M/S. SAVROLI FINVEST LTD.,MUMBAI V. INCOME TAX OFFICER, WARD-15(3)(3), MUMBAI

ITA 282/MUM/2023

AI Insights

The case involves Savroli Finvest Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2012-13. The primary grievances included the legality of the reassessment proceedings initiated under section 148 and the additions made under section 68 of the Income Tax Act, 1961. The Tribunal examined the documentary evidence and previous assessments of related companies, concluding that the assessee had adequately substantiated the transactions in question and that the reassessment was unwarranted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28562 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: ACIT v. Sur Buildcon Pvt. Ltd., TAO Publishing (P.) Ltd. vs. DCIT, Sound Casting (P) Ltd. vs. DCIT, First Source Solutions Ltd. vs. ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHOR DHULE; DR
• Assessee Lawyers: ASHWANI KUMAR; MUSKAN GARG
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Depreciation; Reopening of assessment; Reason to believe; Bogus
• Section: 147; 148; 143(3); 119; 250; 153; 68; 139; 115JB

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 282/Mum/2023 Assessment Year: 2012-13 Savroli Finvest Limited 608, Regent Chambers Nariman Point Mumbai - 400021 [PAN: AAJCS5292A] Vs Income Tax Officer, Ward- 15(3)(3), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Ashwani Kumar, C.A. & Muskan Garg, C.A. Revenue by : Shri Dr. Kishor Dhule, CIT D/R सुनवाई की तारीख/Date of Hearing : 12/03/2025 घोषणा की तारीख /Date of Pronouncement: 19/03/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 03/01/2023 by NFAC, Delhi, [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2012-13. 2. The grievance of the assessee reads as under:- “1. That the order dated 03.01.2023 passed u/s 250 of the Income -tax Act, 1961 (hereinafter called the \"Act\") by the National Faceless Appeal Centre (NFAC), Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income-Tax Officer, Ward -15(3)(3), Mumbai in resorting to the reassessment proceedings and accordingly the notice issued under section 148 of the Act as being bad in law. 2. That the order dated 03.01.2023 passed u/s 250 of the \"Act\" by the National Faceless Appeal Centre (NFAC), Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned ITO, Ward - 15(3)(3), Mumbai in adding back a sum of Rs. 80,00,00,000/- received by the Appellant Company from M/s Sur Buildcon Pvt Ltd (now known as Globus Real Infra Pvt Ltd) and M/s Tremendous Mining & Mineral Pvt Ltd by treating the said receipt as unexplained cash credit under Section 68 of the Act. I.T.A. No. 282/Mum/2023 2 3. That the order dated 03.01.2023 passed u/s 250 of the \"Act\" by the by the National Faceless Appeal Centre (NFAC), Delhi is against law and facts on the file in as much as he was not justified in neither considering nor discussing and adjudicating on the ground relating to reassessment order passed being non-est and bad in law in as much as the proceedings had not been conducted in the manner prescribed by the Departmental instructions, in particular those relating to e-proceedings, issued from time to time, which were to be mandatorily complied with by the Ld. Assessing Officer. 4. That the Appellant craves to add, amend, alter, modify or delete any of all of the grounds of appeal before or at the time of hearing.” 3. The first challenge relates to the notice issued u/s 148 of the Act and the order passed u/s 147 of the Act as bad in law. 4. Representatives were heard at length, case records carefully perused and the relevant documentary evidence brought on record, duly considered in the light of Rule 18(6) of the ITAT Rules, 1963. 5. Briefly stated, the facts of the case are that the assessee electronically filed its return of income on 24/09/2012 declaring total income at Rs.1,478/- under the normal provisions of the Act and declared book profit at Nil u/s 115JB of the Act. On the basis of information received from the office of the ADIT (Inv.), Unit-3(4), New Delhi, the AO came to know about the following alleged facts:- “During the AY 2012-13, a company named Jawahar Credit and Holdings Private Limited issued shares at premium of of Rs. 190/- per share having face value of Rs. 10/- each. It has been noticed that the company has not done any business activity. On perusal of bank statement of share subscribers it was revealed that those subscribers that the assessee, M/s Savroli Finvest Limited has received a sum of Rs. 55,00,000/ - were group companies of M/s Bhushan Steel and family members of Shri Brij Bhushan Singhal. It was also observed that the subscriber companies had no creditworthiness. When the bank account statement of M/s Jawahar Credit and Holdings Private Limited was analyzed it was found that the money taken from the share subscribers were immediately transferred to and invested in various other companies. Apart from the high value share based capital account transactions, there were hardly any revenue account transactions. The assessee company, M/s Savroli Finvest Limited, was one of the companies where M/s Jawahar Credit and Holding Private Limited has made investment. I.T.A. No. 282/Mum/2023 3 The companies which have invested in M/s Jawahar Credit and Holding Private Limited and the companies in which it has invested were found to be registered at the same address and their directors were also common directors. On the basis of examination of return of income for assessment years 2011-12, 2012-13 and 2013- 14, that those companies did not have their own profits and had not been engaged.\" in any real business activity.\" 6. On the basis of the aforementioned information, the AO examined the facts independently and with due diligence it was found that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year under consideration. Accordingly, a reason to believe was formed and notice u/s 148 of the Act was issued to the assessee. Reasons recorded for reopening of assessment read as under:- I.T.A. No. 282/Mum/2023 4 I.T.A. No. 282/Mum/2023 5 I.T.A. No. 282/Mum/2023 6 7. We have carefully perused the reasons mentioned hereinabove. Though the AO has mentioned that there is failure on the part of the assessee company to disclose fully and truly, all material facts necessary for its assessment for the year under consideration, we fail to understand what are those material facts which were not disclosed fully and truly. During the course of original assessment proceedings, the I.T.A. No. 282/Mum/2023 7 assessee had filed detailed reply to the queries raised by the AO vide reply dated 13/11/2014 which is placed in paper book from pages 152 to 153 and at point no. 6, the assessee has furnished details of increase in share capital along with the confirmation bank statements and ITRs in respect of those parties from whom share application money has been received during the year. 7.1. Page 154 is the confirmation of M/s. Sur Buildcon Private Limited confirming the application and allotment of 20,00,000 equity shares of the assessee at a face value of Rs.10/- and premium of Rs.190/-. Consideration of Rs.40,00,00,000/- is also confirmed. Page 155 and 156 are the copies of the bank statement of M/s. Sur Buildcon Private Limited and page 157 is the copy of the ITR of M/s. Sur Buildon Private Limited. Page 158 is the confirmation of M/s. Tremendous Mining & Minerals Pvt. Ltd. by which it confirmed the application of allotment of 20,00,000 equity shares of the assessee at face value of Rs.10/- and premium of Rs.190/- and confirmed the total consideration paid at Rs.40,00,00,000/-. Pages 159 & 160 are copy of the bank statement of M/s. Tremendous Mining & Minerals Pvt. Ltd. Page 161 is the copy of the ITR of M/s. Tremendous Mining & Minerals Pvt. Ltd. 8. After considering the aforementioned documentary evidence, the AO framed the original assessment order u/s 143(3) of the Act vide order dated 30/03/2015. 9. Page 119 to 127 is the copy of the assessment order in the case of M/s. Sur Buildon Private Limited framed u/s 143(3) of the Act on 26/03/2015 for the very same assessment year by which the returned income of Rs. 7,18,936/- was assessed at Rs.98,56,58,936/- after making addition of Rs.98,49,40,000/- I.T.A. No. 282/Mum/2023 8 u/s 68 of the Act. The quarrel travelled up to the Tribunal and the Tribunal interalia in ACIT v. Sur Buildcon Pvt. Ltd. in I.T.A. No.5831/DEL/2016; Assessment Year 2012-13, order dated 18/03/2021, deleted the impugned addition. 10. The assessment order dated 23/03/2015 framed u/s 143(3) of the Act of M/s. Tremendous Mining & Minerals Pvt. Ltd., for AY 2012-13 is placed at pages 147 of the paper book, by which the returned income of the assessee was accepted as such. Moreover, these are group companies of the assesee. 11. Thus, the assessee has furnished clinching evidences before the AO during the course of the original assessment proceedings to prove the transactions. Therefore, by no stretch of imagination it can be said that the assessee failed to disclose truly and fully all material necessary for its assessment for the year under consideration. 12. Since the reopening is of more than four years from the end of the relevant assessment year, first proviso to Section 147 of the Act, squarely applies, which read as under:- “Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : …………… Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of I.T.A. No. 282/Mum/2023 9 section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: ………. Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.” [emphasis supplied]” 13. On similar situation, the Hon’ble High Court of Bombay in the case of TAO Publishing (P.) Ltd. vs. DCIT [2015] 370 ITR 135 (Bombay) has interalia held as under:- “10. As stated above, the reasons supplied to the Petitioner do not disclose that there was any failure on the part of the Petitioner to provide all the material facts. That being the position, this ground could not have been taken up against the Petitioner at the time of disposing of the objections. Once this was not the basis for issuance of notice for Reassessment, it cannot be held against the Petitioner that the Petitioner had failed to make a true and full disclosure. It will have to be held that the Petitioner did not fail to make full and true disclosure of all material facts. The jurisdictional requirement for carrying out the reassessment, after the expiry of period of four years, is not fulfilled in the present case. 11. The learned counsel for the Petitioner also submitted that, in fact, there was no failure to disclose all material facts as the Respondent No.1 had specifically sought details as regard the relevant expenditure and which were furnished. He relied upon the decision of the Apex Court in the case of Gemini Leather Stores v. ITO [1975] 100 ITR 1, to contend that the duty of the assessee was to place on record all the primary facts and drawing of inference from the primary facts is upto the Assessing Officer. However, this issue need not be gone into in depth any further, as the Petitioner is entitled to succeed on the first ground mentioned above. 12. In the circumstances, the Petitioner is entitled to the reliefs prayed for in the Petition. It will have to be held that the Respondent No.1 had no jurisdiction to proceed with the impugned reassessment proceedings.” 14. Similarly, in the case of Sound Casting (P) Ltd. vs. DCIT [2012] 250 CTR 119 (Bombay), the Hon’ble High Court of Bombay held as under:- “Held that the reopening of the assessment had admittedly taken place beyond a period of four years from the end of the relevant assessment year. There was no allegation in the reasons which had been disclosed to the assessee that there was any failure on his part to fully and truly disclosed material facts necessary for assessment for relevant assessment year. Hence, the jurisdictional condition for reopening the assessment beyond a period of four years had not been fulfilled. Even during the course of hearing, it had not been the submission of the revenue that there was any I.T.A. No. 282/Mum/2023 10 suppression of material facts on the part of the assessee. Therefore, the impugned notice was to be set aside.” 15. In another case of First Source Solutions Ltd. vs. ACIT in [2021] 438 ITR 139 (Bombay), the Hon’ble Jurisdictional High Court, held as under:- “11. Therefore, when the assessment is sought to be reopened after the expiry of period of four years from the end of the relevant year, the proviso to section 147 stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. This stipulation does not govern a notice for reopening within a period of four years. In the case at hand, as noted earlier, there is not even a whisper about what fact was not disclosed. In our view, therefore, the notice to reopen under section 148 of the said Act itself was issued without jurisdiction. Consequently, the order passed also cannot be sustained.” 16. In light of the documentary evidence discussed hereinabove, read with the judicial decisions (supra), we have no hesitation in setting aside the impugned notice u/s 148 of the Act thereby quashing the resultant assessment order. 17. For the sake of completeness of the adjudication, we would now address to the merits of the case. As mentioned elsewhere the assessee has furnished all the documentary evidence thereby establishing the identity, creditworthiness and genuineness of the transactions and discharging completely the initial onus cash upon it by the provisions of Section 68 of the Act. 18. As mentioned elsewhere, the assessment orders of the two companies M/s. Tremendous Mining & Minerals Pvt. Ltd and M/s. Sur Buildon Private Limited are also discussed hereinabove by which the impugned transactions have been accepted in the respective cases. Therefore, the same transactions cannot be treated as bogus and colourable in the hands of the assessee. Even on the merits of the case, I.T.A. No. 282/Mum/2023 11 the additions do not stand and, therefore, we direct the AO to delete the impugned additions. 19. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 19th March, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 19/03/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "