KAMAL CLEARING AND FORWARDING AGENCY PRIVATE LIMITED,MUMBAI V. INCOME TAX OFFICER, WARD 6(3)(3), , MUMBAI

ITA 1575/MUM/2024

AI Insights

The case involves Kamal Clearing and Forwarding Agency Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, sustaining an addition of Rs. 54,77,918 under section 68 of the Income Tax Act. The addition was based on the premise that the appellant was the beneficiary of unexplained cash deposits made by Mr. Ravi Prakash, who was allegedly not traceable. The ITAT Mumbai, after considering the arguments and the precedents, decided in favor of the appellant, primarily on the grounds that the income had been declared and the necessary details had been provided.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471371 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Other Referred Cases: Raymond Woolen Mills Ltd. vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHA RAMACHANDRAN
• Assessee Lawyers: SUKHSAGAR SYAL
• Keywords: Business income; Unexplained cash credit; Reopening of assessment; Reason to believe; Borrowed satisfaction
• Section: 147; 148; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) AND SHRI OMKARESHWAR CHIDARA (ACCOUNTANT MEMBER) ITA No. 1575/MUM/2024 Assessment Year: 2011-12 Kamal Clearing and Forwarding Agency Private Limited 304, Vardhman Chamber 72, Kalyan Street, Masjid Bunder, Mumbai-400 009. Vs. Income Tax Officer, Ward 6(3)(3), Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN NO. AAACK6472F Appellant Respondent Assessee by : Shri Sukhsagar Syal Revenue by : Ms. Sudha Ramachandran, Sr. DR Date of Hearing : 12/11/2024 Date of pronouncement : 02/01/2025 ORDER PER OMKARESHWAR CHIDARA, AM This appeal by the assessee is directed against order dated 20.02.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12. 2. The ITAT, Mumbai has appellant’s case for A.Y. 2010 1576/Mum/2024 dated 31/12/2024 Rs. 19,31,004/- on similar issue under similar circumstances. The issue was decided in favour of appellant. For the year under consideration now, in A.Y. 2011 54,77,918/-. While filing an appeal before the Income Tribunal (ITAT), the assessee company customs clearing services, filed only one ground of appeal as follows: 1. On the facts and circumstances of t CIT(A) has erred in sustaining the addition made by the Ld. AO u/s 68 of the Act of Rs.54,77,918/ 3. The Ld. AO has stated the assessee company rendered services to M/s Romex Internationa amount of Rs.54,77,918 amount from M/s Romex International, the appellant company received the money from one Mr. Ravi Prakash. As Mr. Ravi Prakash has deposited cash of Rs.1.57 crores AO held that the appellant company is the beneficiary of the same. The Ld. AO received information from tax Department that Mr. Ravi Prakash is not traceable. As the payments were not received from cash was deposited in the bank account of Mr. Ravi Prakash from where appellant company received money, the Kamal Clearing and Forwarding Agency Pvt. The ITAT, Mumbai has passed an order in the above s case for A.Y. 2010-11 vide order ITA No. 1576/Mum/2024 dated 31/12/2024 where the amount on similar issue under similar circumstances. The issue was decided in favour of appellant. For the year under in A.Y. 2011-12, the amount While filing an appeal before the Income Tribunal (ITAT), the assessee company, was render customs clearing services, filed only one ground of appeal as On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in sustaining the addition made by the Ld. AO u/s 68 of the Act of Rs.54,77,918/- on account of unexplained cash credit. The Ld. AO has stated the assessee company rendered services to M/s Romex International and it had to receive an 918/- from this company. Instead of getting the amount from M/s Romex International, the appellant company received the money from one Mr. Ravi Prakash. As Mr. Ravi Prakash has deposited cash of Rs.1.57 crores in his bank account, the ld. AO held that the appellant company is the beneficiary of the same. The Ld. AO received information from Investigation Wing tax Department that Mr. Ravi Prakash is not traceable. As the payments were not received from Mr. Romex International and cash was deposited in the bank account of Mr. Ravi Prakash from pellant company received money, the Ld. AO treated the Kamal Clearing and Forwarding Agency Pvt. Ltd. 2 ITA No. 1575/MUM/2024 an order in the above vide order ITA No. here the amount involved is on similar issue under similar circumstances. The issue was decided in favour of appellant. For the year under the amount involved is Rs. While filing an appeal before the Income-tax Appellate rendering services as customs clearing services, filed only one ground of appeal as he case and in law, the ld. CIT(A) has erred in sustaining the addition made by the Ld. AO u/s 68 on account of unexplained cash credit. The Ld. AO has stated the assessee company rendered l and it had to receive an from this company. Instead of getting the amount from M/s Romex International, the appellant company received the money from one Mr. Ravi Prakash. As Mr. Ravi Prakash in his bank account, the ld. AO held that the appellant company is the beneficiary of the same. Investigation Wing of Income- tax Department that Mr. Ravi Prakash is not traceable. As the Mr. Romex International and huge cash was deposited in the bank account of Mr. Ravi Prakash from Ld. AO treated the same as unexplained credit u/s 68 of the Act and added an amount of Rs. 54,77,918/- while finalizing the assessment. The has also confirmed the addition made by the Ld. AO by holding that it is a case of money laundering, as Mr. Ravi Prakash who paid money to the appellant company to discharge the liability of M/s Romex International is not traceable. The Ld. CIT(A) has also held that the sources of Mr. Ravi Prakash remained unexplained because Mr. Ravi Prakash deposited huge cash into his bank account. Hence, the addition made by the Ld. AO was upheld by the First Appellate Authority. 4. Aggrieved by the order appellant filed an appeal before the ITAT with the only ground of appeal mentioned in page 1 of this order. Subsequently, an additional ground of appeal was filed on 23.10.2024 by th appellant which is reproduced below: “On the facts and circumstances of the case and in law, the impugned assessment proceedings are without jurisdiction in as much as they are in viol 4.1 Again another petition dated 12 by the ITAT Registrar on 21.11.2024 which states that the appellant wanted to raise another additional ground as follows: “On the facts and circumstances of the case and in law, the impugned reassessment order passed u/s 147 of bad in law in as much as it is only a draft order which does not contain material facts and finding, and cannot be characterized as an order of assessment. Kamal Clearing and Forwarding Agency Pvt. same as unexplained credit u/s 68 of the Act and added an amount while finalizing the assessment. The has also confirmed the addition made by the Ld. AO by holding that it is a case of money laundering, as Mr. Ravi Prakash who paid money to the appellant company to discharge the liability of M/s ernational is not traceable. The Ld. CIT(A) has also held that the sources of Mr. Ravi Prakash remained unexplained because Mr. Ravi Prakash deposited huge cash into his bank account. Hence, the addition made by the Ld. AO was upheld by the Authority. by the orders of the Ld. AO and Ld. CIT(A), the appellant filed an appeal before the ITAT with the only ground of appeal mentioned in page 1 of this order. Subsequently, an additional ground of appeal was filed on 23.10.2024 by th appellant which is reproduced below: On the facts and circumstances of the case and in law, the impugned assessment proceedings are without jurisdiction in as much as they are in violation of section 147 of the Act. Again another petition dated 12.11.2024 which was received by the ITAT Registrar on 21.11.2024 which states that the appellant wanted to raise another additional ground as follows: On the facts and circumstances of the case and in law, the impugned reassessment order passed u/s 147 of the Act is bad in law in as much as it is only a draft order which does not contain material facts and finding, and cannot be characterized as an order of assessment.” Kamal Clearing and Forwarding Agency Pvt. Ltd. 3 ITA No. 1575/MUM/2024 same as unexplained credit u/s 68 of the Act and added an amount while finalizing the assessment. The Ld. CIT(A) has also confirmed the addition made by the Ld. AO by holding that it is a case of money laundering, as Mr. Ravi Prakash who paid money to the appellant company to discharge the liability of M/s ernational is not traceable. The Ld. CIT(A) has also held that the sources of Mr. Ravi Prakash remained unexplained because Mr. Ravi Prakash deposited huge cash into his bank account. Hence, the addition made by the Ld. AO was upheld by the of the Ld. AO and Ld. CIT(A), the appellant filed an appeal before the ITAT with the only ground of appeal mentioned in page 1 of this order. Subsequently, an additional ground of appeal was filed on 23.10.2024 by the On the facts and circumstances of the case and in law, the impugned assessment proceedings are without jurisdiction in ation of section 147 of the Act.” .11.2024 which was received by the ITAT Registrar on 21.11.2024 which states that the appellant wanted to raise another additional ground as follows: On the facts and circumstances of the case and in law, the the Act is bad in law in as much as it is only a draft order which does not contain material facts and finding, and cannot be 5. During the hearing proceedings, the Ld. AR of the appellant has argued extensively follows: (a) As mentioned in the first additional ground raised challenging the reopening of the assessment u/s 148 of the Act, the Ld. AO mentioned that the words used by Ld. AO are “at para 3 of reasons for “suspicious” and “needs hence no “reason to belief” that there are no escapement of income. (b) As the Ld. AO received information from Investigation Wing of Amritsar, to the same is borrowed satisfaction and hence reopening is not valid. (c) The second additional ground of appeal raised by the appellant is that the order received assessee is on assessment order and the same does not contain facts and findings. (d) On merits, the Ld. AR of appellant argues that, as far they are concerned, they have given all particulars like PAN card, address of Mr. Ravi Prakash who discharged the liability on behalf of M/s Romex International who is ---client. (e) Services rendered to M/s Romex International were not disputed by the Ld. CIT(A). (f) They have admitted the receipt as their business income and hence it cannot be added again because Mr. Ravi Prakash is not traceable. 6. The Ld. Departmental Representative (DR) relied on the orders of the lower authorities and submitted that the addition made by Ld. AO may be confirmed for the reasons mentioned in their order. Kamal Clearing and Forwarding Agency Pvt. During the hearing proceedings, the Ld. AR of the appellant has argued extensively and the summary of his arguments are as (a) As mentioned in the first additional ground raised challenging the reopening of the assessment u/s 148 of the Act, the Ld. AO mentioned that the words used by Ld. AO are “at para 3 of reasons for reopeni ” and “needs thorough investigation” and hence no “reason to belief” that there are no escapement (b) As the Ld. AO received information from Investigation Wing of Amritsar, to the same is borrowed satisfaction and hence reopening is not valid. (c) The second additional ground of appeal raised by the appellant is that the order received assessee is on assessment order and the same does not contain facts and findings. (d) On merits, the Ld. AR of appellant argues that, as far they are concerned, they have given all particulars like PAN card, address of Mr. Ravi Prakash who discharged ity on behalf of M/s Romex International who is (e) Services rendered to M/s Romex International were not disputed by the Ld. CIT(A). (f) They have admitted the receipt as their business income and hence it cannot be added again because Mr. i Prakash is not traceable. The Ld. Departmental Representative (DR) relied on the orders of the lower authorities and submitted that the addition made by Ld. AO may be confirmed for the reasons mentioned in their order. Kamal Clearing and Forwarding Agency Pvt. Ltd. 4 ITA No. 1575/MUM/2024 During the hearing proceedings, the Ld. AR of the appellant and the summary of his arguments are as (a) As mentioned in the first additional ground raised challenging the reopening of the assessment u/s 148 of the Act, the Ld. AO mentioned that the words used by Ld. reopening are thorough investigation” and hence no “reason to belief” that there are no escapement (b) As the Ld. AO received information from Investigation Wing of Amritsar, to the same is borrowed satisfaction (c) The second additional ground of appeal raised by the appellant is that the order received assessee is only draft assessment order and the same does not contain facts (d) On merits, the Ld. AR of appellant argues that, as far they are concerned, they have given all particulars like PAN card, address of Mr. Ravi Prakash who discharged ity on behalf of M/s Romex International who is - (e) Services rendered to M/s Romex International were (f) They have admitted the receipt as their business income and hence it cannot be added again because Mr. The Ld. Departmental Representative (DR) relied on the orders of the lower authorities and submitted that the addition made by Ld. AO may be confirmed for the reasons mentioned in their order. 7. Heard both sides and the de that the addition made by the Ld. AO is deleted for the following reasons : (a) Even though the words used in the reasons for reopening are “suspicious” and needs thorough investigation, if all the three paras of “Reasons fo Reopening” recorded are to be has given detailed reasons and the information mentioned is not vague and general. A specific information was received from Investigation Wing of the Department after due enquiries and when the AO h specifically mentioned in 4th para that he has reason to believe, the same cannot be questioned in view of the decision of Hon’ble Supreme Court in the case Raymond Woolen Mills Ltd. 23 held that “what is to assessment got prima facie any material relating income and not the The sufficiency or correctness of material is not a thing to be considered at this stage. We are of the opinion that Court can’t strike down the reopening of the case in these circumstances.” case is valid in this case. (b) The second additional ground raised was submitted on 21.11.2024, whereas the case was 12.11.2024. As the petition was received after the completion of hearing, the same is not entertained and dismissed. As far as the merits are concerned, the assessee cannot raise this g because the appellant company knows all the facts and based on the same, first and second appeals were filed before the Ld. CIT(A)/ITAT and no prejudice was caused to the appellant as it has full information and even a demand notice attached to asses important. So, this ground of reopening also adjudicated against assessee. Kamal Clearing and Forwarding Agency Pvt. Heard both sides and the decision of the Bench adjudicates that the addition made by the Ld. AO is deleted for the following (a) Even though the words used in the reasons for reopening are “suspicious” and needs thorough investigation, if all the three paras of “Reasons fo Reopening” recorded are to be read together. The Ld. AO has given detailed reasons and the information mentioned is not vague and general. A specific information was received from Investigation Wing of the Department after due enquiries and when the AO h specifically mentioned in 4th para that he has reason to believe, the same cannot be questioned in view of the decision of Hon’ble Supreme Court in the case Raymond Woolen Mills Ltd. 236 ITR 34 (SC) where it was held that “what is to be seen at the time of reopening of assessment is only the fact whether the Department has rima facie any material relating to escapement of income and not the sufficiency or correctness of material. The sufficiency or correctness of material is not a thing to considered at this stage. We are of the opinion that Court can’t strike down the reopening of the case in these circumstances.” Hence, it is held that reopening of the case is valid in this case. The second additional ground raised was submitted 1.11.2024, whereas the case was heard on 12.11.2024. As the petition for raising additional ground was received after the completion of hearing, the same is not entertained and dismissed. As far as the merits are concerned, the assessee cannot raise this g because the appellant company knows all the facts and based on the same, first and second appeals were filed before the Ld. CIT(A)/ITAT and no prejudice was caused to the appellant as it has full information and even a demand notice attached to assessment order which is So, this ground of reopening also adjudicated against assessee. Kamal Clearing and Forwarding Agency Pvt. Ltd. 5 ITA No. 1575/MUM/2024 cision of the Bench adjudicates that the addition made by the Ld. AO is deleted for the following (a) Even though the words used in the reasons for reopening are “suspicious” and needs thorough investigation, if all the three paras of “Reasons for together. The Ld. AO has given detailed reasons and the information mentioned is not vague and general. A specific information was received from Investigation Wing of the Department after due enquiries and when the AO has specifically mentioned in 4th para that he has reason to believe, the same cannot be questioned in view of the decision of Hon’ble Supreme Court in the case of 6 ITR 34 (SC) where it was ime of reopening of the fact whether the Department has to escapement of or correctness of material. The sufficiency or correctness of material is not a thing to considered at this stage. We are of the opinion that Court can’t strike down the reopening of the case in these Hence, it is held that reopening of the The second additional ground raised was submitted heard on for raising additional ground was received after the completion of hearing, the same is not entertained and dismissed. As far as the merits are concerned, the assessee cannot raise this ground because the appellant company knows all the facts and based on the same, first and second appeals were filed before the Ld. CIT(A)/ITAT and no prejudice was caused to the appellant as it has full information and even a sment order which is So, this ground of reopening also adjudicated (c) Coming to the merits of the case, the appellant has discharged his duty in indentifying the person who paid to them through banking channels by giving his PAN card, bank statement details etc., the appellant company is not concerned with account of Mr. Ravi Prakash, Department that he is company’s money was deposited in the Ravi Prakash’s bank account. As far as the appellant is concerned, they rendered services to M Ravi Prakash paid money on behalf of/on the instruction of M/s Romex International who is company, th contention of Department that Ravi Prakash or Romex International company. (d) It is not disputed by the Department that the money received by appellant company is business income and the same was account. Once the income is offered as by appellant, the same cannot be added again by AO. 8. In view of the above, the appellant 9. The appeal of appellant is partly allowed as above. Order pronounced in the open Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 02/01/2025 Poonam Mirashi, Stenographer Kamal Clearing and Forwarding Agency Pvt. (c) Coming to the merits of the case, the appellant has discharged his duty in indentifying the person who paid to them through banking channels by giving his PAN card, bank statement details etc., the appellant company is not concerned with the deposit of cash in the of Mr. Ravi Prakash, when it is not the case of Department that he is not the benami nor appellant company’s money was deposited in the Ravi Prakash’s bank account. As far as the appellant is concerned, they services to M/s Romex International and Mr. Ravi Prakash paid money on behalf of/on the instruction of M/s Romex International who is a debtor of appellant through banking channel. It is not the contention of Department that Ravi Prakash or Romex International are fictitious entries and benamis of (d) It is not disputed by the Department that the money received by appellant company is business income and was offered as such already in its books of account. Once the income is offered as “business income” by appellant, the same cannot be added again by AO. In view of the above, the appellant succeeds in his appeal The appeal of appellant is partly allowed as above. Order pronounced in the open Court on 02/01 Sd/ (KAVITHA RAJAGOPAL) (OMKARESHWAR CHIDARA JUDICIAL MEMBER ACCOUNTANT MEMBER Kamal Clearing and Forwarding Agency Pvt. Ltd. 6 ITA No. 1575/MUM/2024 (c) Coming to the merits of the case, the appellant has discharged his duty in indentifying the person who paid to them through banking channels by giving his PAN card, bank statement details etc., the appellant company the bank when it is not the case of nor appellant company’s money was deposited in the Ravi Prakash’s bank account. As far as the appellant is concerned, they /s Romex International and Mr. Ravi Prakash paid money on behalf of/on the instruction a debtor of appellant banking channel. It is not the contention of Department that Ravi Prakash or Romex are fictitious entries and benamis of (d) It is not disputed by the Department that the money received by appellant company is business income and offered as such already in its books of “business income” by appellant, the same cannot be added again by AO. succeeds in his appeal. The appeal of appellant is partly allowed as above. /01/2025. /- OMKARESHWAR CHIDARA) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Kamal Clearing and Forwarding Agency Pvt. Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Kamal Clearing and Forwarding Agency Pvt. Ltd. 7 ITA No. 1575/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai "