VALUKKO INFRASTRUSTURE LIMITED,MUMBAI V. INCOME TAX OFFICER, 11(3)(2), MUMBAI

ITA 1034/MUM/2024

AI Insights

The case involves Volukko Infrastructure Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, for the assessment year 2011-12. The primary issues in the appeal were the legality of the reopening of the assessment under section 147 of the Income Tax Act, the additions made under section 68 concerning unexplained cash credits amounting to Rs. 2,85,69,730, and allegations of violation of natural justice due to the absence of a proper hearing before the CIT(A). The Tribunal found that the assessee had not been given adequate opportunity to present its case and thus decided to remand the matter back to the CIT(A) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32091 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Other Referred Cases: Orient Trading Co. Ltd. v. Commissioner of Income Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESHWARI MENON
• Assessee Lawyers: SUNIL TALATI
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained cash credit; Principle of natural justice; Borrowed satisfaction
• Section: 147; 148; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 1034/MUM/2024 Assessment Year: 2011-12 Volukko Infrastructure Ltd., Gala No. 30, New Satguru Nanik Industrial Estate, Opp. Jai Coach, Western Express Highway, Goregaon Mumbai-400063. Vs. ITO, 11(3)(2), 428, Aayakar Bhavan, M.K. Road, New Marine Lines, Mumbai-400020. PAN NO. AACCV 5359 A Appellant Respondent Assessee by : Mr. Sunil Talati Revenue by : Ms. Rajeshwari Menon, Sr. DR Date of Hearing : 27/11/2024 Date of pronouncement : 01/01/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 23.01.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: 1. The Ld. CIT(A) has upheld the reopening u/s 147 of the IT Act by the AO. It is the A.O. is without jurisdiction, purely on borrowed satisfaction, and is bad in law. Hence the order of re Ld. CIT(A) is prayed to be quashed in the interest of justice. The same be held now. 2. The Ld. CIT(A) has upheld the additions made by the Assessing Officer u/s 68 of the Act on account of the credit amounts reflected in the bank statement amounting to Rs. 2,85,69,730 submitted that such an addition is made purely on the surmise and doubt, ignoring/ not appreciating the evidence filed. Such arbitrary addition is prayed to be deleted. 3. Even before your appellant could file the submissions for which adjournment was taken, without issuing any further notice or allowing the opportunity of being heard via Video Conferencing, the Ld. CIT(A) passed the order sustaining the additions made. Such order passed in gross violation of the principles of natural justice, causing mental agony, and stress is prayed to be set aside to the file of the Ld. CIT(A) or the Assessing Officer for fresh adjudication. 4. The order passed by the learned CIT (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 2. Briefly stated facts of the case are that the assessee was engaged in the business of manufacturing and trading of steel & metal infrastructure work for building and fabrication work. In the year under consideration, the assessee filed return of income on 29.09.2011 declaring total income at Rs. Nil. Subsequently, in view of information received from the Dy. Director of Income Mumbai that huge credits of Rs.2,85,69,730/ the bank account maintained by the assessee with and source in nature which was not expl Wing, the Assessing Officer recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Income Volukko Infrastructure Ltd. ITA No. 1034/MUM/2024 1. The Ld. CIT(A) has upheld the reopening u/s 147 of the IT Act by the AO. It is submitted that the assessment order passed by the A.O. is without jurisdiction, purely on borrowed satisfaction, and is bad in law. Hence the order of reassessment upheld by the Ld. CIT(A) is prayed to be quashed in the interest of justice. The ld now. 2. The Ld. CIT(A) has upheld the additions made by the Assessing Officer u/s 68 of the Act on account of the credit amounts reflected in the bank statement amounting to Rs. 2,85,69,730 submitted that such an addition is made purely on the surmise and doubt, ignoring/ not appreciating the evidence filed. Such arbitrary addition is prayed to be deleted. 3. Even before your appellant could file the submissions for which adjournment was taken, without issuing any further notice or wing the opportunity of being heard via Video Conferencing, the Ld. CIT(A) passed the order sustaining the additions made. Such order passed in gross violation of the principles of natural justice, causing mental agony, and stress is prayed to be set aside to the file of the Ld. CIT(A) or the Assessing Officer for fresh 4. The order passed by the learned CIT (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. d facts of the case are that the assessee was engaged in the business of manufacturing and trading of steel & metal infrastructure work for building and fabrication work. In the year under consideration, the assessee filed return of income on claring total income at Rs. Nil. Subsequently, in view of information received from the Dy. Director of Income Mumbai that huge credits of Rs.2,85,69,730/- were appearing in the bank account maintained by the assessee with urce in nature which was not explained to the Investigation , the Assessing Officer recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Income Volukko Infrastructure Ltd. 2 ITA No. 1034/MUM/2024 1. The Ld. CIT(A) has upheld the reopening u/s 147 of the IT Act submitted that the assessment order passed by the A.O. is without jurisdiction, purely on borrowed satisfaction, assessment upheld by the Ld. CIT(A) is prayed to be quashed in the interest of justice. The 2. The Ld. CIT(A) has upheld the additions made by the Assessing Officer u/s 68 of the Act on account of the credit amounts reflected in the bank statement amounting to Rs. 2,85,69,730/-. It is submitted that such an addition is made purely on the basis of surmise and doubt, ignoring/ not appreciating the evidence filed. 3. Even before your appellant could file the submissions for which adjournment was taken, without issuing any further notice or wing the opportunity of being heard via Video Conferencing, the Ld. CIT(A) passed the order sustaining the additions made. Such order passed in gross violation of the principles of natural justice, causing mental agony, and stress is prayed to be set aside to the file of the Ld. CIT(A) or the Assessing Officer for fresh 4. The order passed by the learned CIT (Appeals) is bad in law and contrary to the provisions of law and facts. It is submitted that d facts of the case are that the assessee was engaged in the business of manufacturing and trading of steel & metal infrastructure work for building and fabrication work. In the year under consideration, the assessee filed return of income on claring total income at Rs. Nil. Subsequently, in view of information received from the Dy. Director of Income-tax (Inv.), were appearing in the bank account maintained by the assessee with Axis Bank Ltd. ained to the Investigation , the Assessing Officer recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’) on 28.03.2018. During the course o reassessment proceedings, the assessee did not file any detail except the copy of the bank statement and therefore, in view of no explanation in respect of source and nature of the Assessing Officer made addition Rs.2,85,69,730/- treating the same as unexplained cash credit in terms of section 68 of the Act. 3. On further appeal, also the assessee did not comply to the notices issued by the Ld. CIT(A) and file submission to explain the nature and source of the c accordingly dismissed the grounds observing as under: “7. Grounds No, 1 to 6: In these grounds the appellant has challenged the Assessment Order and income determined after making the addition of Rs. 2.85,69,730/ are being taken up together for adjudication, The appellant has not cared to elaborate on its grounds of appeal raised with corroborative evidence, In the Assessment Order, the AO carried out examined the submission by the unsatisfactory. To quote from the Assessment Order huge amounts had been credited in the account of the assesses and it has not explained the nature of the same, The source of the said amount had been discovered from Bank Pass Book of document was produced nor the amounts had been confirmed from those persons who were shown to have lent them. Despite being given ample opportunities, the assesses has failed to produce the relevant documents and explain the nature onus of proving the source of a sum of money found to have been received by an is on it. If it disputes the liability for tax, it is for the to show either that the receipt was not income or that exempt from taxation under the provisions of the Act. in the absence of such proof, the Revenue is entitled to treat it as taxable income. * 7.1 The appellant had, in the first instance, not appeared before or given explanation to the In summoned by them on receipt of information relating to the said bank account. Even before the AO the appellant could not explain the nature and source of credits. Merely providing bank statement with month wise entries and Volukko Infrastructure Ltd. ITA No. 1034/MUM/2024 Act, 1961 (in short ‘the Act’) on 28.03.2018. During the course o reassessment proceedings, the assessee did not file any detail except the copy of the bank statement and therefore, in view of no explanation in respect of source and nature of credit the Assessing Officer made addition for credir treating the same as unexplained cash credit in terms of section 68 of the Act. On further appeal, also the assessee did not comply to the notices issued by the Ld. CIT(A) and file submission to explain the nature and source of the credit transactions. The Ld. CIT(A) accordingly dismissed the grounds observing as under: 7. Grounds No, 1 to 6: In these grounds the appellant has challenged the Assessment Order and income determined after making the addition of Rs. 2.85,69,730/- and hence, for the sake of brevity, they are being taken up together for adjudication, The appellant has not cared to elaborate on its grounds of appeal raised with corroborative evidence, In the Assessment Order, the AO carried out examined the submission by the appellant and found it to be incomplete and unsatisfactory. To quote from the Assessment Order – ‘in huge amounts had been credited in the account of the assesses and it has not explained the nature of the same, The source of the said had been discovered from Bank Pass Book of document was produced nor the amounts had been confirmed from those persons who were shown to have lent them. Despite being given ample opportunities, the assesses has failed to produce the relevant ts and explain the nature and source of amount received. The onus of proving the source of a sum of money found to have been received by an is on it. If it disputes the liability for tax, it is for the to show either that the receipt was not income or that if it was? it was exempt from taxation under the provisions of the Act. in the absence of such proof, the Revenue is entitled to treat it as taxable income. * 7.1 The appellant had, in the first instance, not appeared before or given explanation to the Investigation Wing authorities when summoned by them on receipt of information relating to the said bank account. Even before the AO the appellant could not explain the nature and source of credits. Merely providing bank statement with month wise entries and narration cannot explain the deposits. The AO placed Volukko Infrastructure Ltd. 3 ITA No. 1034/MUM/2024 Act, 1961 (in short ‘the Act’) on 28.03.2018. During the course of reassessment proceedings, the assessee did not file any detail except the copy of the bank statement and therefore, in view of no credit transactions, for credir amount of treating the same as unexplained cash credit in On further appeal, also the assessee did not comply to the notices issued by the Ld. CIT(A) and file submission to explain the redit transactions. The Ld. CIT(A) accordingly dismissed the grounds observing as under: 7. Grounds No, 1 to 6: In these grounds the appellant has challenged the Assessment Order and income determined after making the ce, for the sake of brevity, they are being taken up together for adjudication, The appellant has not cared to elaborate on its grounds of appeal raised with corroborative evidence, In the Assessment Order, the AO carried out examined the appellant and found it to be incomplete and the instant huge amounts had been credited in the account of the assesses and it has not explained the nature of the same, The source of the said had been discovered from Bank Pass Book of the No document was produced nor the amounts had been confirmed from those persons who were shown to have lent them. Despite being given ample opportunities, the assesses has failed to produce the relevant and source of amount received. The onus of proving the source of a sum of money found to have been received by an is on it. If it disputes the liability for tax, it is for the to if it was? it was exempt from taxation under the provisions of the Act. in the absence of such proof, the Revenue is entitled to treat it as taxable income. * 7.1 The appellant had, in the first instance, not appeared before or vestigation Wing authorities when summoned by them on receipt of information relating to the said bank account. Even before the AO the appellant could not explain the nature and source of credits. Merely providing bank statement with month narration cannot explain the deposits. The AO placed reliance on various Court judgements, inducting the judgement of the Hon'ble Mumbai Commissioner of Income Tax (reproduced in the Assessment order supra) in his Order. Even during appellate proceedings, the appellant has been unable to substantiate its contentions contained in grounds of appeal with evidence, Mere reference to letters vide which submissions were made before the AO cannot be taken as ex for huge credits in a bank account reported by the Department on investigation, 7.2 In view of the facts and circumstances of the case, ! see no anomaly in the findings of the AO. During appellate proceedings, as mentioned, the appellant did not the findings of the AO, No merit is thus found on the appellant's ground of appeal and I see no reason to interfere with the additions made by the AO in this regard. These grounds of appeal are therefore dismissed.” 4. Before us , the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 142. 5. We have heard rival submission of the parties and perused the relevant material on record. In the case of the assessee addition of Rs.2,85,69,730/- has been su the reason of non-compliance on the part of the assessee of various notices issued by the Ld. CIT(A). Before us, the Ld. counsel for the assessee submitted that could not file the submission, h file the submission explaining nature and source of the credit transaction if matter is restored back. In view of the facts and circumstances of the case and in the interest of the substantial justice, we feel it appropriate to provide one more opportunity to the assessee and therefore, we set aside the order of the Ld. CIT(A) and restore the matter back to him for deciding afresh after taking into Volukko Infrastructure Ltd. ITA No. 1034/MUM/2024 reliance on various Court judgements, inducting the judgement of the Mumbai High Court in the case of Orient trading Co. Ltd. v. Commissioner of Income Tax (reproduced in the Assessment order pra) in his Order. Even during appellate proceedings, the appellant has been unable to substantiate its contentions contained in grounds of appeal with evidence, Mere reference to letters vide which submissions were made before the AO cannot be taken as ex for huge credits in a bank account reported by the Department on 7.2 In view of the facts and circumstances of the case, ! see no anomaly in the findings of the AO. During appellate proceedings, as mentioned, the appellant did not bring anything on record to controvert the findings of the AO, No merit is thus found on the appellant's ground of appeal and I see no reason to interfere with the additions made by the AO in this regard. These grounds of appeal are therefore he Ld. counsel for the assessee filed a Paper Book containing pages 1 to 142. We have heard rival submission of the parties and perused the relevant material on record. In the case of the assessee addition of has been sustained by the Ld. CIT(A) mainly for compliance on the part of the assessee of various notices issued by the Ld. CIT(A). Before us, the Ld. counsel for the assessee submitted that due to non-service of notices, the assessee the submission, however, the assessee file the submission explaining nature and source of the credit transaction if matter is restored back. In view of the facts and circumstances of the case and in the interest of the substantial we feel it appropriate to provide one more opportunity to the assessee and therefore, we set aside the order of the Ld. CIT(A) and restore the matter back to him for deciding afresh after taking into Volukko Infrastructure Ltd. 4 ITA No. 1034/MUM/2024 reliance on various Court judgements, inducting the judgement of the High Court in the case of Orient trading Co. Ltd. v. Commissioner of Income Tax (reproduced in the Assessment order pra) in his Order. Even during appellate proceedings, the appellant has been unable to substantiate its contentions contained in grounds of appeal with evidence, Mere reference to letters vide which submissions were made before the AO cannot be taken as explanation for huge credits in a bank account reported by the Department on 7.2 In view of the facts and circumstances of the case, ! see no anomaly in the findings of the AO. During appellate proceedings, as bring anything on record to controvert the findings of the AO, No merit is thus found on the appellant's ground of appeal and I see no reason to interfere with the additions made by the AO in this regard. These grounds of appeal are therefore he Ld. counsel for the assessee filed a Paper Book We have heard rival submission of the parties and perused the relevant material on record. In the case of the assessee addition of stained by the Ld. CIT(A) mainly for compliance on the part of the assessee of various notices issued by the Ld. CIT(A). Before us, the Ld. counsel for the service of notices, the assessee owever, the assessee was willing to file the submission explaining nature and source of the credit transaction if matter is restored back. In view of the facts and circumstances of the case and in the interest of the substantial we feel it appropriate to provide one more opportunity to the assessee and therefore, we set aside the order of the Ld. CIT(A) and restore the matter back to him for deciding afresh after taking into consideration submission the assessee are allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 01/01/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Volukko Infrastructure Ltd. ITA No. 1034/MUM/2024 consideration submissions of the assessee. The grounds o the assessee are allowed for statistical purposes. In the result, the appeal of the assessee is allowed for nounced in the open Court on 01/01 Sd/- (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Volukko Infrastructure Ltd. 5 ITA No. 1034/MUM/2024 of the assessee. The grounds of appeal of In the result, the appeal of the assessee is allowed for 01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, Registrar) ITAT, Mumbai "