PRAMOD GUPTA,GURGAON V. ITO WARD - 46(5), NEW DELHI

ITA 3648/DEL/2019

AI Insights

The case involves an appeal by Pramod Gupta against the order of the Commissioner of Income-tax (Appeals)-16, New Delhi, which confirmed the additions made by the AO under sections 68 and 69C of the Income Tax Act, 1961. The additions were based on the belief that the assessee had received accommodation entries and had not filed a return for the assessment year 2010-11. However, the Tribunal found that the AO's reasons for reopening the assessment were flawed, as they did not specify the mode of the accommodation entries or provide tangible material for such a transaction. Furthermore, it was established that the assessee had indeed filed a return for the relevant assessment year, contrary to the AO's claim.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 777567 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2019
• Other Referred Cases: ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC), ITO vs. Parashuram Pottery Works Co. Ltd. (1977) 106 ITR 1 (SC), CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), ITO vs. Signature Hotels Pvt. Ltd. (2011) 338 ITR 51 (Del), PCIT vs. G & G Pharma India Ltd. (2016) 384 ITR 147 (Del), PCIT vs. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del), CCE vs. Andaman Timber Industries (2015) 62 taxmann.com 3 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: K. SAMPATH; V. RAJA KUMAR
• Keywords: Additional evidence; TDS; Search and seizure; Accommodation entries; Competent authority; Tangible material; Borrowed satisfaction
• Section: 148; 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No.3648/Del/2019 Assessment Year: 2010-11 Pramod Gupta, B-44, Pinnacle, Sector-43, DLF Phase-05, Gurgaon – 122 009. PAN: AANPG2866P Vs ITO, Ward-46(5), New Delhi. (Appellant) (Respondent) Assessee by : Shri K. Sampath, Advocate & Shri V. Rajakumar, Advocate Revenue by : Ms Harpreet Kaur Hansra, Sr. DR Date of Hearing : 30.07.2025 Date of Pronouncement : 30.09.2025 ORDER PER ANUBHAV SHARMA, JM: This is an appeal preferred by the assessee against the order dated 11.02.2019 of the Commissioner of Income-tax (Appeals)-16, New Delhi (hereinafter referred to as the ld. First Appellate Authority or ‘the Ld. FAA’ for short) in Appeal No.10178/2017-18 arising out of the appeal before it against the order dated 28.12.2017 passed u/s 143(3)/147 of the Income Tax Act, 1961 Printed from counselvise.com ITA No.3648/Del/2019 2 (hereinafter referred as ‘the Act’) by the ITO, Ward 46(5), New Delhi (hereinafter referred to as the Ld. AO). 2. A search and seizure operation was carried out by the department on 18.11.2015 on an entry provider, Sh. Pradeep Kumar Jindal at H-1/1A, Modal Town, New Delhi. The said Sh. Pradeep Kumar Jindal was involved in providing various kinds of accommodation entries in form of share capital/premium, loans and advances etc. in lieu of cash to beneficiary through front/non-descript companies managed and controlled by him with the help of dummy directors. Post search enquiries revealed that the front companies of Sh. Pradeep Kumar Jindal have no creditworthiness to invest such huge amounts. It was also ascertained that the assessee had taken accommodation entries from the front companies managed by Sh Pradeep Kumar Jindal. Accordingly, this information was passed on to the AO who on receipt of the information and after ascertaining that the assessee had not filed a return for A.Y 2010-11 arrived at a prima facie belief that income to that extent had escaped assessment. He, accordingly, issued a notice u/s 148 after recording reasons and after seeking and being accorded approval by the competent authority u/s 151 of the Income Tax Act. During the course of assessment proceedings, the assessee contended that these were genuine loans taken and repaid subsequently and that TDS had been deducted on interest paid on the said loans. In the light of the evidences collected during the course of the search on Pradeep Kumar Jindal, Printed from counselvise.com ITA No.3648/Del/2019 3 the AO did not accept the submission of the assessee and made an addition of Rs 58,87,000/- by invoking the provisions of Section 68. The AO also added a sum of Rs 1,17,740/- being commission paid to the accommodation entry provider by invoking the provisions of Section 69C. Aggrieved by the order, the assessee went in appeal before ld. CIT(A). 3. The assessee has filed additional evidences before the ld.CIT(A) on which remand report was called and, after admitting the additional evidences, the ld.CIT(A) has not found any substance in the grounds and dismissed the appeal for which the assessee is in appeal raising the following grounds:- “That on the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) erred in confirming the following actions of the Assessing Officer: i. in initiating proceedings u/s 147/148 of the Income Tax Act, 1961 without there being any valid reasons of escapement of income from taxation; ii. in passing order u/s 143(3) r.w.s. 147 of the Act without disposing of objections to the re-opening of the assessment; iii. in making following additions to the returned income: a) Rs.58,87,000/- being the amount of unsecured loans treating the same as unexplained income u/s 68 of the Act; b) Rs.l,17,740/- on account of alleged commission paid on surmises and conjectures. All the above actions being erroneous unlawful and untenable it is prayed that the same must be quashed with directions for appropriate relief.” Printed from counselvise.com ITA No.3648/Del/2019 4 4. On hearing both the sides, we find that primarily, it was the ground No.iii(a) which was pressed at length by the ld. counsel submitting that the reasons of escapement of income from taxation as stood recorded does not fulfill the mandate of law. It was submitted that the reasons do not disclose as to what was the mode of taking the accommodation entries and what tangible material of transaction of accommodation entry was relied for making a belief of escapement. It was submitted that the whole belief, in fact, was erroneous as it was mentioned by the AO that the assessee had not filed any return while return of income for AY 2010-11 was filed and even the ld.CIT(A) accepts the fact of filing the return of income. It was submitted that for roving and fishing inquiry there was reopening which was not justified and not in accordance with the law. 4.1 The ld. DR has opposed the same submitting that the ld.CIT(A) has extensively discussed the issue and the loan transactions were not disclosed in Form 3CB. As against that, the ld. Counsel has submitted that Form 3CB was revised wherein all the details of the loans were mentioned. 5. After taking into consideration the material on record and the contentions, we find that at pages 106 to 107 of the paper book, the assessee has provided a copy of reasons for reopening and on appreciating the same, we find that it is merely a narration of the fact of receipt of information from Investigation Wing that the assessee has received accommodation entry of Rs.5 lakhs on 22.06.2009 Printed from counselvise.com ITA No.3648/Del/2019 5 from M/s Parsandi Leasing and Finance Pvt. Ltd. in its own name and accommodation entry of Rs.5,27,000/- in the name of M/s P.L Gupta & Sons from M/s Focus Industrial Resources Ltd./Parsandi Leasing & Finance Pvt. Ltd. On going through these reasons for reopening, very apparently, it is not even mentioned as to whether this accommodation entry was in the form of a loan or by way of subscription to shares on premium or by any other mode. No details of the channel are coming up. There is actually absence of tangible material of the transaction of alleged accommodation entry. 6. Further, the AO mentions that the assessee has not filed its return of income for AY 2010-11 and that no assessment u/s 143(3) of the Act and u/s 147 of the Act has been made in this case. However, the assessee has established on the basis of copy of return of income for AY 2010-11 made available at page 101 of the paper book that on 24.09.2020, the return was filed by the assessee. In fact, the ld.CIT(A) himself, while adjudicating the ground of legality of reopening mentions at page No.11 of the impugned order that even if this return was filed u/s 139(1) of the Act, the case of the appellant has not undergone scrutiny assessment u/s 143 of the Act. However, what is relevant is that it establishes the fact that at the time of recording of the reasons, the AO seems to have merely borrowed the satisfaction from the information of Investigation Wing report and did not make any attempt to corroborate or correlate the information by independent application of his mind. Printed from counselvise.com ITA No.3648/Del/2019 6 7. Then, on going through the reasons for reopening, it is very much apparent that the AO has mentioned that the reopening is necessary to establish the genuineness of the source of the alleged accommodation entries. The averments in the reopening are correctly alleged as roving and fishing inquiries by the ld. counsel. Thus, we are of the considered view that the notice has been issued on incorrect reasons with regard to the assessee not filing the return of income and the satisfaction is merely a borrowed satisfaction on the basis of Investigation Wing report alone. The law is settled that reopening should be on the basis of live link or close nexus which should be there before the AO to form a belief regarding escapement of income. Reliance in this regard can be placed on the decisions in:- (i) ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC); (ii) ITO vs. Parashuram Pottery Works Co. Ltd. (1977) 106 ITR 1 (SC); (iii) CIT vs. Kelvinator of India Ltd. (20101) 320 ITR 561 (SC); (iv) ITO vs. Signature Hotels Pvt. Ltd. (2011) 338 ITR 51 (Del); (v) PCIT vs. G & G Pharma India Ltd. (2016) 384 ITR 147 (Del); (vi) PCIT vs. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del); & (vii) CCE vs. Andaman timber Industries (2015) 62 taxmann.com 3 (SC) 8. In the light of the aforesaid discussion, we are inclined to allow ground No.(i). As the reopening is vitiated, the assessment is liable to be quashed. Printed from counselvise.com ITA No.3648/Del/2019 7 Accordingly the appeal of the assessee succeeds. The same is allowed. The impugned assessment is quashed. Order pronounced in the open court on 30.09.2025. Sd/- Sd/- (AMITABH SHUKLA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30th September, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "