ITO 26(3)(4), MUMBAI V. M/S VIVAAN CORPORATION , MUMBAI

ITA 1063/MUM/2020

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9390 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: F
• Next Hearing Date: 05-10-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 10-02-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Additional evidence
• Section: 131; 68; 133(6); 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 1063/Mum/2020 (Assessment Year 2015-16) T he Incom e T ax Of f icer W ard 26(3)(4 ) Room No.336, Inco m e T ax Off ice, 34d Floo r, Kautil ya Bha van, B KC, Bandra East, Mum bai-400 051 Vs. M/s Vivaan Corporation 505, 5 th Floor, Ackruti Star, Opp Ackruti Centre Point, MIDC, Andheri (East), Andheri-400 093 (Appellant) (Respondent) PAN No. AALFV4392H Assessee by : None Revenue by : Shri Sunil A Umap, DR Date of hearing: 06.10.2022 Date of pronouncement: 31.10.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by The Income Tax Officer 26 (3) (4), Mumbai (the learned AO) against the appellate order passed by the Commissioner of income tax (appeals) – 38, Mumbai dated 30/9/2019 wherein the appeal filed by the assessee against the assessment order dated 29-12- 2017 passed u/s 143 (3) of the income tax act 1961 (the act) for the assessment year 2015 – 16 by the learned AO was partly allowed. Page | 2 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 02. Therefore, the learned that AO aggrieved with appellate order preferred this appeal raising following grounds. “A. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.58,12,01,658/- on account of undisclosed income without appreciating the fact that the amounts received by the assessee through third parties by way of circular transactions. B. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of undisclosed income without appreciating the fact that the reasons given by the assessee for receiving credit in their bank accounts from third parties during the assessment proceedings are different that the reasons given during the remand proceedings. C. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition on account of undisclosed income without appreciating the fact that M/s. Mediclaim Lifesciences Pvt. Ltd. and M/s. Friends Trading Limited are closely related parties of the assessee and third parties have credited an amount of Rs.58,12,01,658/ on behalf of these parties and this shows the transaction is sham transaction and the assessee has used colorable device for its undisclosed income. Page | 3 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 D. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.” 03. Brief facts as noted from the orders of the lower authorities shows that assessee is a partnership firm engaged in the business of trading in pharmaceutical and chemical products. Assessee filed original return of income on 16/9/2015 which was revised on 3/2/2016 at a total income of ₹ 1,526,900. Case was selected for scrutiny. Assessee was asked to submit the party wise details of sales. It was submitted. The learned AO noted that though partnership firm was constituted and commenced its business on 25/3/2014, as at 31/3/2015 sundry debtors reflected in its books of accounts were to the tune of ₹ 226,935,531, during the year sales was 314,15 8943/-, thus only ₹ 8.72 crores were deposited in the bank account of the assessee. On examination of the bank accounts it was noted that assessee has received ₹ 58.30 crores in its bank account. Therefore the assessee was further directed to submit the copies of account of 63 parties. It was not submitted, the AO noted that a sum of ₹ 58.30 crores have been received from 62 parties as stipulated at page number 3 – 5 of the assessment order. The assessee was issued a show cause notice for penalty for non-furnishing of the detail. The assessee replied on 15/12/2017 submitting the Ledger account of 2 parties (1) Medichem Lifesciences private limited, and (2) Friends trading. Assessee explained the reasons by furnishing the above letter which was submitted in that dak. Thus, Page | 4 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 assessee avoided, appearing before the learned assessing officer. The learned AO considered the explanation furnished assessee showing that assessee has given advance for purchases to the above 2 parties. However due to some technical and contractual reasons the consignment did not materialize therefore assessee was liable to recover the advance already given to these two parties. The party number 140 loss of ₹ 27 crores and there was fear among all the parties and creditors of that party whether the advance given will be received back on not due to such a huge loss therefore assessee started putting pressure on that party and took direct payment from the debtors of that party and recovered the money advanced by the assessee to party number one. In case of Bharti number 2 assessee has once again advanced money for materials but the party failed to deliver and therefore it recovered money from various parties were debtors to that party. For this reason the assessee received the above sum in its bank account against the advance already given by the assessee to party number 1 and 2. Therefore the above sum was not appearing in the sales as it is not received on account of sales. However, assessee did not explain why a sum of ₹ 226,935,531/– is outstanding as debtor. 04. The learned AO examined the Ledger account of both the parties. The Ledger account on analysis were tabulated and page number 6 and 7 of the assessment order. The finding of the AO was that party number 1 supplied goods to the assessee amounting to ₹ 96,237,353/– from Page | 5 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 14/6/2014 to 12/9/2014. At that time, the advances outstanding in that account was only ₹ 7,643,199. Assessee made further advances to the above party which resulted into total advance of rupees to crore 36,98,915. Assessee failed to explain what those technical and contractual reasons are and why the consignment did not materialize. He also noted that within 3 days the assessee could realize from the directors of that party number one a sum of ₹ 7,587,000. Accordingly he held that the substantial amounts received from the 3 rd party are nothing but the undisclosed income of the assessee. No documentary evidencewas produced by the assessee. The AO further noted that both the parties are closely associated with the assessee. With respect to the second party the similar explanation was found. Therefore the learned assessing officer noted that the above 2 parties are closely related with the assessee and the undisclosed amount of ₹ 581,348,458/– received from the above 62 parties are transferred to these 2 entities showing colorable device of advances. Considering the above facts and circumstances the learned assessing officer made addition in the hence of the assessee as undisclosed income. Consequently, assessment order u/s 143 (3) of the act was passed on 29/12/2017 where the total income of the assessee was assessed at ₹ 586,189,698. 05. Aggrieved with the assessment order assessee preferred appeal before the learned CIT – A. Before him, assessee submitted additional evidences with respect to the advances received of ₹ 581,201,658/–. The matter was Page | 6 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 remanded to the learned AO. The AO issued notices u/s 133 (6) of the act, the parties submitted that they have made the payment to the assessee at the request of the above 2 parties, those parties submitted that Ledger account and bank statement. The above 2 parties also submitted the confirmation. Statement of the director of the Medichem Lifesciences were recorded u/s 131 of the income tax act wherein he confirmed that there was a credit transaction to the tune of ₹ 39.84 crores in the books of that company which was rooted through the assessee due to some operational issues. He also submitted a detailed note dated 10/9/2018 wherein a submitted that in that company some manager was appointed who purchased the material and sold not recorded the same in the books of that company. In the remand proceedings statement of partner of the assessee company were also recorded u/s 131 of the act on 6/9/2018 wherein he submitted that he was additional director in one of the companies and there was misappropriation by that manager and therefore those companies were unable to receive the sum and hence the money was received by this assessee as it was a related concern and transferred the same that party. The learned assessing officer further noted that the reason for assuming the credits in the bank account of the appellant stated in the assessment proceedings is different from the one submitted in the remand proceedings. The learned AO further held that that the amount received by the appellant through 3 rd parties is in a way of a circular Page | 7 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 transaction which are not acceptable. On the basis of the above finding the assessee pleaded before the learned CIT – A to delete the addition. The learned CIT – A held that considering the materials on record and information collected u/s 133 (6) and statement recorded u/s 131 in the remand proceedings he is of the opinion that the nature and source of the said amount is credited in the bank account of the assessee stands explained and substantiated. Therefore, the provisions of Section 68 do not apply. He further held that as there is no material to hold that these amounts as a business receipts addition u/s 28 of the income tax act is also not sustainable. However with respect to 2 parties who did not respond during the remand proceedings u/s 133 (6) of the act amounting to ₹ 1,846,800 addition was confirmed. Therefore,the addition of ₹ 581,201,658/– was deleted. 06. The learned AO is aggrieved with that order and is in appeal before us. The learned AO raised three grounds challenging the deletion of addition of ₹ 581,201,658/–. The learned CIT DR vehemently submitted that the learned CIT – A has erred in deleting the addition in the hence of the assessee u/s 68 of the income tax act. It was stated that the money is received in the bank account of the assessee and therefore party number one and party number 2 on behalf of which the advances was received is clearly a make-believe story made by the assessee which was believed by the CIT – A. He submitted that during assessment assessee created one story and in remand proceedings it created another story. The learned CIT – A Page | 8 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 making any further enquiry believed the revised story made by the assessee. He therefore submitted that once the assessee has failed to explain the nature and source of the amount deposited in the bank account of the assessee, to the satisfaction of the learned assessing officer the addition deserves to be confirmed u/s 68 of the income tax act. He extensively relied upon the orders of the learned assessing officer as well as the remand report mentioned by the learned CIT – A. 07. Despite notice to the assessee appeared on the appointed date of hearing despite there was proper service of notice by the learned AO wherein the reports are also submitted that the directors who appeared in the remand proceedings have received the notice of hearing. This appeal is also fixed for hearing earlier ten times, despite service of notice, none appeared on any of the occasions. Therefore, we do not have any other option but to dispose of this appeal on the merits of the case as per information available on record. 08. We have carefully considered the contention raised by the learned CIT DR and carefully perused the orders of the lower authorities. We find that during the course of assessment proceedings it was found that there is a youth sum credited in the bank account of the assessee. The assessee did not give proper reply before the assessing officer during the course of assessment proceedings. In the appellate proceedings, the learned CIT – A called for remand report wherein assessee produced the Page | 9 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 confirmation of the parties and the statement u/s 131 of the directors of 2 different related entities of the assessee as well as partner of the assessee was recorded. The information u/s 133 (6) of the act were collected from the parties wherein they also confirmed that at the request of 2 different related entities of the assessee, they have paid money to the assessee on behalf of those 2 entities. The facts clearly shows that huge payment of ₹ 581,201,658/– is received by the assessee in its bank account which did not belong to the assessee but to somebody else i.e., 2 related parties of the assessee partnership firm. The learned CIT – A believed that if on behalf of somebody else the payment can be made to anybody and everybody confirms, the nature and source of such payment in the hence of the party in whose bank account the sum is credited becomes explained. The learned CIT – A held as Under: - “7. I have considered the facts of the case, the oral arguments of the Learned. ASSESSMENT ORDER as well as written submission of the appellant, material on record and case laws relied upon by the appellant as against the observations and findings of the Assessing Officer in the assessment order and in remand report. The submissions and contentions of the appellant are being discussed and decided as under: Page | 10 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 7.1 The first ground raised in this appeal is against addition of undisclosed income amounting to ₹ 58,30,48,458/-. It is contended that the learned Assessing Officer erred in law and in fact by adding ₹ 58,30,48,458/- which is not the income of the appellant. The appellant submitted that it had business connections with two parties, viz., M/s. Friends Trading and M/s. Medichem Lifesciences Pvt. Ltd. on behalf of whom it has received ₹ 18,41,51,946/- and ₹ 39,84,96,512/- respectively. The said parties have responded u/s. 133(6) with the ledger confirmations. However, the learned Assessing Officer has erred in fact and in law by ignoring the response filed u/s. 133(6). It is the contention of the appellant that the appellant has proved beyond about doubt that the said income is income of the abovementioned two parties and does not belong to the appellant. The two parties have already confirmed the same by submitting the ledger confirmations and accepting their income. Further, it is submitted that out of the total amount, the appellant had received ₹ 4,00,000/- from Patel Ishwar Premji to whom the appellant had repaid the said amount subsequently. The appellant is aggrieved that in fact and in law the learned Assessing Officer has erred in not giving any proper opportunity for submitting the reply. The appellant feels highly aggrieved by the high-handed addition. It is submitted that the addition has been made in blatant violation of the principles of natural justice. In view of the above grounds of appeal, the appellant prays that the said addition of ₹ 58,30,48,458/- should be quashed at once. Page | 11 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 7.1.1 It is gathered from the perusal of the assessment order that on perusal of the HDFC bank statement submitted by the assessee, the Assessing Officer observed that during F.Y. 2014-15 appellant received ₹ 58,30,48,458/- from 62 non-sale parties. The summary details of these 62 parties are given in the char placed at Para 4.3 above. In this regard, the authorized representative of assessee vide letter dated 15.12.2017 filed in Tapal on 18.12.2017 submitted, the ledger account of M/s. Medichem Lifesciences Pvt. Ltd and M/s. Friends Trading in its books of account along with its explanation for the receipts from the above-said sixty-two parties. It is stated therein that, the assessee had given advance for purchases to Medichem Lifesciences Pvt. Ltd. and M/s. Friends Trading several times after making initial purchases from the above-mentioned parties against the advance given. However, subsequently, for some technical and contractual reasons, the consignment did not materialize. Therefore, the assessee was liable to recover the advance already given to the abovementioned parties. M/s Medichem Lifesceinces Pvt Ltd suffered huge loss of ₹ 27 crores approx in F.Y. 2014-15 (A.Y 2015-16). The assessee put pressure on the aforesaid parties to recover the advances as materials were not supplied to the assessee and took payments from the debtors of the aforesaid parties. The Assessing Officer brought out the observance from the perusal of the books of accounts of the assessee that the assessee made further advances/payments to the aforesaid parties despite the fact that the said parties did not send the Page | 12 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 consignments. Therefore, the above contention of assessee that there is fear among all the parties & creditors of Medichem Lifesceinces Pvt. Ltd whether the advance given will be received back or not due to such a huge loss and for this reason, assessee started putting lots of pressure on Medichem Lifesceinces Pvt. Ltd. and took direct payment from the debtors of Medichem Lifesceinces Pvt. Ltd and recovered the money paid to them as advance is not found acceptable to the Assessing Officer. The Assessing Officer found the confirmation of M/s. Friends Trading dated 27.12.2017 wherein reference is made to Assessing Officer’s notice u/s. 133(6) for furnishing of information in the case of M/s. Vivan Corporation, unacceptable since the assessee has submitted the ledger account of M/s. Friends Trading without address and PAN. In view of the above the Assessing Officer concluded that, these two parties are closely related with the assessee and the undisclosed amount of ₹ 58,30,48,458/- received from the above stated 62 parties are transferred to M/s. Medichem Lifescience Pvt Ltd and M/s. Friends Trading showing colourable device of advance. Considering the above facts and non-submission of confirmation from the 62 parties, the Assessing Officer related the amount of ₹ 58,30,48,458/- received from them as undisclosed income and added the same to the total income of assessee. 7.1.2 In the remand report, the Assessing Officer objected to the admission of additional evidence, comprising of confirmation of accounts, bank Page | 13 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 statements etc. stating that several opportunities was afforded during the assessment proceedings to furnish confirmation from the aforesaid parties who deposited the amounts in HDFC Bank account of the assessee but the assessee failed to avail them and therefore, the additional evidence must not be taken on record. However, coming to the merits of the case, it is reported by the Assessing Officer and all the 62 parties responded to the notice issued u/s. 133(6) and furnished confirmation except in the case of two parties. Further, it is stated in the remand report that the Shri. Surinder Pal Singh, director of M/s. Medichem Lifescience Pvt. Ltd and Mr. Deepakbhai N. Panchal, Partner of M/s. Friends Trading complied with the notice issued u/s. 131 and attended the Office of the Assessing Officer. In the statements recorded u/s. 131 of the I.T. Act, Shri Suriender Pal Singh, Director M/s. Medichem Life Sciences Pvt. Ltd. confirmed that there was credit transactions amounting to ₹ 39.84 crores in the books of M/s. Medichem Life Sceinecs Pvt. Ltd which was routed through M/s. Vivaan Corporation, the instant appellant due to some operational issues in M/s. Medichem Lifesciences Pvt. Ltd. M/s. Medichem Lifescience Pvt. Ltd incurred big loss also due to embezzlement by Mr. Vishal Soni, Procurement and Sales Manager and FIR has been filed against the said ex-employee copy of which has been submitted. The director admitted of having taken advances from the appellant as per understanding that petrochemical products would be supplied to the appellant Firm. Mr. Deepakbhai N. Panchal, Partner of M/s. Friends Page | 14 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 Trading in his statement recorded u/s. 131 on 07.09.2018 stated that he could not procure the materials due to sudden global price slashing in petrochemical products in F.Y. 2014-15, and so the money to the tune of ₹ 8,24,93,878/- was returned to M/s. Vivaan Corporation. The balance amount of ₹ 10,18,13,848/-(₹18,43,07,726/- less ₹8,24,93,878/-) was advanced to various parties to source petrochemicals in domestic markets. However, looking at worse situation arising in petrochemical products in domestic market due to global slashing in pricing, the said company had to return back all the advances which was directly paid to M/s. Vivaan Corporation by the parties. 7.1.3 However, considering the fact the reasons for receiving the credits in the bank account of the appellant cited in the assessment proceedings is different from the ones submitted in the remand proceedings, the Assessing Officer held the aforesaid amounts received by the appellant through third parties in a way of circular transactions are totally not acceptable and the CIT(A) may not accept the additional evidence submitted by the assessee and upheld the addition made by the Assessing Officer. 7.1.4 On the other hand, it is the contention of the appellant, that before the Assessing Officer during the assessment proceedings and in the remand proceedings at the appellate stage, appellant has asserted that the credits amounting to ₹ 58,30,48,458/- reflected in the HDFC Bank account of Page | 15 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 the appellant do not belong to the appellant but comprises of recovery of advances given by the appellant to two parties viz. M/s. Medichem Lifescience Pvt. Ltd and M/s. Friends Trading while some portion of the said credits are the funds of the aforesaid parties deposited by third parties on their behalf in the said bank account of the appellant as the bank account of M/s. Medichem Lifescience Pvt. Ltd was not operational due to legal issues as there has also been mismanagement of the affairs of the company involving embezzlement of funds of the company by the Ex-Manager of the company, Mr. Vishal Soni. 7.1.5 It is further, submitted that the appellant has furnished to the Assessing Officer all the relevant information and documentary evidence during the remand proceedings. The two parties Viz., M/s. Friends Trading and M/s. Medichem Lifesciences Pvt. Ltd with who the appellant had business transactions in the form of purchases and advances given by the appellant and on whose behalf the appellant has received ₹ 18,41,51,946/- and ₹ 39,84,96,512/- respectively have responded to notice u/s.133(6) issued by the Assessing Officer during the remand proceedings and have furnished confirmation of accounts with regard to the amount deposited in the appellant’s bank account maintained with HDFC Bank. The appellant also submitted that in the remand proceedings, the concerned persons of the aforesaid parties attended the proceedings before the Assessing Officer in response to notice under section Page | 16 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 131. In the statements, recorded under oath, Mr. Deepakbhai N Panchal, Partner of M/s. Friends Trading stated that an advance of ₹ 18,41,51,946/- was given by M/s. Vivaan Corporation, the instant appellant for trading in petrochemical products but the same could not be procured due to global slashing in the price of petrochemical products and hence the same was recovered from the debtors of M/s. Friends Trading and directly deposited by the parties into the HDFC bank account of the appellant. Statement of Shri. Surinder Pal Singh, Director of M/s. Medichem Life Sciences Pvt Ltd is also recorded u/s. 131 of the I.T. Act wherein, he has confirmed that there was credit Sciences Pvt. Ltd. which were routed through M/s. Vivaan Corporation due to some operational issues in M/s. Medichem Life Sciences Pvt Ltd. In view of the above, the appellant contended that the addition made by the Assessing Officer is not justified and must be deleted. 7.1.6 On careful consideration of the materials on record and perusal of the submission of the appellant with reference to the assessment order and the remand report, it is observed that the sole issued of contention is the nature and source of credits amounting to ₹ 58,30,48,458/- reflected in the HDFC Bank account of the appellant. From the perusal of the assessment order and the remand report, the fact that the above credits have been deposited in the HDFC Bank account of the appellant in the impugned assessment year is not disputed either, by the Assessing Officer nor by the appellant. The identity of Page | 17 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 the depositors has been verified by the Assessing Officer vide information collected u/s. 133(6) as stated in the remand report. The purpose and reason as to why the third parties deposited the amounts through banking channels in the bank account of the appellant has been explained by the principal persons of the two parties, M/s. Medichem Lifesciences PvtLtd and M/s. Friends Trading in the statements recorded of Shri Surinder Pal Singh, Director of M/s. Medichem Lifesciences Pvt Ltd and Mr. Deepakbhai N Panchal, Partner of M/s. Friends Trading. The AO does not dispute these facts. The contention of the AO is that the aforesaid amounts received by the appellant through third parties in a way of circular transactions are totally not acceptable and tantamount to colorable device. However, there is no cogent material on record to support the above interpretation of the AO that the credits deposited in the HDFC bank account of the appellant is a colourable device to evade payment of tax. Considering the fact that the appellant's contention is supported by documentary evidence, viz., ledger confirmation by the aforesaid two parties, confirmation by the third parties who affirmed that each of them have deposited the credit amount in the bank account of the appellant on behalf of the said two parties, copy of FIR filed by M/s. Medichem Life Sciences Pvt. Ltd against the Ex-manager for embezzlement of funds received from sales, copy of invoices and statements recorded on oath u/s. 131 of the management of the two parties, I find merit in the submission of the appellant that the aforesaid Page | 18 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 amounts are not business receipts of the appellant in the impugned assessment year but comprises of recovery of advances given by the appellant to two parties viz., M/s. Medichem Lifescience Pvt. Ltd and M/s. Friends Trading while some portion of the said credits belong to the aforesaid parties, M/s. Medichem Lifescience Pvt. Ltd and M/s. Friends Trading deposited by third parties on their behalf in the said bank account of the appellant as the bank account of M/s.Medichem Lifescience Pvt. Ltd was not operational due to legal issues and mismanagement of the affairs of the company involving embezzlement of funds of the company by the Ex-Manager of the company, Mr. Vishal Soni. Considering the materials on record and information collected u/s. 133(6) and u/s.131 in the remand proceedings, I am of the opinion that the nature and source of the said amounts credited in the HDFC Bank account of the appellant stands explained and substantiated. Hence, as the source and nature of such credits deposited in the HDFC Bank account of the appellant stand explained, the deeming provision of Section 68 is not applicable to the said receipts credited in the bank account of the appellant. As there is no material to hold these amounts, as business receipts, no addition is called for u/s.28 of the income Tax, Act. 7.1.7 However, in the case of two parties, M/s. Azaan Enterprises and Mr. Patel Ishwar Premji, for credit entries of ₹ 14,46,800/- and ₹ 4,00,000/- respectively, amounting to ₹ 18,46,800/- as per the Page | 19 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 remand report, the above parties have not responded to notice issued u/s. 133(6) and no confirmation has been received from them directly. In the appellate proceedings, there is no submission with regard to credits for ₹ 14,46,800/- in the name of M/s. Azaan Enterprises. Regarding credit entry amounting to ₹4,00,000/- appearing against the name of Mr. Patel Iswar Premji, the submission that the amount of ₹4,00,000/- received from the Patel Ishwar Premji on 17.12.2014 has been repaid on 15.01.2015 and that the same can be seen from the bank statement is untenable for want of documentary evidence. Appellant has not produce confirmation by the creditor, Mr. Patel Ishwar Premji and statement of bank account held by Mr. Patel Ishwar Premji. Hence, the addition to the tune of ₹18,46,800/- as unexplained cash credit u/s. 68 is sustained. 7.1.8. In view of the above, the Assessing Officer is directed to delete the addition of ₹ 58,12,01,658/- (₹ 58,30,48,458/- less to ₹ 18,46,800/-). Accordingly, Ground No 1 is Partly Allowed.” 09. First, the learned CIT – A failed to make any order of admitting additional evidence Under rule 46A of the act. This is a mandatory requirement whenever the learned CIT – A admits any additional evidence which were not before the learned assessing officer. He has limited power to admit such evidence. In the present case there is no lack of opportunity before the learned AO to the assessee. There are no other reasons shown where assessee was prevented from sufficient cause for not producing those Page | 20 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 evidences before the AO. It is more relevant when the learned assessing officer has specifically objected to the admission of additional evidence, the learned CIT – A should have given reasons for admitting the same. The learned CIT – A has failed to do so. 010. Secondly the learned CIT – A has deleted the addition as per para number 7. In paragraph number 7.1.4 the amount credited in the bank account of ₹ 583,048,458/– has been accepted by the learned CIT – A that it did not belong to the appellant. This finding of fact is contrary that originally advances were given by the assessee to two different parties for supply of material, who could not supply the material, therefore advances given to them were recovered by the assessee from other parties on behalf of those 2 parties. Therefore in fact at the most it can be said that the amount that is credited in the bank account is an advance received back by the assessee from 3 rd party which was given to 2 related parties. Therefore mainly the assessee has to justify the amount credited in the books of accounts of the assessee itself with the identity, creditworthiness and genuineness of the world transaction. Here the assessee has diverted the attention of the learned CIT – A producing the directors of 2 related parties. In fact the AO/CIT – A should have examined the parties were given credit in the books of the assessee/credited in the bank account of the assessee. This exercise is missing. Page | 21 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 011. It is relevant that there is a an embezzlement in the transactions of related parties. Assessee has nothing to do with that, it has the prime responsibility of proving the amount credited in the bank account of the assessee. Therefore, the learned CIT – A has deleted the addition on the basis of the relevant material. 012. It is also worth noting that there is no independent evidence available with the learned CIT – A to delete the addition. He has deleted the addition merely on the basis of statement of the directors of 2 related parties, statement of the partner of the assessee who is also director in one of the company which is involved in the world transaction as per the statement of the assessee. Thus, lack of independent evidence makes the order of the learned CIT – A not sustainable. 013. The learned CIT – A has also wrongly held that when the amount is deposited in the bank account with HDFC bank of the assessee the deeming provisions of Section 68 is not applicable to the said receipt as it is credited in the bank account of the appellant. The learned CIT – A has ignored the fact that the amount which is credited in the bank account of the assessee is also credited in the books of accounts of the assessee and therefore the provisions of Section 68 are definitely attracted. 014. In the result, we set aside whole issue back to the file of the ld. CIT (A) with a direction to pass decide whether the additional evidences submitted by the assessee were admitted or not giving reasons for his order. Thereafter he Page | 22 ITA No.1063/Mum/2020 M/s Vivaan Corporation; A.Y. 2015-16 may decide the issue on merits of the case considering our above finding. 015. In the result, Appeal of the learned AO is allowed for statistical purposes. Order pronounced in the open court on 31.10.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 31.10.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai