IN THE INCOME TAX APPELLATE TRIBUNAL

“F” BENCH, MUMBAI

BEFORE SHRI OM PAKASH KANT, ACCOUNTANT MEMBER

AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER

ITA No. 1540/MUM/2024

Assessment Year : 2012-13

Majestic Premises Private Limited

2403, Awinmarathon Futurex,
N M Joshi Marg, Lower Parel,
Mumbai
PAN: AAECM 5625 L ……………. Appellant

v/s

ACIT, Central Circle-2, Thane ……………. Respondent

Assessee by : Shri Prateek Jain

Revenue by : Ms. Rajeshwari Menon, Sr. DR

Date of Hearing – 28/11/2024 Date of Order – 14/02/2025

ORDER

PER SANDEEP SINGH KARHAIL, J.M.

The assessee has filed the present appeal against the impugned order

dated 08/02/2024, passed under section 250 of the Income Tax Act, 1961

(“the Act”) by the learned Commissioner of Income Tax (Appeals)-11, Pune

[“learned CIT(A)”], for the assessment year 2012-13.

2. In this appeal, the assessee has raised the following grounds: -

“The following grounds of appeal are without prejudice to one other: -

1. On the facts and circumstances in the appellant's case and in law, the
Id. CIT(A) erred in holding the action of Id.AO in re-opening the assessment
 Majestic Premises Pvt. Ltd.. ITA No.1540/M/2024 2

u/s 147 by issue of notice dated 27.03.2019 u/s 148 which is merely due to
change in the opinion and therefore re-opening is bad in law.

2. On the facts and circumstances in the appellant's case and in law, the
Id. CIT(A) erred in holding the action of Id.AO in re-opening the assessment
u/s 147 by issue of notice u/s 148 dated 27.03.2019 which is barred by
limitation in the first proviso to section 147 of the Income tax Act, 1961.

3. On the facts and circumstances in the appellant's case and in law, the
Id. CIT(A) erred in holding the action of Id.AO in alleging that assessee has
entered into accommodation transactions of unsecured loans without any
material evidence on record, for the reasons mentioned in the impugned
order or otherwise.

4. On the facts and circumstances in the appellant's case and in law, the
Id. CIT(A) erred in holding the action of Id.AO in treating loan borrowing
amounting to Rs. 50,00,000/- as unexplained money u/s 69A of the Act, for
the reasons mentioned in the impugned order or otherwise.

5. On the facts and circumstances in the appellant's case and in law, the
Id. CIT(A) erred in holding the action of Id.AO in disallowing an amount to
the extent of Rs.1,37,500/-, being commission paid on the alleged bogus
unsecured loans u/s 69C of the Act, for the reasons mentioned in the
impugned order or otherwise.

6. The Appellant craves leaves to alter, amend, withdraw or substitute

any ground or grounds or to add any new ground or grounds of appeal on or
before the hearing.

The Appellant prays your Honour to delete the additions/disallowances made

by the Id.AO and upheld by the Id. CIT(A).”

3. The brief facts of the case are that the assessee is engaged in the

business of builders and developers. For the year under consideration, the

assessee filed its return of income on 28/09/2012, declaring a total income

of INR 1,98,37,510. Thereafter, the assessee filed its revised return of

income on 13/12/2012, declaring a total income of INR 6,50,37,510.

Subsequently, on the basis of the search action conducted under section

132(4) of the Act at the business and residential premises of Mutha Group

on 22/02/2012, which also covered the assessee, proceedings under section

153A of the Act were initiated and assessment order was passed on
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25/03/2014 accepting the returned income amounting to INR 6,50,37,510.

Thereafter, re-assessment proceedings were initiated and the assessment

was completed under section 143(3) read with section 147 of the Act on

28/12/2017 accepting the returned income. Later on, the case was

reopened under section 147 of the Act on the basis of the information that

the assessee has obtained accommodation entry on account of loan from

Aditi Gems Private Ltd, the company floated by Mr. Shripal Vora, who in turn

stated in his statement under section 132(4) of the Act that he and his

entities are engaged in providing the accommodation entries. Accordingly,

notice under section 148 of the Act was issued to the assessee on

27/03/2019. In response to the notice, the assessee filed its return of

income on 30/04/2019. After receipt of the reasons recorded for reopening

the assessment, the assessee filed its detailed objections against the

reassessment proceedings, which were disposed of. During the assessment

proceedings, notice under section 133(6) of the Act was issued to Aditi

Gems Private Ltd and Mr. Shripal Vora for confirmation of the alleged

transactions of accommodation entries of loans amounting to INR 50 lakh.

However, neither anyone attended nor filed any response to the notice

issued under section 133(6) of the Act despite due service of the notice at

the address provided by the assessee. Further, a summon under section 131

of the Act was issued to the director of the assessee, and in response to the

same the statement of Mr. Anil Mutha, the director of the assessee

company, was recorded, wherein he confirmed that he did not have any

business transaction with Aditi Gems Pvt Ltd or Mr. Shripal Vora nor have

any relationship with them in any concern. It was further stated by Mr. Anil
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Mutha that he doesn’t know Mr. Shripal Vora nor have any business

transaction in any of its concerned. Mr. Anil Mutha submitted that he had

approached a common friend Mr. Shakhar Jethwa, who arranged this loan,

but the assessee failed to produce the address and business details of such

friend. Mr. Anil Mutha also denied having any transaction with Aditi Gems

Private Ltd in any other assessment year. Accordingly, vide order dated

31/10/2019 passed under section 147 read with section 143(3) of the Act,

the Assessing Officer (“AO”) held that the assessee has failed to produce the

director or employee of the lender company, and thus, the identity of the

lender is not proved. Further, the AO held that as per the information

received from the Investigation Wing, Surat, the premises of all companies

related to Mr. Shripal Vora were found locked and no real business was

being conducted from such premises. Further, on the basis of the statement

of Mr. Shripal Vora recorded under section 131 of the Act, the AO held that

the assessee is a beneficiary of accommodation entry transaction in lieu of

cash and after payment of commission @2.75% of the amount. Accordingly,

the amount of INR 50 lakh was held to be taxable in the hands of the

assessee as unexplained money under section 69A of the Act, which is

provided to Aditi Gems Private Ltd for obtaining a loan through RTGS of

equivalent amount and subsequently received back by making payment

through RTGS to Aditi Gems Private Ltd. In addition to the above, an

addition of INR 2,75,000 was made in respect of alleged commission

expenditure under section 69C of the Act.

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4. The learned CIT(A), vide impugned order, upheld the initiation of re-

assessment proceedings under section 147 of the Act. Further, the learned

CIT(A) also upheld the addition amounting to INR 50 lakh on the basis that

the assessee has availed accommodation entry of an unsecured loan from

Aditi Gems Private Ltd (a shell entity operated by Mr. Shripal Vora), and has

failed to establish the identity and creditworthiness of the loan lender and

genuineness of the transaction. The learned CIT(A) also upheld the addition

in the hands of the assessee on account of commission expenditure for

availing the accommodation entry. Being aggrieved, the assessee is in

appeal before us.

5. We have considered the submissions of both sides and perused the

material available on record. The present appeal is arising out of the third

round of assessment proceedings pursuant to the notice issued under

section 148 of the Act. In the first round of assessment proceedings, notice

under section 153A of the Act was issued to the assessee pursuant to the

search action conducted under section 132(4) of the Act at the business and

residential premises of the assessee’s group concern including the assessee.

Vide order passed under section 143(3) read with section 153A of the Act,

the assessment was concluded accepting the return of income filed by the

assessee. Thereafter, proceedings under section 147 of the Act were

initiated on the basis that the assessee declared additional income on

account of on-money received as sales, whereas it should have been

included in the total income of the assessee. However, again the assessment

was concluded by accepting the return of income filed by the assessee vide
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order passed under section 143(3) read with section 147 of the Act. In the

third round of assessment proceedings, which resulted in the present

appeal, proceedings under section 147 of the Act were initiated on the basis

of the information received from the DCIT, Central Circle-1(2), Ahmedabad,

that the assessee is a beneficiary of accommodation entry transaction of

unsecured loans from Aditi Gems Private Ltd, which is a company floated by

Mr. Shripal Vora, who in turn in his statement recorded under section 132(4)

of the Act admitted that he and his entities are engaged in providing

accommodation entries. Accordingly, notice under section 148 of the Act

was issued to the assessee, and re-assessment proceedings were initiated.

Vide order dated 31/10/2019 passed under section 147 read with section

143(3) of the Act, the AO made an addition of INR 50 lakh under section

69A of the Act and an addition of INR 2,75,000 as commission expenditure

under section 69C of the Act on the basis that the assessee has availed

accommodation entry of unsecured loan from an entity controlled by Mr.

Shripal Vora.

6. From the perusal of the reasons recorded for reopening the

assessment, forming part of the paper book from pages 23-24, it is

ostensible that the only basis for initiating the reassessment proceedings

was the information received from the DCIT, Central Circle-1(2),

Ahmedabad, that the assessee is a beneficiary of accommodation entry

transaction of unsecured loans from Aditi Gems Private Ltd, which is a

company floated by Mr. Shripal Vora, who in his statement recorded under

section 132(4) of the Act admitted that he and his entities are engaged in
 Majestic Premises Pvt. Ltd.. ITA No.1540/M/2024 7

providing accommodation entries. Further, it is evident from the record that

in the earlier two rounds of assessment proceedings, the transaction with

Aditi Gems Private Ltd was not examined by the AO. The assessee has also

not brought any material on record to show that in the earlier two rounds of

assessment proceedings, the AO formed any opinion in respect of the

assessee’s transaction of unsecured loans from Aditi Gems Private Ltd. Such

being the facts, we find no merits in ground no.1 raised in the assessee’s

appeal that the reopening of assessment under section 147 by issuing of

notice dated 27/03/2019 under section 148 is due to a change of opinion of

the AO. Further, there is no material available on record to substantiate the

plea of the assessee that the present case falls within the ambit of the first

proviso to section 147 of the Act. It is pertinent to note that in ACIT v/s

Rajesh Jhaveri Stock Brokers (P.) Ltd., reported in [2007] 291 ITR 500 (SC),

the Hon’ble Supreme Court held that if there is relevant material on the

basis of which a reasonable person can form a requisite belief that income

chargeable to tax has escaped assessment, then proceedings under section

147 of the Act can be validly initiated. Further, it is also well settled that the

sufficiency or correctness of the material is not a thing to be considered at

the stage of recording the reasons. In the present case, we are of the

considered view that the information received from the DCIT, Central Circle-

1(2), Ahmedabad, constitutes new and tangible material for initiating the

reassessment proceedings in the case of the assessee. As a result, we find

no infirmity in the reassessment proceedings initiated by the AO under

section 147 of the Act. As a result, grounds no.1 and 2, raised in the

assessee’s appeal are dismissed.

 Majestic Premises Pvt. Ltd.. ITA No.1540/M/2024 8

7. In the present case, it is the plea of the assessee that at the time of

taking the loan, Mr. Shripal Vora was not the director of Aditi Gems Private

Ltd, on whose statement additions have been made. The assessee

submitted that Mr. Shripal Vora was the director of Aditi Gems Private Ltd

only at the time of the recording of the statement and therefore Mr. Anil

Mutha denied having any dealings with Mr. Shripal Vora. In order to

substantiate the identity and creditworthiness of the loan lender and the

genuineness of the transaction, the assessee has furnished a copy of the ITR

and financials of Aditi Gems Private Ltd for the year under consideration.

The assessee has also submitted a copy of the loan confirmation issued by

Aditi Gems Private Ltd. Further, bank statements reflecting the transfer of

loan through the banking channel and repayment of same through the

banking channel have also been furnished by the assessee. The assessee

has also filed a copy of Form 16A, reflecting the deduction of TDS on

interest paid to Aditi Gems Private Ltd in respect of the loan availed by the

assessee. We find that these details were also furnished before the AO

during the assessment proceedings. However, without doubting the

correctness of any of the documents submitted by the assessee in support of

its claim that the loan of INR 50 lakh was genuinely availed by the assessee

from Aditi Gems Private Ltd, the AO made the impugned addition solely on

the basis of the statement of Mr. Shripal Vora and findings of the

Investigation Wing. From the perusal of the statement of Mr. Shripal Vora,

recorded under section 131 of the Act, which forms part of the assessment

order, we find that there is no mention of any transaction by Mr. Shripal

 Majestic Premises Pvt. Ltd.. ITA No.1540/M/2024 9

Vora with the assessee, and instead, Mr. Shripal Vora has admitted of a

transaction with Globe 200 Sourcing Private Limited. Without highlighting

the relevance of the aforesaid statement vis-à-vis the transaction of the

assessee with Aditi Gems Private Ltd, the AO concluded that the transaction

of unsecured loan is nothing but an accommodation entry transaction

availed by the assessee from Aditi Gems Private Ltd. Further, there is no

evidence available on record to substantiate the claim of cash trail between

the assessee and Aditi Gems Private Ltd. Thus, apart from the fact that the

assessee availed loan from Aditi Gems Private Ltd, which was later repaid by

the assessee along with interest, there is no material available on record to

prove that the transaction was not genuine. The assessee, in the paper book

filed before us on pages 92-94, has also placed on record a copy of the bank

statement of Aditi Gems Private Ltd. from where the assessee received a

loan of INR 50 lakh on 13/04/2011, which was repaid by it to the same

account of Aditi Gems Private Ltd. on 17/01/2012. From the perusal of the

same, it is evident that there is neither any cash transaction prior to the

grant of loan to the assessee nor any material has been brought on record

by the Revenue to show that there was layering of funds prior to the grant

of loan to the assessee.

8. Therefore, having considered the facts and circumstances of the

present case, in light of the documents placed on record, we are of the

considered view that the identity and creditworthiness of the loan lender and

the genuineness of the transaction are proved in the present case. Before

concluding, we may also note that the Hon’ble Jurisdictional High Court in
 Majestic Premises Pvt. Ltd.. ITA No.1540/M/2024 10

PCIT v/s Bairagra Builders (P) Ltd., reported in [2024] 164 taxmann.com

162 (Bom.) held that where the taxpayer had taken unsecured loan from

two companies and had submitted all evidences to substantiate loan

including confirmation from creditors and loan was taken and repaid through

banking channels, the AO was not justified in treating said unsecured loan

as fake and unexplained cash credit. Accordingly, we find no merits in the

additions amounting to INR 50 lakh made under section 69A and INR

2,75,000 made under section 69C of the Act, and the same are deleted. As

a result, grounds no.3 – 5, raised in the assessee’s appeal, are allowed.

9. In the result, the appeal by the assessee is partially allowed.

Order pronounced in the open Court on 14/02/2025.

Sd/- Sd/-

Sd/- Sd/-
OM PRAKASH KANT SANDEEP SINGH KARHAIL
ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, DATED: 14/02/2025

P.K.Mishra, Sr.PS (on tour)

Copy of the order forwarded to:

(1) The Assessee;
(2) The Revenue;
(3) The PCIT / CIT (Judicial);
(4) The DR, ITAT, Mumbai; and
(5) Guard file.
By Order

Assistant Registrar
ITAT, Mumbai