DCIT-4(1), Indore V. M/s. Yaksha Infrastructure Com. Pvt. Ltd., Taloja, Raigarh

ITA 460/Ind/2019

AI Insights

The case involves appeals by both the Assessee, Yaksha Infrastructure Company Pvt. Ltd., and the Revenue against the order of the Commissioner of Income Tax (Appeals)-II, Indore. The appeals were related to the assessment year 2011-12 and concerned the additions made under Section 68 of the Income Tax Act, 1961, which were later deleted by the CIT(A). The Tribunal's decision was based on the examination of the financial transactions, the credibility of the parties involved, and the application of the VSV Scheme, which led to the withdrawal of the Assessee's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122485 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2019
• Other Referred Cases: Lovely Exports (P) Ltd. vs. CIT, Parametric Trading Pvt. Ltd. vs. CIT, Asst. CIT vs. Ats Promoters & Builders (P.) Ltd., ACIT vs. Golden Line Studio Pvt. Ltd., Perfect Paradise Emporium Pvt. Ltd. vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Accommodation entries
• Section: 68; 143(3); 133(6); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I.T .A . No s. 29 0/ In d/ 20 19 & 46 0/ In d/ 20 19 (As se ss me nt Y ea r: 20 11- 12 ) Ya ks h In fr as tr uct ure Co mp any Pr iv ate Li mit ed (F or mer l y k no wn a s Fro li c Rea lt y P r iv ate L i mi ted ) 20 5, Su ja ta C ha mb ers , 2 n d Fl oor , 1/ 3 Ab hi ch a nd Ga nd hi Ma rg, Of f . Ka tha B aza r, Ma sji d ( W es t) , Mu mb ai – 40 00 00 9 Th e De pu ty C o mm iss io ne r of In co me T ax -4 (1 ) Ind or e Vs. & De pu ty C o mmi ss io ner o f In co me T ax -3( 1) Ind or e [New – As si st an t Co mmi s si on er of I n co me Tax - 4( 1) , I nd or e] M / s. Ya k sh I nfr as t ruc tu re Co m. P vt. L td . A 9 /2 , Ta lo ja, R ai g arh , Ma har as ht ra , Pin - 41 02 08 PA N No . AA BC F 1 08 9Q (Appellant) .. (Respondent) Assessee by : Shri Sumit Nema & shri Gagan Tiwari, Advocates Revenue by : Shri P. K. Mishra, CIT.D.R. Dat e of H ea ri ng 30.01.2023 Dat e of P ro no un ce me nt 14.03.2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeals filed by the Assessee and Revenue are directed against the order dated 30.01.2019 passed by the Commissioner of Income- Tax (Appeals)-II, Indore (‘CIT(A)’ in short), arising out of the order dated 29.03.2014 passed by the DCIT-3(1), Indore under section 143(3) r.w.s. 144 ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 2 - of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2011-12. 2. These appeals are heard analogously and are being disposed of by a common order for the sake of convenience. ITA 290 of in the order of 20 2018 for assessment year 1112 3. At the time of hearing of the instant appeal, the Learned counsel appearing for the assessee submitted before us that the appeal preferred by the assessee has already been settled under the VSV Scheme. In that view of the matter they don’t want to proceed with the matter further. Taking into consideration this particular aspect of the matter and upon perusal of the documents relied upon by the assessee in support of the contention made above, we dismiss the appeal preferred by the assessee as withdrawn. ITA No. 460/IND/2019 for assessment year 2011-2012 4. The instant appeal filed by the revenue is directed against the following grounds : “Ground No. 1: Was the Ld. CIT(A) justified in deleting the addition made by the AO of Rs. 37.89,000/- as 68 of the IT Act, 1961 with respect to credit entry received from M/s Maxworth Leafin and Investment Pvt. Ltd., especially in view of the fact that the nature and character of the transaction, as well as its creditworthiness, was not established either by the assessee company of e creditor company? “Ground No. 2: Was the Ld. CIT(A) justified in deleting the addition made by the AO of Rs. 22,54,71,970/- us 68 of the IT Act. 1961 by stating that these transaction related to AY 2010-11- when the credit entries had been received in FY 2010-11, and the assessee company as well as the creditor entities failed to produce evidences for establishing the identity, genuineness and creditworthiness of the transactions? Ground No. 3: Was the Ld. CITIA) justified in deleting the addition made by the AO of Rs. 62.30,000/- us 68 of the IT Act, 1961 by accepting the assessee's claim that it represented return of advance given, in view of the fact that both the ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 3 - creditor companies as well as the assessee company failed to produce the nature and character of the transactions, as well as failed to submit evidences for establishing the identity, genuineness and creditworthiness of the transactions? Ground No. 4: Was the Ld. CIT(A) justified in deleting the addition made by the AO of Rs. 18,84,23,265/- us 68 of the IT Act in view of the fact that the both the assessee company as well as the creditors failed to submit evidences in support of their claims that the payments made were in lieu of sale purchase transactions, and also failed to show the sale purchase nature of the transaction? Ground No. 5: Was the Ld. CIT(A) justified in deleting the treatment of income of Rs.28,89,064/- from sale purchase of shares as income from business by the AO and in upholding its treatment as income from short term capital gains by the assessee, given the fact that the assessee failed to submit the most basic details pertaining the share transactions such as quantity purchased and sold, rate of purchase and sale, frequency of transactions, etc.?” 5. The brief fact leading to the case is this that the assessee is a Private Limited Company, engaged, in the business of trading of pulses and other commodity. The company was incorporated on 31.03.2017 under the provisions of Companies Act, 1956 with its registered office at Mumbai which was subsequently transferred in the same state of Maharashtra at Taloja. The assessee filed its return of income electronically on 27.09.2011 declaring total income at Rs.24,28,290/- which was further revised on 31.03.2013 by declaring total income at Rs.30,38,290/-. The case was selected for scrutiny notice whereupon under Section 143(2) of the Act dated 14.08.2013 was duly served upon the assessee. Initially issues cropped up in regard to the jurisdiction of the Learned CIT(A) in issuing orders to the assessee which was ultimately went up to the Hon’ble Madhya Pradesh High Court. In Writ Petition being W.P. No. 1609 of 2014, the Hon’ble High Court was pleased to direct the competent authority to decide the issue in regard to the jurisdiction and to pass appropriate order whereupon the Chief Commissioner of Income Tax, Indore, ultimately passed an order on the question of jurisdiction rejecting ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 4 - the prayers of the assessee for transfer of files to Mumbai for the reasons contained therein. 6. Ground No. 1: Deletion of addition of amount of Rs.37,89,000/- in respect of credit entry received from one M/s. Maxworth Leafin & Investment Pvt. Ltd. is the subject matter before us. 7. We have heard the rival submission made by the respective parties and we have also perused the relevant materials available on record. It appears from the records that the assessee received advance from M/s. Maxworth Leafin & Investment Pvt. Ltd. In regard to such advances received by the assessee since no evidence was produced before the Ld. AO, the same was added to the income of the assessee. In this regard, relevant documents were produced before the First Appellate Authority as additional evidences whereupon remand report was called for. In the remand report the Ld. AO submitted as follows in regard to the issue in question: “Advance Received: According to the assessee, this amount represents advances/loans received from various parties. Rs. 37,80,000/- each was received from Shubhmangal Traders Pvt. Ltd. and Viksit Engineering Ltd., while Rs.37,89,000/- was received from Maxworth Leafin and Invt. Pvt. Ltd. Notice u/s 133/6) were also issued to these parties. All 3 parties shared the same premises as par their IIR during the concerned year, and all 3 have claimed that they have issued cheques to the assessee company as trade advances. However, none of them have submitted copies of invoice/bill, and have not stated what the advance was for i.e. what was being traded. They have not given details of the nature of their business/trade relationship with the assessee and based on their responses, the following observations are being made. That these advances given were of exactly the same amount from three entirely different parties (almost in one case), and that too on the same date (07.03.2011) also shows the suspect, pre-planned nature of the transactions. We have seen above why transaction claimed to have been entered into with Shubhmangal Traders can be concluded as bogus in nature, Similarly, Maxworth Leafin's ITR shows that it has no creditworthiness to make such high advance payment to the assessee company. In fact, the Assessee Company and Maxworth Leafin share a common Director by the name of Shailesh Gupta. ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 5 - It is clear from the above detailed account that the addition made of Rs. 1,13, 49,000/ by the AO on account of payments received from these 2 parties stands justified, as the claim of the assessee that these payments were trade advances is bogus, and your honour is requested to kindly sustain this addition.” 8. When the said trade advance was found to be bogus as per the Ld. AO, the assessee submitted the following before the First Appellate Authority: “The Appellant submits that there are addition in respect of advances received from three companies ie. Shubhmangal Traders Private Limited, Viksit Engineering Limited and Maxworth Leafin and Investment Private Limited. The Assessing Officer has neither shares any details received from these parties nor have asked any query in relation to advanced received from this parties. Company wise submissions of the Appellant are as under. a) Shubhmangal Traders Private Limited: As mentioned in earlier paragraphs, the submission by the Assessing Officer that Shubhmangal Traders Private Limited is not in existence is incorrect. Balance Sheet and Profit & Loss of Shubhmangal Traders Private Limited have been downloaded from MCA website by paying requisite fees. (Copy of Both Balance Sheet and Challans are attached herewith as Annexure -7 for your kind reference). Further, the Assessing Officer has issued notices u/s. 133(6) of the Act to all three parties and they have confirmed the transactions that they have given trade advances to the Appellant. These prove that the company is in existence and claim of the Assessing Officer regarding non-existence of Shubhmangal Traders Private Limited is baseless and misleading. He has again under the influence of his prejudiced mind, made an effort to give wrong picture without thinking that he has relied on the documents which send by Shubhmangal Traders Private Limited and he has itself saying that Shubhmangal Traders Private Limited is not in existence. Hence, the Appellant submits that the transaction of trade advances with the said party is genuine and addition u/s. 68 of the Act ought to be deleted. b) Viksit Engineering Limited: The Assessing Officer has not given any comments in relation to Viksit Engineering Limited. But he has commented that addition made is not justified. This once again shows that the Assessing Officer has given his comments without verifying / understanding the facts based on his suspicions/ assumptions. Further, the Assessing Officer has issued notices u/s. 133(6) of the Act to all three parties and they have confirmed the transactions that they have given trade advances to the Appellant. Hence, the Appellant submits that the transaction of trade advances with the said party is genuine and addition u/s. 68 of the Act ought to be deleted. ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 6 - c) Maxworth Leafin & Investments Private Limited: The Assessing Officer has given his opinion about limited financial standing of this company without disclosing any figures or justification for the same. The below mentioned figures are more than enough to prove financial capacity of this company. (Kindly find attached herewith copy of Balance Sheet received from party as Annexure 9). Also, this trade aduance received from Maxworth leafin and investments Put Ltd has been repaid on 31-03- 2012 Le. before completion of assement proceedings. Particulars Maxworth Leafin & Investments Pvt. Ltd. Amount in Rs. Sales (F.Y. 2010-2011) 3,74,79,857/- Net worth (As on 31-03-2011) 20,05,15,532/- Further, the Assessing Officer has issued notices u/s. 133(6) of the Act to all three parties and they have confirmed the transactions that have given trade advances to the Appellant. Hence, the Appellant submits that the transaction of trade advances with the said party is genuine and addition u/s 68 of the Act ought to be deleted. The confirmation given by all 3 companies proves that advance received from the said companies is genuine. The financials of companies as on 31-03-2011 and as on 31-03-2018 proves about existence, identity and creditworthiness of the transactions in case of both the companies Le 1) Shubhmangal Traders Private Limited and 2) Maxworth Leafin & Inus, Private Limited. Also in case of Viksit Engineering Limited, the Assessing Officer has not given justification for addition The same is enclosed as Annexure 10. Further, the Appellant submits that, as far as provisions of Section 68 of the Act is concerned, the Appellant has already discharged its obligation through providing evidences like the details name, address, bank statement, net worth of the counterparties, etc. to prove identity, genuineness of transaction and creditworthiness of counterparties. Further, the identity of the counterparties is proved beyond doubt as the Assessing Officer has issued notices u/s. 133(6) of the Act and they have replied also. Even the Assessing Officer has relied on its letter without conflicting about their identity. As discussed above, addition u/s 68 of the Act cannot be made where the assessee has discharged its obligation through providing evidences to prove identity, genuineness of transaction and creditworthiness of counterparties. Further, it would be relevant to take note of the decision of the Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd. (supra), wherein the Apex Court observed that once the assessee has given names and identity of the shareholders, the onus upon it gets discharged and no addition can be made in the hands of the assessee, Therefore, the Appellant submits that the said transactions are genuine and addition u/s 68 of the Act ought to be deleted. Further, the Appellant draws Your Honour kind attention that in the similar facts in the case of Parametric Trading Put. Ltd. (Formerly known as Aspirants Mercantiles Private Limited) for A. Y. 2011-12 Appeal No. IT-464/14-15/664 ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 7 - order dated 07.03.2018, the same Assessing Officer has given his remand report positive and Your Honour has accepted the same in that case and deleted the addition made u/s. 68 of the Act. Copy of the CIT(A) order of Parametric Trading Pvt. Ltd. is enclosed as Annexure Extract of the order is reproduced as under:” 9. Upon perusal of the entire aspect of the matter, the Ld.CIT(A) deleted the impugned order with the following observation: “5.5 The appellant had received advance from Maxworth Leafin & Investment Pvt. Ltd. The AO had taken stand in its remand report about the limited financial standing of this company without disclosing any figures or justification for the same. The appellant has submitted the balance sheet of the said company. The appellant has also submitted the figure of sales which was Rs. 3,74,79,857 and the net worth i.e. Rs. 20,05,15,532 of that company during the year under consideration. The said fact clearly proves the financial status of the said company on which the AO had raised the objection. Further, the AO had issued the notice to the said company and in compliance to the same; the company had confirmed that they had given trade advances to the appellant company. This fact clearly shows that the transaction was done between both the parties. Further, the trade advance received by the appellant company from Maxworth Leafin and Investment Pvt. Ltd had been repaid on 31.03.2012 i.e. before completion of assessment proceedings. 5.6 The documents so submitted by the appellant before this office were duly verified by this office. The following documents were thoroughly scrutinized to verify the claim of the appellant company:- (a) Copy of Balance sheet, Profit & Loss Account of Shubhmangal Traders Pvt Ltd, Viksit Engineering Limited and Maxworth Leafin-&-Inv. Pvt Ltd as on 31.03.2011 and 31.03.2018 were verified. On verification of the same, the financial status as well as the transaction was clearly reflected. (b) Copy of confirmations given by Shubhmangal Traders Private Limited, Maxworth Leafin & Investment Private Limited and Viksit Engineering Limited was also verified. In the confirmation, the transaction was accepted by those companies. (c) Copy of Ledger account of Shubhmangal Traders Pvt. Ltd, ——- Maxworth Leafin & Investment Private Limited & Viksit Investment Engineering Limited in the books of appellant was also verified. On verification of the said documents, this transaction was clearly reflected. 5.7 During the appellate proceedings, the appellant has submitted the bank details and ledger accounts of the said companies. After verifying the same, all the advance so taken by the appellant company were found to be correct but the ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 8 - appellant had failed to explain the nature of transaction with the company viz Shubhmangal Traders Pvt. Ltd and Viksit Engineering Ltd on which the appellant had received the advance. Merely the amount was reflected in the bank statement and ledger account of the said company which does not mean that the advance was taken for the purpose of any business transaction. 5.8 As per the section 68 of the Act, the appellant is required to prove the identity, creditworthiness and genuineness of the said transaction so done by the company. The appellant has submitted the confirmation of all the three companies wherein it is clearly mentioned that the said companies had given advances to the appellant company. The appellant has submitted the relevant documents i.e. ledger account of the said three companies, bank statements, copy of balance sheet for A.Y. 2010-11 & 2011-12. In the instant case, the appellant had proved the identity of the said companies and genuineness of the transactions that was also cleared from the documents so submitted by the appellant. But on the issue of the creditworthiness, the appellant company had failed to prove the same on the part of the Shubhmangal Traders Pvt. Ltd. and Viksit Engineering Ltd. The AO in its remand report had also raised the issue in respect of what being traded with the companies namely ubhmangal Traders Pvt. Ltd and Viksit Engineering Ltd. The appellant had submitted the quantitative details in respect of Maxworth Leafin & Investment Pvt. Ltd and the said amount was also repaid by that company 31.03.2012 i.e. before completion of assessment proceedings. Hence, the nature of transaction so done with Maxworth Leafin & Inv. Pvt. Ltd is clear from the quantitative details so submitted by the appellant. Keeping in mind all the facts and circumstance of the case, it is clear that the appellant had discharged its onus after submitting all the details i.e. name, address, bank statement, net worth of the counterparties etc to prove identity, and creditworthiness of counterparties. But appellant had failed to prove creditworthiness of transaction so done by the company with Shubhmangal Trader Pvt. Ltd and Viksit Engineering Ltd. Hence, this ground of appeal is allowed on the part of transaction so done with Maxworth Leafin & Investment Pvt. Ltd. On the part of transaction so done with Shubhmangal Trader Pvt. Ltd and Viksit Engineering Ltd., the addition so made by the AO is hereby confirmed.” 10. From the perusal of the remand report submitted by the Ld. AO and the rebuttal of the assessee against the same and the documents filed before the authorities below and before us too, we find that the confirmation has been given by M/s. Maxworth Leafin & Investment Pvt. Ltd. confirming the fact of trade advances given by them to the assessee company, which was duly verified. The same is also verifiable from page 187 of the paper book filed before us. The same also contains the bank statement, Ledger account, copy of income tax return, details of the directors of the said M/s. ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 9 - Maxworth Leafin & Investment Pvt. Ltd. In fact, the copy of the balance sheet, profit and loss account of the said company as on 31.03.2011 and 31.03.2018 were verified wherefrom the financial status and the transactions made with the said company by the assessee were clearly reflected. The transaction in question was duly confirmed by the said company. Furthermore the trade advances received by the assessee company has been claimed to have been refunded on 31.03.2012 which was also verified by the Ld. CIT(A). In fact, the advance received by the assessee from other two companies, namely, Shubhmangal Traders Pvt. Ltd. and Viksit Engineering Ltd. were also in question. However, considering the identical set of documents the Ld. CIT(A) came to a finding of identity of the said two companies and genuineness of those transactions been proved but the issue of creditworthiness of the said two companies were not proved. However, upon considering the quantitative details in respect of the M/s. Maxworth Leafin & Investment Pvt. Ltd. and the amount squared up by the assessee company on 31.03.2012 i.e. before the completion of the assessment order, the Learned CIT(A) came to a finding that the assessee truly discharged its onus by submitting all the details in respect of the name, address, bank statement, network of the counterparties etc. in order to prove the identity, genuineness and creditworthiness of the said party being M/s. Maxworth Leafin & Investment Pvt. Ltd. In that view of the matter, the Learned CIT(A) finally allowed this ground of appeal preferred by the assessee in respect of the advance received to the tune of ₹37,89,000/-from M/s. Maxworth Leafin & Investment Pvt. Ltd. 11. Having regard to the facts and circumstances of the case, we do not find any infirmity in such deletion of addition made by the Learned CIT(A), keeping in view of this particular fact that the three limbs of Section 68 of the Act has duly been discharged by the assessee. We, ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 10 - therefore, do not find any reason to interfere with the said order passed by the Learned CIT(A). Hence, the same is hereby confirmed. The appeal preferred by the Revenue on this count is, therefore, fails. 12. Ground Nos.2, 3 & 4 relate to addition of Rs.22,54,71,970/- under Section 68 of the Act on account of credits entries from three parties, addition of Rs.1,62,30,000/- under Section 68 of the Act on account of received against advance given and Rs.18,84,23,265/- under Section 68 of the Act on received towards material sales made by the Ld. AO, which were deleted by the First Appellate Authority. Hence, under challenge before us. 13. The impugned addition of Rs. 22,54,71,970/- under Section 68 of the Act has been made by the Ld.AO on account of credit entries found by him of 3 parties namely NSIL Infotech Ltd., NSIL power Ltd and Satguru Iron & Steel Co. Pvt. Ltd. In fact, certain bank statements was directly called for from ICICI and HDFC Banks by the Ld.AO during the assessment proceeding, upon perusal of which, huge deposits in those bank accounts was found. The assessee did not produce any evidence to prove the genuineness of such entries. In the earlier year, the similar kind of deposits were found to be non-genuine and in the year under consideration since nothing has been produced in support of the genuineness of such entries, the deposits has been treated as non-genuine and addition to the tune of total amount of Rs.44,56,79,235/- has been made out of which the impugned addition of Rs.22,54,71,970/- under Section 68 of the Act relates to the transaction with the above-mentioned 3 companies. 14. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 11 - 15. Before the First Appellate Authority, the assessee submitted that the said companies had invested into shares of Mid India Steel & Power Ltd. through the assessee before us. These two companies are independent companies and therefore do not have any relationship with the assessee company. The assessee submitted confirmation letter, bank statement, copy of Income Tax Return, details of Director, ledger account of investment in shares to MIEL in the case of NSIL Infotech Ltd. The said document is also available before us being part of the paper book commencing from page 112 to page 117. The Ledger account of shares of MIEL is also appearing at page No. 490 of the paper book filed before us by the assessee. 16. The balance sheet of A.Y. 2010-11 and 2011-12 along with the schedule and breakup of investment, Mid India Steel & Power Ltd. in the books of the assessee, for F.Y. 2009-10 which was downloaded from MCA website reflecting transfer of shares held by the assessee company in the name of NSIL Infotech Ltd. and NSIL Power Ltd. has been filed before the First Appellate Authority in support of the contention made by the assessee. The assessee further submitted the confirmation letter received under section 133(6) of the Act, the bank statement, copy of ITR, details of Director, Ledger account of investment in share and Ledger account of shares of MIEL in the case of measures and M/s. NSIL Power Limited before the First Appellate Authority. The same is also made available before us being part of the paper book commencing from page 103 to 107 and page 490. The assessee company made transaction with Satguru Iron & Steel Co. Pvt. Ltd. The assessee company had received trade advance in the F.Y. 2009-10 from the said party in support of which the balance sheet and P&L Account as on 31.03.2011, confirmation letter under section 133(6) of the Act, bank statement, Ledger account, copy of ITR, the details ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 12 - of Director and Ledger account in assessee’s book were duly submitted before the First Appellate Authority, the copies whereof have also been filed before us. The same is appearing from page 444 to 453, page 122 to 135 of the Paper Book No. 1 and page 585 of Paper Book No.2 filed by the assessee. It is the case of the assessee that the amount could not be added in the hands of the assessee in the current year since the same was not received in the current year and the same was duly accounted for the earlier year. As the assessee followed the Mercantile system of accounting and transaction since were pertain to the earlier year which has not been disputed by the Ld. AO in the remand report, the addition is not sustainable as the main contention of the assessee. In support of the case made out by the assessee the assessee submitted the following before the First Appellate Authority: “5.13 In the present case, the appellant had received the said amount in the F.Y. 2009-10. The same was also not disputed by the AO. Therefore, in the year under consideration i.e. FY 2010-11 (AY 2011-12), the same amount cannot be added u/s 68 of the Act. In this contention, reliance is placed on the following decisions wherein it has been held that section 68 of the Act was not applicable as there was no cash credit during the year under consideration: > In the case of Asst. CIT Vs. Ats Promoters & Builders (P.) Ltd. [2015], (5:7 taxmann.com 21) (All.), the Hon'ble Allahabad High Court has held that: "6. The Tribunal is correct in the view which has been taken because Section 68 of the Act permits an addition to be made where any sum is found credited in the books of account of the ' assesses for that year. In the present case, on a plain reading. Section 68 of the Act was not attracted. Hence, no substantial question of law would arise on this ground.” > In the case of ACIT Vs. Golden Line Studio Pvt. Ltd. [2018] 98 taxmann.com 299 (Mumbai - Trib.), the Hon'ble Mumbai Tribunal has held that : "15. ..............Yet another point, which supports the case of the assesses is that the assessee had received funds in the earlier years and not during the year under consideration. During the year under consideration, the assessee has transferred the funds to "preference shares account" and "shares premium" account by passing journal entries. There should not be any doubt that the ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 13 - provisions of sec.68 shall apply only in the year in which the cash credit was found. 16. In view of the foregoing discussions, we are of the view that there is no justification in assessing the alleged excess premium as income of the assessee. Accordingly we are of the view that the Ld CIT(A) was justified in deleting the impugned addition and accordingly we uphold his decision." > In the case of Perfect Paradise Emporium Pvt. Ltd. Vs. ITO (ITA No. 159/Del/2Oll) (Del. - Trib.), the Hon'ble Delhi Tribunal has held that: "8. .................It is trite law that an addition under Section 68 can be made only in the year in which credit was made to the account of the creditors in the books of account maintained. Kindly refer to the Hon'ble Supreme Court in the case of Damodar Hansraj Vs. CIT, (1969) 71 ITR 427 (SC). admittedly, in this case the credit to the account of creditors was made in the earlier years and therefore the amount even cannot be brought to tax under Section 68 in the year under appeal................." 17. Considering the entire aspect of the matter, the Ld. CIT(A) while deleting the addition made by the Ld. AO observed as follows: “ 5.14 The appellant has submitted various documents in support of its claim. The said documents were verified by this office. After verification of the same, following facts emerge out which are mentioned as below:- (a]. On verification of Bank statement of HDFC bank account of the said parties as on 31.03.201O as well as ledger account of the said parties, it is noticed that all the entries pertained to A.Y. 2010-11. (b) Confirmation was also submitted of the said parties wherein the said parties had accepted the transaction so done by them with the appellant's company. (c) Copy of annual return of Mid India Steel and Power Limited (Now known as Shreeyam Power and Steel Industries Limited) for the F.Y. 2009-10 were also verified. The said return clearly shows that transfer of shares so held by the appellant is in the name of NSIL Info tech Limited and KSIL Power Limited. 5.15 Hence, it is clear from the above verification that the above transactions were related to sale of shares of Mid India Steel and Power Limited by the appellant to NSIL Infotech Limited and NSIL Power Limited and the said transaction had taken place in A.Y. 2010-11. The said fact was also not disputed by the AO. The appellant has relied on the various case laws so discussed in its submission. The law clearly mandates that no addition can be made for this year in respect of transaction pertaining to earlier year. Hence, in light of the above facts and judicial decisions so discussed above, the ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 14 - addition so made by the AO is no longer sustainable and is - accordingly deleted.” It is relevant to mention that the documents which were placed before the First Appellate Authority and verified by him have also been filed before us. The copy of annual return of Mid India Steel & Power Ltd. clearly shows the transfer of shares by the assessee is in the name of NSIL Infotech Ltd. and NSIL Power Ltd. There is no doubt that such transactions were related to sale of shares of Mid India Steel & Power Ltd. by the assessee to NSIL Infotech Ltd. and NSIL Power Ltd. which took place only in A.Y.2010-2011. The Ld. DR at the time of hearing of the instant appeal is also failed to controvert such fact as borne out from the records. In that view of the matter when the transaction pertaining to the earlier year, holding the addition not sustainable in the eyes of law and deletion of the same by the Ld. CIT(A) is, according to us, found to be just and proper so as to warrant interference. The same is therefore uphold. This ground of appeal preferred by Revenue is, therefore, found to be devoid of any merit and thus dismissed. 18. The deletion of addition in respect of advance received to the tune of Rs.1,62,30,000/- from the 2 parties, namely, TOP Trade mercantile Pvt. Ltd. and Satguru Iron & Steel Co. Pvt. Ltd. is under challenge before us by the Revenue. 19. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 20. Before the First Appellate Authority, it was placed by the assessee that the advances were given to those parties earlier and the impugned amount has been received against such advances. In support of such ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 15 - contention made by the assessee, the balance sheet, P&L Account as on 31.03.2011, confirmation letter obtained under section 133(6) of the Act, bank statement, Ledger account, copy of ITR, details of Director, Ledger account in assessee’s books and invoices in respect of Top Trade mercantile Pvt. Ltd. were duly submitted. Similarly documents in respect of the other party, namely, Satguru Iron & Steel Co. Pvt. Ltd. were duly filed. Needless to mention that the same set of documents have duly been filed before us by way of a paper book details whereof is as follows: “In cast of TOP Trade mercantile Balance Sheet, P&L Account as on 31/03/2011 Page No. 455-468 Confirmation letter u/s 133 (6) Page No. 149 PB - 1 Bank Statement Page No. 152-153 Ledger Account Page No. 150 Copy of ITR Page No. 154-167 Details of Director Page No. 168 Ledger Account (In Appellant Books) Page No. 587 PB - II Invoices Page No. 151-153 In case of Satguru Iron & Steel Balance Sheet, P&L Account as on 31/03/2011 Page No. 444-453 Confirmation letter u/s 133 (6) Page No. 122 PB - 1 Bank Statement Page No. 123-129 Ledger Account Page No. 130-131 Copy of ITR Page No. 132-134 ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 16 - Upon verification of those documents, the Ld. CIT(A) came to a finding that the transaction and the respective amount were clearly reflecting in the balance sheet and Profit and Loss account of Top Trade Mercantile Private Ltd. and Satguru Iron & Steel Co. Pvt. Ltd. From the confirmation filed by the parties, it has also been verified that the parties had accepted the transactions so done by them with the assessee company. Even from the Ledger account, the transaction of both the companies with the assessee has been found to be clearly reflected. Copy of balance sheet of the assessee company for A.Ys. 2010-11 & 2011-12 alongwith confirmation were also verified which establishes the fact of advance given and received back from the above parties as also observed by the First Appellate Authority, upon verification of the above documents placed before him. It is relevant to mention that those documents have also been verified by us and the Ld. DR has not been able to controvert such facts borne out from the records placed before us. As it is a fact that the assessee had duly accounted for the said transaction in its books of accounts and when the said parties had confirmed the same, no addition can be said to be justifiable on account of receiving back the advances so given in earlier year in the present facts and circumstances of the case as observed by the Ld. CIT(A) is found to be proper, without any ambiguity so as to warrant interference. In that view of the matter, we confirm the same. The grounds of appeal preferred by Revenue, is therefore, found to be devoid of any merit and, thus, dismissed. Details of Director Page No. 135 Ledger Account (In Appellant Books) Page No. 585 PB - II ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 17 - 21. The impugned addition of Rs.18,84,23,265/- has been claimed to have been received against the sale of yellow peas made to Subhamangal Traders Pvt. Ltd. and Ruchi Agro Tech Pvt. Ltd. 22. Before the First appellate Authority, the following documents were filed which have also been filed before us. The details of the said documents is mentioned hereinbelow: “In case of Shubhmangal Traders Balance Sheet, P&L Account as on 31/03/2011 Page No. 337-354 Balance Sheet, P&L Account as on 31/03/2018 Page No. 383-404 Details of Stock & Turnover Page No. 352 Confirmation letter u/s 133 (6) Page No. 136 PB-I Ledger Account Page No. 139 Copy of ITR Page No. 137-138 & 140 Details of Director Page No. 141 Ledger Account (In Appellant Books) Page No. 582 PB – II Invoices Page No.589 In case of Ruchi Agro Tech Pvt. Ltd. Confirmation letter u/s 133 (6) Page No. 142 PB-I Ledger Account Page No. 143 Copy of ITR Page No. 144 to 146 Bank Account Page No. 147 Details of Director Page No. 148 ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 18 - Ledger Account (In Appellant Books) Page No. 586 PB – II Invoices Page No.588 23. A remand report was called for by the Ld. CIT(A) from the Ld.AO whereupon the Ld.AO observed as follows justifying the addition made by the AO during the assessment proceeding: “Receipt from Material Sales: Notice u/s 133(6) was also issued to the concerned parties. In response, reply of the parties along with a copy of just one invoice for the entire sale amount, ledger account of the assessee company in their books, bank statements and ITR were received. Based on the response received from them, it can be concluded that the addition made is fair and correct, and should be sustained, for the following reasons: Both the companies, located at the same premises in Mumbai, have submitted that they have purchased yellow peas from the assessee company, and the payment has been made in lieu of this purchase. The huge purchases made by them of Rs. 3,74,79,765/- in the case of Ruchi Agro Tech and Rs15,09,43,500/- in the case of Shubhmangal Traders has been done in one go, for which there 'is'' one bill and payment also of such huge amounts has been made in one go. The invoice submitted by both are identical, and has no supplier's reference, no buyer's order no., no dispatch document no., no delivery note date, no destination, and no other reference. The only thing mentioned is the invoice no., which is interestingly "FRO/001" in the case of Ruchi Agro Tech, and "FRO/002" in the case of Shubhmangal, which shows that these happen to be the first set of purchases made by them during the entire year, that too in the months of February and March 2011. The improbability of all this put together. where such high value sales/purchases have been made in the most callous manner with no mention of even the bare minimum details shows that the entire transaction is a sham, and only a means of providing accommodation entries and rotation of funds. A cursory search about these two companies on MCA/Zauba shown that Ruchi Agro Tech is no longer known by that name it was renamed as Middlemist Agro Tech Put Ltd yet it has submitted its repon.se on the letter head of Ruchi Agro Tech Put Ltd similarly shubhmangal Traders Put Ltd also no longer exists by that name yet has used the letter head of this company. The ITRs of these companies shows the limited financial standing and lack of creditworthiness of these companies to make such huge purchase and their bank accounts show a similar story where they have received huge equivalent credit entries in their bank accounts before making the payment to the assessee company which stands unexplained. 24. The copy of invoices being FRO/001 and FRO/002 were duly considered by the First Appellate Authority. On the other hand, the Ld. ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 19 - AO came to a finding in the remand report that the company had done transaction for the first time with the above companies. In rebuttal, the assessee submitted that the total purchase made by the Subhamangal Traders Pvt. Ltd. was Rs.84,72,50,787/- and purchases from the assessee was Rs.15,09,43,500/-. Similarly the total purchases made by Ruchi Agro Tech Pvt. Ltd. was Rs.22,80,64,052/- and purchase from the assessee was Rs.37,47,09,765/-. Further that the balance sheet and profit and loss of the both companies for assessment year 2010-11 downloaded from MCA website the Ld. CIT(A) had satisfied the identity of those companies. Moreso, those companies had confirmed the transaction with the assessee company. Upon examination of all the relevant documents placed the financial status of both the companies as on 31.03.2011 and as on 31.03.2011 proved the existence, identity and creditworthiness of the said companies as of the view of the Ld. CIT(A). The money which has been received on account of sales has already been reflected and accounted for in the assessee P&L account by the assessee company and in that view of the matter, the addition on the bank entry tantamount to double taxation as of the observation of the Ld. CIT(A). Upon verification of the entire set of documents submitted by the assessee in order to prove the existence, identity and creditworthiness of those companies the Ld.CIT(A) made the following observations: “(a) The invoice furnished by the appellant company was verified. On verification of the same, this fact is clear that the transaction of Yellow Peas was done with the companies. (b) Bank details were also verified along with the ledger accounts in the books of the appellant. On verification of the same, the transaction amount was clearly reflected in the bank statements and ledger account. (c) The Profit & loss account of the appellant's company was also verified. In the said documents, this transaction was clearly reflected. 5.23 Hence, it is clear from the above documents and verification of the same that the appellant company had done transaction with the above companies. This fact is also clear from the bank statements and P&L account of the said companies. Further, as mentioned earlier, these sales have already been offered as income by ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 20 - the appellant in the P&L account, hence, making addition on this bank entry would be double taxation of the same amount which is not permissible in law. In light of the above facts and circumstances of the case, the addition so made by the AO is hereby deleted and accordingly, these grounds of appeal are allowed.” 25. It is relevant to mention that we have also verified those documents as submitted before us by way of a paper book filed by the assessee the contents whereof has not been doubted by the Ld. Representative of the Department. Further that the sales has already been offered as income by the assessee in its P&L account and therefore the addition on the bank entry tantamount to double taxation of the same amount which has not been found to be permissible in law by the CIT(A). According to us, such view taken by the Ld. CIT(A) while in deleting the addition found to be just and proper in the present facts and circumstances of the case so as to warrant interference. The order under challenge is therefore, upheld. This ground of appeal is therefore dismissed. 26. Ground No. 5 relates to deletion of addition of Rs.28,89,064/- in respect of short term capital gain is under challenge before us by the Revenue. 27. We have heard the rival submission made by the respective parties and we have also perused the relevant materials available on record. 28. In the remand report, the Ld. AO stated that no relevant documents have been furnished by the assessee in support of the claim, in reply whereof, the assessee submitted detailed working of short-term capital gain along with date of purchase of shares, date of sale of shares, quantity, purchase, cost sales price etc. The contract notes of the above transaction were duly submitted by the First Appellate Authority, perusal and verification whereof confirms that the assessee had entered into this transaction during the year under consideration and from the said ITA Nos. 290 & 460/Ind/2019 [M/s. Yaksha Infrastructure Co. P. Ltd.] Asst.Year.– 2011-12 - 21 - transaction earned profit of Rs.28,89,064/-. It is relevant to mention that the shares as investment has also been shown in its balance sheet and the assessee has offered the same as short term capital gain under the head ‘income from capital gain’. The entire set of details have also been filed before us by the assessee. As the said income has been offered in its return by the assessee, the addition made by the Ld.AO on the same amount treating the same as income under business head tantamounts to double taxation. Since, the same has already been offered for taxation by the assessee company, the addition, in our considered opinion, has been rightly deleted by the Ld. CIT(A) for the reasons above. The ground of appeal preferred by the Revenue is, therefore, found to be devoid of any merit and hence dismissed. 29. In the combined result, Revenue’s appeal is dismissed. 30. In the combined result, Assessee’s and Revenue’s appeals are dismissed. This Order pronounced on 14/03/2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 14/03/2023 S. K. Sinha, Sr. PS True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. िवभागीय ितिनिध, / DR, ITAT, Indore 6. गाड फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore