KHOPOLI INVESTMENTS LIMITED ,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX -4, MUMBAI

ITA 3789/MUM/2025

AI Insights

The case involves two interconnected appeals: one by Khopoli Investments Limited against the addition of Rs. 7,00,00,000 as unexplained cash credit, and another by the Deputy Commissioner of Income Tax challenging the deletion of an addition of Rs. 4,12,60,000 as unexplained cash credit. The appeals arose from the assessment orders passed under section 143(3) of the Income Tax Act, 1961, following a search operation under section 132. The Tribunal's decision addressed the procedural and substantive aspects of how these amounts were recorded and reported, emphasizing the need for proper documentation and verification of financial transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780280 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RITESH MISRA
• Assessee Lawyers: PRIYANK GHIA
• Keywords: Additional evidence; Unexplained cash credit
• Section: 143(3); 132; 68; 69C

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.3789/MUM/2025 (A.Y. 2014-15) Khopoli Investments Limited 206, 1st Floor, Dalamal House, J.B. Marg Nariman Point, Mumbai – 400 021, Maharashtra v/s. बनाम Deputy Commissioner of Income Tax, Central Circle– 4(1), 420, 4th Floor,Kautilya Bhavan, Bandra Kurla Complex, G-Block, Bandra East, Mumbai – 400 051, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACK1740J Appellant/अपीलाथी .. Respondent/प्रतिवादी ITA No.3846/MUM/2025 (A.Y. 2014-15) Deputy Commissioner of Income Tax, Central Circle–4(1), 420, 4th Floor, Kautilya Bhavan, Bandra Kurla Complex, G-Block, Bandra East, Mumbai – 400 051, Maharashtra v/s. बनाम Khopoli Investments Limited 206, 1st Floor, Dalamal House, J.B. Marg Nariman Point, Mumbai – 400 021, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACK1740J Appellant/अपीलार्थी .. Respondent/प्रतिवादी Assessee by : Shri Priyank Ghia,AR Revenue by: Shri Ritesh Misra, (CIT DR) Date of Hearing 07.08.2025 Date of Pronouncement 07.10.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- 1. The above captioned appeal ITA No. 3789/MUM/2025 is preferred by the assessee and ITA No. 3846/MUM/2025 is filed by Printed from counselvise.com P a g e | 2 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited the Revenue against the orders of even date as passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) - 52, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to the assessment orders passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2014-15. Since the issues are interlinked and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity. We take up assessee’s appeal first as below. 2. The grounds of both the appeals are as under:- ITA No.3789/MUM/2025 (A.Y. 2014-15) 1. Addition of Rs.7,00,00,000/- u/s. 68 of the Income Tax Act, 1961: The learned CIT(A) has erred in law and in facts in confirming the addition of Rs.7,00,00,000/- as unexplained cash credit merely based on a loose sheet found during the search and a statement of an ex-employee, without appreciating that the said amount was duly received through banking channels and supported by bank statements and audited financials. a. The addition is made despite the fact that the appellant furnished:  Reconciliation of the amount with entries in its UCO Bank account (Account No. 05290210001707),  A list of 18 parties from whom the amount aggregating to Rs.6,99,99,200 was received via proper banking channels,  Entries recorded in the audited financial statements under “Other Current Liabilities”. b. The Learned AO, in the remand report, has verified and acknowledged that the said amount of Rs. 6,99,99,200 was indeed received from 18 Printed from counselvise.com P a g e | 3 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited parties through banking channels and that these parties were recorded as sundry creditors in the books of the appellant. c. It is respectfully submitted that:  The documents filed before the CIT(A) are clarificatory in nature and supplement the earlier submissions made during assessment.  The remand report confirms receipt through proper banking channels.  The appellant had written back and offered the same amount for taxation in AY 2022-23, the appellant cannot be made to pay tax on the same amount twice. d. The addition of Rs.7,00,00,000/- is therefore unjustified and unsustainable in law, having failed the threefold test of section 68 (identity, creditworthiness, genuineness), especially in light of the verification of banking transactions and accounting treatment provided. e. The Ld. AO's reliance on the loose sheet and uncorroborated statements without appreciating corroborative material on record is contrary to the settled legal position. 3. Brief facts of the case are that search action u/s 132 of the Act was undertaken in the Yashovardhan Birla Group of concerns on 07.01.2014 alongwith some of the Directors and other persons associates with it. The assessee is also one of the group companies. Additions were made u/s 68 and 69C of the Act based on certain loose sheet seized from the office premises of one of Sri Sanjay Himmatramka, Accountant of the assessee company. The assessee had also furnished additional evidences before him. On the basis of the same, a remand report was called for from the AO who submitted a Printed from counselvise.com P a g e | 4 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited Remand report content thereof of which have been duly considered by the ld.CIT(A). The AO justified the additions made claiming that the loose paper was found from assessee's premises during the search action conducted u/s 132 of the Act and in the statement recorded on oath of Shri Sanjay Himmatramka u/s 132(4) of the Act, he confirmed the fact that said the paper was found from his cabin and he explained content thereof by stating the said page contained details of receipts and payments of the assessee company. 4. In the instant appeal, the only ground of appeal pertains to the addition of Rs 7 cr. u/s 68 of the Act. Based on the loose sheet entries as discussed above, the AO noted that the assessee company had received cash amounting to Rs 7 cr. by way of “Cash Conversion”. He considered the same as unexplained cash credit although it was contented before him that the amount pertained to certain cash credits duly disclosed in the books of account by referring to the bank account showing the details of amount credited of Rs. 6,99,99,200/- as received from 19 parties. He concluded that the said sum of Rs. 7 cr. was found credited in the books (not in the regular books) of the assessee and observing the failure of the assessee in furnishing any satisfactory explanation with regard to the nature and source of the impugned Printed from counselvise.com P a g e | 5 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited amount shown on account of “cash conversion”, the same was added to the income of the assessee, as per provision of section 68 of the Act. 5. In this regard, before the ld.CIT(A), it was contented by the assessee that it duly informed the AO that the amount of Rs. 6,99,99,200/- was received from several parties through legitimate banking channels, specifically via UCO Bank Account. These bank statements were submitted to him reflecting receipt of above sum from them. Furthermore, an age-wise list of creditors was provided along with copies of the audited financial statements submitted. These amounts, as reflected in the bank account, had been accurately recorded as ‘Current liabilities’ in the financial statements. Besides, the addition was based solely on statements from a third party, Mr. Sanjay Himmatramka, who left the company after the search, thereby raising concerns about the reliability and credibility of this evidence. The amount was accurately recorded as Current liabilities in the Balance Sheet. Thus, the addition as unexplained cash credit was legally unsustainable. 6. The ld.CIT(A) observed on perusal of the said document that under the “received” column of the said document, Rs. 7,00,00,000/- is recorded as cash conversion. During the remand proceedings, the appellant had contended that the sum of Rs. 6,99,99,200/- was Printed from counselvise.com P a g e | 6 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited received from 19 parties vide UCO Bank account No. 05290210001707. The AO has pointed in the remand report that during the assessment proceedings, the assessee was requested to furnish the details like address, PAN, Return of Income, Balance sheet. P & L A/c along with all annexures, bank statement and confirmation of all the parties, but assessee failed to provide the requisite details. The ld.CIT(A) observed that during the appellate as well the assessee did not furnish the above stated to prove the genuineness of transaction amounting to Rs.7 cr. He observed further that onus as regards section 68 of the Act remained firmly on the appellant. It was the bounden duty of the appellant to establish the identity, genuineness and creditworthiness of such receipts. The contention of the appellant that such amounts had been written back and offered for taxation in AY 2022-23 did not make much difference. The AO was right in stating that such addition deserved to be made in AY 2014-15 when the funds were actually received. Hence, the addition was upheld for AY 2014-15. It was however, clarified by him that the appellant could not be made to pay tax twice for the same sum. Hence, it was held that the addition was liable to made only in one year and the AO would give corresponding relief in any other year so that effectively only one addition was made. Printed from counselvise.com P a g e | 7 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited 7. Before us, the ld.DR has placed reliance on the orders of authorities below while the ld.AR has reiterated the same contentions as made before the ld.CIT(A). 8. After careful consideration of relevant facts of the case, we do not find any infirmity in the conclusion drawn by the appellate authority, more so in the light of admission of the assessee itself that it offered the entire sum for taxation in AY 2022-23.Since the transactions were made in the instant assessment year, the ld.CIT(A) rightly affirmed the addition but directed the AO to give equivalent relief in the AY 2022-23 to prevent double taxation of the impugned sum. We further find that the Revenue has not agitated this conclusion drawn by the ld.CIT(A) nor the assessee. Accordingly, the ground stands dismissed. 9. In the result, appeal of the assessee is dismissed. 10. ITA No. 3846/MUM/2025 (A.Y. 2014-15) 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition u/s. 68 of the Income Tax Act, 1961 of Rs. 4,12,60,000/- made by the A.O. on account of unexplained cash credit, without appreciating the fact that the assessee was unable to prove the genuineness of such transactions along with the documentary evidence.” 11. The ground of the Revenue pertains the addition on account of unexplained cash credit in respect of Essel Mining and Industries Ltd. It was noticed by the AO from the seized paper marked referred Printed from counselvise.com P a g e | 8 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited above that the assessee had received a sum of Rs.30 cr. from EMIL. Further, the amount of Rs.4,12,60,000/- received, which was noted as ‘investment company”. This amount of Rs 4,12.60,000/- was also added to the total income as unexplained cash credit u/s.68 of the Act. 12. Before the ld.CIT(A),it was submitted by the assessee that the term “Investment Company” was employed to denote potential future inflows from various clients and companies for investments in shares and securities, rather than actual amounts received by the assessee. With respect to the addition made on account of unexplained cash credit amounting to Rs 4,12,60,000/- assessee submitted that Rs. 7 cr.as dealt with in preceding paras included addition of Rs. 4,12,60,000/-. The assessee further submitted that this was received during F.Y 2012-13 relevant to the A.Y 2013-14. The ld.CIT(A) observed that the appellant has been able to reasonably establish that these amounts are received from Group Entities and had been accounted for in the regular books of account. He further noted that the this entity alongwith some others had already been considered included in Rs. 6,99,99,200/-, the addition of which had been confirmed by him. Thus, there was no reason to uphold any repetitive addition in respect of the same parties. Moreover, as stated earlier, the appellant had been able to reasonably establish its receipts from the investment companies. Printed from counselvise.com P a g e | 9 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited There is no adequate material to hold that such sums had been received in cash or represent any unaccounted receipts. It was also noted that the AO had accepted the version of the appellant as regards the 3 rd receipt entry of Rs.30 cr. from EMIL, in para 4.10 of the assessment order. Thus, considering the overall facts, he was of the view that the addition of Rs. 4,12,60,000/- could not be sustained. Hence, this addition was deleted. 13. Before us, the ld.DR could not controvert the findings and the decision arrived at by the ld.CIT(A). Accordingly, we do not find any infirmity in the appellate order as there is absolutely no basis for treating the impugned sum as unexplained cash credit u/s 68 of the Act since the assessee has fully discharged the onus in this regard with cogent evidences which have been duly appreciated by the ld.CIT(A) before deleting the addition. Thus, the ground of appeal is dismissed. 15. In the result, both Assessee’s and Revenue’s appeals are dismissed. Order pronounced in the open court on 07.10.2025. Sd/- Sd/- ANIKESH BANERJEE PRABHASH SHANKAR (न्यातयक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Printed from counselvise.com P a g e | 10 ITA No. 3789& 3846/Mum/2023 A.Y. 2014-15 Khopoli Investments Limited Place: म ुंबई/Mumbai ददनाुंक /Date 07.10.2025 Lubhna Shaikh / Steno आदेश की प्रतितलतप अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविवनवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अतिकरण/ ITAT, Bench, Mumbai. Printed from counselvise.com "