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TMI Blog2025 (5) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... ised the following grounds of appeal: AY 2011-12 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding the re-opening of assessments as bad in law and change of opinion without appreciating that the AO made the reason to believe on the receipt of new information viz cash deposits from Investigation Wing." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 3,45,00,000/- made in terms of section 68 of the Income Tax Act without appreciating that the assessee had failed to establish the source of the deposits." AY 2012-13 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding the re-opening of assessments as bad in law and change of opinion without appreciating that the AO had the reason to believe on the receipt of new information viz cash deposits from DCIT CC 2(2), Mumbai." 2. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 9,71,00,000/- made in terms of section 68 of the Income Tax Act without appreciating that the assessee had failed to establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial facts necessary for the assessment" 4. Since similar issues are involved in the appeals and the cross objections and facts and circumstances are the same for AY 2011-12 and 2012-13, these two appeals and cross objections are being disposed of by a common order. ITA No. 3111/Mum/2024 is being taken as a lead case. ITA No. 3111/Mum/2024 for AY 2011-12 5. The assessee filed its original return on 24.09.2011 at an income of Rs. 3,19,19,160/-. The return was processed u/s 143(1) of the Act. Subsequently, the assessee filed an application before the Hon'ble Income Tax Settlement Commission (ITSC) in respect of certain purchases made by it from suspicious hawala parties, as reported by the Sales Tax Department (STD). The assessee offered additional income of Rs. 1,86,36,506/- in addition to its returned income of Rs. 3,19,19,160/- before the Hon'ble Settlement Commission, which was accepted vide order u/s 245D(4) dated 12.12.2013 of the ITSC. Thereafter, the case was reopened u/s 147 of the Act on account of bogus accommodation entries, and assessment was completed u/s 147 r.w.s. 143(3) after making addition on account of bogus loan of Rs. 50,00,000/- and interest paid thereon of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not made full and true disclosure of its income. Accordingly, it has been argued by the Ld. AR that the assessee had made full and true disclosure before the Hon'ble ITSC in respect of all his undisclosed income and, therefore, the only course available to the Ld. AO was to approach the Hon'ble ITSC before reopening the assessment. Further, even on merits, it has been argued by Ld. AR that the order of Ld. CIT(A) has been passed after taking into account all the relevant facts and circumstances, and relief has been granted on merits, hence the order of Ld. CIT(A) deserves to be upheld. 9. Ld. DR, on the other hand, vehemently argued that the order of Hon'ble ITSC did not take into account the unexplained cash deposits, which were noticed by the department subsequently, and hence, this issue is not covered by the order of Hon'ble ITSC. He has, further, stated that the order of the Hon'ble ITSC is conclusive only with regard to the matter stated therein. Since this issue is not covered by the order of Hon'ble ITSC, Ld. AO was justified in making the addition on account of the unexplained cash deposit in the bank account. 10. We have heard the rival submissions and perused the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scopic theory has to be applied to the additions made u/s.68 of the Act and once the source was explained, the primary onus was discharged then the theory of human probabilities and preponderance cannot be applied. The appellant placed reliance on the two decisions which are brought out supra in the submissions of the appellant. I have gone through the details filed and addition made by the AO. It is seen from the submissions that the appellant is seeking telescoping benefit for the cash withdrawals. From the assessment order it is seen that the AO brought out cash deposits and cash withdrawn in a statement of table. On a perusal of the table, it is noticed that there are cash deposits and cash withdrawals in all the months from April, 2010 to March, 2011. As held by various Courts/Tribunals, benefit of telescoping has to be considered before arriving unexplained cash deposits by the appellant. On verification of the submissions filed by the appellant, it is seen that the appellant is having sufficient sources for cash deposits and the same have been duly explained and the addition made by the AO is not warranted." 12. Thus, even on merits, the decision of Ld. CIT(A) is justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be necessary." 16. The assessee has raised the following grounds of objections for the above cross-objections: AY 2013-14 "1. Ground no. 1: On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in re-opening the Respondent's assessment on mere suspicion and without any credible material on hand to believe that its income chargeable to tax had escaped assessment. The re-assessment proceedings u/s 147 deserve to be quashed in appeal 2. Ground no. 2: On facts and circumstances of the case and in law, the learned Commissioner (Appeals) ought to have also quashed the re-assessment proceedings as illegal in terms of first proviso to section 147. Here, there was prior assessment u/s 143 (3) and re-assessment was made beyond four year from the assessment year without any failure on part of the Respondent to disclose fully and truly all material facts necessary for the assessment. 3. The Respondent reserves the right to add to, alter or delete any of the above grounds of appeal." AY 2014-15 "1. Ground no. 1: On facts and circumstances of the case and in law, the learned Commissioner (Appeals) erred in re-opening the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore Ld. AO, as such, he could not have reopened the assessment as more than 4 years had elapsed. It has been demonstrated by filing relevant documents before us that the bank account with Ratnakar Bank was duly disclosed by the assessee while filing its return. Further, the balance in the name of M/s Chaturbhuj Diamonds Pvt. Ltd. was also declared in the Schedule 'C' of the balance sheet, which was filed along with the original return of income. It has further been submitted that even on merits, the assessee has furnished complete details with regard to both issues. It had explained that while cash deposit of Rs. 8,86,87,600/- had been made in the bank account maintained with Ratnakar Bank during the FY 2012-13, the assessee had also withdrawn, on various occasions, a total amount of Rs. 9,51,00,000/- and that the deposits in the bank account were out of such withdrawals. The assessee had also explained before Ld. CIT(A) that these frequent deposits and withdrawals were necessitated due to the fact that the assessee is engaged in the road construction work, which requires a huge labour force. Accordingly, there was a need to withdraw cash from the bank account for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cash re-deposited in bank is Rs. 8,86,87,600/-, Hence, the assumption that cash is not available in redeposit is incorrect. The decision relied by the appellant during the course of appeal proceedings and video conference are as below: (1) Sri Sampathraj Rakeshkumar vs. ITO in ITA No.1451/Bang/2018 dated 03.10.2018 (ITAT Bangalore) (2) ACIT 12(3), Mumbai vs. Chirag Jayant Mehta, ITAT Mumbai in ITA Nos.8548, 8871, 2230 & 2231/Mum/2011, dated 31.07.2017. (3) Shri Shail Jayesh Shah vs. ITO-20(3)(3), Mumbai, ITA No.1102/Mum/2021, dated 02.01.2023 (ITAT Mumbai). 5.2.3. In view of the above, the addition due to cash deposit is deleted, as the contention of the AO is not supported by any evidence. 5.2.4 With regard to loan of Rs. 40 lakhs from M/s. Shree Chaturbhuj Diamond Pvt.Ltd, the AO treated the loan as dubious, as it could not be verified. On the other hand the appellant submitted that it had received the sum through RTGS on 11.04.2012 and during the year it had paid interest for deducted TDS @ 10%. The appellant also submitted loan confirmation and bank statements and stated that it had discharged onus of establishing the identity, creditworthiness and genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X
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