SAJAL IMPEX PVT. LTD.,KOLKATA V. ITO, WARD 12(1), , KOLKATA

ITA 265/KOL/2025

AI Insights

The case involves Sajal Impex Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning an assessment year 2012-13. The primary contention was the jurisdiction of the assessing officer and the validity of the ex-parte assessment, which was based on information from the Investigation Wing about the assessee being a beneficiary of accommodation entries. The CIT(A) upheld the assessment, which included a significant addition to the assessee's income under section 68 of the Income Tax Act, 1961, citing the non-compliance of the assessee with notices and the dubious nature of transactions with a shell company. The Tribunal found that the matter required further examination of facts and evidence, particularly regarding the transactions with M/s Divyadrishti Merchants Private Ltd.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708858 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: PCIT vs M/s .NRA Iron and Steel Pvt. Ltd., M/s. NRA Iron and Steel Private Limited
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S. B. CHAKRABORTY
• Assessee Lawyers: MIRAZ D SHAH
• Keywords: Set aside; Opportunity of being heard; Unexplained cash credit; Income from undisclosed sources; Accommodation entries; Bogus
• Section: 147; 148; 142(1); 68; 131; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH KOLKATA BEFORE SHRI DUVVURU RL REDDY, VICE PRESIDENT AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.265/KOL/2025 AY 2012-13 Sajal Impex Pvt. Ltd. 4, Synagogue Street, Kolkata-700001, West Bengal (PAN: AAHCS5794D) Vs. Income Tax Officer, Ward 12(1), Aaykar Bhawan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) Present for: Appellant by : Shri Miraz D Shah, AR Respondent by : Shri S.B. Chakraborty, DR Date of Hearing : 17.06.2025 Date of Pronouncement : 15.07.2025 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13 dated 28.11.2024. 02. The grounds of appeal raised by the assessee are reproduced as un- der: “1) For that on the facts and circumstances of the case, Ld. CIT (Appeals), NFAC was erred in not holding that the assessment is bad in law in as much as the assessing officer who completed the assessment was not having juris- diction over the assessee. 2) For that on the facts and circumstances of the case, since the notices issued by A.O. was not received by appellant resulting into ex-parte assessment Ld. CIT (Appeals) was wrong in not cancelling the assessment on the ground of lack of jurisdiction. Page | 2 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 3) For that on the facts and circumstances of the case, Ld. CIT (Appeals), NFAC was grossly erred in not considering the submission regarding trans- action of Rs. 98,95,750/-with Divya Dharesti Merchants Ltd., where it was submitted that appellant had paid said sum to said concern and not received the said sum. 4) For that on the facts and circumstances of the case, the order of Ld. CIT(Ap- peals), NFAC is arbitrary, unjustified, unwarranted to the facts of the case and liable to be modified by allowing the relief to the appellant. 5) We may add, alter, amend or withdraw any grounds of appeal on or before the date of hearing.” 03. Brief facts of the case are that the assessee claims to be engaged in the business of wholesale trading of different types of textile products like fabrics and garments etc. It filed its return of income u/s 139(1) of the Act on 29.09.2012, declaring total income of ₹12,240/-. Thereafter, the Ld. AO received information from the Investigation Wing that the assessee is a beneficiary of accommodation entries and accordingly, the assess- ment of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 29.03.2019, which was not complied with by the assessee and thereafter the notice u/s 142(1) of the Act along with the questionnaire was issued. However, there was no further compliance by the assessee. The total income of the assessee was assessed by making an addition of ₹98,95,752/- u/s 68 of the Act as neither any return of income was filed nor any compliance was made to the notice issued. Ag- grieved with the assessment order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A), who, vide the impugned order, dismissed the appeal. In the appellate proceedings the Ld. CIT (A) dismissed the appeal of the assessee and the relevant extract from the order is as under: - “I have gone through the grounds of appeal, statement of facts, assessment order and the submissions of the appellant. Remand report submitted by the JAO has also been perused. With regard to the issue of Jurisdiction of the AO, it is submitted by the JAO that erstwhile Ward 12(10, Kolkata, Ward 12(2) Kolkata, Ward 12(3) Kolkata and Ward 12(4) Kolkata were merged in a new Page | 3 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 Ward i.e. Ward 12(1) Kolkata. It is further submitted that recurrence of non- response strongly indicates that M/s. Divyadrishti Merchants P Ltd. is shell company and transaction made by the assessee with this company was noth- ing but book entries. 5.4.1 In the assessment order, the AO held that according to information re- ceived from DDIT Inv. Unit-6 Kolkata, the assessee company is a beneficiary who brought back its unaccounted income in the books of accounts to the tune of Rs. 98,95,752/- through bank account No. 605010065 from shell company M/s. Divya Drishti Merchants P Ltd. It has seen that the appellant company has received money from companies having dubious creditworthiness and fictitious paper existing and the entire transaction should be considered as sham. The assessee has received funds from M/s. Divya Drishti Merchants P Ltd. In order to verify the genuineness of the transactions the AO has issued notice u/s. 133(6) of the IT Act on the available mail ID to M/s. Divya Drishti Merchants P Ltd. for providing details which was duly served upon the above party on available mail Id. No response in respect of the notices u/s. 133(6) of the IT Act has been received from the concerned party. 5.4.2 As the assessee had not offered any explanation with regard to credit- worthiness and genuineness of transactions with the above two parties, the same remained un-established. It is evident that the said transactions are bogus transactions. Hence, I am of the firm opinion that the AO had rightly made the addition of investment appearing in the books of the appellant as unexplained cash credits. 5.4.3 The Hon'ble Supreme Court in the decision of PCIT vs M/s .NRA Iron and Steel Pvt. Ltd., dated 5th March, 2019 (103 taxmann.com 48) held as follows :- • Identity, Creditworthiness and Genuineness have to be proved by the appellant to the satisfaction of the Assessing Officer. • The mere mention of the income tax file number of an investor was not sufficient to discharge the onus u/s.68 of the Income Tax Act. • The investor companies which had filed income tax returns with meager or nil income had to explain how they had invested huge sums of money in the appellant company. Hence, the onus to establish the creditworthiness of the investor companies was not discharged and the entire transaction seem bogus and lacked credibility. • The practice of conversion of unaccounted money though the cloak of share capital / premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares Page | 4 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 where a higher onus is required to be placed on the assessee since the information is within the personal knowledge of the assessee. The as- sessee is under a legal obligation to prove the receipt of share capital / premium to the satisfaction of the Assessing Officer, failure of which, would justify addition of the said amount to the income of the as- sessee. 5.4.4 It is a fact that the appellant company has not established Identity, Creditworthiness and Genuineness as per the rigors of Section 68 to the sat- isfaction of the Assessing Officer and subsequently also in the appellate pro- ceedings. The mere mention the financials of the investor was not sufficient to discharge the onus u/s.68 of the Income Tax Act. Hence, the onus to estab- lish the creditworthiness of the investor companies was not discharged and the entire transaction was bogus and lacked credibility. The practice of con- version of unaccounted money though unsecured loans has been duly no- ticed. In the case of unsecured loans onus is placed on the appellant company since the information is within its knowledge. The appellant is under a legal obligation to prove the receipt of unsecured loan to the satisfaction of the As- sessing Officer and failure of this justifies addition of the said amount to the income of the appellant company. On the other hand, from the facts and sur- rounding circumstances, human conduct, preponderance of probabilities etc. the Assessing Officer in the assessment has clearly established that the im- pugned transactions were without any basis and clearly were arranged or manipulated transactions. 5.4.5 Respectfully following the judgment of the Hon'ble Supreme Court in the case of M/s. NRA Iron and Steel Private Limited and also after examining various facts and circumstances of the appellant's case is, it is held that the Assessing Officer has aptly held that the appellant failed in discharging its onus of proving the identity, genuineness of the transaction and creditworthi- ness of the investor-companies. In view of the facts of the case mentioned above and the judicial pronouncements discussed above and also relied on the remand report submitted by the JAO, I agree with the AO that these are unexplained cash credits in the books of the appellant and the addition of Rs. 98,95,752/- is confirmed. This ground of appeal is dismissed.” 04. Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before us. 05. We have heard the rival submissions and perused the material available on record. We note that an ex parte assessment order was framed by the Ld. AO when the assessee did not file any return in Page | 5 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 response to the notice issued under section 148 of the Act and did not comply with the notices issued and he made an addition of ₹98,95,772/- u/s 68 of the Act vide order under section 147/144 of the Act. Even the directors who were required to be produced were not produced in re- sponse to the summons issued under section 131 of the Act. Before the Ld. CIT(A), the assessee submitted that the notices could not be complied with as they were sent on the electronic mode only and no hard copy of the same was received by post. It was stated that the case was reopened only on the basis of the information received that during the course of survey conducted on 30/03/2015, Shri Anuj Agarwal had accepted the fact that M/s Divyadrishti Merchants Private Ltd is a mere paper/shell company, having no real business. It was argued before the Ld. CIT(A) that the Investigation Wing failed to establish the correlation and linkage between the amount received against the supply of materials and the pri- mary facts upon which the conclusions is based. Even before us, in Ground No. 3, the assessee has stated that the Ld. CIT(A) grossly erred in not considering the submission regarding transaction of ₹ 98,95,752/- with M/s Divyadrishti Merchants Private Ltd, where it was submitted that the assessee had paid such sum to the said concern and not received the said sum. The Ld. DR relied upon the order of the appellate authority and requested that the same may be confirmed. The Ld. AR requested that the matter may be remitted to the Ld. CIT(A) while the Ld. DR supported the order of the Ld. CIT(A). 06. We have considered the submission made. Since the assessee claims that it had paid the amount to M/s Divyadrishti Merchants Private Ltd and not received the said sum, while before the Ld. CIT(A) as well as before the Ld. AO, no such submission appears to have been made and in fact before the Ld. CIT(A) it was submitted that the amount was Page | 6 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 received against the supply of materials and the primary facts upon which the conclusion is based were not correlated, we are of the view that the matter needs to be remanded back to the Ld. CIT(A) to examine whether the amount was received or it was paid by the assessee and thereafter to decide the appeal as the facts of the case do not appear to have been examined either by the Ld. AO on account of non-compliance by the as- sessee nor even before the Ld. CIT(A) on account of non-furnishing the proper evidence. Therefore, we deem it appropriate in the interest of jus- tice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, there- fore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and to be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereafter pass an order in accordance with law. The as- sessee shall be at liberty to file evidences submission in respect of facts of the case, as well as a legal issues. For statistical purposes, the appeal of the assessee is allowed. 6. Order pronounced in the open court on 15th July, 2025. Sd/- Sd/- (DUVVURU RL REDDY) (RAKESH MISHRA) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Dated: 15th July, 2025 Sudip sarkar, Sr. P.S. Page | 7 ITA No. 265/KOL/2025 Sajal Impex Pvt. Ltd; AY 2012-13 Copy to: 1. The Appellant: 2. The Respondent. 3. CIT(A), NFAC, Delhi 4. The CIT, 5. DR, ITAT, //True Copy// BY ORDER, Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "