NILDHARA LTD.,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD

ITA 271/AHD/2024

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Nildhara Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 2,97,45,000 as income under Section 68 of the Income Tax Act, based on allegations of accommodation entries from M/s. Shoryaraj Enterprises. The Assessing Officer had reopened the assessment under Section 147, following information from the DDIT (Investigation) about these entries. The Tribunal examined the validity of the reopening and the subsequent additions, focusing on the procedural adherence and the substantive evidence provided by the assessee, including sales and transport bills, which were not adequately disputed by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25351 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A. P. SINGH
• Assessee Lawyers: TUSHAR HEMANI; .
• Keywords: Corroborative evidences; Unexplained cash credit; Reopening of assessment; Principle of natural justice; Accommodation entries; Tangible material
• Section: 147; 143(3); 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.271/Ahd/2024 (Assessment Year: 2012-13) Nildhara Ltd., Block 67/2, Nr. Zanju Patia, Village Bhuvaladi, Tal. Daskroi, Kathwada Road, Ahmedabad-382430 Vs. Income Tax Officer, Ward-3(1)(1), Ahmedabad [PAN No.AADCB5913F] (Appellant) .. (Respondent) Appellant by : Shri Tushar Hemani, Sr. Adv. & Shri Parimalsinh B. Parmar, A.R. Respondent by: Shri A. P. Singh, CIT DR Date of Hearing 09.10.2024 Date of Pronouncement 08.01.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 09.01.2024 passed for A.Y. 2012-13. 2. The assessee has raised the following grounds of appeal: “1. The Ld. AO has erred in law and on facts of the case reopening the assessment u/s. 147 of the Act. Under the facts and circumstances of the case, the action of reopening is without jurisdiction and in not permissible either in law or on facts. 2. The Ld. CIT(A) has erred in law and on facts of the case in confirming addition of Rs. 2,97,45,0007- u/s. 68 of the Act. 3. In the facts and circumstances of the case, provisions of Section 68 have no application as the amounts subjected to addition represents the receipts towards the sales made during the course of business. ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 2– 4. Both the lower authorities have erred in law and on facts of the case in making addition by relying on the statement recorded u/s. 131 of proprietor of M/s. Shoryaraj Enterprise without providing an opportunity of cross-examination resulting in gross violation of principles of natural justice. 5. Alternatively and without prejudice, the addition shall be restricted to the amount of profit earned from sales made to M/s. Shoryaraj Enterprise. 6. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment order passed u/s. 143(3) r.w.s. 147 of the Act despite the fact that the assessment proceedings have not been conducted in the manner prescribed by the departmental instructions from time to time which were mandatory for compliance insofar as requisite condition of Circular No. 19 of 2019 dated 14.08.2019 of issuing order electronically with a computer-generated DIN quoted in the body of the order is not fulfilled, thus” 3. The brief facts of the case are that as per information received from DDIT (Investigation), Bhavnagar, Assessing Officer noted that during the course of investigation in the case of Shri Satyajitsinh R. Gohil, proprietor of M/s. Shoryaraj Enterprises, a statement was taken in which Shri Satyajitsinh R. Gohil accepted that he was not doing any retail business and only dealt in providing accommodation entries. The Assessing Officer observed that the assessee also availed accommodation entries from Shri Satyajitsinh R. Gohil during the impugned year under consideration. In response to notice, assessee furnished copies of bills raised upon M/s. Shoryaraj Enterprises and also furnished the ledger account. However, the Assessing Officer rejected the explanation of the assessee on the basis that Shri Gohil in his statement recorded under Section 133(1) of the Act has accepted the fact he was not doing any real business and only dealt with accommodation entries. Therefore, the Assessing Officer was of the view that with respect to sales made by the assessee to M/s. Shoryaraj Enterprises, actual delivery of goods has not taken place and only a paper transaction took place, in which the assessee has reflected the sale transaction of Rs. 2,97,45,000/- as income of the asessee. ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 3– Accordingly, the above amount was added as income of the assessee u/s.68 of the Act. 4. In appeal, the Ld. CIT(A) dismissed the appeal of the assessee with the following observations: “Regarding the contention of the appellant that the genuineness of the sale transaction was proved before AO, I find from the assessment order that the appellant has claimed to have done transactions of sales with M/s. Shoryaraj Enterprises but as per the Investigations carried out by the Investigation wing, it was admitted by the Prop. Of M/s. Shoryaraj Enterprises Shri. Satyajitsinh R. Gohil that he was not doing any real business but only bills were arranged as accommodation entries. During the course of assessment proceedings the AO had asked the appellant to prove the genuineness of transaction in the background of the above investigations carried out by the Investigation wing. However the appellant could not prove with supporting evidences as to how the investigations carried out by the Investigation wing were not correct. Therefore the AO had made the addition of Rs.2,97,45,000/- u/s 68 of the Act being unexplained credits. During appellant proceedings, the appellant re-iterated the same submission/explanation that was submitted before AO, however the appellant has not controverted the finding of the AO with supporting evidences and failed to prove the genuineness of credit transactions appearing in the bank accounts. Therefore the addition made by the AO is confirmed and grounds of appeal raised by the appellant are dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). 6. With respect to Ground No. 1, in which the assessee has challenged the reopening of assessment under Section 147 of the Act, we observe that in the instant case, the assessment of the assessee was reopened on the basis of information received by the Assessing Officer from the Investigation Wing that the assessee had obtained accommodation entries from M/s. Shoryaraj Enterprises and on the basis of such information, the Assessing Officer formed a reasonable beliefe that income of the assessee had escaped assessment. Further, Shri Satyajitsinh R. Gohil, proprietor of M/s. Shoryaraj Enterprises, in ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 4– his statement also accepted that he was not doing any retail business and only dealt in providing accommodation entries. The Assessing Officer observed that the assessee had taken accommodatin entries from Shri Satyajitsinh R. Gohil during the impugned year, in his account held with Bank of India. Accordingly, looking into the instant facts, we are of the considered view that the Assessing Officer had sufficient tangible material to form a view that income had escaped assessment and therefore, we find no infirmity in the order of Ld. CIT(A), in which he had quashed the challenge to reopening of assessment under Section 147 of the Act by holding that the Assessing Officer had a reasonable belief on the basis of cogent tangible material, that income of the assessee had escaped assessment. 7. In the result, Ground No. 1 of the assessee’s appeal is dismissed. 8. Ground Nos. 2 to 5: The Counsel for the assessee submitted that the amount which was added by the Assessing Officer of Rs.2,97,45,000/- crores has already been reflected as sales in the books of accounts of the assessee. Secondly, it was submitted that the Assessing Officer has not doubted the corresponding purchases against the sales made by the assessee in the assessment order. Therefore, the income element embedded on such sales has already been offered to tax by the assessee. Further, the Counsel for the assessee furnished details of sales and transport bills, corresponding purchase bills, bank statement, confirmation of M/s. Shoryaraj Enterprises and also the VAT return in support of genuineness of the transaction. However, the basic argument of the Counsel for the ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 5– assessee was that once the amount which has been added as income of the assessee under Section 68 of the Act has already been reflected as “sales” and duly accounted for by the assessee in the books of accounts and such income has also been accepted by Assessing Officer, then the very same amount cannot be added again under Section 68 of the Act or else it shall amount to double taxation. Further, the Counsel for the assessee also submitted that the Assessing Officer has also not doubted the corresponding purchases against these sales and therefore, in the instant facts, no addition is called for again in terms of Section 68 of the Act. In addition, the Counsel for the assessee also raised a legal contention that in the instant case, the entire additions have been made only on the basis of statement of Shri Gohil without giving any opportunity of cross-examination to the assessee and therefore, even on this count the assessment order is liable to be set-aside. 9. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A), in their respective orders. 10. On going through the facts of the instant case, we observe that the amount which has been added by the Assessing Officer has already been reflected as sales in the assessee’s books of accounts. Evidently, the Income Tax Authorities have also not disputed the genuineness of purchases against the corresponding sales reflected in the assessee’s books of accounts. Accordingly, we are of the considered view that once the amount which has been added as income of the assessee under Section 68 of the Act had already been recorded as sales by the assessee in it’s books of accounts, then the ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 6– same amount cannot be again added under Section 68 of the Act. Notably, the Assessing Officer has not doubted the corresponding purchase against such, sales made by the assessee. The aforesaid facts have not been disputed by the Department. In our view, once the underlying amount forms parts of sales duly accounted for in the books of accounts and such income has been accepted by the Assessing Officer, the very same amount cannot be again added under Section 68 of the Act, else it shall tantamount to double taxation of the same income. Further, we also observe that the entire additions have been made solely on the basis of statement of Shri Satyajitsinh R. Gohil, proprietor of M/s. Shoryaraj Enterprises and no opportunity of cross-examination was also afforded to the assessee. We observe that the Assessing Officer has not made any independent enquiry prior to making the impugned addition and the additions have been made only on the basis of finding of investigation in the case of Satyajitsin R. Gohil, proprietor of M/s. Shoryaraj Enterprises. The Assessing Officer did not issue summons under Section 131 of the Act nor issued notice under Section 133(6) of the Act carry out any independent enquiry, nor was any opportunity of cross-examination given to the assessee. Even for the above reasons, in our considered view, the addition made under Section 68 of the Act is not sustainable in the hands of the assessee. 11. In the result, the Ground Nos. 2, 3 and 4 of the assessee’s appeal are allowed. ITA No. 271/Ahd/2024 Nildhara Ltd. vs. ITO Asst.Year –2012-13 - 7– 12. The balance grounds of appeal raised by the assessee were not argued before us and hence, the same are being dismissed as not pressed. 13. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 08/01/2025 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 08/01/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 20.12.2024/02.01.2025 2. Date on which the typed draft is placed before the Dictating Member 20.12.2024/02.01.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 03.01.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 08.01.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.01.2025 7. Date on which the file goes to the Bench Clerk 08.01.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "