Bundelkhand Ispat Melting Pvt. Ltd. Vs ITO (ITAT Agra)

As a result of search and seizure operation AO observed that assessee received unsecured loan of Rs. 28,00,000/- which he held as undisclosed income of the assessee. Case was reopened and statutory notices were issued, for which no compliance was made by the assessee. Penalty proceedings u/s 271 (1) (b) were initiated, for which no compliance was made by the assessee. AO made addition of Rs. 28 Lakh as undisclosed income and further added Rs. 70,000/- as commission paid for providing accommodation entry.

On appeal CIT (A) observed that assessee used different PAN in Form 35 instead of one used for reassessment. Assessee neither file return in response to notice u/s 148 not it complied with the statutory notices. Hence, AO rightly made addition of Rs. 28,70,000/-. CIT(A) directed to the AO to verify the authenticity of order u/s 147/144 in the case of the assessee bearing PAN AADCB3941R against which appeal has been filed. CIT(A) dismissed the appeal on the ground that assessee has filed the appeal using PAN AADCB5490K while the re-assessment order u/s. 147/144 was issued bearing PAN-AADCB3941R. CIT (A) also observed assessment order dated 11.02.2015 passed by the AO with PAN AADCB5490K. CIT (A) also held that assessee did not come with clean hands. Due to duplication of PAN details of the order u/s 143(3) dt 11.02.2015 bearing PAN AADCB5490K could not be located on the CASS/AST/ITD module.

On appeal before ITAT, none appeared on behalf of the assessee. It was submitted on behalf of revenue that department had filed a letter according to which both PAN nos. belong to assessee. The accommodation entries were received using PAN AADCB3941R, while the return was filed for the impugned AY declaring income of Rs. 29,14,245/- using PAN AADCB5490K.

ITAT held that assessee is holding two PAN numbers for which no explanation was offered by the assessee. Assessee used PAN AADCB3941R while receiving alleged accommodation entries, while different PAN AADCB5490K was used for filing return of income for the impugned AY. Original assessment was framed u/s 143(3) with PAN AADCB5490K. Hence, onus is on the assessee to explain the holding of two PAN. CIT (A) also dismissed appeal on this very ground that assessee didnot come with clean hands after holding two PAN numbers.

ITAT allowed the appeal for statistical purposes by remanding back the appeal to CIT (A). Penalty order was also remanded.

FULL TEXT OF THE ORDER OF ITAT AGRA

First we shall take up the appeal of the assessee in ITA No. 18/Agr/2023-Assessment Year:2012-13

ITA No. 18/Agr/2023:

This appeal filed by assessee for the assessment year 2012-13 has arisen from the appellate order dated 17.11.2022(DIN& Order No. ITBA/NFAC/S/250/2022-23/1047487247(1)) passed by ld. Commissioner of Income-tax(Appeals), NFAC, Delhi, which appeal in turnhas arisen from the assessment order dated 26.12.2019 passed by Assessing Officer u/s. 147/144 of the Income-tax Act, 1961.

2. The Grounds of Appeal raised by the assessee in the Memo of Appeal filed with Income Tax Appellate Tribunal, Agra Bench, Agra , reads as under :

“01. Because no notice under section 148 of the Income-tax Act, 1961 having been served on the assessee, the entire re-assessment proceedings initiated and the assessment order passed is without jurisdiction, bad in law and be quashed.

2. Because there being no reason far less any material, the entire proceedings under section 148 of the Income-tax Act, 1961 are void abinitio and be quashed.

3. Because the re-assessment framed under section 144/147 of the Income-tax Act, 1961 ex-parte, without giving adequate and reasonable opportunity is against the principles of natural justice, the order passed be quashed.

4. Because none of the notices, issued under section 148 or subsequent thereto having been issued as per the provisions of section 282 of the Income-tax Act, 1961, the assessee was prevented by sufficient and reasonable cause in not making the compliance, the order passed under section 144 is contrary to the provisions of law be quashed.

5. Because the initial assessment was framed under section 143(3) of the Income-tax Act, 1961, there being no failure on the part of the assessee to disclose true and material facts necessary for assessment, the case being covered by the proviso to section 147, the entire re- assessment proceedings initiated being contrary to the provisions of section, bad in law be quashed.

6. Because on a proper consideration of facts and circumstances of the case, nothing prevented the Assessing Officer from issuing the notices manually also as done by him with respect to the assessment order framed ex-parte, there being no service of notices as per the provisions of section 282 of the Income-tax Act, 1961, the assessee was prevented by sufficient and reasonable cause all throughout being under a bonafide belief, unaware of the proceedings, the assessment framed be quashed.

7. Because on a proper consideration of the facts of the case, the entire transaction of Rs.28,00,000/- alleged to be undisclosed and taxable under section 68 of the Income-tax Act, 1961 having been already disclosed in the accounts and having been examined during the course of assessment proceedings framed u/s.142(2), the Assessing Officer was not justified in framing the assessment ex-parte, the order passed be quashed.”

3. Brief facts of the case are that a search and seizure action u/s. 131 of the Act was conducted by DIT(Inv.), Kanpur on 28.04.2015 in the case of Shri Shaswat Agarwal and Rich Udhyog Group. During the course of search, it was found that Shri Shaswat Agrawal was engaged in the activity of providing accommodation entries in the guise of unsecured loan/LTCG/Turnover/investment through companies effectively controlled and managed by him and his brother Shri Ashish Agrawal. The said Shri Shri Shaswat Agrawal and Shri Ashish Agrawal was providing accommodation entries to Bansal Supplier Private Limited (PAN AADCB7622F).During the course of assessment of Rich Udhyog group of cases, it was observed by the AO that in Financial Year 2011-12 ,that the assessee, M/s. Bundelkhand Ispat Melting Pvt. Ltd. (PAN- AADCB3941R) has received unsecured loan of Rs.28,00,000/- from Bansal Supplier Pvt. Ltd. The AO after making post search investigation and after analysis of the bank documents and other seized material, were of the view that amount transferred from Bansal Suppliers Private Limited to the assessee is nothing but the undisclosed income of the assessee which has been advances as unsecured loans just to give it a color of legitimacy. The AO relied upon decision of Hon’ble Allahabad High court in the case of WT 458/459 of 2015 and WT 80/2017. The AO was of the view that the assessee has paid undisclosed cash to the tune of Rs. 28,00,000/- and also commission ( in the form of undisclosed cash) of 2.5% of the same amount to purchase such entry. After getting information from DCIT, Central Circle-1, Kanpur, the Assessing Officer has reasons to believe that the income of the assessee has escaped assessment. The AO invoked the provisions of section 147 and recorded reasons for reopening of the assessee . After obtaining approval from Competent Authorities, accordingly notice u/s. 148 was issued by the AO to the assessee on 29.03.2019 through income tax module as well by registered post. Statutory notices u/s 142(1) were also issued by the AO to the assessee during reassessment proceedings. There was no compliance on the part of the assessee to the notices issued during reassessment proceedings. Thereafter penalty notice u/s 271(1)(b) was issued by the AO to the assessee, but there was no compliance on the part of the assessee. The Assessing Officer after considered the material made the addition of income in the hands of the assessee on account of unsecured loan of Rs.28,00,000/- received by the assessee from Bansal Supplier Private Limited, as undisclosed income of the assessee. Further, the Assessing Officer assessed commission @ 2.5% of the unsecured loan of Rs. 28,00,000/- received by the assessee i.e., Rs.70,000/- in the hands of the assessee being undisclosed income . The AO found support from the decision of Hon’ble Allahabad High Court in WT458/459 of 2015 and WT 80/2017.Thus, the income of the assessee was reassessed by making an additions of Rs. 28,70,000/00 in the hands of the assessee(PAN AADCB3841R), vide re-assessment order dated 26.12.2019 passed by the AO u/s 147/144 of the 1961 Act,

4. Aggrieved, the assessee filed first appeal with ld. CIT(A). However, while filing the appeal in form No. 35, the assessee used PAN-AADCB5490K ,instead of PAN-AADCB3941R on which the re­assessment order was framed by the AO. The ld. CIT(A) observed that the assessee did not file its return of income in response to notice u/s 148 issued by the AO. The assessee did not deliberately complied with statutory notices issued by the AO u/s 148 and 142(1) during reassessment proceedings.The AO has rightly assessed undisclosed income of Rs. 28,70,000/- towards raising of unscured loan of Rs. 28,00,000/- from Bansal Suppliers Private Limited and 2.5% i.e. Rs. 70,000/- commission paid in cash towards unexplained commission, in the hands of the assessee. The said issue is settled by Hon’ble Allahabad High Court in favour of Revenue in WT 458/459 of 2015 and WT 80/2017. The ld. CIT(A) observed that the assessee for availing the alleged accommodation entries used PAN-AADCB3941R. The assessment has been framed on the PAN AADCB3941R. While filing appeal , different PAN AADCB5490K was used by the assessee. The ld. CIT(A) upheld the reopening u/s 147. The ld. CIT(A) observed that the AO has relied upon the decision of Hon’ble Allahabad High Court in in WT 458/459 of 2015 and WT 80/2017, wherein Hon’ble Allahabad High Court has already decided this issue in favour of Revenue that the appellant received unsecured loan of Rs. 28,00,000/- from Bansal Supplier Private Limited and for availing such accommodation entries the assessee paid undisclosed cash of equivalent and commission (in the form of undisclosed cash) of 2.5% of the same amount to purchase the entry. The Ld. CIT(Appeals)directed to the AO to verify the authenticity of the assessment order u/s 147/144 dated 26.12.2019 in the case of the appellant bearing PAN AADCB3941R against which appeal has been filed. The ld. CIT(A) also produced in its appellate order at page 6 -7 , assessment order dated 11.02.2015 passed by the AO with PAN AADCB5490K.The ld. CIT(A) dismissed the appeal of the assessee on the ground that the assessee has filed the appeal using PAN-AADCB5490K while the re-assessment order u/s. 147/144 of the Act was issued bearing PAN-AADCB3941R. The ld. CIT(A) observed that the assessee has not come with clean hand. Ld. CIT(Appeals) observed that there is a duplication of PAN in case of assessee due to which details of the assessment order u/s 143(3) dated 11.02.2015 bearing PAN AADCB5490K in the case of the assessee could not be located on the CASS/AST/ITD module. The ld. CIT(A) directed the assessee to come with clean hand, and to make an application to the AO for de-duplication of PAN. The assessee is filing appeal using PAN AADCB5490K , but filing copy of assessment order u/s 147/144 bearing PAN AADCB3941R, which violates appeal proceedings. The ld. CIT(A) dismissed the appeal of the assessee.

5. Still aggrieved, the assessee has filed second appeal with ITAT. None appeared on behalf of the assessee when this appeal was called for hearing. On earlier occasion also none appeared on behalf of the assessee. Adjournment application is filed which is rejected. Thus, I proceed to adjudicate this appeal on merits based on materials on record. Department has filed a letter dated 03.12.2024, in which it is stated that as per details retrieved by the department from ITBA Portal, both the PANs, viz., AADCB3941R(date of allotment 31.03.2008) and PAN: AADCB5490K(date of allotment 11.09.2008) belongs to the assessee. The reply filed by the department is reproduced hereunder:

“Government of India Kanpur.
Office of the Income Tax Officer 2(1)(5)
2806, Churkhi Road, Orai(Jalaun)
Email: Kanpur.ito.2.1.5.@incometax.gov.in

F.No. ITO/Orai/BIMPL/PAN/2024-25/240

Dated:03.12.2024

To,
The Income Tax Officer (ITAT),
O/o the Commissioner of Income Tax (DR),
ITAT, AGRA

Sir,

Sub: Requisition of report regarding PAN details/de-duplication of PAN in the case of Bundelkhand Ispat Melting Pvt. Limited, A.Y. 2012-13, ITA No. 18/Agr/2023-Regarding –

Kindly refer your letter F. No. CIT(DR)/ITAT/Bundelkhand Ispat/Agra/2024-25/152 dated 03.12.2024 on the above mentioned subject.

In this connection it is submitted that as per the details retrieved from department’s ITBA portal, both the PAN belongs to Bundelkhand Ispat Melting Pvt. Limited. The details are as under :

Copy of the details of both above PANs (Screen shot) retrieved from ITBA portal is enclosed herewith for your kind perusal and further necessary action please.

Yours faithfully
Sd/-

Encl: As above

(Madan Mohan Tewari)
Income-tax Officer-2(1)(5)
Orai (Jalaun)

5.2 Ld. Sr. DR submitted that the assessee is holding multiple PANs and has not come with clean hands. The assessee was assessed to tax with PAN AADCB3941R, but the assessee has deliberately filed appeal with ld. CIT(Appeals) and also Tribunal with PAN AADCB5490K and prayers were made to dismiss the appeal of the assessee. It is also submitted that the person is not allowed to hold two PAN’s as per Income-tax Act. The assessee is holidng 2 PAN’s even as of date, despite directions issued by the ld. CIT(A) in its appellate order dated 17.11.2022 vide para 4.7 and 4.8. This clearly indicates that the assessee is holding 2 PAN’s with ulterior motive. The accommodation entries were received using PAN AADCB3941R held in the name of the assessee, while the return of income was originally filed on 24.09.2012 for the impugned assessment year declaring income of Rs. 29,14,245/- using PAN AADCB5490K(refer CIT(A) order [page 6-7], wherein assessment order is reproduced). Thus, this evidences that for ulterior objectives of raising un-accomodation entries, different PAN is used, while return of income is filed with different PAN.

6. I have considered the contentions of the ld. Sr. DR and perused the material on record. Facts are stated in preceding para’s of this order and are not repeated. I have observed that the case of the assessee was reopened by the AO u/s 147 after recording reasons. Notice u/s 148 was issued by the AO to the assessee. The assessee did not filed return of income in response to notice u/s 148. The assessee did not participated in reassessment proceedings, despite several notices issued by the AO. I have observed that the assessee was re-assessed to tax with ITO, Orai (Jalaun) vide reassessment order dated 26.12.2019 passed u/s. 147/144 of the Act with PAN AADCB3941R ,wherein income was re-assessed at Rs.28,70,000/-. The assessee filed first appeal with ld. CIT(Appeals) as well with second appeal with ITAT, using different PAN AADCB5490K. The alleged accommodation entries to the tune of Rs. 28,00,000/- by way of unsecured loans was received by the assessee under the PAN:AADCB3941R , from one alleged accommodation entry provider M/s Bansal Suppliers Private Limited, which was added to the income of the assessee being income from undisclosed sources. There was further addition made by the AO of allegation of payments being made by the assessee from undisclosed sources towards commission @2.5% on the alleged bogus loans raised by the assessee to the tune of Rs. 28,00,000/- from Bansal Suppliers Private Limited , which also led to addition of Rs. 70,000/-in the hands of the assessee, during re-assessment proceedings. The authorities below have relied on the judgment and order of Hon’ble Allahabad High Court in WT 458/459 of 2015 and WT80/2017, decided in favour of Revenue.The original return of income u/s139(1) was filed by the assessee on 28.09.2012 , declaring income of Rs. 29,14,245/-, using PAN AADCB5490K. The original assessment was framed by AO u/s 143(3) vide assessment order dated 11.02.0215,wherein the assessee participated in the assessment proceedings, wherein PAN AADCB5490K was used by the assessee in filing return of income. As per provisions of the 1961 Act ,No person is allowed to hold more than one PAN, otherwise consequence follows as provided the 1961 Act. The assessee is still holding as of date 2 PAN’s as per the letter dated 03.12.2024 filed by department, before the Bench. These 2 PAN’s are held by assessee at different addresses both at Orai, Jalaun. Despite directions of ld. CIT(A) at para 4.7 and 4.8, it clearly appears that the assessee has not taken any steps in compliance thereof. The assessee has used PAN AADCB3941R while receiving alleged accommodation entries to the tune of Rs. 28,00,000/- towards unsecured loans from Bansal Suppliers Private Limited, while different PAN AADCB5490K was used for filing return of income u/s 139(1) for the impugned assessment year. Original assessment was framed u/s 143(3) with PAN AADCB5490K. Reassessment proceedings were initiated by Revenue based on the information that the assessee has raised allegedly bogus loans from Bansal Suppliers Private Limited, using PAN AADCB3941R. No return of income in pursuance to notice issued by the AO u/s 148 was filed by the assessee during reassessment proceedings nor the assessee participated in reassessment proceedings before the AO ,despite several statutory notices u/s 142(1) issued by the AO. The assessee has not come with clean hands , and has not given explanation as to the reasons for holding 2 PAN’s which the assessee is not allowed to hold as per statute. The onus become more heavier on the assessee as one of the PAN was allegedly used for alleged availing accommodation entry, while the other PAN is used for filing return of income. However, since the assessee was holding multiple PANs and the appeal was filed with ld. CIT(Appeals) with different PAN– AADCB5490K instead of PAN:AADCB3941R on which the assessee was assessed by the Assessing Officer during reassessment proceedings, theld. CIT(Appeals) dismissed the appeal of the assessee, with directions as are contained in appellate order at para 4.7 and 4.8. The assessee thereafter has filed ansecond appeal with the Tribunal with the same PAN AADCB5490K, although assessee was re-assessed to tax with PAN-AADCB3941R during reassessment proceedings. The assessee has also paid the appeal fees with Tribunal as well as with ld. CIT(Appeals) with PAN-AADCB5490K. I have observed that the assessee has been assessed to tax with PAN AADCB3941R during reassessment proceedings, while the appeal is filed with PAN-AADCB5490K with both the appellate authorities. No explanation whatsoever has been given by the assessee for holding 2 PAN’s , while one PAN is used for filing return of income and the other used for raising alleged bogus accommodation entry by way of unsecured loan from Bansal Suppliers Private Limited. The assessee is still holding 2 PAN. These 2 PAN’s held by the assessee are with different addresses both at Orai, Jalaun. The onus is on the assessee to explain and come with clean hands. I have observed that the assessee has, although filed appeal with different PAN, but the assessee has been vigilant in filing the appeals with the higher appellate authorities. The ld. CIT(Appeals) dismissed the appeal on the ground that the assessee is holding two different PANs and the assessee has not come with clean hands, with directions as are contained in para 4.7 and 4.8 of the ld. CIT(A) appellate order. In the interest of justice and keeping in view entire facts and circumstances, I set aside the order of ld. CIT(Appeals) and restore the matter back to the file of ld. CIT(Appeals) ,with liberty to the assessee to rectify the appeal filed with ld. CIT(A) with PAN on which re-assessment was made or to file fresh appeal with ld. CIT(Appeals) with the PAN AADCB3941R on which reassessment was made by the AO and withdraw the earlier appeal filed with ld. CIT(A). In case the assessee decides to file fresh appeal with PAN AADCB3941R, the ld. CIT(Appeals) shall condone the delay in filing the fresh appeal keeping in view that the assessee has been vigilant in pursuing the litigation before the higher appellate forums . The ld. CIT(A) shall adjudicate the appeal on merits after giving opportunities to both the parties. The appellate order of ld. CIT(A) is set aside, and the matter is restored back to the file of the ld. CIT(A) , with directions as stated above. The assessee has also averred in statement of facts filed before ld. CIT(A) that the amount raised by the assessee from Bansal Suppliers Private Limited was towards raising of share application money for allotment of shares at premium, and not unsecured loan The ld. CIT(A) shall also look into this aspect, while adjudicating appeal of the assessee on merits in accordance with law. Proceeding Further,the onus will be entirely on the assessee to give explanations and reasons for holding 2 different PAN and that too with 2 different addresses, and the Revenue is also directed to verifyas to the utilisation of these 2 PAN’s by the assessee, so as to check and unearth concealment of income , if any by the assessee .Thus, the appeal of the assessee is allowed for statistical purposes with aforesaid directions both to assessee as well to the department.I order accordingly.

ITA No. 17/Agr/2023:

7. This appeal is arising from the appellate order dated 16/11/2022 passed by ld. CIT(A), NFAC , Delhi(DIN & Order No. ITBA/NFAC/S/250/2022-23/1047415333(1), which in turn has arisen from penalty orderdated 28.09.2021 passed by the AO u/s 271(1)(c). Since the appeal of the assessee in quantum is restored by me to the file of ld. CIT(Appeals) for fresh adjudication as per directions given in ITA No. 18/Agr/2023 to both the assessee as well to Department , by setting aside the appellate order passed by ld. CIT(A) in quantum, it will be fair and proper and in the interest of justice to set aside the appellate order of ld. CIT(Appeals) dated 16.11.2022 which had arisen from penalty order u/s 271(1)(c), and accordingly restore this matter also to the file of ld. CIT(Appeals) for denovo adjudication of the appeal of the assessee with similar directions to both the assessee as well Revenue as were given in ITA No. 18/Agr/2023. Accordingly, this appeal is also allowed for statistical purposes. I order accordingly.

8. In the result, both the appeals filed by assessee i.e, ITA 17 &18/Agr/2023 are allowed for statistical purposes.

Order pronounced in the open court on 04.12.2024 after conclusion of hearing in the presence of ld. Sr. DR and reduced in writing and signed on 06/12/24.