SHREE HARI AGRO INDUSTRIES LIMITED ,ALWAR V. ACIT, CENTRAL CIRCLE, ALWAR

ITA 1037/JPR/2024

AI Insights

The case involves two appeals by M/s. Shree Hari Agro Ind. Ltd. against the orders of the Ld. CIT(A) for the assessment years 2012-13 and 2016-17. The primary issue was the addition of certain amounts as unexplained credits under section 68 of the Income Tax Act, 1961, which the AO treated as accommodation entries. The Tribunal examined whether the reopening of the assessment was valid and whether the additions made were justified. The Tribunal found that the reopening was valid but partially allowed the appeals by deleting some of the additions made under section 68, particularly where the sales were included in the income and no double addition was justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31818 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: ACIT Vs. Shiv Vegpro (P) Ltd., Goyal Vegoils Ltd Vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR; LD
• Assessee Lawyers: P.C. PARWAL; LD
• Keywords: Unexplained cash credit; Rejection of books of accounts; Onus to prove; Reopening of assessment; Accommodation entries; Reason to believe; Bogus
• Section: 147; 148; 143(3); 250; 153A; 68; 22; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE SHRI GAGAN GOYAL, ACCOUNTANT MEMBER AND SHRI NARINDER KUMAR, JUDICIAL MEMBER ITA Nos. 1037 (A.Y. 2012-12) & 1038 (A.Y. 2016-17)/JPR/2024 M/s. Shree Hari Agro Ind. Ltd. 20, 21 and 22 Old Industrial Area Alwar, (Raj.) – 301 001 PAN No. AADCH 7756H ...... Appellant Vs. ACIT, Central Circle, Alwar …...Respondent Appellant by : Mr. P.C. Parwal, CA, Ld. AR Respondent by : Mr. Manoj Kumar, JCIT, Ld. DR Date of hearing : 18/02/2025 Date of pronouncement : 21/02/2025 O R D E R PER GAGAN GOYAL, A.M: These two appeals filed by the assessee is directed against the two separate orders passed by Ld. CIT(A), Jaipur-4 both dt.27.06.2024 u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’). Since issues raised in both the appeals are common, for the sake of convenience, both the appeals are disposed of by this common order. The assessee has raised following grounds of appeal vide ITA No.1037/JPR/2024 for AY 2012-13:- Ground No.1 That the Ld. CIT(A) has erred in law as well as on facts and circumstances of the case in upholding the order of AO in reopening of the case u/s 148 of the Income Tax Act, 1961 in as much as there is no failure on the part of assessee to disclose fully and truly all material facts necessary for assessment, there is no independent application of mind by the AO while recording the reason to believe more so when it is third round of assessment and consequently upholding the order passed by AO u/s 147 of the Act which is without jurisdiction and time barred. Ground No.2 That Ld. CIT(A) has erred on facts & in law in confirming the addition of Rs.1,37,40,151/- (12,25,000 + 1,25,15,151) made by AO by treating the amount received against sale of goods to Shree Ram Trading Co. and Varsha Enterprises as unexplained credit u/s 68 of the Act by:- (i) not appreciating that when assessee has included such amount in sale, again making the addition has resulted into double addition, more so when he has already accepted the purchases and stock (ii) not disproving pointing out any discrepancy in the various documents filed in support of sale (iii) not providing the copy of statement of Sh. Vipin Garg & not allowing opportunity to cross-examine him which is the basis for making the addition (iv) not providing the copy of letter of Jt. DIT(Inv.), Gurugram, as relied upon by him, inspite of specific request in this regard (v) not appreciating that section 68 is not applicable to the amount received against sales (vi) not following the order of ITAT, Jaipur Bench in case of ACIT Vs. Shiv Vegpro (P) Ltd. in ITA No. 739/JP/2019 dt. 30.07.2020 having identical facts and (vii) making various incorrect and irrelevant observations. In ITA No.1038/JPR/2024 for AY 2016-17, the assessee has raised following ground of appeal:- Ground No.1 That Ld. CIT(A) has erred on facts & in law in confirming the addition of Rs. 4,97,20,407 /- made by AO by treating the amount received against sale of goods to Shree Shyam Trading Co. and Sunmax Enterprises as unexplained credit u/s 68 of the Act by:- (i) not appreciating that when assessee has included such amount in sale, again making the addition has resulted into double addition, more so when he has already accepted the purchases and stock (ii) not disproving pointing out any discrepancy in the various documents filed in support of sale (iii) not providing the copy of statement of Sh. Vipin Garg & Shri Anil Soni not allowing opportunity to cross- examine him which is the basis for making the addition (iv) not providing the copy of letter of Jt. DIT(Inv.), Gurugram, as relied upon by him, inspite of specific request in this regard (v) not appreciating that section 68 is not applicable to the amount received against sales (vi) not following the order of ITAT, Jaipur Bench in case of ACIT Vs. Shiv Vegpro (P) Ltd. in ITA No. 739/JP/2019 dt. 30.07.2020 having identical facts and without distinguishing it (vii) without having found any incriminating/ adverse material against the assessee company for making such addition (viii) without having found any collaborating material to sup[port the statement of Sh. Vipin Garg (ix) without discharging the burden of proof and (x) making various incorrect and irrelevant observations. 2. The brief facts of Ground No.1 for A.Y. 2012-13 are that the assessee is engaged in the business of manufacturing of refined edible oil and extraction of solvent oil. The original assessment order u/s. 143(3) of the Act was made on 14.03.2015. A search was conducted on 14.10.2015 and consequently order u/s. 143(3) r.w.s. 153A of the Act was passed on 21.12.2017. Thereafter AO issued notice u/s. 148 of the Act dt. 27.03.2019 on the basis of information received from Jt. DIT (Inv.), Gurugram vide letter dt. 16.01.2018 that assessee has paid Rs. 12,25,000/- to Shri Ram Trading Company and information received from ADIT(Inv.), Unit 5(2), New Delhi vide letter dt. 23.03.2018 that assessee has made transaction of Rs. 1, 25, 15,151/- with M/s. Varsha Enterprises. However, these transactions were not examined during assessment proceedings. Notice u/s. 133(6) of the Act was issued to the assessee was not responded. Therefore, AO concluded that he has reason to believe that income of assessee to the tune of Rs. 1, 37, 40,151/- has escaped assessment on account of failure on part of assessee to disclose fully and truly all material facts necessary for his assessment. The assessee filed objection against reopening of the assessment on 21.11.2019 which were disposed on 05.12.2019 by rejecting the objections filed. 3. The Ld. CIT(A)upheld the validity of reopening of assessment holding that AO has material before him for formation of reasonable belief of escapement which has live nexus in his possession for assuming valid jurisdiction for reopening u/s 147 of the Act. The Ld. AO also carried out specific enquiry directly from the appellant before reopening the case but the appellant did not furnish the information. The AO has disposed of the objections as well. Thus all the conditions for reopening of assessment are fulfilled. 4. The assessee submitted before us that AO has not examined the information received by him rather he has mechanically and blindly acted upon the information received from the ADIT(Inv.), New Delhi and Jt. DIT(Inv.), Gurugram without applying his own mind to arrive at believe that income of the assessee has escaped assessment. He also ignored that this amount has already been considered by the assessee in the income. Hence, the reopening of assessment only at the instance of ADIT (Inv.), New Delhi and Jt. DIT (Inv.), Gurugram is illegal and bad in law. 5. We find that AO received the information from Jt. DIT (Inv.), Gurugram vide letter dt. 16.01.2018 and from ADIT (Inv.), New Delhi on 23.03.2018. This is the new information which is received after the AO passed the order u/s. 143(3) r.w.s. 153A of the Act dt. 21.12.2017. The assessee has not filed reply in response to notice u/s. 133(6) of the Act dt. 13.04.2018. The objection filed by assessee was disposed of by the AO. The AO has independently applied his mind to the information received and therefore considering the overall facts of the case, the reopening of assessment u/s. 148 of the Act is as per law and thus this ground of appeal of assessee is dismissed. 6. In respect of Ground No.2, the AO by referring to the statement of Sh. Vipin Garg dt. 16.12.2016 and Sh. Anil Kumar Soni dt. 15.12.2016 recorded by ADIT (Inv.), Rohtak, the relevant portion of which is reproduced at Pg 3 to 8 of the assessment order held that Shree Ram Trading Company is a bogus firm of Sh. Vipin Garg providing the accommodation entry. The AO also referred to the statement of Sh. Vipin Garg dt. 17.04.2018 where, with reference to the specific question, relating to transaction with the assessee during F.Y. 2015-16, he admitted, that he received commission of 0.30% or 0.50% on the transaction made with Assessee Company. Accordingly he made addition of Rs. 12, 25,000/- u/s. 68 of the Act. In respect of transaction made with M/s. Varsha Enterprises, AO observed that M/s. Varsha Enterprises has not responded to notice u/s. 133(6) of the Act dt. 18.12.2019. Therefore, on the basis of enquiry done by ADIT (Inv.), New Delhi it is held that M/s. Varsha Enterprises is also providing accommodation entries for which addition of Rs. 1, 25, 15,151/- was made u/s. 68 of the Act. 7. The Ld. CIT (A) after reproducing the submission of the assessee at Pg 38 to 90 of the order, at Para 5.2, Pg 90 to 105 after referring to certain decisions and relying on the statement of Sh. Vipin Garg, at Pg 105 Para (xxi) held that the assessee has not furnished any judgment wherein the addition made u/s. 68 on account of accommodation entry receipt in garb of sale has been deleted whereas the sales were treated as not genuine. Even assuming that the sales are genuine the assessee has not proved the identity, genuineness and creditworthiness of these parties in as much as these parties did not respond to notice u/s. 133(6) of the Act, assessee did not produced these parties or filed their confirmation and has not furnished document like P&L A/c, Balance Sheet, bank statement of these parties. Accordingly the addition made by the AO is upheld. 8. The assessee submitted before us that the lower authorities have considered the transaction made with these two parties as accommodation entry ignoring that when assessee has included such amount in income as part of sale, again making addition for the same results into double addition. In support of the transaction assessee has furnished various evidences, i.e., copy of accounts of M/s. Shree Ram Trading Company and M/s. Varsha Enterprises (Annexure 17) in the books of accounts, VAT invoices (Annexure 18), freight receipt (Annexure 19), weighment receipt (Annexure 20),dispatch register (Annexure 21),VAT Form 49A (Annexure 22), CST Form-C (Annexure 23), broker note (Annexure 24), ledger account of broker (Annexure 25),excise return (Annexure 26)and complete details of sales made to both the parties (Annexure 27).The assessee has sold goods to both the parties after receipt of payment and therefore only because these concerns have not responded to the notice issued to them u/s. 133(6) of the Act that is too after a lapse of more than 6 years cannot be viewed adversely more particularly when sales made to these concerns has been accepted by AO and the assessee has offered the entire sales made to them in its income. The assessee also submitted a statement stating the rate at which goods were sold to these two concerns vis-à-vis the rate at which the goods were sold to other parties on the nearby dates to demonstrate that the rates are comparable. Reliance was placed on the decision of ITAT Jaipur Bench in case of Goyal Vegoils Ltd Vs. DCIT ITA No.243/JP/2024 for AY 2012-13 where similar addition made on the basis of statement of Shri Vipin Kumar Garg in respect of sales transaction made with M/s. Shree Ram Trading Company was deleted. Accordingly assessee prayed for the deletion of entire addition made by the AO. 9. The Ld. D/R vehemently supported the order of Ld. CIT (A) by arguing that once the assessee has not furnished the identity of parties and genuineness of transactions, addition u/s. 68 of the Act is correctly made. In the rejoinder the A/R of assessee argued that if the sale is considered non genuine, the same should be excluded from the sales and to that extent the profit declared would be reduced which would offset the addition made u/s. 68 of the Act. 10. We have considered the rival contentions and perused the material available on record. From the assessment order we note that AO has not brought on record any statement or the report of ADIT (Inv.), Delhi in respect of sales made to M/s. Varsha Enterprises that this party is engaged in providing accommodation entry. The name of this party is also not appearing in the list of concerns through whom Sh. Vipin Garg was providing the accommodation entries. Hence in the absence of any documentary evidence by way of statement or otherwise, the sales made to Varsha Enterprises cannot be held to be non genuine and therefore addition of Rs. 1,25,15,151/- made by the AO and confirmed by Ld. CIT(A) is deleted. So far as sales made to Shree Ram Trading Company are concerned, we find that Sh. Vipin Garg in his statement has admitted that through these concerns he has been providing the accommodation entry. The Ld. A/R has not brought on record any evidence that such statement is retracted by Sh. Vipin Garg. At the same time we note that Ld. A/R has brought on record the various evidences in support of sales which are not controverted by the lower authorities. AO has accepted the sales in as much as he has not rejected the books of accounts maintained by the assessee. Thus once sales is credited in the books of accounts, without rejecting the same, any addition made u/s. 68 of the Act would result into double addition. Hence the addition made u/s. 68 is deleted. At the same time since the statement of Sh. Vipin Garg is not controverted, it would be fair & reasonable to presume that assessee must have sold goods at higher rate than that recorded in the books of accounts. We therefore estimate additional profit of 3% on sale of Rs. 12,25,000/- made to Shree Ram Trading Company and thus confirmed addition of Rs. 36,750/- and delete the balance addition of Rs. 1,37,03,901/-. Thus this ground of the assessee is partly allowed. 11. In the result, appeal of the assessee is partly allowed. ITA No.1038/JPR/2024 12. The facts relating to this ground is same as in Ground No.2 of ITA No.1037/JPR/2024. In this year assessee made sales of Rs. 4, 97, 20,407/- to Shree Shyam Trading Co. and Sunmax Enterprises. Both these concerns are operated by Sh. Vipin Garg. The finding given in Para 10 above would squarely apply to sales made to these two concerns and therefore we estimate additional profit of 3% on sales of Rs. 4,97,20,407/-. Thus addition of Rs. 14, 91,612/- is confirmed and balance addition of Rs. 4, 82, 28,795/- is deleted. Thus this ground of the assessee is partly allowed. 13. In the result, appeal of the assessee is partly allowed. 14. In the result of the above, both the appeals filed by the assessee is partly allowed. Order pronounced in the open court on21st Day of February 2025. Sd/- Sd/- (NARINDER KUMAR) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 21/02/2025 Copy of the Order forwarded to: 1. अपीलाथ\r/The Appellant , 2. \u000eितवादी/ The Respondent. 3. आयकर आयु\u0015 CIT 4. िवभागीय \u000eितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड\u001e फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) ITAT, Jaipur Details Date Initials Designation 1 Draft dictated on PC on 21.02.2025 Sr.PS/PS 2 Draft Placed before author 21.02.2025 Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order "