VERTOOL CONSULTANCY LLP,AHMEDABAD V. THE DY. CIT, CIRCLE-2(1)(1), AHMEDABAD

ITA 1132/AHD/2024

AI Insights

The case involves Vertool Consultancy LLP, which appealed against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi, for the Assessment Year 2018-19. The primary contention was against the ex parte assessment order passed by the Assessing Officer, which included substantial additions to the income declared. The additions included an estimation of business income, unexplained investments in penny stocks, and unexplained cash credits from unsecured loans. The ITAT found merit in some of the assessee's arguments, particularly regarding the unrealistic profit estimation and the treatment of certain investments, while remanding the issue of unsecured loans for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315764 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.P SRIVASTAVA
• Assessee Lawyers: ASEEM L THAKKAR
• Keywords: Business income; Unexplained cash credit; Unexplained investment; Accommodation entries
• Section: 144; 68; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 1132/Ahd/2024 (Assessment Year: 2018-19) Vertool Consultancy LLP, 503, Murlidharr Complex, Opp. Fatehpura Post Office, Paldi, Ahmedabad-380007. [PAN :AANFV1223 F] Vs. The Deputy Commissioner of Income Tax, Circle-2(1)(1), Nadiad. (Appellant) .. (Respondent) Appellant by : Shri Aseem L Thakkar, AR Respondent by: Shri B.P Srivastava, Sr DR Date of Hearing 08.05.2025 Date of Pronouncement 16.05.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed by the assessee against the order dated 30.03.2024 passed by the Ld. Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeals: 1 The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming action of the Assessing officer in computing the total income at Rs. 1,97,38,900/- as against that of Rs. Nil declared by the appellant in the return of income filed on 31/10/2018. 2. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming Ex parte assessment order passed by the Assessing Officer without providing copy of material, information, documents statements etc. received by him from the office of DDIT(Inv) Unit-1(3), Ahmedabad and without granting cross examination of the persons/third parties in whose case search was conducted and statements recorded during the search. Hence the same being illegal and bad in law requires to be cancelled. 3. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the action of the Assessing Officer in rejecting the audited books of accounts of the appellant/s.145(3) of the Act and estimating the business income at Rs.13,67,570/- at the 8 percent of the sales of ITA Nos. 1131 & 1132/Ahd/2024 Vertool Consultancy LLP Vs. DCIT Asst. Years : 2017-18 & 2018-19 - 2– Rs.1,70,94,635/-ignoring the loss of Rs.24,91,347/- declared by the appellant in Profit and loss account. He thereby erred in making total addition of Rs.38,58,917/- by disallowing the losses without any basis. 4 The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming addition of Rs.1,03,13,435/- made by the Assessing Officer holding the purchase transactions of penny stock scrip of Prerna Infrabuild Ltd. And Padmanabh Industries (now known as Nichem Industries Ltd.) as alleged accommodation entries treating the same as alleged unexplained investment u/s.69 of the I.T. Act, 1961 and taxing the same applying the special rate provided u/s.115BBE of the Act. 5. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming addition of Rs.80,57,897/- made by the Assessing Officer treating the unsecured loans during the year as alleged unexplained cash credits u/s.68 of the LT. Act, 1961 and taxing the same applying the special rate provided u/s. 115BBE of the Act. 6. The Appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal. 3. The brief facts of the case are that the assessee filed return of income for the year under consideration on 31.10.2018 declaring total income at Rs. Nil. The assessment u/s 144 r.w.s. 144B of the Act has been completed by the Assessing Officer on 24.05.2021 determining the total income at Rs.1,97,38,900/-, with the following additions :- a) Estimation of business income @ 8% - Rs. 13,67,570/- b) Addition u/s 69 of the Act - Rs.1,03,13,435/- c) Addition u/s 68 of the Act - Rs. 80,57,897/- 4. Aggrieved by the order of the Assessing Officer, the Assessee filed appeal before the Ld. CIT(A) who upheld the order of the Assessing Officer. 5. We have heard the arguments of both the parties and perused the material available on record, including the appellate order and the paper book filed by the assessee which consist of the submission made before the Revenue authorities. ITA Nos. 1131 & 1132/Ahd/2024 Vertool Consultancy LLP Vs. DCIT Asst. Years : 2017-18 & 2018-19 - 3– Estimation of profits 6. The assessee is a broker and has shown Revenue from operation of Rs.1.70 crores. The Assessing Officer estimated profit @ 8% on the turnover which the Ld. CIT(A) has confirmed. We find that the profit estimated @ 8% in the case of sub- broker is unrealistic and hence we determine profit @ 1% to the total turnover. The ground of appeal on this issue is partly allowed. Addition u/s. 69 of the Act 7. We have gone through the balance-sheet as on 30.03.2017 & 30.03.2018 and find that these investments have been duly reflected in the balance-sheet of 30.07.2017 pertaining to AY 2017-18. Thus, this is opening balance for the Assessment Year 2018-19 and hence no addition can be made in the instant year. The ground of appeal on this issue is allowed. Unsecured Loans 8. The Assessing Officer has made addition of Rs.80,57,798/- during the assessment and the Ld. CIT(A) confirmed the same by observing as under: “…5.7. During the assessment proceedings, the appellant was silent on this issue & did not file any submission. However, during the appellate proceedings, the appellant furnished the confirmation of creditors, PAN and return of income filed by the creditors. The appellant also furnished the bank account statements but the same are not clearly legible. Also it is noted that the income returned by the creditors is not commensurate with the amount of unsecured loans given by them to the appellant firm. In the absence of clear & legible bank account statements, it is also not verifiable that whether there was any cash deposits or not before giving loan to the appellant firm. Thus identity of the creditors is proved but genuineness of transactions & creditworthiness of the creditors could not be established during the assessment as well as appellate proceedings. Hence there is no need to take a divergent view from the view taken by the AO during the assessment proceedings…” 9. Both the parties fairly submitted that the addition has been confirmed owing to absence of clear bank statements which has become a handicap for the Ld. CIT(A) to arrive at accurate conclusion. The Ld. AR prayed that, given an ITA Nos. 1131 & 1132/Ahd/2024 Vertool Consultancy LLP Vs. DCIT Asst. Years : 2017-18 & 2018-19 - 4– opportunity, due details would be submitted before the ld. CIT(A). We find that no prejudice would be caused to the Revenue if the issue is remanded to the file of the Ld. CIT(A) for a detailed examination of the bank accounts and then to pass a detailed order. The appeal of the assessee on this ground is allowed for statistical purposes. 10. In the result, the appeal filed by the assessee is partly allowed. The order is pronounced in the open Court on 16.05.2025 Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated .05.2025 MV/btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 09.05.2025 2. Date on which the typed draft is placed before the Dictating Member 14.05.2025 3. Other Member 14.05.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S 14 .05.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 16.05.25 6. Date on which the fair order comes back to the Sr.P.S./P.S 16 .05.25 7. Date on which the file goes to the Bench Clerk 16.05.25 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "