KHEC (INDIA) PVT LTD,DELHI V. INCOME TAX OFFICER WARD 14(3), NEW DELHI, DELHI

ITA 3064/DEL/2024

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396677 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: KAPIL GOEL
• Keywords: Reassessment proceedings; Principle of natural justice; TDS; Search and seizure; Accommodation entries; Borrowed satisfaction; Bogus
• Section: 143(3); 68; 69C

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SHRI SUDHIR KUMAR, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3064/Del/2024 Assessment Year: 2015-16 KHEC (India) Pvt. Ltd. C/o Kapil Goel Adv, F-26/124/sector 7 Rohini Delhi PAN No. AABCK8895K Vs. Income Tax Officer, Ward 14(3), New Delhi (APPELLANT) (RESPONDENT) Appellant by Sh. Kapil Goel, Advocate Respondent by Sh. Om Prakash Sr. DR Date of hearing: 22/05/2025 Date of Pronouncement: 29/05/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal is preferred by the assessee against the order dated 15.04.2024 of the National Faceless Appeal Centre Delhi [hereinafter referred to as “Ld. NFAC”] arising out of the order of 2 the Income Tax Officer Ward 14(3) dated 26.12.2017 passed under section 143(3) of the Income Tax Act, 1961 [hereinafter referred as the ‘Act’] for the assessment year 2015-16. 2. The assessee has raised the following grounds in appeal: “1. That impugned assessment order passed u/s 143(3) of 1961 Act (dated 26.12.2017) and further impugned first appeal order passed u/s 250 of 1961 Act (dated 15.04.2024) are both invalid and deserve to be quashed in toto because impugned assessment framed u/s 143(2)/143(3) of the Act, solely/merely on basis of stated investigation wing report (in turn based on stated search based findings) could only be done if at all u/s 153C of the Act (after following due/prescribed procedure), and not u/s 143(3) of the Act as done in extant case; 2. That impugned assessment order passed u/s 143(3) of 1961 Act (dated 26.12.2017) and further impugned first appeal order passed u/s 250 of 1961 Act (dated 15.04.2024) are both invalid and deserve to be quashed in toto because the impugned asst u/s 143(3) is simply made on basis of \"borrowed satisfaction\" that is on dictate and direction of \"investigation wing\" and without any independent application of mind on part of Ld AO/Ld CIT-A; GROUND ON TOTAL VIOLATION OF PRINCIPLE OF NATURAL JUSTICE DURING IMPUGNED ASST U/S 143(3) 3. That impugned assessment order passed u/s 143(3) of 1961 Act (dated 26.12.2017) and further impugned first appeal order passed u/s 250 of 1961 Act (dated 15.04.2024) are both invalid and deserve to be quashed in toto because there is total and gross violation of principle of natural justice (that is no back material (like statement etc) being confronted to assessee much less tested on cross examination though pointed by assessee during asst in its reply); GROUNDS ON MERITS: ABRITRARY AND NON-APPLICATION OF MIND ON PART OF LD AO AND LD CIT-A 4. That impugned assessment order passed u/s 143(3) of 1961 Act (dated 26.12.2017) and further impugned first appeal order passed u/s 250 of 1961 Act (dated 15.04.2024) are both totally invalid and unlawful in so far as the impugned additions made u/s 68 & Sec 69C 3 respectively amounting to Rs 51,00,000 AND RS 102,000 are considered which is mechanically sustained by Ld. CITA; 4.1 That impugned assessment order passed u/s 143(3) of 1961 Act (dated 26.12.2017) and further impugned first appeal order passed u/s 250 of 1961 Act (dated 15.04.2024) are both totally invalid and unlawful in so far as the impugned additions made u/s 68 & Scc 69C respectively amounting to Rs 51,00,000 AND Rs.102,000 are considered as subject \"loan\" transaction recd. through banking channel has been already repaid through banking channel which is sufficient to delete the impugned additions;” 3. The brief facts of the case are that the assessee company filed its return of income for A.Y. 2015-16 on 30-09-2015 declaring total income of Rs, 2,18,710/-. Subsequently, information received from the Asstt. Director of Income Tax about the donation of rupees two crore to Aam Party by four allegedly bogus companies. A search and seizure operation were carried out at the different residential and office premises of Shri Deepak Agarwal and Shri Mukesh Kumar and large numbers of documents were seized. During investigation it was found that sum was credited to the account of M/s Khec India Pvt Ltd. from M/s Aarti Securities and controlled by Deepak Agarwal and Shri Mukesh Kumar for providing accommodation entries. The case was taken for scrutiny through compulsory Manual selection for 4 the A.Y. 2015-16 after taking approval from Pr. CIT New Delhi. Later case was selected for scrutiny through CASS on limited parameters. But after due consideration the case was carried on as Manual selected complete Scrutiny case. After considering the submission submitted by assessee the A.O. has found that the assessee has taken the accommodation entry amounting Rs. 51,00,000/- from Aarti Securities and services Pvt. Ltd. The A.O. completed the assessment after making the additions of Rs. 5100,000/- u/s 68 and Rs 1,02,000/- the 2% commission of the amount of Rs 51,00,000/- under section 69C of the Act. Aggrieved the order of the A.O the assessee filed the appeal before the Ld. NFAC who vide order dated 15-04-2014 dismissed the appeal. Being aggrieved the order of the of the Ld. NFAC the assessee is in appeal before the Tribunal. 4. Ld. Counsel for the assessee submitted that the AO has made the addition without conducting the independent inquiry, where admittedly assessee has paid the loan through banking channel after deducting the TDS. The assessee has filed the document 5 before the AO but without considering these documents the AO passed the assessment order. The Ld. Counsel brought to our notice the financial statements (paper book Page No. 14 to 17) to prove that the loan was taken and repaid by banking channel. Reliance has placed on the following decisions; (i) Amee Mahasukhlal Parekh vs. ITO Ward 1(1) (1) in civil Application No. 18254 /2022 (ii) PCIT-1 Surat vs HI-Choice Processors Pvt Ltd in R/Tax Appeal No. 680/2023 dated 04-12-2023 (iii) PCIT-1 Vadodara vs. Ojas Tarmake Pvt. Ltd in R/Tax appeal No. 533/2023 dated 22-08-2023 (iv) PCIT-1 Vs Merrygold Gems Pvt Ltd in R/Tax Appeal No. 811/2023 dated 11-06-2024 (v)PCIT(Central) Ahmedabad vs. Ambe Tradecorp Pvt Ltd R/Tax Appeal No. 306/2022 dated 05-07-2022 4.1. In the case of Real Innerspring Technologies Pvt. Ltd. vs ACIT Central 29 New Delhi ITA No. 647/Del/2023 the Co- ordinate bench held as under: 6 “ 10. Considered the rival submissions and material placed on record. We observed that the AO has initiated reassessment proceedings on the basis of information received from the Investigation Wing and search proceedings in the case of Shri Verma. It is brought on record that these two companies were found to be controlled by the accommodation entry providers, Shri Verma and Shri Anil Agarwal. Merely because the assessee has taken the unsecured loan from the companies controlled by them, the addition was made rejecting the various supporting documents provided by the assessee relating to transactions. 11. In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee's own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid thru the banking channel as under :- Name of the Lender Amount of the Loan Date on which loan taken Date of interest payment Date of repayment of loan M/s. Citzy Infrahei ghts Pvt. Ltd. 50,00,000 09.07.20 15 (Pg 38 of the PB) 30.12.20 17 (Pg 40 of the PB) 06.12.2017 30.12.2017 (Pg 39 & 40 of the PB) M/s. CEA Consult ants Pvt. Lt 50,00,000 18.03.20 16 (Pg 81 of the PB) 27.04.20 16 28.03.20 17 (Pg 81 of the PB) 17.03.2017 18.03.2017 21.03.2017 (Pg 83 & 84 of the PB) 7 12. From the above, it is clear that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Therefore, we are inclined to allow the grounds raised by the assessee.” 4.2. In the case of CIT vs. Minda Industries Ltd. 2012 Taxpub (DT) 3331 (Del-Trib.), the Co-ordinate bench held as under: “ With the submission of details of net worth copy of income-tax returns and permanent account number of creditors, requirement of identity, genuineness and creditworthiness was fulfilled and therefore, addition made under section 68 was not Justified.\" 27. It may kindly be appreciated that the assessee has furnished complete details about the transactions along with related documents. All the transactions have been carried out through regular banking channels. The identity and the capacity of the lender is clearly established through the documents already submitted. Therefore, the allegation that the assessee company received accommodation entries is false and is therefore submitted that provisions of section 68 are not applicable in the case of the assessee. 28. It is submitted that the principles laid down in the various rulings are that the assessee Company has to establish that the shareholders/creditor exist and they have invested in the share capital/borrowings of the assessee-company, The assessee had laid substantial evidence and established all these facts. 29. It is further submitted that from all the material placed on record by the assessee, there is no doubt that the assessee has fulfilled its onus of. 8  Establishing the source of amount received.  Genuineness of the transaction and  Credit worthiness of the party. 30. The above submission clearly establish that the addition made by the Ld. AO is totally arbitrary, illegal, judicial pronouncement and not in line with facts and circumstances of the case and hence deserves to be deleted.” 5. Ld. Representative for the Department submitted that the assessee has taken accommodation entry and has paid the commission. He relied on the findings of lower Authorities. 6. We have heard the parties and gone through the material available on record. 7. Grounds No. 1 & 2 not pressed by the Ld. Counsel, hence decided against the assessee. 8. Ground No. 3 is general in nature and does not require any separate adjudication. 9. Ground No. 5 9.1 We observed that the A.O. has initiated the proceedings on the basis of information received from the Asstt. Director Of Income tax and case was selected for manual scrutiny. The assessee has taken the unsecured loan from the M/s Aarti 9 Securities controlled by Shri Deepak Agarwal and Mukesh Kumar. The addition was made rejecting the documents submitted by the assessee relating to the loan. In our consideration view, the additions were made only on the basis of alleging that the loan taken by the assessee from the M/s Aarti Securities are only accommodation entry. In the case in hand the amounts were paid by the parties through banking channels The assessee has not received any amount in cash and loan was repaid after deducting the TDS. The assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with interest clearly shows that the transactions are genuine. Merely, because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. In the present case the assessee has submitted all the documents in support of the transaction before the Ld. AO and he has rejected the same on the basis that the assessee has obtained the 10 accommodation entry while the transaction was made through banking channel. The ground raised by the assessee is allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29.05.2025. Sd/- Sd/- (MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 29 .05.2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "