for Assessment Year (AY) 2017- 18. ITA No. 1116/Ahd/2023 2. The Revenue has taken following grounds of appeal:- “In the facts and on the circumstances of the case, Ld. CIT(A) has erred in restricting the addition of unexplained transaction to 5 percent, i.e. Rs.14,98,500/- as against addition of Rs.2,99,70,000/- even after accepting the fact that the parties M/s. Green Traders, Shri Jitendra R. Patel, Mahesh P. Gandhi etc. were clearly involved in providing accommodation entries from bank accounts from entities controlled and managed by them and that the appellant had received cheques from these parties.” IT(SS)A No. 153/Ahd/2023 “In the facts and on the circumstances of the case, Ld. CIT(A) has erred in restricting the addition of unexplained transaction to 5 percent, i.e. Rs.4,39,525/- as against addition of Rs.87,90,500/- even after accepting the fact that the bank account of M/s. SVP Corporation (Prop. Sh. Vishal D. Pandya) was used by Sh. Pandya And Sh. Bharat Popat for providing accommodation entries and that the appellant had received cheques from these parties.” 3. The brief facts of the case are that the assesses is a wholesale and retail trader of bullion. The assessee has filed his original return of income for the under consideration as on 31.07.2017 declaring total IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 3– income of Rs.15,66,390/-. Thereafter, the case of the assessee was reopened under section 147 of the Act and the Assessing Officer passed assessment u/s 143(3) r.w.s. 147 r.w.s 153C of the Act as on 31.12.2019 determining the total income of assessee at Rs.1,03,56,890/-, by making an addition of Rs.87,90,500/- u/s. 68 of the Act on account of unexplained credit in the books of accounts. 4. Meanwhile, a survey under section 133A of the Act was carried out at the business premises of the assessee as on 07.02.2020 and on the basis of information available on insight portal the Assessing Officer reopened the case of the assessee and a notice under section 148 of the Act served to the assessee as on 09.03.2021. The Assessing Officer passed an assessment order under u/s 143(3) r.w.s. 147 of Act by determining the total income of the assessee at Rs.4,03,26,900/-, compared to previously assessed income of Rs.1,03,56,890/-, by making impugned addition of Rs.2,99,70,000/- (Rs.1,49,20,000/- + 1,50,50,000/-). 5. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee by restricting the addition to Rs.14,98,500/- i.e. 5% of the total addition of unexplained transaction amounting to Rs.2,99,70,000/-. IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 4– 6. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal. 7. Heard both the parties and the material available on record. The adjudication is based on the examination of the facts and the subsequent derivations. 8. A Survey u/s 133A of the Act was conducted on Axis Bank wherein cash deposits were made in the bank account by group of persons in name lending accounts. Consequently, action u/s 132 and 133A of the Act were carried out at various premises belonging to that of cash handlers, middlemen and the beneficiaries. One such person was Mr. Sanjay Soni who used to send Whatsapp messages of various bank accounts along with details of amounts to be transferred and he had given Rs.48 crores in old demonetized notes which were transferred to various parties through RTGS. In search carried out at the premises of Shri Soni, date-wise details of cash in old demonetized notes received from various persons which were deposited in dummy accounts and subsequently transferred by way of RTGS to various recipients which includes cheque transfer to assessee from Green Traders. 9. Subsequently, survey action was carried out at the premises of assessee wherein tally data was found from which it was found that assessee has made sale of bullion to Green Traders for IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 5– Rs.1,46,15,000/-. Similar transaction of Rs.3,05,000/- was also carried out by Shri Jitendra Patel with assessee. 10. During the course of assessment proceedings, the assessee had submitted details of stock and contended that it has already offered such amount as sales and regularly complied with requirement of laws like Gujarat VAT Act. The Assessing Officer had not accepted the explanation of assessee and relied upon investigation report wherein it was found that cash were collected from various persons by Shri Sanjay Soni and others and were deposited in various dummy accounts with Axis Bank and part of such amount was ultimately transferred to assessee hence such amount is treated as unexplained credit under Section 68 of the Act. 11. With regard to the addition of Rs. 1,50,50,000/- is concerned, the AO had received information from Insight Portal wherein it was noticed that Shri Mahesh Prabhudas Gandhi, proprietor of DPS Commodities had made huge cash deposits during post- demonetisation period and part of such cash was transferred through RTGS to assessee. Before the Ld. CIT(A), the assessee submitted that he was a trader in bullion having turnover of Rs.721.03 crores in year under consideration and he sold bullion to various persons on receipt of any amount through banking channel after obtaining identity proof being PAN Card/Aadhar Card, as required by the Law. It was submitted that during the course of such business when assessee IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 6– receives the funds and sold the bullions, corresponding sales amount was shown as sales and he was not required to verify sources of such funds were received as part of his business activity. The assessee has contended that if any counter-party was in the business of providing accommodation entries to third parties and purchases the gold bullion in such process, sales made to such parties did not become unexplained when corresponding amount was already offered to tax. 12. The assessee has submitted that he had offered funds received from Green Traders, Shri Jitendra Patel, DPS Commodities as sales in books of account which was not disputed by the Assessing Officer. The assessee had already submitted ledger account of SVP Corporation also from his books of account, cross confirmation, sales invoices and VAT return. It was submitted that when books of account maintained by assessee were accepted by the AO, quantitative records are not disputed by the AO and sales are made out of available stock, AO was not justified in treating sales made to above referred parties as unexplained credit. 13. On going through all these undisputed facts, Ld. CIT(A) held that the assessee was a trader of bullion and in the year under consideration, he had made sales to Green Traders, Shri Jitendra Patel and DPS Commodities against which amount was received through banking channel. The Ld. CIT(A) held that the though the assessee had submitted copy of relevant bills issued to SVP Corporation, stock IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 7– register and VAT report no contrary evidence was brought by the AO. The Ld. CIT(A) held that the assessee had sufficient stock before making any sales. The Ld. CIT(A) in unequivocal terms held that when assessee was a trader in bullion, having sufficient stock before making any sale, the AO not doubting any purchases made by assessee including its quantitative records, there was no reason for treating entire cheque amount received from above concerns as unexplained credit under Section 68 of the Act. 14. The Ld. CIT(A) relied on the decision of Hon’ble Ahmedabad ITAT in the case of Shri Ankesh Kumar Bachubhai Gandhi in ITA No. 396/Ahd/2O22 dated 24th February, 2023 wherein it is held as under: “3. The assessee is dealing in Gold and Silver in wholesale and retail market in the name of Vimlachal Jewels. The assessee filed return of income ITA No. 396/Ahd/2022 Shri Ankeshkumar Bachubhai Gandhi vs. ITO Asst. Year-2017-18 for A.Y. 2017-18 on 01.10.2017 declaring total income at Rs. 2,95,250/-. Notice under Section 143(2) dated 21.08.2018 was issued and served upon the assessee. The Assessing Officer observed that in respect of availment of accommodation entry amounting to Rs. 31,81,000/- by the assessee through the concern M/s. SVP Corporation, controlled and managed by Shri Vishal Dipakkumar Pandya/Bharat Popat as received the said amount by way of accommodation entry, therefore, the sale concerned. In response to the same show-cause notice the assessee submitted that the assessee do not take any accommodation entry during the year from Shri Vishal D. Pandya/Bharat Popat but the amount of Rs. 31,81,000/- was received from SVP Corporation on account of sale IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 8– made. The assessee Tiled confirmation, copy of sale bill dated 13.11.2016, copy of ledger account had also been enclosed with the reply. The Assessing Officer did not accept the said reply and made addition of Rs. 31,80,000/- as unexplained credit under Section 68 of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. At the time of hearing none appeared on behalf of the assessee despite giving notices. There is no change in address and in fact the acknowledgement card issued by postal authorities alongwith (envelope) return back to the registry with the remark left. Therefore, we are proceeding on the basis of the submissions made by the assessee during the assessment proceedings reproduced in assessment order and statement of facts filed by the assessee before the CIT(A). 6. Heard Ld. D.R. and perused all the relevant material available on record, it is pertinent to note that the assessee has filed confirmation copy of ITA No. 396/Abd/2022 Shri Ankeshkumar Bachubhai Gandhi vs. ITO Asst. Year-2017-18 sale bill, copy of ledger bill account but the remark of the Assessing Officer that same was fabricated has not been substantiated by the Assessing Officer in the assessment order as well as by the CIT(A). The statement of fact filed by the assessee has given the details about confirmation from SVP Corporation, Sales Bill, Stock Register, PAN Card of proprietor (Vishal Pandya), Sales Register, Purchase Register etc. In fact, the accounting entries are passed in Bank book, Sales register and Stock register were, duly recorded by the assessee in its-books of accounts as per the statement of facts filed by the assessee. All these contentions were not taken into account by the Assessing Officer as well as CIT(A). The observation of the Assessing Officer as well as CIT(A) that the documents were fabricated was not established by the revenue IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 9– authorities at any point of time and merely rejecting the evidences filed by the assesses cannot be sole criteria for making addition. Therefore, the addition does not sustain. Hence, the appeal of the assesses is allowed.\" 15. The Ld. CIT(A) further relied on the decision of the Hon’ble Ahmedabad ITAT in the case of Shri Sanand Textile Industries Limited vs DCIT, 995/Ahd/2014, dated 6th January, 2020 wherein it is held as under: “9.5 From the above, we note that the provisions of section 68 of the Act can be attracted where there is a credit found in the books of accounts and the assesses failed to offer any explanation or the offer made by the assessed is not satisfactory in the opinion of the assessing officer. The assesses has explained to the authorities below that the impugned amount represents the sale which has not been doubted by the authorities below. Thus in our considered view, the impugned amount cannot be treated as unexplained cash credit under section 68 of the Act merely on the ground that the assesses failed to furnish the details of the existence of the parties.” 16. It is an undisputed fact that the assessee had made sales to SVP Corporation which was already offered to tax. On this issue, we rely to decision of the Hon’ble Ahmedabad ITAT in the case of Vishal Exports in ITA No. 1684/Ahd/2004, dated 7th August, 2009 as affirmed by the Hon’ble Jurisdictional High Court of Gujarat in Tax Appeal No. 2471 of 2009, dated 3rd July, 2012. The relevant part of the order is as under: IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 10– \"The assessee had made export of goods to M/s Arina worth of Rs. 70,00,000/- in the A. Y. 1998-99. The AO having only such information that the assesses had also made so called bogus export to M/s Arina, he alleged that the assessee is also involved in such kind of bogus export of goods by over invoicing and receiving money from Russia on large scale. The assessee submitted that the AO has just made an assumption that the assessee has also made bogus export to Russia merely on the basis of information that some parties are involved to make bogus export to M/s Arina, Moscow, however as a matter of facts the name of the assessee is not found in the proceedings earned out by the DRI, New Delhi. For other years similar allegations were made for some other genuine parties. The AO on such basis made addition of Rs.70,00,000/- , Rs.64,00,000/- , Rs.,1,06,00,000/- Rs.72,00,000/- in the A.Ys. 1998-99, 1999-00, 2000-01 and 2001- 02 respectively after holding that the bogus export proceeds are nothing but the receiving back of money of the assessee’s own money initially sent abroad through hawala. The assesses submitted before us that it had shown Rs.70,00,000/-, Rs.64,00,000/-, Rs.,1,06,00,000/- and Rs.72,00,000/- for the A.Y. 1998-99, A.Y. 1999-00, A.Y. 2000-01 and A. Y. 2001-02 respectively In the Profit & loss account as sales which has been offered for taxation. The assessee also submitted that the AO has even accepted such turnover for working out deduction u/s 80HHC of the Act. The assessee further submitted that when it had already offered sales realization of Rs.70,00,000/-, Rs.64,00,000/-, Rs., 1,06,00,000/- and Rs.72,00,000/- for the A.Y. 1998-99, A.Y. 1999- 00, A.Y. 2000-01 and A.Y.2001-02 respectively as sales and such income is accepted by the AO to be the income of the assessee for respective years, addition of the same amount once again u/s 68 of the Act would tantamount to double taxation of the same income. Having regard to the facts of the case, it was argued that addition in these assessment years is based on some information gathered in some other party’s case and without concrete evidences concerning the assessee. In any case, this amounts to double taxation of the same income, when the assessee has IT(SS) Nos. 153/Ahd/2023 & ITA No. 1116/Ahd/2023 DCIT Vs. Sureshkumar Periwal Asst. Year : 2017-18 - 11– already offered the same income in the Profit & Loss account as sales. 17. Hence, the decision of the Ld. CIT(A) cannot be held to be incorrect on facts and in law. With regard to the extra-profit determined by the Ld. CIT(A), the rationale of the Ld. CIT(A) cannot be invalidated. Ergo we find no reason to interfere with the order of the Ld. CIT(A). 18. In the result, both the appeals of the Revenue are dismissed. The order is pronounced in the open Court on 22.04.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 22/04/2025 btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "