RUDRAMUKHI VINTRADE LTD.,KOLKATA V. A.C.I.T., CIRCLE - 11(1), KOLKATA

ITA 2317/KOL/2024

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Rudramukhi Vintrade Ltd. appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which was passed under section 250 of the Income Tax Act, 1961, for the assessment year 2013-14. The appeal was against an assessment order under sections 147 read with section 144 of the Act, which added Rs. 3,89,00,000 to the income of the assessee, alleging that these were accommodation entries from shell companies. The CIT(A) partially upheld this addition, leading to the current appeal. The Tribunal found issues with the CIT(A)'s selective consideration of transactions and remitted the case back for a comprehensive reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314673 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: CIT v. P. Mohanakala, Kale Khan Mohammad Hanif v. CIT, Roshan Di Hatti v. CIT, CIT Vs Durga Prasad More
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; Accommodation entries
• Section: 147; 148; 144; 68

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री जॉजज माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. Vs. ACIT/DCIT, Circle-11(1), Kolkata (Appellant) (Respondent) PAN: AAFCR9464F Appearances: Assessee represented by : Deep Agarwal, Adv. Department represented by : Arun Kumar Meena, Addl. CIT, Sr. DR. Date of concluding the hearing : March 5th, 2025 Date of pronouncing the order : May 7th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2013-14 dated 25.09.2024, which has been passed against the assessment order u/s 147 r.w.s. 144 of the Act, dated 25.09.2021. Page | 2 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1. On the facts and in the circumstances of the case, the order passed by the learned CIT(A) under section 250 is erroneous, contrary to the principles of natural justice, and is liable to be quashed. The assessment was made based on assumptions without adequately considering the appellant's submissions and documents that substantiate the genuineness of transactions. 2. The Ld. CIT(A) failed to consider that all transactions were consistent and carried out within the normal course of business operations. These included both the purchase and sale of shares, which were genuine transactions supported by audited accounts and recorded in the appellant's books of accounts and completed through recognized banking channels. 3. The CIT(A) accepted partial credits for certain transactions but failed to apply consistent principles across all similar transactions. This selective approach is unsustainable and fails to appreciate the appellant's full compliance and transparent disclosures throughout the proceedings. 4. The appellant reserves the right to add, alter, amend, or withdraw any ground of appeal at or before the hearing of the case.” 3. Brief facts of the case are that the Assessing Officer (hereinafter referred to as Ld. 'AO') was in receipt of a credible information wherein routing of funds amongst several shell/jamakharchi entities with financial hollowness and without any business rationale had been unearthed. It was found that several bank accounts were maintained in the name of different proprietorship firms whose sole proprietor was Shri Dipu Ghosh (PAN ATAPG1940N) and the total cash deposit observed collectively in all the 4 bank accounts was Rs. 15.57 Crore. It was observed that the cash was being remitted to accounts of different entities either within the same day or on a subsequent date. There were four corporate entities in which all the funds were pooled apart from the four proprietorship firms and the status of all the four companies was “Struck Off” as per the RoC database. The Ld. AO examined the cash Page | 3 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. trail as per the bank accounts and noted that a cumulative sum of Rs. 3,89,00,000/- was received by the assessee, which was transferred from M/s Afterlink Commercial Pvt. Ltd., M/s Overtop Vanijya Pvt. Ltd., M/s Jalnayan Vinimay Pvt. Ltd. & M/s Pachmurti Vincom Pvt. Ltd., the details of which are mentioned at page 3 of the assessment order. On analysis of the return for AY 2013-14, it was found that the assessee had disclosed total income of Rs. 27,900/- vide acknowledgment No. 779148511190913 on 19.09.2013 and no regular assessment was made. Accordingly, the assessment was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued. The assessee furnished documents and reply in response to the notice issued. The Ld. AO was of the view that mere showing the transactions in the books does not make it a genuine transaction as the companies with whom the transactions were made are shell/paper/jamakharchi companies. It was held that the assessee had provided accommodation entries to the shell companies to the extent of Rs. 3,89,00,000/- during the financial year relevant to AY 2013-14 and the sum was added to the income of the assessee and total income was assessed at Rs. 3,89,00,000/-, as the assessee had not filed any return in response to the notice u/s 148 of the Act. However, the income disclosed in the original return filed was not added while making the addition. 3.1 Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who considered the written submissions filed by the assessee, the facts of the case and the ground-wise submissions which related to purchase of equity shares of M/s Fairlink Mercantile Pvt. Ltd., M/s Favourite Shoppers Pvt. Ltd. and other such 27 companies which were sold during the year amounting to 1,09,700 unquoted equity shares to 4 companies for a total consideration of Rs. Page | 4 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. 3,89,00,000/-. The details are mentioned at pages 4 to 9 of the appeal order. The Ld. CIT(A) considered the submission and summarised the finding as under: Sl no Particulars Evidence produced Whether accepted. 1 Bank statement showing receipt of money. Copy of bank account with KVB, Salt Lake branch, Kolkota (account no 310628), BOB (0902020000887). Bank statement shows receipt of money during FY 2012-13. But immediately after credit of the amount, the amount is withdrawn leaving a negative cash balance. A copy of the bank statement of account with KVB is attached herewith. The debits are in the name of companies whose shares are purchased. 2 Explanation for source of credit in the bank account. Copy of share bills, sale bills of entities. There is credit entry of Rs 20 lakhs and 25 lakhs as well as 18 lakhs in the name of Jalnayan Vinimay Pvt Ltd. Jalnayan has been sold 12600 unquoted equity shares for a total consideration of 63 lakhs. Though the assessee has not been able to show a direct link between the sale of shares and receipt of money, still credit is given towards Rs 63 lakhs as money is credited during the year. Similarly in the case of Overtop Vanijya the total sale consideration receivable is Rs 11400000. Out of that bank account shows a credit of Rs 28 lakhs which is given credit. In the case of After Link a credit of Rs 57 lakhs is found out of the total receivable of Rs 1.32 cr. Even though a one to one correlation between sale of shares and credit in the bank account is not proved by the taxpayer, considering the bank statement credit for Rs 1.48 cr is given. 4. The request for cross examination of the accommodation entry provider was not considered necessary by the Ld. CIT(A). The Ld. CIT(A) has also considered the judicial pronouncements in the cases mentioned below: i) CIT v. P. Mohanakala 291 ITR 278 (SC) ii) Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) iii) Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) iv) CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC) Page | 5 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. 4.1 The Ld. CIT(A) accordingly concluded as under: “7.4 It is therefore obligatory on the part of the assessee that it explains the nature and source of credits in its books of accounts out of which the cash deposits were made in the bank account. However, in the instant case, the assessee has failed to discharge its legal obligation by furnishing any explanation, which is found satisfactory in the opinion of the assessing officer. Therefore, the source of these cash deposits remain unexplained. This is more so in the backdrop of demonetisation. Clearly, the assessee has utilized its own unaccounted income held in the form of SBNs to deposit in its bank accounts by routing the same through his books of accounts. As no explanation regarding the source of cash deposited in the bank accounts has been provided, corresponding credits to his books of accounts remain unsubstantiated. 7.5 Under the facts and circumstances as above, it is clear that source of credits in his books of accounts amounting to Rs 389,00,000/- during the year remains unsubstantiated. The assessee has offered no satisfactory explanation about the nature and source of credits in its books of accounts. The total amount of credits which are accepted are given in the Table above, the total of which comes to Rs 2.41 crores. Considering the facts and circumstances or the case, these credits in his books of accounts are treated as unexplained cash credits under section 68 of the Act and added to the income of the assessee. This is to be taxed at special rate as per the provisions of the section 115BBE of the Act. The addition of Rs 24100000 is upheld. VIII. In the result the appeal is partly allowed.” 4.2 The appeal was accordingly partly allowed and the addition of Rs. 2,41,00,000/- out of Rs. 3,89,00,000/- was confirmed. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made and the paper book filed have been examined. It was submitted before us that the Ld. AO relied upon the statements and made the addition. The assessee had replied that the money was received on account of sale of shares which was held to be accommodation entry by the Ld. AO. The Ld. CIT(A) upheld part of the addition as entries related to Rs. 2.40 Crore were not found in the bank account and the details are mentioned at Page | 6 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. page 20 of the paper book. The shares sold were of unlisted companies and are mentioned at pages 4 to 9 of the order of the Ld. CIT(A). No capital gain was shown as these were business transactions and no profit was earned, it was so submitted before us. The balance sheet was submitted before the Ld. AO. It was submitted by the Ld. AR that the order of the Ld. CIT(A) is not a speaking order in which part of the addition has been deleted and for the rest a rectification application was pending. 6. We have considered the submission made. As is informed that the rectification application filed before the Ld. CIT(A) is pending before him and in para 7.5 of the appeal order on the basis of the calculation done part of the addition has been confirmed. The assessee has assailed the appeal order on ground of selective acceptance of the submissions made before the Ld. CIT(A) by the assessee. The extract from the written submissions filed before us is as under: “The CIT(A) has selectively considered only certain transactions from the appellant's bank statements while completely ignoring others, despite the fact that all transactions are genuine and routed through proper banking channels. The appellant had provided a complete and comprehensive set of bank statements, which clearly depicted the inflow and outflow of funds in a transparent manner. However, the CIT(A), instead of taking a holistic view, adopted a fragmented approach, wherein relief was granted only in respect of certain transactions while arbitrarily sustaining an addition of ₹241 Iakhs. Such an inconsistent treatment of identical transactions demonstrates an inherent flaw in the reasoning and has led to an unjustified and erroneous computation of taxable income. The selective consideration of evidence by the CIT(A) amounts to a violation of the principles of natural justice. The appellant had placed all necessary documents on record to substantiate the genuineness of the transactions. However, instead of conducting a comprehensive assessment, the CIT(A) failed to appreciate the complete picture and restricted relief to a portion of the credits without providing any rational basis for such a partial acceptance. It is a settled principle that if a part of the bank statement is relied upon for granting relief, Page | 7 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. then the remaining transactions from the same bank statement cannot be disregarded without justifiable cause. The failure to provide a reasoned order for ignoring certain entries amounts to a denial of justice and has resulted in an erroneous and arbitrary addition. The Hon'ble Tribunal is requested to consider the entire set of transactions in their totality, as this would provide a clear and accurate representation of the financial dealings undertaken by the appellant. The failure to adopt a uniform approach has led to the sustenance of an incorrect addition, which is liable to be deleted in the interest of justice. To substantiate the genuineness of all transactions, the appellant once again submits before the Hon'ble Tribunal a full set of bank statements. These documents clearly establish that every transaction is accounted for and verifiable through proper banking channels. There is no adverse finding regarding the authenticity of these documents, and no discrepancy has been pointed out in the bank records. Since the transactions form part of the same bank statement, it is imperative that they be considered in their entirety rather than in an isolated manner. The Hon'ble Tribunal is therefore requested to take into account the full documentary evidence and grant appropriate relief to the appellant.” 7. We have considered the submissions made. Considering the totality of facts and the submissions made and in the interest of justice and fair play, we are of the view that the order of the Ld. CIT(A) may be remitted back to him for deciding afresh all the issues including the issues raised before us and after providing an opportunity of being heard to the assessee as it is alleged by the assessee that the Ld. CIT(A) has accepted partial credits for certain transactions but has failed to apply consistent principle on similar other transactions and the selective approach is unsustainable and fails to appreciate the appellant’s compliance and transparent disclosure throughout the proceedings. The Ld. AO shall also be given an opportunity of being heard and a remand report may be called for, if required, as some of the companies are said to be struck off companies as per the RoC’s Page | 8 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. database. The assessee shall not seek unnecessary adjournments. Hence, all the grounds of appeal are partly allowed for statistical purposes. 8. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 7th May, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 07.05.2025 Bidhan (P.S.) Page | 9 I.T.A. No.: 2317/KOL/2024 Assessment Year: 2013-14 Rudramukhi Vintrade Ltd. Copy of the order forwarded to: 1. Rudramukhi Vintrade Ltd., C/o. Agarwal Vishwanath & Associates, 133/1/1 A, S.N. Banerjee Road, Pushkal Bhawan, 3rd Floor, Kolkata, West Bengal, 700013. 2. ACIT/DCIT, Circle-11(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "