SULAY PAPER PVT. LTD.,AHMEDABAD V. THE ITO, WARD-4(1)(1)(1), AHMEDABAD

ITA 2006/AHD/2024

AI Insights

The case involves Sulay Paper Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which upheld the addition of Rs. 1.80 crores to the company's income for the Assessment Year 2013-14. The addition was initially made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, suspecting the amount received as a loan from Rashmin K Vakta to be unexplained. The Tribunal's decision to allow the appeal was based on the fact that the amount was returned on the same day it was received, and the assessee had provided sufficient explanation and documentation regarding the transaction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312580 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVAN LIMBASIYA
• Assessee Lawyers: S.N. DIVATIA; SAMIR VORA
• Keywords: Principle of natural justice
• Section: 147; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2006/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year: 2013-14) Sulay Paper Pvt. Ltd. 992-994, Kantilal Vakta House, Nr. Pragati Bank, Relief Road, Kalupur, Ahmedabad, Gujarat – 380001 बनाम/ Vs. ITO Ward-4(1)(1)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAICS6076K (Appellant) .. (Respondent) Assessee by : Shri S. N. Divatia & Shri Samir Vora, A.Rs. Revenue by : Shri Kavan Limbasiya, Sr. DR Date of Hearing 03/04/2025 Date of Pronouncement 29/04/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi (in short ‘the CIT(A)’) dated 25.10.2024 for the Assessment Year 2013-14. 2. The brief facts of the case are that no return of income has been filed by the assessee for the A.Y. 2013-14. The case was reopened under Section 147 of Income Tax Act, 1961 (in short ‘the Act’) on the basis of an information that the assessee was first level beneficiary from Shri Renuka Mata Multi State Urban Co-operative Society Limited for an amount of Rs.1.80 Crores. ITA No. 2006/Ahd/2024 [Sulay Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 2 – The assessment was completed u/s.147 r.w.s. 144B of the Act on 02.05.2023 at total income of Rs.1,80,00,801/- wherein an addition of Rs.1.80 Crores was made u/s.68 of the Act. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. The assessee is in second appeal before us. The following grounds of appeal have been taken in this appeal: “1.1 The order U/s.250 passed on 25-10-2024 for AY 2013-14 by NFAC[CIT(A)], Delhi (for short \"CIT(A)\") upholding the addition of Rs. 1,80,00,000/- towards the loan from Rashmin K Vakt from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that there was a sufficient cause for failure to comply with the notices claimed to be issued by NFAC[CIT(A)]. 2.2 The ld. CIT(A) ought to have appreciated that in view of the explanation given and documents produced by the appellant with regard to the impugned amount of Rs. 1,80,00,000/-, the burden cast u/s 68 was duly discharged by the appellant. The CIT(A) has ignored the said explanation and material. 3.1 The ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,80,00,000/- towards the loan from Rashmin K Vakta from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd as unexplained. 3.2 That the in the facts and circumstances of the ld. CIT(A), ought not to have upheld the addition of Rs.1,80,00,000/- towards the loan from Rashmin K Vakta from his account with Shri Renuka Mata Multi State Urban Co.Op. Credit Soc. Ltd. as unexplained.” ITA No. 2006/Ahd/2024 [Sulay Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 3 – 5. Shri S. N. Divatia, Ld. AR of the assessee submitted that all the grounds taken by the assessee pertain to addition of Rs.1.80 Crores made u/s.68 of the Act. He explained that the assessee had duly explained the source of credit of Rs.1.80 Crores appearing in his bank account. The said amount of Rs.1.80 Crores was received from Shri Rashmin K Vakta who was maintaining his account with Shri Renuka Mata Multi State Urban Co-operative Society Limited. The said amount was given as loan but since the assessee was no longer in need of funds the amount of Rs.1.80 Crores was returned on the same day to Dinesh Paper Traders, a proprietary concern of Shri Rashmin K Vakta. Thus, the assessee had duly explained the transaction. Further, since the amount of Rs.1.80 Crores was returned on the same day, the AO was not correct in making addition u/s.68 of the Act. The Ld. AR further submitted that in the assessment of Shri Rashmin K Vakta for A.Y. 2013-14 total addition of Rs.97,53,07,845/- was made u/s.68 of the Act, which was upheld by the Ld. CIT(A) to the extent of Rs.19,51,74,450/-. He, therefore, submitted that no addition was called for in the case of the assessee. 6. Per contra, Shri Kavan Limbasiya, Ld. Sr. DR submitted that the Ld. CIT(A) had dismissed the appeal for the reason that no compliance was made by the assessee before him. He submitted that as many as six opportunities were provided by the Ld. CIT(A), but no compliance was made even on a single occasion and no explanation was given by him. He further submitted that the addition made in the hand of Rashmin K Vakta are fresh evidences brought on record by the assessee which require verification. ITA No. 2006/Ahd/2024 [Sulay Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 4 – 7. We have considered the rival submissions. The assessee had submitted before the AO that a sum of Rs.1.80 Crores was received by it from Rashmin K Vakta who was maintaining his account with Shri Renuka Mata Multi State Urban Co-operative Society Limited. It was further explained that this amount was received as loan. However, since the assessee was no longer in requirement of funds, the amount was returned to Shri Rashmin K Vakta on the same day. In the bank account of the assessee the sum of Rs.1.80 crores was received on 28.03.2013 and the sum of Rs.1.80 crore was also transferred out on the same day. Under the circumstances, there was no reason for the AO to disbelieve the submission of the assessee and make addition of Rs. 1.80 crore on account of unexplained loan. 7.1 Before the Ld. CIT(A), no compliance was made by the assessee in spite of the fact that six opportunities were provided by him. The assessee had submitted that adjournments were sought on various occasions as the Tax Consultant was busy with audit and filing of ITRs. It is found that the assessee had sought adjournments on two occasions only which was allowed by the Ld. CIT(A). In spite of that, no compliance was made by the assessee. At the same time, the Ld. CIT(A) had dismissed the appeal due to non-compliance and without examining the merits of the addition. The contention of the AO that the intention of the assessee was to divert its own funds towards accommodation entry is without any basis. No evidence was brought on record to establish that the funds received by the assessee were its own fund. Further, if the assessee was an instrument in providing accommodation entry then only commission income should have ITA No. 2006/Ahd/2024 [Sulay Paper Pvt. Ltd. vs. ITO] A.Y. 2013-14 - 5 – been considered in its hand. Be that as it may, the facts remain that there was no basis to make addition of Rs. 1.80 crores in the hands of the assessee, when the amount was returned by the assessee on the same day. The assessee has produced copy of assessment order of Shri Rashmin K Vakta for A.Y. 2013-14 wherein total addition of Rs.97,53,07,845/- was made u/s.68 of the Act and also copy of CIT(A) order in that case wherein addition was upheld to the extent of Rs.19,51,74,450/-. These are the copy of orders passed by the Revenue and can’t be considered as fresh evidence on which any enquiry is necessary. Considering the fact that addition was already made in the hands of Shri Rashmin K Vakta, who had provided the funds, no addition was called for in the case of the assessee. Therefore, the addition as made by the AO is deleted. 8. In the result, appeal of the assessee is allowed. This Order pronounced on 29/04/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 29/04/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "