The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) confirmed the Commissioner of Income Tax (Appeals) [CIT(A)]’s decision to limit the addition to Rs. 1,45,10,000, acknowledging that although shell companies linked to the Praveenkumar Jain Group were involved in money laundering, the remaining amounts were either not received or refunded.
Lydia Construction Pvt. Ltd., the respondent-assessee filed “NIL” return for the assessment year (AY) 2011-12, which was processed under Section 143(1).Following a search on the Praveenkumar Jain Group revealing bogus transactions, the assessment was reopened under Section 148. The assessee, identified as receiving Rs. 9 crore in accommodation entries, confirmed their original return in response to the notice.
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Despite confirming the original return and requesting reasons for reopening, the objections were overruled. The key person in the Jain Group admitted to bogus transactions, and notices issued for verification received no response. The Assessing Officer (AO) added Rs. 9 crore as unexplained cash credit under Section 68 and initiated penalty proceedings under Section 271(1)(c) for inaccurate particulars.
During the appeal before the CIT(A) the assessee disputed the addition of Rs. 9 crore as unexplained cash credit under Section 68 of the act, clarifying that only Rs. 6.5 crore was received: Rs. 3 crore from Ansh Merchandise Pvt. Ltd., Rs. 1 crore from Casper Enterprises Pvt. Ltd., and Rs. 2.5 crore from Vanguard Jewels Ltd. The assessee submitted that out of Rs. 6.5 crore, Rs. 5.05 crore was refunded within 15 days.
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The AO confirmed the actual receipt was Rs. 6.5 crore and not Rs. 9 crore, acknowledging duplicate entries. The assessee provided supporting documents to validate the transactions.
The CIT(A) limited the addition to Rs. 1,45,10,000/-, finding that the companies Ansh Merchandise Pvt. Ltd. and Casper Enterprises Pvt. Ltd. were shell companies involved in money laundering. Despite the assessee providing documentation, the share application money was deemed non-genuine, and the addition was upheld.
The revenue-appellant filed an appeal before the tribunal aggrieved with the order passed by CIT(A).
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The tribunal noted that the CIT(A) took a reasonable approach by restricting the addition to Rs. 1,45,10,000/-, based on the evidence. The CIT(A) acknowledged that M/s. Ansh Marketing Pvt. Ltd. and M/s. Casper Enterprises Pvt. Ltd. were bogus companies involved in laundering unaccounted money.
The two-member bench comprising Siddhartha NautiyaI (Judicial Member) and Makarand V. Mahadeokar (Accountant Member) upheld the CIT(A) order, confirming that the balance amount of Rs. 9 crore was either not received by the assessee or was promptly repaid and dismissed the department’s appeal.
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