M/s. Shri Rang Infrastructure Pvt. Ltd., Gandhinagar V. DCIT, Gandhinagar Circle, Gandhinagar

ITA 665/AHD/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0672 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 14-07-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 15-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Reassessment proceedings
• Section: 68; 148; 143(3); 142(1); 208; 64

Judgement Text

ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.665/Ahd/2019 Assessment Year: 2012-13 M/s. Shri Rang Infrastructure Pvt. Ltd., Shyamvan, B/h. Vrundavan Hotel, Koba Circle, Post: Koba Dist. Gandhinagar – 382 007 Gujarat. [PAN – AAICS 9126 J] Vs. Deputy Commissioner of Income Tax, Gandhinagar Circle, Gandhinagar. (Appellant) (Respondent) Assessee by Shri M.S. Chhajed, AR Revenue by Shri Ashok Kumar Suthar, Sr. DR D a t e o f H e a ri n g 15.07.2024 D a t e o f P ro n o u n c e m e n t 30.07.2024 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the Assessee against order dated 15.03.2019 passed by the CIT(A), Gandhinagar, Ahmedabad for the Assessment Year 2012-13. 2. The assessee has raised the following grounds of appeal :- “1. The order passed by the Ld. CIT(A) is against law, equity & justice. 2. The Ld. CIT(A) has erred in law and on facts in upholding reopening of assessment by the Ld. AO on reivies of case records. 3. The Ld. CIT(A) has erred in law and on facts in upholding validity of reopening of assessment in absence of valid sanction as required under Section 151 of the Act was not given. ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 2 of 7 4. The Ld. CIT(A) has erred in law and on facts in upholding addition made by the Ld. AO to the extent of Rs.4,75,00,000/- under Section 68 of the Act ignoring vital evidence on records.” 3. The assessee has also raised the following additional ground:- “(1) The assessment order passed by the Ld. AO is bad and illegal as the Ld. AO had no valid jurisdiction.” 4. The original Assessment Order under Section 143(3) of the Income Tax Act, 1961 was passed on 30.03.2015 and income was assessed at Rs.2,83,71,720/-. Thereafter, subsequent to certain discrepancies, the assessment was reopened by way of issuance of notice under Section 148 of the Act after recording reasons for reopening the case and obtaining statutory approvals. Notice under Section 148 of the Act was issued on 21.11.2016 which was duly served on 22.11.2016. In response to notice under Section 148, return of income was filed by the assessee on 05.10.2017. Copy of reasons was supplied to the assessee on 18.09.2017. Notice under Section 143(2) of the Act dated 06.10.2017 was issued. The Assessing Officer observed that the assessee company is primarily engaged in the business of construction and as part of Profit & Loss account and Balance Sheet as well as notes on items of Balance Sheet, 3CD report and submission of the assessee in respect of work-in-progress revealed that the assessee has debited Rs.1,02,88,690/- in Profit & Loss account as AUDA fees and Rs.1,11,82,000/- as land development expenditure. The same were allowed by the Assessing Officer but as per Section 68 of the Act wherein any sum found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory to the Assessing Officer, the sum so credited may be charged to income tax. The Assessing Officer further observed that the assessee though furnished confirmations, bank statements and copy of returns of all the parties from which it had obtained unsecured loans to prove the genuineness of the transactions, with respect to Shukan Developers Pvt. Ltd. and Shukan Finance & Investment, assessee failed to establish the genuineness of the transactions. Thus, the claim of the assessee that it has loan balance of Rs.6,10,00,000/- (Rs.1,35,00,000 + Rs.4,75,00,000) as on 31.03.2012 of new loans and advances obtained from two Sukan Group of entities were not verifiable. Thus, the Assessing Officer, after issuing notice under Section 142(1) dated 10.11.2017 and taking into account assessee’s ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 3 of 7 reply, observed that the submissions of the assessee are not tenable as the only return of income of the two parties namely Shukan Developers Pvt. Ltd. and Shukan Finance & Investment have been filed from whom was not revealed in respect of unsecured loans received amounting to Rs.1,35,00,000 & Rs.4,75,00,000 and no creditworthiness and genuineness was established by the assessee. Thus, the Assessing Officer made addition as unexplained cash credit under Section 68 of the Act. 5. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. As regards additional ground, the Ld. AR submitted that the Assessing Officer while reopening the assessment has reviewed the original assessment order and, therefore, the review of the original assessment order is not permissible and the assessment itself is bad in law. The Ld. AR further submitted that the reasons recorded itself was dealt with the original assessment proceedings and, therefore, as decided by the Hon’ble Supreme Court in the case of Ajantha Industries (1976) 102 ITR 281, the same should not be reopened and the order of reopening becomes bad in law. The Ld. AR further submitted that there was no order under Section 127 of the Act passed/communicated for transfer of jurisdiction from ITO, Circle-I, Gandhinagar to DCIT, Circle Gandhinagar. 7. The Ld. DR submitted that there was an internal transfer for which no communication is required and in fact reassessment is not review and, therefore, the decision of Hon’ble Apex Court will not be applicable in the present case in the facts and circumstances which was distinguishable from the present assessee to that of decision of Hon’ble Supreme Court. 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the contention of the Ld. AR that no order under Section 127 of the Act was passed/communicated for transfer of jurisdiction, but the same is there mentioned in the Assessment Order which categorically does not require any communication to the assessee as it is an internal transfer for the administrative purpose of the Assessing Officer and the powers are envisaged with the concerned authorities. The decision of Hon’ble Supreme Court in case of Ajantha Industries will ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 4 of 7 not be applicable as the jurisdiction invoked by the Assessing Officer who has the power, passed the Assessment Order in assessee’s case. Besides this, the contention of Ld. AR is that there is a review of the original assessment order is also not justifiable as the Assessing Officer while giving the satisfaction note has dealt with the different issues after indicating the same in the reopening while recording the reasons. Thus, the additional ground is dismissed. 9. The Ld. AR further submitted that the CIT(A) has erred in law and on facts in upholding valid reopening of assessment in absence of valid sanction as required under Section 151 of the Act for which it is pertinent to note that the assessee has not objected the satisfaction at the relevant time and, therefore, the following decisions cannot be applicable in assessee’s case. Thus, ground nos.1 & 2 are dismissed. 1. Hon'ble Supreme Court has dismissed the SLP in the case of Deputy Commissioner of Income Tax, Circle 1(1) vs. Bajaj Allianz Life Insurance Company Ltd. (2021] 278 taxman 104 (SC) 2. Hon'ble High Court of Bombay in the case of Bajaj Allianz Life Insurance Company Ltd. vs. Deputy Commissioner of Income Tax, Circle 1(1) [2020] 269 taxman 208 (Bombay) 3. Hon'ble Apex Court in the case of Kelvinator India Limited [2010] 187 Taxman 3 (SC) 6. Hon'ble Supreme Court of India in the case of Income Tax Officer, Ward No.16(2) vs. TechSpan India (P.) Ltd [2018] 92 taxmann.com 361 (SC) 5. Hon'ble High Court of Gujarat in the case of Siddhi Developers and Builders vs. Assistant Commissioner of Income Tax, Circle No.3(3) [2021] 129 taxmann.com 117 (Gujarat) 6. Hon'ble Gujarat High Court in the case of Gujarat Power Corpn. Ltd. vs. Assistant Commissioner of Income-tax [2012] 26 taxmann.com 51 (Guj.) 7. Hon'ble Gujarat High court in the case of Vishwanath Engineers vs. Assistant Commissioner of Income Tax 354 ITR 211 (Guj) 8. Hon'ble High Court of Bombay in the case of Commissioner of Income- tax vs. Amitabh Bachchan [2013] 33 taxmann.com 535 (Bombay) 9. High Court of Delhi in the case of Commissioner of Income-tax, Delhi-XI vs. Batra Bhatta Company [2008] 174 Taxman 444 (Delhi) 10. Hon'ble High Court of Madras in the case of Commissioner of Income Tax, Corporate Ward 3(4), Chennai vs. B. Suresh Kumar (2021) 430 ITR 60 ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 5 of 7 11. Hon'ble ITAT Mumbai in the case of Abbot India Ltd. vs. Assistant Commissioner of Income-tax, Circle-2(1), Mumbai [2017] 81 taxmann.com 456 12. Madhya Pradesh High Court in the case of CIT Jabalpur vs. S Goyenka Lime & Chemicals (2015) 231 taxman 73. 13. Supreme Court has dismissed SLP in the case of CIT Jabalpur vs. S Goyenka Lime & Chemicals (2015) 64 taxmann.com 313 (SC). 14. Delhi HC in the case of Central India Electric Supply Co. Ltd. vs. Income Tax Officer (2011) 333 ITR 237 15. Delhi HC in the case of Pr. CIT vs. N C Cables Ltd. (2017) 391 ITR 11 16 Delhi HC in the case of United Electrical Co. Pvt. Ltd. vs. CIT 258 ITR 317 17. High Court of Punjab & Haryana in the case of Commissioner of Income tax vs. Smt. Attridevi (2005) 276 ITR 0532 18. Delhi High Court in the case of Principal Commissioner of Income Tax- 6 vs Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Delhi) 19. Delhi High Court in the case of Principal Commissioner of Income Tax vs RMG Polyvinyl (1) Ltd. [2017] 83 taxmann.com 348 (Delhi). 10. As regards to ground no.4 which is on merit, the Ld. AR submitted that the addition made by the Assessing Officer to the extent of Rs.4,75,00,000/- under Section 68 of the Act was passed ignoring the evidences on record. The Ld. AR has given details as follows :- Particulars Amount Unsecured loan received from Shukan Finance and Investment 3,90,00,000/- Due to mistake amount received from Shukan Developers Private Limited is wrongly credited in the account of Shukan Finance and Investment 85,00,000/- TOTAL 4,75,00,000/- “Copy of account of Shukan Finance and Investment from the books of assessee company is annexed at page nos.69-70 of Paperbook-1 On going through the above account your honour would notice that the loan taken from M/s. Shukan Finance and Investment Services Loan has been repaid in subsequent years which has been accepted by Department. ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 6 of 7 All the transactions are done through bank. It is held in jurisdictional High Court that when all the transactions are through Account payee cheque then the initial burden on assessee u/s.68 of the Act is discharged. Assessee has submitted ITR, computation of income and confirmation from Shukan Finance and Investment which are annexed at Pg Nos.71-75 Paperbook-1. According to the provisions of Section 68 the onus on assessee has been duly discharged in reassessment proceedings. It has been held in Apex Court and jurisdictional High Court that when the primary onus on the assessee is discharged then the Ld. A.O. cannot proceed further for making addition u/s. 68 of the Act.” 10.1 The Ld. AR also relied upon the following decisions :- 1. Hon'ble Gujarat High court in the case of CIT Rajkot vs. Ayachi Chandrashekhar Narsangi, 221 taxman 146. 2. Hon'ble Gujarat High Court in the case of Ranchhod Jivabhai Nakhave [2012] 208 taxman 35 (Guj.). 3. Hon'ble High Court of Gujarat in the case of Deputy Commissioner of Income Tax Vs. Rohini Builders (2002) 256 ITR 360 4. Hon'ble High Court of Gujarat in the case of Commissioner of Income Tax vs. Jagdish B. Agarwal (2010) 45 DTR (Guj) 197. 5. Hon'ble ITAT Ahmedabad Bench 'C' in the case of Claris Lifesciences Ltd. vs. Assistant Commissioner of Income-tax, Circle 1, Ahmedabad, 112 ITD 307. 6. Hon'ble Ahmedabad ITAT in the case of Sarjan Corp. vs ACIT [2012] 25 taxmann.com 426 (Ahmedabad - Trib.). 11. The Ld. DR relied upon the Assessment Order and the Order of the CIT(A). 12. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given the details related to Shukan Finance & Investment and also has given the details related to the identity of Shukan Finance & Investment as relates to genuineness and credit worthiness. The assessee submitted ITR, computation of income and confirmation from Shukan Finance & Investment for which the assessee also submitted the details about loan ITA No.665/Ahd/2019 Assessment Year: 2012-13 Page 7 of 7 which was subsequently repaid and, therefore, it will not be justifiable to make the addition under Section 68 of the Act as unexplained cash credits. The assessee has explained before the Assessing Officer as well as before the CIT(A) related to the unsecured loan received from the two parties i.e. Shukan Developers Pvt. Ltd. and Shukan Finance & Investment and after going through the same, it appears that the Assessing Officer as well as the CIT(A) was not justified in making addition. Thus, ground no.4 is allowed. 13. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on this 30 th July, 2024. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 30 th July, 2024 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad