DEPUTY COMMISSIONER OF INCOME TAX (CENTRAL-1), RAIPUR, RAIPUR V. .M/S NAWAB VYAPAR PVT. LTD., , HOWRA

ITA 33/RPR/2023

AI Insights

The case involves multiple appeals and cross objections related to the assessment year 2011-12, concerning various companies linked to the SONA Bhatia Group, which underwent a search and seizure operation under section 132 of the Income Tax Act, 1961. The primary legal contention revolves around the addition of substantial amounts as unexplained cash credits under section 68 of the Act. The Tribunal's decision to restore the matter to the AO follows the finding that the same amount of money cannot be added to two different entities on a substantive basis, aligning with the directions previously given by the PCIT under section 264 of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106767 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2023
• Other Referred Cases: M/s Sona Power Pvt Ltd, M/s Merigold Impex Ltd, M/s Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, Commissioner of Income Tax Vs. Ashwani Gupta, Commissioner of Income Tax Vs. SMC Share Brokers Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.L.ANURAGI
• Assessee Lawyers: JEHANGIR D. MISTRY; .
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reassessment proceedings; Question of law; Unexplained cash credit; Period of limitation; Principle of natural justice; Deemed to accrue or arise in india; Reason to believe; Revision of order; Borrowed satisfaction
• Section: 147; 148; 143(3); 142(1); 143(2); 132; 68; 264; 10(14)

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM ITA No’s: 31, 32, 33, 34 & 116/RPR/2023 (Assessment Year: 2011-12) Sr. no ITA No’s Appellant Respondent 01 31/RPR/2023 Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 M/s Muskan Dealers Pvt. Ltd., 5th Floor GB 181, New town North, 24 Parganas, Kolkata-700092 PAN: AAFCM1245D 02 32/RPR/2023 Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 M/s Vikas Tradecom Pvt. Ltd, H/H-8, VIP Road, P.O. Aswininagar, Baguiatinorth 24 Parganas, Kolkata- 700159 PAN: AACCV5138P 03 33/RPR/2023 Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 M/s Nawab Vyapar Pvt. Ltd, Ward No. 39, Holding No., Koyla Department, 28 No Gali, Shibpur, Howrah (W.B.)-700032 PAN: AACCN4666N 04 34/RPR/2023 Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 M/s Puja Dealcom Pvt. Ltd, Ward No. 39, Koyla Dept 28, Howrah, Sibpur S.O. Howrah, West Bengal- 700032 PAN: AAECP3427F 05 116/RPR/2023 M/s Puja Dealcom Pvt. Ltd, Ward No. 39, Koyla Dept 28, Howrah, Sibpur S.O. Howrah, West Bengal- 711102 PAN: AAECP3427F Income Tax Officer, Ward-10(4), 3, Govt. Place, Kolkata-700001 2 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd Cross Objection Nos. 21, 22, 23 & 24/RPR/2023 (Assessment Year: 2011-12) Arising out of ITA Nos. 31, 32, 33 & 34/RPR/2023 Sr. no CO No’s (Arising Out of ITA) Appellant Respondent 01 21/RPR/2023 (31/RPR/2023) M/s Muskan Dealers Pvt. Ltd., 5th Floor GB 181, New town North, 24 Parganas, Kolkata, Pin: 700092 PAN: AAFCM1245D Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 02 22/RPR/2023 (32/RPR/2023) M/s Vikas Tradecom Pvt. Ltd, H/H-8, VIP Road, P.O. Aswininagar, Baguiatinorth 24 Parganas, Kolkata- 700159 PAN: AACCV5138P Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 03 23/RPR/2023 (33/RPR/2023) M/s Nawab Vyapar Pvt. Ltd, Ward No. 39, Holding No., Koyla Department, 28 No Gali, Shibpur, Howrah (W.B.)-700032 PAN: AACCN4666N Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 04 24/RPR/2023 (34/RPR/2023) M/s Puja Dealcom Pvt. Ltd, Ward No. 39, Koyla Dept 28, Howrah, Sibpur S.O. Howrah, West Bengal- 700032 PAN: AAECP3427F Deputy Commissioner of Income Tax (Central-1), Raipur, C.G., 492001 िनधाŊįरती की ओर से /Assessee by : Shri Jehangir D. Mistry, Sr. Adv., Shri Madhur Agrawal, Adv. & Shri Praveen Jain, CA राजˢ की ओर से / Revenue by : Shri S. L. Anuragi, CIT-DR सुनवाई की तारीख / Date of Hearing : 22.11.2024 घोषणा की तारीख /Date of Pronouncement : 11.12.2024 3 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd आदेश / O R D E R Per Bench: The captioned appeals are filed by the revenue/assessee and the cross objections by the assessees against the separate orders of Commissioner of Income Tax (Appeals)-3, Bhopal, (in short “Ld. CIT(A)”), all pertains to the Assessment Year 2011-12, dated 22.11.2022 (w.r.t. appellants at Sr. No. 1-4) and dated 09.08.2021 (w.r.t. appellants at Sr. No. 5), which in turn arises from the orders U/s 143(3) r.w.s. 264 of the Income Tax Act, 1961 (in short “The Act”), passed separately by the Deputy Commissioner of Income Tax, Circle-1, Raipur (in short “Ld. AO”), dated 20.09.2021 (w.r.t. appellants at Sr. No. 1,3 & 4), dated 26.12.2018 (w.r.t. appellants at Sr. No. 2 & 5). 2. All the aforesaid matter pertains to various assessees connected with or who had invested in SONA Bhatia Group, which was subject to a Search & Seizure operation u/s 132 of the Act, carried out on 24.05.2017. Since the issues involved in the captioned appeals / cross objections are common, interconnected and inextricably interwoven, except the quantum involved therein, thus, for the sake of convenience and brevity, all the aforesaid matter are being heard together and are disposed of under this common order. 4 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 3. In order to deliberate upon and to decide the common issues involved in the present appeals, ITA No.34/RPR/2023 in the case of M/s Puja Dealcom Pvt. Ltd., has been taken up for adjudication as the lead case, wherein our findings / observations / decision shall have a direct bearing on the issues in the other cases, therefore, the outcome of the lead case shall apply mutatis mutandis to the remaining other matters. 4. Ground of appeal raised by the department in ITA No. 34/RPR/2023 are extracted as under: 1. Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.58,61,300/-, Rs.4,61,64,250/- and Rs. 57,01,400/- made by the AO u/s 68 as unexplained cash credit. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 58,61,300/-, Rs.4,61,64,250/- and Rs. 57,01,400/- without appreciating the fact that the assessee completely failed to explain the nature and source of the said credit amount. 3. Without prejudice to the above, whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in assuming jurisdiction over the case and deleting the addition without appreciating that the same issue had already been addressed by PCIT(Central), Bhopal in his order u/s 264 of the IT Act. 5. The brief facts of the case, as emanating from the records or so apprised before us are that, the appellant is a company, deriving income from investments (i.e. buying and selling shares, property, bonds, other funds and other assets etc). A search and seizure operation u/s 132 of the Act was carried out on SONA Bhatia Group on 5 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 24.05.2017. The appellant, M/s Puja Dealcom Private Ltd. is one of the investor company in SONA Bhatia group. The case of the appellant was reopened on the basis of information received by, ITO Ward 10(4), Kolkata. Consequently, return of income was filed u/s 147 of the Act declaring total income of Rs 17,230/- on 26.04.2018. The assessment u/s 147 r.w.s 143(3) was concluded on 26.12.2018 and total income was assessed at Rs. 5,77,44,178/- by making substantive additions of Rs. 5,77,26,950/- on account of unexplained cash credit of u/s 68. Subsequently, during re-assessment proceedings in the case of M/S Sona Power Pvt Ltd, the AO of the said company found that it had received share application money of Rs. 38,38,50,000/- from Nine (9) Kolkata based shell companies, including the appellant company. M/S Sona Power Pvt Ltd has received sum of Rs. 11,98,50,000/- from the appellant company during AY 2011-12, which includes amount of Rs. 5,77,26,950/-. Further, during the reassessment proceedings for the AY 2011-12 in the case of M/S Merigold Impex Ltd., it was found that the said entity had received share application money to the tune of Rs. 9,53,00,000/- from four Kolkata based shell companies, including a sum of Rs. 21,50,000/- from the assessee company. An addition of same amount on substantive basis was also made in the hands of M/s Sona Power Pvt Ltd and M/S Merigold Impex Ltd., during the reassessment proceedings u/s 147 of the Act. 6 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 6. Since the addition qua the investment made by the assessee company are made under the re-assessment order in the case of M/s Sona Power Pvt Ltd and M/s Merigold Impex Ltd., wherein substantive addition of the same amount has been made by treating them the ultimate beneficiary, the assessee, being aggrieved with the aforesaid action of the revenue have filed an application u/s 264 on 27.01.2021, against the order of Ld. AO u/s 143(3) r.w.s.147 passed on 26.12.2018, before the Ld. PCIT(Central), Bhopal at Jaba, with the contentions that evidently when the addition on substantive basis is made in the hands of entities of Sona Bhatia Group, the same cannot be made in the hands of assessee on substantive basis. For the sake of completeness of facts and information, the copy of application u/s 264 filed before Ld. PCIT(Central), Bhopal at Jaba for revision of assessment made u/s 143(3) r.w.s. 147, is culled out as under: 7 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 8 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 9 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 10 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 11 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 12 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 13 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 14 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 15 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 16 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 17 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 18 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 19 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 20 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 21 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 7. The aforesaid application of the assessee was thereafter disposed of by the Ld. PCIT(Central), Bhopal at Jaba on 25.03.2021 by passing an order u/s 264 of the Act, directing the Ld. AO to reconsider matter on merits after giving proper opportunity to the assessee, keeping in view the fact that the same amount of money cannot be added in two different entities on substantive basis, it can be substantive in the case of actual beneficiary and protective in the hands of other entity to protect the interest of revenue, which verbatim reads as under: 22 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 23 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 24 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 25 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 26 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 27 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 28 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 8. Further, in accordance with direction of the Ld. PCIT(Central), Bhopal at Jaba, a consequential order u/s 143(3) r.w.s. 264 of the Act has been passed by the Ld. AO on 20.09.2021, wherein the substantive addition made in the case of assessee vide order u/s 147 r.w.s. 143(3) dated 26.12.2018 has been rendered to be the addition on protective basis. The findings of Ld. AO while passing the consequential order are extracted as under: 5. As a matter of fact, in the case of M/S Sona Power P Ltd. & M/S Merigold Impex, the applications under VsVs have been filed for the year under consideration involving these issues. Since the assessee has claimed that this amount of Rs. 5,77,26,950/-, has flown to the M/S Merigold Impex & M/s Sona Power P Ltd. and has been taxed in those entities, the addition made in this case has to be treated as Protective Assessment. There is nothing on record to contradict the submission given by the assessee. Therefore, based on the facts and evidences placed on record, submission made by the assessee and keeping in view the fact that the same amount of money cannot be added in two different entities on substantive basis in the same assessment year the amount of Rs. 5,77,26,950 is treated as Income in the hands of the assessee on Protective Basis substantive basis. 29 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 9. Being aggrieved with the aforesaid impugned assessment order, the appellant preferred an appeal before the First Appellant Authority, wherein the contentions of the assessee-appellant are concurred with by the Ld. CIT(A) and has held that the entire protective addition is liable to be deleted, by observing as under: In view of the above discussion and disagreeing with the request of the AO, as the entire substantive addition has already been ascertained by the AO in the hands of M/s Sona Power Pvt Ltd and the same have already been upheld by my Id predecessor, the protective addition of Rs. 5,55,76,950/- cannot be sustained in the hands of the appellant on protective basis. 3.2.7 Considering the discussion made above, the AO is hereby directed to delete entire protective addition amounting to Rs. 5,77,26,950/-. Therefore, appeal on these grounds is allowed. 10. As the relief has been granted by Ld. CIT(A) to the assessee, the revenue finds it unjustified, therefore, in appeal before us in the present matters. 11. At the outset, Shri S. L. Anuragi, CIT-DR representing the revenue have reiterated the facts of the case and have submitted that the Ld. CIT(A) was not justified in deleting the addition of Rs. 5,77,26,950/- made by the Ld. AO u/s 68 of the Act as 30 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd unexplained cash credit. Ld. CIT-DR raised the objection to the decision in the order of Ld. CIT(A), stating that the same was without appreciating the fact that the assessee company had completely failed in explaining the nature and source of said credit amount. Ld. CIT-DR placed his reliance on the order of Ld. AO u/s 143(3) r.w.s. 264 dated 20.09.2021, have requested to set aside the impugned order passed by Ld. CIT(A) dated 22.11.2022 and to restore the addition made by Ld. AO on protective basis in the hand of assessee company. 12. On the contrary, Shri Jehangir D. Mistry, Sr. Adv., representing the assessee (in short “Ld. AR”), have raised various contentions, inter alia alleging as under: (i) the Ld. AO has not followed directions given by the Ld. PCIT in his order u/s 264 dated 25.03.2021, (ii) that the jurisdictional conditions as prescribed in section 147 to 151 of the Act are not fulfilled in the present case, the Ld. AO, therefore, has assumed jurisdiction contrary to the law in absence of valid notice u/s 148, the reasons recorded does not show any application of mind, (iii) notice u/s 143(2) of the Act has not been served to the assessee company, (iv) the provisions of section 68 are inapplicable. 31 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 13. To elaborate the aforesaid contentions along with reasonings and prayer, Ld. AR requested to submit a written submission after the hearing for which permission is granted and in due course a written submission is furnished before us, the same for the sake of completeness has been extracted as under: PUJA DEALCOM PRIVATE LIMITED Reg. Off: Ward No 39, Holding No. Koyla Dept.28 No. Goli P.s Shibpur Howrah Howrah WB 711102 CIN: U51909WB2007PTC117689, E-mail: [e-mail] To, The Hon. Members, ITAT Raipur, Bench. Assessee: Puja Dealcom Private Limited ITA Number: ITA 34/RPR/2023 CO 24/RPR/2023 ITA 116/RPR/2023 With respect to hearing on the above-mentioned matter, we submit as under: The present Appeal by the Department and the cross objection (\"CO\") by the Company is against the CIT(A)'s order dated 31.10.2022 arising out of the order dated 20.09.2021 passed u/s 143(3) rws 264 of the Act. In this regard submit the synopsis of the arguments on behalf of the Company: 1. The AO has not followed directions given by the Pr. CIT in its Order dated 25.03.2021 passed u/s 264 of the Act: We submit that the Pr. CIT after considering the application of the Company and the submissions made by the company, disposed of the application by giving the direction to the AO to \"reconsider this matter on merits after giving proper opportunity to the assessee keeping in view the fact that the same amount of money cannot be added in two different entities on substantive basis in the same assessment year. It can, at best, be added on substantive basis in the hands of the entity which is identified as the actual beneficiary, and on protective basis in the hands of the other entity, to protect the interest of revenue. The AO is, therefore, directed to take action accordingly. \" It is submitted that the AO erred in not following the direction of the Pr. CIT of adjudicating the issue on the merits. It is submitted that the adjudication on merits would 32 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd include all the ground to challenge the addition including the validity of the reopening of the assessment as well as the correctness of applicability of section 68 of the Act to the amounts of Rs. 5,77,26,950/- in the original assessment order. The AO merely treated the original \"substantive addition\" as \"Protective addition\" without appreciating that the AO was first required to decide all the issues on the merits and then adjudicate as to whether the addition, if any, should at all be substantive or protective. The CIT(A) deleted the protective addition by merely holding that as part of substantive addition has been confirmed in the hands of the ultimate beneficiary and on balance tax has been paid, the protective addition ought to be deleted. It is submitted that the Order of the AO is clearly contrary to the direction issued by the Pr. CIT and, hence, liable to be quashed and set aside. 2. The AO has assumed jurisdiction contrary to law as the jurisdictional condition in section 147 to 151 of the Act are not fulfilled in the present case on the basis of the following submission — 2.1 No valid notice issued under section 148 of the Act — a. It is submitted that two notice both dated 26.03.2018 have been issued to the Company. The first notice (Pg. 628 of PB) does not provide the time limit within which the return of income is required to be file and, secondly, the tab to file the return was available only against the second notice issued on 10.04.2018. Therefore, it is submitted that the said notice is invalid and bad in law. b. It is submitted that the second notice dated 26.03.2018 (page 629 of paper book) is firstly an unsigned notice and, secondly, the said notice has been issued on 10th April 2018 (page 631 of paper book). Therefore, it is submitted that the second notice is clearly invalid being an unsigned notice; and beyond the period of limitation as per section 149 of the Act as being issued beyond the period of six years from the end of the relevant assessment year. c. It is further submitted that the Assessing Officer cannot issue two notices under section 148 of the Act for the same assessment year and, hence, the said notices are invalid and bad in law. 2.2 The reasons as recorded by the Assessing Officer does not show any application of mind on the basis of the following submissions — a. The reasons are based on borrowed satisfaction as the Assessing Officer has not independently applied his mind to the information, which was allegedly received from 33 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd the Investigation wing and, hence, the reasons cannot be said to be the reasons of the Assessing Officer. b. The reasons proceed on incorrect factual basis as para two of the reasons (page 6 of paper book) referred to three companies with respect to which alleged information was received by the Assessing Officer from the investigation wing whereas the letter received from the investigation wing as extracted in the assessment order (page 57 of paper book) dated 26.12.2018 also referred to three companies but one of the companies as referred to in this letter is different from the company referred to in the reasons. Further the amount mentioned in reasons (page 6 of paper book) differ from amount as per the alleged information (page 57 of paper book). Therefore, it is submitted that the reasons as recorded by Assessing Officer are not even based on information received from the investigation wing and, hence, the same are unsustainable in law. c. The reasons as recorded by the Assessing Officer (page 6 of paper book) referred to an amount of Rs. 2,13,03,300/- as having been received from the bank account of the alleged three companies, however, the basis of arriving this amount has not been explained. Even in the assessment order alleged information from investigation wing of completely different amount of Rs. 5,77,26,950/- has been stated and has been added on the same basis i.e. credits from the said companies. Therefore, it is submitted that the amount as referred to in the reasons have no basis and, hence, the reasons cannot give any belief to the Assessing Officer that income to that extent has escaped assessment. d. Copies of the alleged information as having been received by the Assessing Officer from the investigation wing has not been provided to the Company even after asking for the same (page 21 of paper book). In fact, the Assessing Officer in its letter dated 26.10.2018 (page 37 of paper book) citing held that the said documents are \"Internal Matter of the Department\" and, hence, cannot be provided to the Company. It is submitted that such stand of the Revenue is clearly contrary to law. Therefore, it is submitted that an adverse inference must be drawn against the Department, that the information does not justify the reopening of the assessment. e. That the assessee during the course of assessment proceeding demanded \"certified copy of Approval\" for reopening vide letter dated 28.04.2018 and again pointed out same in its objection vide letter dated Nil filed on 20.07.2018 (Pg 7 and 23 of PB). However, objection with respect to approval was neither disposed off nor copy of same was provided till completion of scrutiny assessment. Thus it can be presumed that the same is invalid as not provided. 34 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 3. Notice under section 143(2) of the Act has not been served on the Company and, therefore, no scrutiny assessment order can be passed for the relevant year. a. It is submitted that in the assessment order dated 26 December 2018 (page 57 - 82 of paper book) at page 58, the Assessing Officer notes that the notice issued under section 143(2) of the Act dated 21st May 2018 was returned back undelivered. It is further submitted that the said notice has not been uploaded on the Income-tax portal although all other notices issued under section 148 and 142(1) of the Act, have been so uploaded. (page 630-631 of paper book) b. Therefore, admittedly as the jurisdictional notice under section 143(2) of the Act has not been served on the company, no assessment order under section 143(3) of the Act can be passed. 4. The provisions of section 68 of the Act are inapplicable to the alleged addition made by the Assessing Officer. The Assessing Officer has proposed to add the amounts of Rs. 5,77,26,950 received in the bank account of the company from the alleged three companies as referred to in the reasons as well as in the assessment order. It is submitted that the nature of the amount received by the company from the alleged three alleged entities do not come within the ambit of section 68 on the basis of the following submission as under— 4.1 Sale proceeds from sale of shares — a. The company submits that the shares are stock-in-trade of the company and the amount of sale consideration on the sale of shares has already been included as income / revenue in the profit and loss account of the company and, hence, the said amount has already been considered as income for the purposes of filing the income tax return. It is submitted that once an amount has already been offered to tax as income of the Company, there is no question of provisions of section 68 being applicable to the very same amount to deem the same amount as again the income of the Company. The ledger account of the said three entities in the books of the Company are at page 148-153 of paper book. b. The shares have been sold by the Company at cost i.e. no profit or loss has been made or incurred by the Company. Therefore, it is submitted that there is no question of applying section 68 of the Act on the transaction of sale of shares which has been sold at cost. The Company has not claimed any exemption on the same of shares. 4.2 Repayment of loan by the said alleged entities to the Company- It is submitted that some of the entries with the alleged three entities represents repayment of the loan given by the company to them and, therefore, there can be no question of any allegation of section 68 being applicable on the repayment of the loan given by the company to the said entities. 35 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd By no stretch of imagination receiving back one's own money which has been given on loan can be income or deemed income of the Company. 4.3 Receipt of loan which has been repaid by the Company — a. It is submitted that some of the entries with respect to the alleged three entries represents loan given by the said entities to the Company which have been repaid within short span of time. It is submitted that admittedly all the loans have been repaid as at the end of the year there are no outstanding amounts shown as payable by the Company to the said entities. b. It is submitted that the Company had an open and running account with the said entities where there are multiple transactions inter se between the companies. However, as at the end of the year there is neither any receivable nor payable with the said entities. Therefore, it is submitted that even if, there was some loan at some point of time during the year as the loan has been repaid within the year, the question of applicability of section 68 does not arise. 4.4 Therefore, it is submitted that, even on the merits no addition could have been made under section 68 with respect to the alleged transactions as referred to by the Assessing Officer in the assessment order. 5. That ITA 116/RPR/2023 is the appeal arising out of original assessment order dated 26.12.2018 which has been subjected to revision order dated 25.03.2021, however erroneously first appeal order has been passed subsequently on 09.08.2021. 6. Prayer: 6.1 It is therefore submitted that the impugned additions be deleted and the reassessment proceedings be quashed. 6.2 Alternatively, the order of the AO dated 20th September, 2021 under section 143(3) r.w.s. 264 of the Act be set aside and the AO be directed to pass a fresh order in compliance with the directions of the Pr. CIT in Order u/s 264 completely dated 25.03.2021 including the direction to consider the aforesaid grounds as raised herein above and restricting the scope of the direction to the extent of the alleged addition of Rs. 5,77,26,950 as made in the original order. Thanking You For, Puja Dealcom Private Limited Place: Raipur Date : 05.12.2024 36 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 14. Based on aforesaid submissions, it was the prayer that the impugned additions be deleted, and reassessment proceedings be quashed. Alternatively, it is requested that the order of Ld. AO dated 20.09.2021 passed under section 143(3) r.w.s. 264 of the Act be set aside and the Ld. AO be directed to pass a fresh order in compliance with the directions of the Ld. PCIT in his order u/s 264 dated 25.03.2021, including the directions to consider the aforesaid grounds raised by the assessee and to restrict the scope of reassessment to the extent of the alleged addition of Rs. 5,77,26,950/-. 15. CO No. 24/RPR/2023 (arising out of ITA No. 34/RPR/2023) for AY 2011-12 filed by the assessee. The grounds / additional grounds of aforesaid CO by the assessee are extracted as under: 1. On facts and in the circumstance of the case and in law, the initiation of the reassessment proceedings under section 147 of the Act was without jurisdiction and, hence bad in law. 2. On facts and in the circumstance of the case and in law, the reassessment order is unjustified, bad in law as being against principles of Natural Justice. The Assessee submits that even after repeated request, Assessee was neither provided the copies of documents received from Investigation Wing relied by the Assessing Officer nor was the opportunity given to the Assessee to cross examine the persons whose statements are relied on by the Assessing Officer. 3. On facts and in the circumstance of the case and in law, the CIT(A) ought to have held that the provision of section 68 of the Act is not applicable with respect to the 37 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd amount of Rs. 5,77,26,950/-, which has been treated as the income of the Assessee by the Assessing Officer under the said section. 4. On facts and in the circumstance of the case and in law, the CIT(A) ought to have held that the amount of sale consideration received from the sale of the shares, which has already been treated as income by the assessee cannot be again added as income of the Appellant under section 68 of the Act. 5. Without prejudice to grounds No. 4, the Assessee submits that if the amount of sale consideration received from the sale of the shares is treated as income under section 68 of the Act, then the Assessing Officer ought to be directed to reduce the sale consideration by the same amount while computing income under the head \"Income from Business and Profession\", The Assessing Officer should also be directed to give setoff of the business loss against the income allegedly taxable under section 68 of the Act. 6. The Assessee craves leave to add / alter / delete / substitute the grounds raised above which are all without prejudice to one another. Additional ground dated 27.03.2024 Ground 7: On the facts and in the circumstances of the case and in law, the initiation of reassessment proceedings vides two notices dated 26th March, 2018, under section 148 of the Act is invalid and bad in law. Ground 8: On the facts and in the circumstances of the case and in law, the reassessment order dated 26/12/2018 passed under section 147 r.w.s. 143(3) of the Act is invalid and bad in law being passed without complying with the provisions of section 143(2) of the Act. 38 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 16. Condonation of delay in filing of Cross Objections by the assessee: 16.1 At the very beginning, it is pointed out by the registry that the cross- objection No.24/RPR/2023, filed by the assessee against the appeals of department are barred by limitation, being filed with a delay of 25 days. 16.2 In explanation, Ld. AR have submitted that the department has filed the appeal on 02.02.2023 before the ITAT, the notice for hearing was issued by the ITAT on 21.06.2023 fixing the date of hearing on 31.07.2023. After knowing about the fixation of appeal through the ITAT Portal, assessee requested to provide copy of Form 36 filed by the department, which was received by the assessee on 11.07.2023. Thereafter, the cross objection was filed by the assessee in Form No. 36A on 04.09.2023, with a delay of 25 days after getting advice from Sr. Counsel at Mumbai on 26.08.2023. An application along with affidavit has been filed by the assessee in support of such clarification. Copy of application for condonation along with affidavit is extracted as under: 39 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 40 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 16.3 Considering the aforesaid submissions, by the Ld. AR, under the circumstances of the present case, the delay of 25 days, without any deliberate / 41 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd malafide intention of the assessee is found to be on account of sufficient cause, therefore, we condone the same. 17. Adverting to the controversies raised by the department and the assessee in the lead matter by way of appeal and cross objection in ITA No. 34/RPR/2023 and CO No. 24/RPR/2023, respectively. After a thoughtful consideration to the rival submissions, perusal of the material available on record and the orders of revenue authorities. As a fallout of the aforesaid discussion and deliberations, it is emerging in the present that an additions u/s 68 for Rs.5,77,26,950/- was made, treating the investment by the assessee company in the share application and share premium of M/s Sona Power Pvt. Ltd., as unexplained cash credit in the case of the appellant by the Ld. AO on substantive basis, while passing the order of reopening assessment u/s 147 r.w.s. 143(3) on 26.12.2018. The reopening assessment order was assailed by the assessee, seeking directions from the Ld. PCIT through an application for revision of the assessment on 27.01.2021. Ld. PCIT after considering request of the assessee and the fact that the impugned amount of addition was taxed on substantive basis in the hands of two beneficiaries of Bhatia Group and the assessee company, have directed the Ld. AO to reconsider the matter on merits, also clarified that the same amount of money cannot be added in two different entities on substantive basis, at best it can be added on substantive basis in the hands of 42 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd the entity which is identified as actual beneficiary and on protective basis in the hands of other entity. Consequent to the directions of Ld. PCIT, the Ld. AO had passed an order u/s 143(3) r.w.s. 264 of the Act dated 20.09.2021, recharacterizing the addition in the hands of assessee M/s Puja Dealcom Pvt. Ltd. on protective basis, as the substantive addition was already made in the hands of M/s Merigold Impex and M/s Sona Power Pvt. Ltd. The order of Ld. AO dated 20.09.2021, thereafter, has been challenged by way of an appeal before the First appellate Authority, who had decided the issue in favour of the assessee, observing that the entire substantive addition has already been ascertained by the Ld. AO in the hands of M/s Sona Power Private Ltd. and the same have already been upheld by his predecessor, therefore, the protective addition cannot be sustained in the hands of appellant, thus, deleted. We may herein observe that the issue herein on merits cannot be decided at this juncture as prayed by the Ld. AR to delete the addition and quash the reassessment proceedings, since the matter of M/s Sona Power Pvt. Ltd., who has been saddled with the addition on substantive basis, involving the impugned amount under consideration is already restored back to the files of Ld. AO for fresh assessment vide order of this tribunal in ITA No. 15/RPR/2020 dated 27.03.2023 wherein, the relevant observations are as under: 28. We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the refusal by the A.O of the assessee’s request for copies of the complete 43 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal that were, inter alia, acted upon both for initiating proceedings u/s 147 of the Act as well as for drawing of adverse inferences as regards the receipt of share application money/share capital by the assessee company. Also, we are unable to concur with both the lower authorities who had declined the assessee’s specific written request for allowing an opportunity to cross- examine the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal, both of whom were stated to be not unrelated/not acquainted with the assessee company. Although it is a matter of fact borne from record that the A.O had made available to the assessee company extracts of the statements of the aforementioned persons, i.e to the extent the same as per her were relevant to its case, but the same in our considered view could by no means be held to be sufficient. We, say so, for the reason that as pointed out by the assessee company in its letter dated 21.12.2018 it was impractical to comment on the details mentioned in the extracts that were made available to it by the A.O, for the reason that the same referred to the balance portion of the statements which were never made available. Also, we find substance in the claim of the assessee that proper inferences could not be drawn in the absence of complete details as there could be strong possibility that the remaining part of the statements that were withheld by the A.O might have contained some element which would be in contradiction of the extract/portion made available to the assessee. Be that as it may, we are of the considered view that a blind reliance on the statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal that were not even recorded by the A.O but by the Investigation Wing, Kolkata, and that too without making available to the assessee the complete copies of the statements of the said persons would by no stretch of imagination be held to be justified. We would at this stage not hesitate to observe that making available extract/portion of the statements of the aforementioned persons would be nothing better than eyewash. As the statements of the aforementioned persons had, inter alia, been pressed into service by the A.O not only the stage of initiating proceedings u/s 147 of the Act, but was also carried further for drawing of adverse inferences as regards the share application money/share capital received by the assessee company, therefore, in our considered view it was obligatory on the part of the A.O to have made available complete copies of the same specifically when the assessee had vide its letter dated 21.12.2018 (supra) requested for it. 44 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd Our aforesaid view is all the more fortified by the fact that the assessee in the absence of the balance portion of the statements of the aforementioned persons that were withheld by the A.O had in a clear and unequivocal terms expressed its inability to comment on the details mentioned in the extracts made available to it. On the basis of our aforesaid observations, we are of a strong conviction that the A.O before pressing into service the statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal and drawing adverse inferences therefrom, ought to have made available complete copies of their statements to the assessee company. 29. Adverting to the claim of the Ld. AR that the A.O by declining the assessee’s specific written requests for allowing of cross-examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal i.e. third parties who were in no way related/acquainted to the assessee company, had acted in a flagrant violation of the basic tenements of the principles of natural justice, we find substance in the same. As observed by us hereinabove, the assessee company vide its letter dated 21.12.2018 (supra) had specifically requested the A.O for facilitating a cross examination of the aforementioned persons whose statements were pressed into service by her both for initiating proceedings u/s 147 of the Act; as well as for drawing of adverse inferences as regards the authenticity of the transactions of receipt of share application money/share capital in its hand. It was specifically stated before the A.O that as the statements of the aforementioned persons were not recorded by him but by the Investigation Wing, Kolkata, therefore, no adverse inferences be drawn without carrying out a personal examination of the said persons and allowing their cross examination to the assessee company. Also, as noticed by us hereinabove, it was categorically stated by the assessee that as no nexus could be established between the statements of the aforementioned persons and the adverse inferences which were sought to be drawn by referring to the same, therefore, a cross- examination of the aforementioned persons was indispensably required. Although the assessee had specifically requested the A.O for allowing a cross-examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal, but we find that the same was declined by her for the reason that the same as per her was not deemed to be 45 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd necessary. We are absolutely unable to comprehend as to how a cross- examination of the third party whose statements had been pressed into service for drawing of adverse inferences in the hands of the assessee company could have been declined by the A.O. In our considered view the refusal to allow a cross-examination of the aforementioned persons is beyond doubt a flagrant violation of the basic tenements of the principles of natural justice. 30. Our aforesaid view that the A.O was obligated to have facilitated to the assessee a cross-examination of the aforementioned persons whose statements were, inter alia, pressed into service by her both for initiating proceedings u/s 147 of the Act; as well as for drawing adverse inferences as regards the authenticity of the transactions of receipt of share application money/share capital by the assessee company is supported by the judgment of the Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, C.A No.4228 of 2006 (SC) dated 02.09.2015. In the aforesaid case the Tribunal had upheld the rejection by the lower authorities of the assessee/appellant’s request for allowing a cross-examination of the dealers whose statements were relied upon by the adjudicating authority while passing its order by observing as under: “6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders.” On appeal, the Hon’ble Apex Court was of the view that the failure on the part of the adjudicating authority to allow the assessee an opportunity to cross-examine the aforementioned persons whose statements were made the very basis of the impugned order was a serious flaw which rendered the order as nullity inasmuch as it amounted to violation of the principles of natural justice. It was observed by the Hon’ble Apex Court that though the assessee had requested for an opportunity to cross-examine the aforementioned persons but the said requests were turned down by the adjudicating authority. Considering the fact that the Tribunal had upheld the orders of the lower authorities which had turned down the assessee’s 46 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd request for a cross-examination, the Hon’ble Apex Court held the order of the Tribunal as totally untenable. Referring to the observations of the Tribunal that cross-examination of the persons concerned would not serve any purpose, the Hon’ble Apex Court was of the view that it was not for the Tribunal to have taken recourse to any guess work as to for what purposes would have been served by the assessee appellant by carrying out cross-examination. For the sake of clarity, the relevant observations of the Hon’ble Apex Court are culled out as under: “We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 47 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.” 31. Our aforesaid view that cross examination of a person whose statement is relied upon by the A.O for drawing of adverse inferences is statutorily required to be facilitated to the assessee is also supported by the judgment of the Hon’ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Ashwani Gupta (2010) 322 ITR 396 (Delhi). It was observed by the Hon’ble High Court that as the A.O had, inter alia, failed to facilitate cross-examination of the person whose statement was relied upon by him for drawing of adverse inferences in the hands of the assessee, then such failure would amount to denial of an opportunity and would be fatal to the proceedings. The Hon’ble High Court while concluding as hereinabove had observed as under: “Once there is a violation of the principles of natural justice inasmuch as seized material is not provided to an assessee nor is cross-examination of the person on whose statement the Assessing Officer relies upon, granted, then, such deficiencies would amount to a denial of opportunity and, consequently, would be fatal to the proceedings. Following the approach adopted by us in SMC Share Brokers (supra), we see no reason to interfere with the impugned order. No substantial question of law arises for our consideration.” (emphasis supplied by us) 32. Also, a similar view had been taken by the Hon’ble High Court of Delhi in the case of Commissioner of Income Tax Vs. SMC Share Brokers Ltd. (2007) 288 ITR 345 (Delhi). It was observed by the Hon’ble High Court that in the absence of cross-examination of a person on the basis of whose statement proceedings had been launched in the hands of the assessee, no adverse inferences could have validly been drawn. 33. On the basis of the facts involved in the case before us read a/w. the aforesaid settled position of law, we are clear in our mind that the A.O had grossly erred in law and facts 48 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd of the case, both in withholding the copies of the complete statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal; and also by refusing to allow their cross-examination to the assessee despite its persistent requests for the same. Although the Ld. AR by drawing support from the aforesaid judicial pronouncements had tried to impress upon us that the failure on the part of the A.O to facilitate cross- examination of the aforementioned persons; and also making available complete copies of their statements would be fatal to the validity of the assessment in hand, but we are unable to persuade ourselves to subscribe to his aforesaid contention. Admittedly, as observed by us hereinabove, the failure on the part of the A.O to make available complete copies of the statements a/w. facilitating a cross-examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal is a serious flaw and is in fact a flagrant violation of basic tenements of the principles of natural justice, but the same in our considered view would not on such standalone basis render the assessment framed by the A.O as nullity. As the failure on the part of the A.O to facilitate a cross examination of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal; and also make available complete copies of their statements would have undeniably made it impractical for the assessee company to defend its case and rebut the adverse inferences which the A.O would have drawn by pressing into service the statements of the aforementioned persons, therefore, in our considered view the matter in all fairness would require to be revisited by the A.O. We, thus, in all fairness by adopting a balanced approach restore the matter to the file of the A.O for re adjudication after making available complete copies of the statements of the aforementioned persons, viz. S/Shri Narendra Jain and Champak Mandal and facilitating their cross-examination to the assessee company. 34. As we have restored the matter for fresh adjudication to the file of the A.O in terms of our aforesaid observations, therefore, we refrain from dealing with the other contentions advanced by the ld. A.R before us, both as regards the validity of the jurisdiction that was assumed by the A.O for initiating proceedings u/s.147 of the Act; as well as those qua the merits of the case, which the assessee would be at a liberty to raise before the lower authorities in the course of de-novo proceedings. Needless to say, the A.O shall in the 49 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. 35. In the result, appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations. 18. According to the aforesaid decision in the case of M/s Sona Power Pvt. Ltd., which is the entity in whose hand the substantive addition was made, the matter is restored to the files of the Ld. AO, thus, the order of Ld. CIT(A) having the assumption that the substantive addition in the hands of M/s Sona Power Pvt. Ltd., which was upheld by his predecessor reached the finality, gets reversed and yet to be decided. Herein, it would also be pertinent to mention that in the present case, neither the Ld. AO nor the First Appellate Authority have dealt with the merits of the issue, whereas the specific directions by the Ld. PCIT while passing the order u/s 264 of the Act was, to reconsider the matter on merits was overlooked. Both the revenue authorities have failed to look into the merits of the issue, to check and to observe that whether the assessee had complied with the condition’s requisite u/s 68 of the Act, or not. Ld. AO had simply altered or recharacterized the nature of addition from substantive to protective. 19. In view of aforesaid facts, circumstances, and the allegation by the Ld. AR that the directions of Ld. PCIT are not followed by the Ld. AO in toto, therefore the assessee is aggrieved with the same and have requested for fresh assessment. We find merits in such contentions of the Ld. AR, specially as the case is connected with 50 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd the case of M/s Sona Power Pvt. Ltd., in whose case the substantive addition was made, wherein it has been decided to restore the matter back to the file of assessee, as discussed (supra), therefore, we deem it fit to set aside the order of Ld. CIT(A) and to restore the matter back to the file of Ld. AO, with the directions to reconsider the matter on merits and decide the issue afresh, restricting the scope of assessment to the extent of the addition which is the subject matter in present case i.e., addition of Rs.5,77,26,950/- u/s 68 of the Act. resultantly, the appeal of revenue in ITA 34/RPR/2023 has been partly allowed for statistical purposes, in terms of our aforesaid observations. 20. Needless to say, that the assessee shall be provided with reasonable opportunity of being heard in the set aside assessment proceedings. 21. As we have decided the appeal of the department in ITA No. 34/RPR/2023 by setting aside the order of Ld. CIT(A) and the matter has been restored to the file of Ld. AO for fresh assessment, the CO No. 24/RPR/2023 of the assessee become infructuous thus, dismissed, without dealing with its grounds, however, the assessee would be at liberty to raise the issues which are not alluded herein, before the revenue authorities in the set aside proceedings. 51 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 22. Since, the lead case i.e., ITA No. 34/RPR/2023 in the case of Puja Dealcom Pvt. Ltd. is restored back to the file of Ld. AO and CO of assessee in CO No.24/RPR/2023 is dismissed. Having similar facts and circumstances, involving identical grounds of appeal by the revenue in ITA 31, 32, 33/RPR/2023 in case of other connected appellants of the same group, the appeals of revenue are partly allowed for statical purposes and CO by the assessee in CO No. 21,22,23/RPR/2023 are dismissed, in terms of our decision in ITA No. 34/RPR/2023 in the case of Puja Dealcom Pvt. Ltd. and CO No.24/RPR/2023, respectively. 23. ITA No. 116/RPR/2023 by the assessee, M/s Puja Dealcom Pvt. Ltd. Grounds of appeal raised by the assessee are as under: 1. That Assessee has applied for First Appeal against the Assessment Order passed by the Ld. ITO, Ward 10(14) Kolkata. Subsequently, assessee applied for Revision Order before Hon. PCIT(Central), Bhopal on 27.01.2021 withdrawing its First appeal, which was admitted. Inspite of the withdrawal of First Appeal, Order has been passed by Hon. CIT(E), without considering the same, thus same is bad in law. 2. That the AO has passed Order u/s 143(3) rws 264 Dt.20.09.2021 by covertining above sustantive addition on protective basis and against this order assesee has filed appeal before Hon. CIT(A)-3, Bhopal who deleted the above addition vide Order dt. 22.11.2022. Since Revision Order u/s 264 dated 25.03.2021 was already passed by withdrawing the first appeal even before the present Order of CIT(A)-3 dated 09.08.2021 being appealed; Appellant hereby request your honour to kindly quash the Order of CIT(A)-3 dated 09.08.2021. 52 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 3. That on the facts and in the circumstances of the case, the notice u/s 148 of the Income Tax Act, 1961 issued by the Assessing Officer is without any jurisdiction and bad in law and all proceedings conducted pursuant thereto are void ab initio. 4. That on the facts and in the circumstances of the case the learned assessing officer erred in making addition of Rs. 5,77,26,950/u/s 68 of the Income Tax Act, 1961 and Ld. CIT(A) erred in sustaining the same inspite of withdrawal of appeal. 5. That on the facts and in the circumstances of the case, the learned assessing officer had no reason to believe or had formed no belief regarding the escapement of income of the assessee and has issued notices u/s 147 merely on the basis of information supplied by allied officer and on the basis of suspicion, surmises and conjectures. 6. That on the facts and in the circumstances of the case the learned assessing officer erred in relying on statement of third parties, without supplying the said statements to the assessee and without providing the assessee with the opportunity to cross examine such witness. 7. That on the facts and in the circumstances of the case Ld. AO has erred in appreciating the findings made in scrutiny assessment of assessee for subsequent AY 2015-16. Thus, addition is bad in law and may kindly be deleted. 8. That on the facts and in the circumstances of the case the learned assessing officer erred in completing the assessment based on suspicion, surmises and conjectures. 9. The appellant craves leave to add, amend, alter and delete the ground(s) of appeal at the time of hearing of the appeal. 24. Briefly stated, the facts of the case are same as described (supra) in ITA No. 34/RPR/2023 in the assessee’ own case, however, the assessee had also challenged the reopening order u/s 147 r.w.s. 143(3) dated 26.12.2018, before the Ld. CIT(A) by filing the appeal in form no. 35 dated 20.03.2019, in consequence an appellate order dated 09.08.2021 was passed by the First Appellate Authority, confirming the addition of Rs.5,77,26,950/- u/s 68 made by the Ld. AO. It was the submission before us that after filing the appeal before the First Appellate Authority 53 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd on 20.03.2019, the assessee has defied the impugned assessment order dated 26.12.2018 before the Ld. PCIT seeking revision of the same by submitting an application dated 27.01.2021, consequently, have filed an application for withdrawal of the appeal pending before the First Appellate Authority on 16.03.2021 (Copy extracted hereunder), however, Ld. CIT(A) had not considered the request for withdrawal of the appeal and have passed an order on 09.08.2021. It was the submission that as the impugned order of assessment dated 26.12.2018 was subjected to revision order u/s 264 dated 25.03.2021, therefore, the appellate order passed subsequently on 09.08.2021 was erroneous and needs to be struck down. Copy of withdrawal application filed before the Ld. CIT(A) dated 16.03.2021 is extracted for the sake of completeness of facts: 54 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 55 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 25. On a thoughtful consideration of the aforesaid facts, we find merits in the contentions raised by the Ld. AR, that once the assessment order passed was already subjected to revision and an order of revision u/s 264 was passed on 25.03.2021, the same cannot be considered by the First Appellate Authority in an appeal before him, for which an application of withdrawal was also submitted by the assessee, though the application of assessee has no mentioned about the pending revision proceedings before the Ld. PCIT, but since the revision order of Ld. PCIT was passed on 25.03.2021, i.e., prior to the passing of order by First Appellate Authority on 09.08.2021, therefore, the revision order u/s 264 shall prevail in the eyes of law. 26. In view of aforesaid facts, circumstances and observations the order passed by First Appellate Authority dated 09.08.2021, cannot sustained with a decision contrary to the verdict in the revision order u/s 264 dated 25.03.2021, thus, the same stands set aside. 27. Without adverting to the contentions of the assessee qua assailing the validity of jurisdiction of Assessing Officer or the addition on merits with the prayer to quash the assessment and to delete the addition, since the issues in the present appeal are already restored back to the files of Ld. AO in terms of our observations in ITA No. 34/RPR/2023, the present appeal of the assessee need not be adjudicated separately. 56 ITA No. 31 to 34/RPR/2023, ITA No. 116/RPR/2023 and CO No. 21 to 24/RPR/2023 M/s Muskan Dealers Pvt. Ltd., M/s Vikas Tradecom Pvt. Ltd., M/s Nawab Vyapar Pvt. Ltd., M/s Puja Dealcom Pvt. Ltd 28. In result, ITA NO. 116/RPR/2023 of the assessee is partly allowed, in terms of our aforesaid observations. 29. In combined result, ITA No. 31 to 34/RPR/2023 of the revenue are partly allowed for statistical purposes, CO No. 21 to 24/RPR/2023 of the assessee are dismissed and ITA NO. 116/RPR/2023 of the assessee is partly allowed, in terms of our observations, as indicated above. Order pronounced in the open court on 11/12/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 11/12/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- 2. ŮȑथŎ / The Respondent- 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT, Raipur (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // "