EVERMORE FINANCIAL SERVICES PVT LTD.,NEW DELHI V. ITO,WARD 8(1), DELHI

ITA 530/DEL/2025

AI Insights

The case revolves around the reopening of an assessment for the Assessment Year 2013-14 by the National Faceless Appeal Centre (NFAC), Delhi, under Section 147 read with Section 144B of the Income Tax Act, 1961. The AO had alleged that the assessee received an unsecured loan of Rs. 1 crore from M/s Fitworth Financial Services Pvt. Ltd., which was considered as unexplained income under Section 69 of the Act. The assessee contested that no such transaction occurred and that the reopening was based on incorrect facts and vague information. The tribunal agreed with the assessee, noting the lack of evidence and improper application of mind by the AO and the PCIT in the reopening process.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783046 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 29-01-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: C. S. ANAND; VAISHNAVI YADAV; ASTHA SHARMA
• Keywords: Reopening of assessment; Search and seizure
• Section: 147; 144; 69

Judgement Text

"P a g e | 1 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER & SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.530/Del/2025 (Assessment Year: 2013-14) Evermore Financial Services Pvt. Ltd. C/o CS Anand, Advocate B-81, First Floor, (Part B), Defence Colony, Bhishma Pitamah Marg, New Delhi – 110024 Vs. ITO Ward 8(1) Income Tax Office Central Revenue Building I.P. Estate New Delhi - 110002 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AACCE7809C Appellant .. Respondent Appellant by : Sh. C.S. Anand, Adv, & Ms. Vaishnavi Yadav, Adv, & Ms. Astha Sharma, Adv. Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 11.09.2025 Date of Pronouncement 27.10.2025 Printed from counselvise.com P a g e | 2 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) O R D E R PER MADHUMITA ROY, JM: The instant appeal filed by the assessee is directed against the order passed by the Ld. National Faceless Appeal Centre (NFAC) Delhi dated 09.01.2025 arising out of the Assessment Order dated 30.03.2022 passed by the NFAC, Delhi under Section 147 r.w.s 144 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2013-14. 2. The assessee filed its return of income under Section 139(1) of the Act on 30.09.2013 declaring loss of Rs.29,337/- for Assessment Year 2013-14. On the basis of information received from the DCIT, Circle 9(1) dated 05.03.2020 stating that a search and seizure conducted on 23.03.2018 on Luv Kush Group by the Investigation Wing, Guwahati and from the post search investigations it revealed that one M/s Vagmi Financials Services Pvt. Ltd. previously known as M/s Fitworth Financials Services Pvt. Ltd.) had made a transaction of Rs.1 crore with the assessee before us, during the Financial Year 2012-13 in the form of unsecured loans. The Ld. AO was on the opinion that it is the fit for accommodation entry provided by the said M/s Vagmi Financials Pvt. Ltd. to the assessee in the form of unsecured loans which has escaped assessment and proposed to be brought to tax and thus, the case under Section 147 of the Act was reopened upon approval granted by the PCIT, Delhi-1 dated 31.03.2021 under Section 151 of the Act. The assessee raised objection to this effect that the assessee never received Rs. 1 crore from M/s Fitworth Financial Services Pvt. Ltd. by way of unsecured loan Printed from counselvise.com P a g e | 3 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) during the year under consideration neither the assessee paid the said amount to the said M/s Fitworth Financial Services Pvt. Ltd. The said amount was treated as unexplained income under Section 69 of the Act and added in the hands of the assessee by the Ld. AO which was further confirmed by the First Appellate Authority. Hence, the instant appeal before us. 3. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that though full compliance was made by the assessee before the Ld. AO, the Ld. CIT(A) made a wrong statement that the assessee never responded to the notice issued during the assessment proceedings. In fact, the compliance made by the assessee duly been recorded by the Ld. AO in his order under challenge. Apart from that the reason recorded by the Ld. AO was mainly of escaping assessment by the assessee to the tune of Rs.1 crore which was alleged to have been received from one M/s Fitworth Financial Services Pvt. Ltd. in the form of unsecured loan in the year under consideration which was absolutely an incorrect finding of fact as there was no transaction entered with the said company by the assessee to the tune of Rs.1 crore. At no point of time during the Financial Year 2012-13 the amount of Rs.1 crore was credited in the bank account of the appellant assessee. In fact, the assessee paid cash of Rs.1,10,67,266/- on 30.03.2013 to M/s Fitworth Financial Services Pvt. Ltd. through RTGS. As the assessee has not received the said amount of Rs. 1 crore from M/s Fitworth Financial Services Pvt. Ltd. the question of recording of ownership of the said money by the assessee is absolutely incorrect finding of fact recorded by the Ld. AO and explanation in regard to the source of acquisition of such money of Rs.1 crore does not and cannot Printed from counselvise.com P a g e | 4 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) arise under the present facts and circumstances of the case. In fact, the satisfaction recorded as apparently on a wrong finding of fact and initiation of proceeding on the basis of the same without verifying the said fact before recording reason and particularly on the basis of vague information and further that the nature of transaction mentioned in the reason recorded is nothing but a non application of mind by the Ld. AO and approval thereof by the Ld. PCIT is, therefore, further non application of mind while recording satisfaction that I am satisfied with the reason recorded, it is a fit case for reopening under Section 147 of the Act by the Ld. PCIT as argued by the Ld. AR. No independent inquiry has been conducted by the Ld. AO and simply relying upon the information received from the DCIT, Circle 9(1) the Ld. AO proceeded against the assessee by reopening of the assessment under Section 147 of the Act which is bad in law and therefore, liable to be quashed as was the crux of the argument advanced by the Ld. Counsel appearing for the assessee. It was further contended by him that objection raised by the assessee was neither disposed of nor the assessee was given opportunity to place this fact effectively before the Ld. AO through video conference though prayed for. The entire acts of the Ld. AO seems to be clearly arbitrary so as to reopen assessment against the assessee which on a wrong finding of fact and conclusion thereof by making addition in the hands of the assessee under Section 69A of the Act is, thus, bad in law. On the other hand, the Ld. DR relied upon the order passed by the authorities below. 4. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. It Printed from counselvise.com P a g e | 5 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) appears that the assessment was reopened under Section 147 of the Act by the Ld. AO solely on the basis of an information received from the DCIT, Circle 9(1) that the assessee has received an amount of Rs.1 crore from one M/s Fitworth Financial Services Pvt. Ltd. in the form of unsecured loans but no evidence to that effect is being mentioned by the Ld. AO while recording reason of escaping assessment by the assessee. No evidence to that effect neither reveals from the order passed by the Ld. AO while making addition. The case of the assessee that no such transaction of Rs.1 crore was ever made with the M/s Fitworth Financial Services Pvt. Ltd. has been considered by the Ld. AO. We note that from the documents submitted by the assessee, it appears that the assessee debited an amount of Rs.1,10,67,266/- to the M/s Fitworth Financial Services Pvt. Ltd. Thus, the recording of reasons apparently on incorrect finding of fact rather blindly based on the information received from the DCIT, Circle 9(2). Before recording reason neither we get any iota of evidence that the Ld. AO has made any investigation whether actually there is an escapement of assessment of Rs. 1 crore by the assessee on the alleged amount received from one M/s Fitworth Financial Services Pvt. Ltd. in the form of unsecured loan. Thus, in the absence of any document in the hands of the revenue, the finding of fact is palpably bad that too initiation of reopening of assessment under Section 147 of the Act without making any inquiry by the Ld. AO cannot be said to be justified. The PCIT has also erred in confirming the recording of reasons and addition on escaping assessment by the Ld. AO without verifying the said fact recorded by the Ld. AO; the same is thus, also a product of non application of mind. Therefore, once the basis of the reopening of assessment being the reason recorded by the Ld. AO is not the actual fact and as the Ld. AO erred in law and on facts while reopening the Printed from counselvise.com P a g e | 6 ITA No.530/Del/2025 Evermore Financial Services Pvt.Ltd.(AY: 2013-14) assessment, the entire proceeding is vitiated and the same is thus, quashed. 5. The appeal of the assessee is allowed. Order pronounced in the open court on 27.10.2025 Sd/- (Naveen Chandra) Sd/- (Madhumita Roy) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 27.10.2025 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "