TMI Blog2022 (11) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... directors of 2 related parties, statement of the partner of the assessee who is also director in one of the company which is involved in the world transaction as per the statement of the assessee. Thus, lack of independent evidence makes the order of the learned CIT A not sustainable. CIT A has also wrongly held that when the amount is deposited in the bank account with HDFC bank of the assessee the deeming provisions of Section 68 is not applicable to the said receipt as it is credited in the bank account of the appellant. CIT A has ignored the fact that the amount which is credited in the bank account of the assessee is also credited in the books of accounts of the assessee and therefore the provisions of Section 68 are definitely attracted. We set aside whole issue back to the file of the ld. CIT (A) with a direction to pass decide whether the additional evidences submitted by the assessee were admitted or not giving reasons for his order. Thereafter he may decide the issue on merits of the case considering our above finding. Appeal of AO is allowed for statistical purposes. - ITA No. 1063/Mum/2020 - - - Dated:- 31-10-2022 - Shri Prashant Maharishi, AM And Ms. Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales. It was submitted. The learned AO noted that though partnership firm was constituted and commenced its business on 25/3/2014, as at 31/3/2015 sundry debtors reflected in its books of accounts were to the tune of ₹ 226,935,531, during the year sales was 314,15 8943/-, thus only ₹ 8.72 crores were deposited in the bank account of the assessee. On examination of the bank accounts it was noted that assessee has received ₹ 58.30 crores in its bank account. Therefore the assessee was further directed to submit the copies of account of 63 parties. It was not submitted, the AO noted that a sum of ₹ 58.30 crores have been received from 62 parties as stipulated at page number 3 5 of the assessment order. The assessee was issued a show cause notice for penalty for non-furnishing of the detail. The assessee replied on 15/12/2017 submitting the Ledger account of 2 parties (1) Medichem Lifesciences private limited, and (2) Friends trading. Assessee explained the reasons by furnishing the above letter which was submitted in that dak. Thus, assessee avoided, appearing before the learned assessing officer. The learned AO considered the explanation furnished assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 581,348,458/ received from the above 62 parties are transferred to these 2 entities showing colorable device of advances. Considering the above facts and circumstances the learned assessing officer made addition in the hence of the assessee as undisclosed income. Consequently, assessment order u/s 143 (3) of the act was passed on 29/12/2017 where the total income of the assessee was assessed at ₹ 586,189,698. 05. Aggrieved with the assessment order assessee preferred appeal before the learned CIT A. Before him, assessee submitted additional evidences with respect to the advances received of ₹ 581,201,658/ . The matter was remanded to the learned AO. The AO issued notices u/s 133 (6) of the act, the parties submitted that they have made the payment to the assessee at the request of the above 2 parties, those parties submitted that Ledger account and bank statement. The above 2 parties also submitted the confirmation. Statement of the director of the Medichem Lifesciences were recorded u/s 131 of the income tax act wherein he confirmed that there was a credit transaction to the tune of ₹ 39.84 crores in the books of that company which was rooted thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances was received is clearly a make-believe story made by the assessee which was believed by the CIT A. He submitted that during assessment assessee created one story and in remand proceedings it created another story. The learned CIT A making any further enquiry believed the revised story made by the assessee. He therefore submitted that once the assessee has failed to explain the nature and source of the amount deposited in the bank account of the assessee, to the satisfaction of the learned assessing officer the addition deserves to be confirmed u/s 68 of the income tax act. He extensively relied upon the orders of the learned assessing officer as well as the remand report mentioned by the learned CIT A. 07. Despite notice to the assessee appeared on the appointed date of hearing despite there was proper service of notice by the learned AO wherein the reports are also submitted that the directors who appeared in the remand proceedings have received the notice of hearing. This appeal is also fixed for hearing earlier ten times, despite service of notice, none appeared on any of the occasions. Therefore, we do not have any other option but to dispose of this appeal on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectively. The said parties have responded u/s. 133(6) with the ledger confirmations. However, the learned Assessing Officer has erred in fact and in law by ignoring the response filed u/s. 133(6). It is the contention of the appellant that the appellant has proved beyond about doubt that the said income is income of the abovementioned two parties and does not belong to the appellant. The two parties have already confirmed the same by submitting the ledger confirmations and accepting their income. Further, it is submitted that out of the total amount, the appellant had received ₹ 4,00,000/- from Patel Ishwar Premji to whom the appellant had repaid the said amount subsequently. The appellant is aggrieved that in fact and in law the learned Assessing Officer has erred in not giving any proper opportunity for submitting the reply. The appellant feels highly aggrieved by the high-handed addition. It is submitted that the addition has been made in blatant violation of the principles of natural justice. In view of the above grounds of appeal, the appellant prays that the said addition of ₹ 58,30,48,458/- should be quashed at once. 7.1.1 It is gathered from the perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading without address and PAN. In view of the above the Assessing Officer concluded that, these two parties are closely related with the assessee and the undisclosed amount of ₹ 58,30,48,458/- received from the above stated 62 parties are transferred to M/s. Medichem Lifescience Pvt Ltd and M/s. Friends Trading showing colourable device of advance. Considering the above facts and non-submission of confirmation from the 62 parties, the Assessing Officer related the amount of ₹ 58,30,48,458/- received from them as undisclosed income and added the same to the total income of assessee. 7.1.2 In the remand report, the Assessing Officer objected to the admission of additional evidence, comprising of confirmation of accounts, bank statements etc. stating that several opportunities was afforded during the assessment proceedings to furnish confirmation from the aforesaid parties who deposited the amounts in HDFC Bank account of the assessee but the assessee failed to avail them and therefore, the additional evidence must not be taken on record. However, coming to the merits of the case, it is reported by the Assessing Officer and all the 62 parties responded to the notice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, it is the contention of the appellant, that before the Assessing Officer during the assessment proceedings and in the remand proceedings at the appellate stage, appellant has asserted that the credits amounting to ₹ 58,30,48,458/- reflected in the HDFC Bank account of the appellant do not belong to the appellant but comprises of recovery of advances given by the appellant to two parties viz. M/s. Medichem Lifescience Pvt. Ltd and M/s. Friends Trading while some portion of the said credits are the funds of the aforesaid parties deposited by third parties on their behalf in the said bank account of the appellant as the bank account of M/s. Medichem Lifescience Pvt. Ltd was not operational due to legal issues as there has also been mismanagement of the affairs of the company involving embezzlement of funds of the company by the Ex-Manager of the company, Mr. Vishal Soni. 7.1.5 It is further, submitted that the appellant has furnished to the Assessing Officer all the relevant information and documentary evidence during the remand proceedings. The two parties Viz., M/s. Friends Trading and M/s. Medichem Lifesciences Pvt. Ltd with who the appellant had business t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough banking channels in the bank account of the appellant has been explained by the principal persons of the two parties, M/s. Medichem Lifesciences PvtLtd and M/s. Friends Trading in the statements recorded of Shri Surinder Pal Singh, Director of M/s. Medichem Lifesciences Pvt Ltd and Mr. Deepakbhai N Panchal, Partner of M/s. Friends Trading. The AO does not dispute these facts. The contention of the AO is that the aforesaid amounts received by the appellant through third parties in a way of circular transactions are totally not acceptable and tantamount to colorable device. However, there is no cogent material on record to support the above interpretation of the AO that the credits deposited in the HDFC bank account of the appellant is a colourable device to evade payment of tax. Considering the fact that the appellant's contention is supported by documentary evidence, viz., ledger confirmation by the aforesaid two parties, confirmation by the third parties who affirmed that each of them have deposited the credit amount in the bank account of the appellant on behalf of the said two parties, copy of FIR filed by M/s. Medichem Life Sciences Pvt. Ltd against the Ex-manager for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation by the creditor, Mr. Patel Ishwar Premji and statement of bank account held by Mr. Patel Ishwar Premji. Hence, the addition to the tune of ₹18,46,800/- as unexplained cash credit u/s. 68 is sustained. 7.1.8. In view of the above, the Assessing Officer is directed to delete the addition of ₹ 58,12,01,658/- (₹ 58,30,48,458/- less to ₹ 18,46,800/-). Accordingly, Ground No 1 is Partly Allowed. 09. First, the learned CIT A failed to make any order of admitting additional evidence Under rule 46A of the act. This is a mandatory requirement whenever the learned CIT A admits any additional evidence which were not before the learned assessing officer. He has limited power to admit such evidence. In the present case there is no lack of opportunity before the learned AO to the assessee. There are no other reasons shown where assessee was prevented from sufficient cause for not producing those evidences before the AO. It is more relevant when the learned assessing officer has specifically objected to the admission of additional evidence, the learned CIT A should have given reasons for admitting the same. The learned CIT A has failed to do so. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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