OASIS SECURITIES LIMITED,MUMBAI V. DCIT, CENTRAL CIRCLE-3(2), MUMBAI

ITA 1953/MUM/2025

AI Insights

The case involves M/s. Oasis Securities Limited appealing against an order by the Deputy Commissioner of Income Tax, Central Circle 3(2), which resulted from a reopened assessment for the Assessment Year 2011-12. The assessment was initially reopened due to allegations that a loan amount of Rs.1,00,000/- constituted accommodation entries and that income above this amount had escaped assessment. However, the subsequent addition made was not related to the reason for reopening but was instead a disallowance under section 14A read with rule 8D of the Income Tax Rules. The tribunal found this addition to be impermissible as per the judgment in the Jet Airways Ltd. case, leading to the allowance of the appeal and deletion of the disputed addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396922 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Other Referred Cases: Jet Airways Ltd. 331 ITR 236
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH KUMAR; LD.
• Assessee Lawyers: PRAKASH JOTWANI; LD
• Keywords: Accommodation entries; Rule 8D
• Section: 147; 148; 143(3); 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SMT RENU JAUHRI, ACCOUNTANT MEMBER ITA No.1953/M/2025 Assessment Year: 2011-12 M/s. Oasis Securities Limited, 2nd Floor, Building No.5, Raja Bahadur Compound, 43, Tamarind Lane, Mumbai – 400 001 PAN: AAACO0091J Vs. Deputy Commissioner of Income Tax, Central Circle 3(2), 642, Aaykar Bhavan, M.K. Road, Mumbai – 400 020 (Appellant) (Respondent) Present for: Assessee by : Shri Prakash Jotwani, Ld. A.R. Revenue by : Shri Yogesh Kumar, Ld. Sr. D.R. Date of Hearing : 08.05.2025 Date of Pronouncement : 30.05.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 10.02.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2011-12. 2. In the instant case, the reason for reopening of the assessment u/s 147 of the Act was recorded with the following allegations: “That the loan amount of Rs.1,00,000/- was given to the Assessee company as accommodation entries and the Assessee was not able to quantify the details of loan and also ITA No.1953/M/2025 M/s. Oasis Securities Limited 2 not produced any evidence which clearly indicates that the income above Rs.1,00,000/- has escaped assessment”. 3. Consequently, on the basis of aforesaid reason, case of the Assessee was reopened by issuing notice dated 31.03.2017 u/s 148 of the Act, which resulted into making the addition of Rs.1,70,970/- on account of disallowance u/s 14A r.w. rule 8D of the Rules (in short ‘the Rules’) but not on the issue for which case was reopened. 4. Therefore the Assessee has claimed that as the case of the Assessee was reopened with the allegations that income above Rs.1,00,000/- on account of loan amount as accommodation entries has escaped assessment for the A.Y. 2011-12 for the reason of the failure on the part of the Assessee to furnish the correct particulars of facts necessary for the assessment, however, the Assessing Officer (AO) made no addition on such reason/issue for reopening but ultimately vide order dated 31.10.2017 u/s 143(3) r.w.s. 147 of the Act, made the addition of Rs.1,70,970/- on account of disallowance u/s 14A r.w. rule 8D of the Income Tax Rules 1962 (in short ‘the Rules’), which is not permissible in view of the judgment passed by the Hon’ble Bombay High Court in the case of Jet Airways Ltd. 331 ITR 236, wherein it has been held as under: “That where no addition was made on the ground for which the assessment was reopened, then no further addition/disallowance on a fresh issue could have been made”. 5. The Ld. D.R. on the contrary has submitted that in fact the AO has given effect to the order passed by the then Ld. CIT(A) order dated 16.03.2016 and therefore the disallowance of Rs.1,70,970/- made u/s 14A r.w. rule 8D of the Rules, cannot be considered as a new addition/disallowance. ITA No.1953/M/2025 M/s. Oasis Securities Limited 3 6. Having heard the parties and given thoughtful consideration to the peculiar facts and circumstances of the case and rival submission of the parties. As we have observed above that in view of the judgment of the Hon’ble Bombay High Court in the case of Jet Airways Ltd. (supra) “that when no addition has been made on the ground/issue for which the assessment was reopened then no addition/disallowance on a fresh issue can be made”, thus the addition in any case by way of assessment order dated 31.10.2017 u/s 143(3) r.w.s. 147 of the Act which is under consideration, is un- sustainable. Thus the same is deleted. 7. Considering the claim of the Ld. DR and order dated 16.03.2016 passed by CIT(A) for substantial justice, we clarify that the AO would be at liberty to pass fresh appeal effect giving order as per the facts and circumstances of the case and by following the directions of the higher authority, if any, in accordance with law. 8. Thus, the appeal filed by the Assessee stands allowed with the liberty mentioned above. Order pronounced in the open court on 30.05.2025. Sd/- Sd/- (RENU JAUHRI) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai "