DCIT-CC 3(2), MUMBAI V. CHINTAMANI TEXTILES PVT. LTD., MUMBAI

ITA 1878/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1035 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Accommodation entries
• Section: 68; 132; 69C; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI GAGAN GOYAL, AM आयकर अपील सं/ I.T.A. Nos. 1878 & 1879/Mum/2019 (निर्धारण वर्ा / Assessment Years:2011-12 & 2012-13) DCIT-CC 3(2) Room No.1913, Air India Building, Nariman Point, Mumbai-400021. बिधम/ Vs. Chintamani Textiles Pvt. Ltd. Mezanine Office No.2, Sujata Chambers, Narshi Natha Street, Mumbai-400064. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACCC744OD (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 10/05/2022 घोषणा की तारीख /Date of Pronouncement: 27/05/2022 आदेश / O R D E R PER ABY T. VARKEY, JM: These appeals are against the order of the Ld. CIT(A)-51, Mumbai dated 29.01.2019 for A.Y. 2011-12 and for A.Y.2012-13. 2. None appeared for the assessee despite notices. The Ld. CIT DR has brought to our notice reports submitted by AO on the lis, which according to us will be sufficient to dispose of both the appeals of revenue. 3. For A.Y.2011-12, the revenue is aggrieved by the action of the Ld. CIT(A) deleting the protective addition of Rs.3,35,00,000/- on the issue of unaccounted investment and Rs.9,30,500/- on the issue of unaccounted commission u/s 69C of the Act and for A.Y.2012-13, the revenue is aggrieved by the action of the Ld. CIT(A) deleting the protective addition of Rs.6,88,00,000/- on the issue of unaccounted Revenue by: Shri H. N. Singh (DR) Assessee by: None ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 2 investment and of Rs.17,20,000/- on the issue of unaccounted commission u/s 69C of the Act. 4. Since the facts and law governing the lis for both assessment years are identical/similar, the result of the adjudication in respect of A.Y.2011-12 will decide the appeal of revenue for A.Y.2012-13. So, first the appeal of the revenue for the A.Y.2011-12 is taken up. 5. The brief facts of the case as noted by Ld. CIT(A) is as under:- “The brief facts of the case are that the assessee filed its return of income for A.Y. 2011-12 on 23.09.2011 declaring the total income at Rs. 5,52,090/-. The return was processed u/s. 143(1). In this case, a search under section 132 of the Act was conducted in the First Winner Group on.11.08.2014 which includes the assessee. During the course of search u/s 132 the statement of Rinku Indrakumar Patodia (Main person of First Winner Group) was recorded under oath u/s 132(4) of the Act on 11.08.2014 and 12.08.2014. In his statement Rinku Patodia has accepted that during the relevant year M/s First Winner Textiles (India) P Ltd., M/s. Bhagwat Textiles P. Ltd. & M/s. Starwood Exports P. Ltd. and have obtained accommodation entry of the share application money of Rs. 3,75,00,000/- which has been routed through our assessee, who was found to be not carrying out any business activity and was used as a conduit for introducing the unaccounted funds by way of accommodation entries from concerns of Pravin Kumar Jain, an entry operator. A notice u/s. 153A of the Act was issued on 06.05.2015 and was duly served on the assessee. After due consideration of the facts, the assessment u/s. 143(3) r.w.s 153A was completed by the AO on 29.12.2016 after making a protective ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 3 addition of Rs. 3,75,00,000/- being the unaccounted investment made by the assessee in M/s First Winner Textiles (India) P Ltd., M/s. Bhagwat Textiles P. Ltd. & M/s. Starwood Exports P. Ltd. Moreover, protective addition of Rs.9,37,500/- u/s 69C was also made being the unaccounted commission estimated @ 2.5% for obtaining the said accommodation entries.” 6. Aggrieved by the aforesaid action of AO making protective addition on it, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same by noting that the AO had made substantive addition in the hands of M/s. First Winner Textiles (India) P. Ltd., M/s. Bhagwat Textiles P. Ltd. & M/s. Starwood Exports P. Ltd. on account of accommodation entries received from concerns of Shri Pravin Kumar Jain and has only resorted to protective addition in the hands of the assessee. The Ld. CIT(A) also took note of the fact that the protective addition of Rs.1,25,00,000/- made in the hands of assessee was confirmed substantively by him vide order dated 03.11.2017 in the hands of the M/s. Bhagwat Textiles Pvt. Ltd while he confirmed the substantive addition u/s 68 of the Act to the tune of Rs.13,05,00,000/- [which included the addition related to that of the assessee to the tune of Rs.1,25,00,000/-]. 7. Coming to the substantive addition in the case of M/s. Starwood Exports Pvt. Ltd, the Ld. CIT(A) has noted that vide his order dated 03.11.2017, the substantive addition was confirmed u/s 68 of the Act of Rs.10,10,00,000/-in its hand which included the addition relating to this assessee of Rs.1 crores. During the appellate proceedings, it was ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 4 brought to the notice of the Ld. CIT(A), by the assessee that even though substantive addition of Rs. one crore has been made in the hands M/s. Starwood Exports and corresponding protective addition has been made in the hands of the assessee, the annual accounts of investment made by the assessee in M/s. Starwood Exports Pvt. Ltd, would reveal that it was only to the tune of Rs.97,78,000/-. In the light of the same, the assessee contended that the substantive as well as protective addition should be restricted to Rs.97,70,000/-. Therefore, the Ld. CIT(A) has directed the AO to verify the claim of the assessee and to adopt the figure accordingly in respect of the substantive addition in respect of M/s. Starwood Exports Pvt. Ltd and corresponding action of protective assessment accordingly in the hands of the assessee company. 8. Coming to the case of M/s. Firstwinner Textile (India) Pvt. Ltd., the Ld. CIT(A) noted that vide order dated 03.11.2017 he has confirmed the substantive addition u/s 68 of the Act of Rs.14,00,00,000/- which included the addition related to the assessee of Rs.50 lakhs. However, the Ld. CIT(A) noted that the AO while making the protective addition in the hands of the assessee made addition to the tune of Rs.1,50,00,000/- whereas according to assessee it was only Rs.50 lakhs. Therefore, the AO was directed to verify this issue and adopt the correct figure in respect of both companies. Thereafter, the Ld. CIT(A) has passed the impugned order by taking note that since he has confirmed the substantive additions on the three ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 5 entities (supra), he was pleased to delete the protective addition made in the hands of the assessee. Aggrieved by the impugned action of Ld CIT(A), the Revenue is before us. 9. Having heard the Ld DR for revenue and after careful perusal of records and in the light of the aforesaid facts which are not repeated for sake of brevity, we note that the AO has made total protective addition of Rs.3,75,00,000/- in the hands of assessee company by holding that the said investment it purportedly made in shares of three companies i.e. in (i) M/s. Firstwinner Textile (India) Pvt. Ltd. of Rs.1,50,00,000/- (ii) M/s. Bhagat Textile Pvt. Ltd. of Rs.1,25,00,000/- and (iii) M/s. Starwood Exports Pvt. Ltd, of Rs.1,00,00,000/- as unexplained and made the addition on protective basis and the AO made corresponding substantive addition in the hands of the M/s. Firstwinner Textile (India) Pvt. Ltd. of Rs. 50,00,000/-, M/s. Bhagat Textile Pvt. Ltd. of Rs.1,25,00,000/- and M/s. Starwood Exports Pvt. Ltd, of Rs.1,00,00,000/-. We also note that the Ld. CIT(A) vide order dated 03.11.2017 has confirmed the substantive additions in the hands of (i) M/s. Firstwinner Textile (India) Pvt. Ltd., (ii) M/s. Bhagat Textile Pvt. Ltd. and (iii) M/s. Starwood Exports Pvt. Ltd. We have perused the AO’s report in respect of this appeal, which reveals that those assessee’s in whose hand the substantive addition has been confirmed by the Ld. CIT(A) [i.e. (i) M/s. Firstwinner Textile (India) Pvt. Ltd., (ii) M/s. Bhagat Textile Pvt. Ltd. and (iii) M/s. Starwood Exports Pvt. Ltd], have not preferred any appeal before this Tribunal ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 6 till date against the addition substantively confirmed by Ld CIT(A) (supra). In the light of the aforesaid facts, we find that the Ld. CIT(A) has passed the impugned order by taking note that he has confirmed the substantive additions on the three entities (supra), so the protective addition made in the hands of the assessee has been deleted by him which action of the Ld. CIT(A) does not require any interference from our side because we note from the AO’s report placed before us in respect of this appeal that these three entities in whose hands the substantive additions have been confirmed by the Ld. CIT(A) by his order dated 03.11.2017, has not preferred any further appeal against the action of Ld. CIT(A) before this Tribunal, so the impugned action of Ld. CIT(A) deleting the protective addition in the hands of assessee company is upheld. Nevertheless, as an abundant caution for the interest of revenue, incase if these three entities had preferred or prefers an appeal later, then the revenue would be at liberty to take appropriate action to recall this order in accordance to law. 10. Coming to the protective addition based on the purported commission income also we note that the same have been substantively confirmed in the hands of the three parties namely M/s. Firstwinner Textile (India) Pvt. Ltd., M/s. Bhagat Textile Pvt. Ltd. and M/s. Starwood Exports Pvt. Ltd. Therefore, the Ld. CIT(A) has deleted the protective addition in the hands of the assessee on the same reason for deleting the addition on the aforesaid ground. Therefore, on the same reasoning (mutatis and mutandis) as stated ITA Nos. 1878 & 1879/Mum/2019 A.Ys.2011-12 & 2012-13 Chintamani Textile Pvt. Ltd. 7 (supra) for confirming the action of the Ld. CIT(A), we uphold this action of the Ld. CIT(A) also. And coming to the revenue appeal for AY 2012-13, we note that there is no difference in facts (except of figures) as well as law and additions made are also identical and the grounds of appeal are also same, so on same reasoning (mutatis mutandis) we dismiss both the appeals of the revenue. 11. In the result, the appeals filed by the revenue are hereby dismissed. Order pronounced in the open court on 27/05/2022. Sd/- Sd/- (GAGAN GOYAL) (ABY T. VARKEY) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 27/05/2022. Vijay Pal Singh (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai