DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1), VISAKHAPATNAM V. SSNR PROJECTS PRIVATE LIMITED, VISAKHAPATNAM

ITA 486/VIZ/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax, Circle-3(1), Visakhapatnam as the appellant and M/s. SSNR Projects Private Limited as the respondent. The dispute arose from the assessment year 2015-16, where the Assessing Officer (AO) added Rs. 1.80 Crores to the income of the assessee, alleging it was an unexplained cash credit received as a fictitious loan. The CIT(A) reversed this decision, leading to the Revenue's appeal to the Tribunal. The Tribunal found that the AO's addition was not substantiated by any material evidence and was based solely on a statement from an individual involved in providing accommodation entries.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312555 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA VILLURI
• Assessee Lawyers: SAMUEL NAGADESI
• Keywords: Corroborative evidences; Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 147; 148; 142(1); 68

Judgement Text

"आयकर अपीलीयअिधकरण, िवशाखापटणम पीठ, िवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM “DIVN” BENCH, VISAKHAPATNAM ᮰ी िवजय पाल राव, उपा᭟यᭃ एवं ᮰ी एस बालाकृ᭬णन, लेखा सद᭭य के समᭃ BEFORE SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER (Through Hybrid Hearing) आयकर अपील सं./ I.T.A. No.486/Viz/2024 (िनधाᭅरण वषᭅ / Assessment Year : 2015-16) Deputy Commissioner of Income Tax, Circle-3(1), Visakhapatnam. Vs. M/s. SSNR Projects Private Limited, Visakhapatnam. PAN: AARCS2464C (अपीलाथᱮ/ Appellant) (ᮧ᭜यथᱮ/ Respondent) अपीलाथᱮ कᳱ ओर से/ Assessee by : Shri Samuel Nagadesi, CA ᮧ᭜याथᱮ कᳱ ओर से / Revenue by : Dr. Aparna Villuri, Sr. AR सुनवाई कᳱ तारीख / Date of Hearing : 22/04/2025 घोषणा कᳱ तारीख/Date of Pronouncement : 28/04/2025 O R D E R PER S. BALAKRISHNAN, AM: This appeal filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)”) in DIN & Order No. ITBA/NFAC/S/250/2024-25/1069261351(1), dated 30/09/2024 2 for the AY 2015-16 arising out of the order passed U/s. 147 of the Income Tax Act, 1961 (“the Act”), dated 27/03/2022. 2. Briefly stated the facts of the case are that the assessee being a company is engaged in the business of Civil Contracts. The assessee filed its return of income for the AY 2015-16 admitting a taxable income of Rs. 5,94,46,710/- on 30/09/2015. Based on the information received, the Ld. AO observed that the assessee company received accommodation entries for fictitious loan of Rs. 1.80 Crs from Shri Joginder Pal Gupta / M/s. Bell Indus Fibercom Pvt Ltd. Subsequently, the Ld. AO issued a notice U/s. 148 of the Act on 31/03/2021. In response, the assessee in its reply dated 27/01/2022 submitted that the return filed on 30/09/2015 may be treated as return in response to notice U/s. 148 of the Act. Subsequently, the Ld. AO issued statutory notices U/s. 143(2) and 142(1) of the Act. The assessee made submissions on various dates in response to the questionnaire called for by the Ld. AO. However, the Ld. AO, not being satisfied with the replies of the assessee, added the entire sum of Rs. 1.80 Crs U/s. 68 r.w.s 115BBE of the 3 Act. On being aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). 3. Before the Ld. CIT(A), the assessee contested that it has received an amount of Rs. 1 Cr towards share application money by providing evidence of the financial statements of the investors, before the Ld. CIT(A). It was also submitted that these documents are already available before the Ld. AO for his consideration. The Ld. CIT(A), on examining the documents and the submissions made by the assessee, deleted the addition made by the Ld. AO thereby allowing the appeal of the assessee. On being aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us by raising the following grounds of appeal: “1. The order of the Ld. CIT(A), NFAC is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in deleting the addition of Rs. 1,80,00,000/- made by the AO U/s. 68 of the Act merely relying on the audit report and a certificate of statutory auditors furnished by the assessee. 3. The Ld. CIT(A) in not observing the fact that the case of the assessee was reopened by issue of notice U/s. 148 of the Act as per the information received from the investigation wing that the assessee was provided with an accommodation entry for a fictitious loan of Rs. 1,80,00,000/- by Shri Joginder Pal Gupta, an entry provide, through his shell company, M/s. Bell Indus Fibercom Private Ltd. 4. The Ld. CIT(A) erred in not appreciating the fact that Shri Joginder Pal in his sworn statement recorded U/s. 132(4) of the Act during the course of search and seizure operation conducted by the investigation wing in the case of DAG Group of Shri Joginder Pal on 23/12/2019, 4 asserted that he was an accommodation entry provide through various paper companies and as per the list of such companies furnished, M/s. Bell Indus Fibercom Pvt Ltd was one of the companies though which the assessee has been provided with the accommodation entry for the said fictitious loan. 5. The Ld. CIT(A) erred in not appreciating the fact that the statement of Shri Joginder Pal being of evidentiary value that carries more weight than the assessee’s submission. 6. The Ld. CIT(A) erred in not observing the fact that during assessment proceedings, the assessee could not satisfactorily prove regarding the entries pertaining to the receipt of share application money vis-à-vis shares allotted to M/s. Bell Indus Fibercom Pvt Ltd. 7. The Ld. CIT(A) erred in deleting the addition made by the AO without causing necessary examination to uncover the veil and expose the transactions involving accommodation entries entered into by the assessee particularly in the light of the fact that such information / data emanated out of a search action conducted by the investigation wing. 8. The appellant craves leave to add or delete or amend or substitute any ground of appeal before and /or at the time of hearing of appeal. 9. For these and other grounds that may be urged at the time of appeal hearing, it is prayed that the disallowance /additions made by the AO be restored.” 4. The only issue emanating from the above grounds is with respect to the deletion of addition of Rs. 1.80 Crs, by Ld CIT(A). 5. The Learned Departmental Representative (“Ld. DR”) submitted that the assessee has taken accommodation entry for Rs. 1.80 Crs which was added back to the total income of the assessee based on the statement recorded from Sri Joginder Pal Gupta U/s. 132(4) of the Act. The Ld. DR further submitted that the assessee has also voluntarily accepted the receipt of unsecured loan from the 5 accommodation entry provided by M/s. Bell Indus Fibercom Pvt Ltd., for an amount of Rs. 1 Cr. He pleaded that the order of the Ld. AO be upheld. 7. Per contra, the Learned Authorized Representative (“Ld. AR”) submitted that the assessee has never received any loan from Shri Joginder Pal Gupta / M/s. Bell Indus Fibercom Pvt Ltd. He vehemently argued that the addition was made merely on the basis of the statement recorded from Shri Joginder Pal Gupta U/s. 132(4) of the Act without making any further enquiries. The Ld. AR also submitted that the assessee received share application money of Rs. 1 Crs through banking channels as detailed in the assessment order. The Ld. AR also submitted that the details of allotment of shares for the above share application money received from M/s. Bell Indus Fibercom Pvt Ltd., including the bank statements were provided to the Ld. AO for examination. He further submitted that the Ld. AO did not consider the above submission of the assessee and by simply relying on the statement recorded U/s. 132(4) of the Act, resorted to make an addition of Rs. 1.80 Crs in the hands of 6 the assessee. He therefore pleaded that the order of the Ld. CIT(A) be upheld. 8. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an admitted fact that the assessee has received a sum of Rs. 1 Cr towards share application money from M/s. Bell Indus Fibercom Pvt Ltd and accordingly shares have been allotted to the subscriber. The Ld. AO by merely relying on the statement recorded U/s. 132(4) of the Act from Shri Joginder Pal Gupta made an addition of Rs. 1.80 Crs without making any further enquiries nor providing any opportunity for cross examination by the assessee. The Ld. AO neither rejected the audited financial statements of the assessee company for the FY 2014-15 wherein it can be observed that no such unsecured loans are recorded in the audited financial statements. The Ld. AO has invoked section 68 of the Act without establishing the receipt of 1.80 Crs in the books of the assessee. Further, various judicial pronouncements have held that addition cannot be justified merely on the statement recorded U/s. 132(4) of the Act without any corroborative evidences being 7 established for the receipt of amount by the assessee-company. The Ld. CIT(A), therefore, by relying on various judicial pronouncements in the order, has held as follows: “Considering the facts and circumstances of the case and authoritative judicial precedents as discussed preceding para, it is clear that there was no unsecured loan amounting to Rs. 1,80,00,000/- was received by the appellant during the FY 2014-15 relevant to the AY 2015- 16 from Sh. Joginder Pal / Bell Indus Fibercom Pvt Ltd., it is received only Rs. 1,00,00,000/- as share application money for which the appellant furnished documentary evidences before the AO but the AO failed to consider the same. Merely, on the basis of some statement while generally describing his modus operandi of providing accommodation entries, the addition can’t be sustained. T eh appellant has satisfactorily explained the identity, capacity and creditworthiness and genuineness of transaction, the AO has not conducted any further enquiries to rebut appellant’s claim therefore, the requirements of section 68 being fulfilled, the AO is not justified to add Rs. 1,80,00,000/- to the total income as unexplained cash credit U/s. 68 of the Act. The AO is directed to delete the addition made at Rs. 1,80,00,000/-. Grounds raised by the appellant regarding this issue are allowed.” 9. In the instant case the Ld AO by relying on the statement recorded u/s 132(4) form Sri Joginder Pal Gupta, proceeded to make an addition u/s 68 of the Act, without bringing any material on record to establish receipt of Rs 1.80 Crs as unsecured loans. Hence there is no justification on the part of Ld AO and therefore 8 we are of the considered view that there is no infirmity in the order of the Ld. CIT(A) and the grounds raised by the Revenue are dismissed. 10. In the result, appeal of the Revenue is dismissed. Pronounced in the open Court on 28th April, 2025. Sd/- Sd/- (VIJAY PAL RAO) (S. BALAKRISHNAN) उपा᭟यᭃ/VICE PRESIDENT लेखा सद᭭य/ACCOUNTANT MEMBER Dated : 28/04/2025 OKK - SPS आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the order forwarded to:- 1. िनधाᭅᳯरती/ The Assessee – M/s. SSNR Projects Private Limited, D.No. 51-8-40, Behind BOC Limited, Seethammadhara, Andhra Pradesh- 530013. 2. राज᭭व/The Deputy Commissioner of Income Tax, Circle-3(1), 2nd Floor, 35, 50-92-35, Sankara Matam Road, Opp. Reliance Fresh, Beside Reliance Fresh, Near-by Main Road, Madhuranagar, Dwaraka Nagar, Visakhapatnam, Andhra Pradesh-530016. 3. The Principal Commissioner of Income Tax, 4. आयकर आयुᲦ (अपील)/ The Commissioner of Income Tax 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, िवशाखापटणम/ DR, ITAT, Visakhapatnam 6. गाडᭅ फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "