RSD CONTAINERS PRIVATE LIMITED,JAIPUR V. ITO, WARD 7(1), JAIPUR, JAIPUR

SA 3/JPR/2024

AI Insights

The case involves RSD Containers Pvt. Ltd., which appealed against the order of the CIT(A) confirming the addition of Rs. 1,37,00,000 to the assessee's income for the Assessment Year 2017-18. The addition was based on the finding that the assessee had received accommodation entries through a paper company, which were treated as unaccounted cash. The Tribunal considered the stay application against this order, evaluating the prima facie case, balance of convenience, and potential irreparable loss to the applicant. The Tribunal decided to grant a stay, emphasizing the need for a deposit of Rs. 20,00,000 as a condition for the stay.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35314 (ITAT-JAIPUR)
• Appeal Type: Stay Application
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Assessee Lawyers: MUKESH KHANDELWAL; WAY OF CREDIT
• Keywords: Unexplained cash credit; Depreciation; Peak credit; Application of stay; Bogus
• Section: 68; 20

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Jh xxu xks;y] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM SA No. 03/JP/2024 (Arising out of vk;dj vihy la- ITA No. 1320/JP/2024) fu/kZkj.k o\"kZ@Assessment Year : 2017-18 RSD Containers Pvt. Ltd., A-129 (N-1), Road No. 9, VKI Area, Jaipur Vs. ITO, Ward 7(1), Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:AAFCR 9364 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Sh. Mukesh Khandelwal, CA jktLo dh vksj ls@Revenue by: Sh. Manoj Kumar, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 24/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 24/02/2025 vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER. This order is to dispose of stay application No. 03/JP/2024, filed u/s 254 of the Income Tax Act, 1961, in the above captioned appeal - ITA No. 1320/JP/2024. 2. Assessee-applicant is in appeal while challenging order dated 24.10.2024, passed by Ld. CIT(A), NFAC, Delhi whereby the appeal filed by the assessee-a Private (L) Company has been dismissed. 2 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. 3. Assessee was in appeal before Ld. CIT(A) feeling aggrieved by order dated 11.05.2023 passed by Assessing Officer, relating to the Assessment Year 2017-18. Arguments heard. File perused. 4. On the point of stay of the impugned order, Ld. AR for the appellant- applicant has submitted that the applicant company may be permitted to deposit 20% of the demand, and that too in installments, the reason being that the applicant company is suffering from paucity of liquid funds and the applicant has chances of succeeding in the appeal on the grounds raised in the grounds of appeal. 5. As is available from the assessment order, an information was available with the department that the assessee had taken accommodation entry through a paper company operated Shripal Vohara, in the form of loan to the tune of Rs. 1,37,00,000/-, in the Financial Year 2016-17. Assessing Officer found that the assessee company had infused unaccounted cash in his books of accounts through bogus entries for the said amount, from the said shell company, and as such, it was a case of escapement of income in the case of the assessee. 3 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. 6. Assessing Officer then issued notices to the assessee u/s 148, 143(2) & 142(1), in addition to a show cause notice. 7. On verification of all documents, Assessing Officer found that the assessee had made transactions with M/s Rati Diamonds (P.) Ltd. and M/s Kripanidhi Gems (P) Ltd. 8. In its response to the notice, the assessee submitted to have obtained unsecured loan of Rs. 1,37,80,000/- from the above named companies. In response to the show cause notice dated 20.05.2025, the assessee is stated to have replied for adding Rs. 75,00,000/- as the peak credits, but, as observed by the Assessing Officer, no supporting document was submitted in this regard by the assessee. In absence of any supporting documents, Assessing Officer did not take into consideration the said response given by the assessee. That is how, the Assessing Officer framed assessment order while computing the total income of the assessee at Rs. 1,37,00,000/- while observing that the paper/shell companies controlled and managed by 4 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. Shripal Bohara were found to have provided accommodation entry to the assessee, in the nature of bogus unsecured loan or in other forms. 9. When the matter came up in appeal, Ld. CIT(A), NFAC did not find any merit in the claim/version put forth by the appellant, and confirmed the addition of Rs. 1,37,00,000/- resorting to the provisions of section 68 of the Act for want of evidence. 10. It is well settled that while disposing of such like application seeking stay of the impugned order, factors to be considered are as to whether any prima facie case is made out in favour of the applicant; that balance of convenience lies in favour of the applicant; and that irreparable loss is going to be caused to the applicant in case of non- grant of the stay. 11. Herein, the applicant has challenged the impugned order while pleading that notice u/s 147/148 of the Act was issued without jurisdiction as except a screen shot no material was provided to the assessee, for the purpose of defending the assessment proceedings; that without prejudice to the Ground Nos. 1 to 4 raised in the grounds of appeal, it is only the peak credit which can be added as unexplained credit u/s 68 of the Act, 5 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. meaning thereby, that addition should have been restricted to the peak credit balance; that set off of unobserved depreciation of Rs. 4,859,280/- has not been allowed by way of deduction; and that carry forward/credit of MAT to the tune of Rs. 22,10,576/- has not been allowed to the assessee by way of credit. 12. On the other hand, Ld. DR for the department has contended that the appellant is required under the law to deposit 20% of the disputed demand, unless stay has been granted by the Assessing Officer or Range Head, Pr. CIT or any Appellate authority and that the assessee having failed to comply with instructions No. 1914 dated 20.02.1993, as modified vide OM dated 19.02.2016 and clarified vide OM dated 31st July, 2017, the applicant is not entitled to the relief being claimed here. Another submission put forth by Ld. DR is that the assessee-applicant has not disclosed if the applicant had filed any such application before the authorities below, and if so, fate of any such stay application. Ultimately, Ld. DR has submitted that the applicant be directed to deposit 20% of the disputed demand i.e. Rs. 43,00,000/-, in compliance with the instructions issued by CBDT. 6 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. 13. In the course of arguments, Ld. AR for the appellant has submitted that the total demand of Rs. 1,80,64,864/- which is in dispute, includes a sum of Rs. 77,06,987/- towards interest, meaning thereby that demand towards tax comes to Rs. 1,03,57,877/-. 14. As regards non-deposit before Learned CIT(A), we are informed that no application was filed there. But, it is surprising as to why no such direction for such a deposit was issued by Learned CIT(A) in connection with the appeal filed there. Be that as it may, as noticed above, Assessing Officer made addition and computed total income of the assessee at Rs. 1,37,00,000/- finding that no supporting document was filed by the assessee as regards its claim of having obtained unsecured loan of this amount, and expressed that actually, it is a case of paper/shell Company providing accommodation entry to the assessee in the form of bogus unsecured loan or in other forms. 15. In the appeal, assessee-applicant has submitted a paper book which contains copies of certain documents stated to have been submitted before the Assessing Officer or before Ld. CIT(A). 7 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. In view of the grounds raised by the applicant challenging the impugned order and the impugned assessment, it is to be seen if the applicant had produced before authorities below sufficient material in support of its claim that the above said transaction was by way of unsecured loan and not by way of any accommodation entry. 16. Legal grounds raised by the assessee are also to be considered, having regard to the settled law in the cases mentioned in the Case Law Index submitted on behalf of the assessee, as regards the relevant issues. 17. In the given facts and circumstances, and the copies of the material relied on behalf of the applicant, which include confirmations by the two above named companies and copies of their bank statements as well as ITRs, we find that at this stage, a prima facie case is made out in favour of the applicant, and balance of convenience lies in favour of the applicant, even though this being a taxation matter pertaining to the AY 2017-18 and keeping in view the provisions of refund of amount, if any, so got deposited under orders of the court, it cannot be said that any irreparable loss is going to be caused to the applicant in case of non grant of the stay order, 8 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. we deem it a fit case to pass an order of stay in the operation of the impugned order subject to deposit of Rs. 20 lakhs only. 18. As regards the prayer for deposit of the said amount in installments, having regard to all the facts and circumstances and the nature of allegations leveled, and the percentage of the amount directed to be deposited i.e. Rs. 20,00,000/-, we do not find any merit in this prayer. Same is hereby disallowed. Result 19. Accordingly, we hereby grant order of stay in the operation of the impugned order passed by Learned CIT(A), for a period not exceeding 180 days from date of this order, subject to the condition that the assessee deposits a sum of Rs. 20,00,000/-(Rs. Twenty lakhs), under the relevant head, within a week from the date of this order and furnishes copy of challan before 06.03.2025. 20. Assessee-appellant shall supply copy of challan to Ld. DR well before next date. 9 SA No. 03/JP/2024 RSD Containers Pvt. Ltd. 21. It is made clear that in case of failure on the part of the assessee to comply with this order, law shall take its own course on 6.3.2025 for further orders. 22. With the above directions, this application is disposed off. Order pronounced in open court on 24th of February, 2025. Sd/- Sd/- ¼xxu xks;y ½ ¼ujsUnz dqekj½ (GAGAN GOYAL) (NARINDER KUMAR) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 24/02/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- RSD Containers Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 7(1), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (SA No. 03/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "