Pr. Commissioner Of Income Tax-7 v. M/S R.n. Khemka Enterprises

$~99 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 431/2022 PR. COMMISSIONER OF INCOME TAX-7.....AppellantThrough:Mr Sanjeev Menon, JSC. versus M/S R.N. KHEMKA ENTERPRISES .....RespondentMr Sumit Lalchandani, Advocate. Through: CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R01.04.2025 % CM APPL. 29615/2024 1.This is an application filed by the respondent [Assessee] seeking toraise cross-objections in the above-captioned appeal preferred by theRevenue. 2.The learned counsel for the Assessee fairly states that the applicationis not maintainable in view of the decision of the coordinate bench of thiscourt in Pr. Commissioner of Income Tax (Central)-2 v. Nagar Dairy Pvt.Ltd.: 2025:DHC:1350-DB. 3.The application is accordingly dismissed. ITA 431/2022, CM APPL. 29616/2024 & CM APPL. 4277/2025 4.The Revenue has filed the present appeal under Section 260A of theIncome Tax Act, 1961 [the Act] impugning a common order dated09.08.2019 passed by the learned Income Tax Appellate Tribunal insofar as it relates to ITA No.6016 of 2018 pertaining to Assessment Year 2007-08. The assessee had preferred the said appeal, inter alia,impugning an order passed by the Commissioner of Income Tax (Appeals)[CIT(A)] upholding the addition of ₹3,34,31,000/- under Section 68 of the Act. 5.The Assessee’s assessment for the relevant AY 2007-08 was reopenedpursuant to a search conducted at the office of Sh Surender Kumar Jain andSh Virender Jain on 14.09.2010. It was alleged that various incriminatingmaterial and documents were seized during the course of the search and itwas found that the said persons were engaged in providing accommodationentries by issuing cheques (pay orders in lieu of cash) to a large number ofbeneficiary companies. 6.It was alleged that the Assessee had availed of accommodation entriesfrom various intermediary companies. 7.The Assessee had challenged the addition essentially on two grounds.First was regarding the reopening of the assessment as it was claimed thatthe same was not based on any tangible material; and second that thetransactions in respect of the companies were justified. 8.The learned ITAT took up the Assessee’s appeal along with severalother appeals and had found that the companies from whom the Assessee isalleged to have availed of accommodation entries, were genuine andexisting.In view of the said conclusion, the learned ITAT set aside theaddition made by the AO. It is the Revenue’s case that the addition made inthe relevant assessment year has been set aside on the basis ofa finding pertaining to existence of the companies with whom the Assesseehad transactions in the other assessment years. The learned ITAT has allowed the Assessee’s appeal by following its decision in respect of otherassessment years without examining whether the companies with whom thepetitioner has had transactions in the financial year 2006-07 weregenuine. 9.In the aforesaid context, this court had admitted the present appealand framed the following question of law: “4. We accordingly admit the instant appeal on the followingquestion of law: - A. Whether on the facts and circumstances of the case, theTribunal has erred in deleting the addition of INR 3,34,31,000/-made by the AO under Section 68 of the Act as unexplained cashcredits without appreciating that the capacity or creditworthinessof the investor has not been established?” 10.The learned counsel appearing for the Revenue has handed over atabular statement to indicate that apart from three companies, which hadextended credit to the assessee in FY 2005-06 relevant to AY 2006 – 07, allother companies in respect of which the transactions in FY 2006-07, werefound to be non-genuine by the AO are different. A tabular statement settingout list of companies, which were considered by the learned ITAT in thecontext of additions made in AY 2006-07 and the additions made in AY2007-08 are set out below: 10.The learned counsel appearing for the Revenue has handed over atabular statement to indicate that apart from three companies, which hadextended credit to the assessee in FY 2005-06 relevant to AY 2006 – 07, allother companies in respect of which the transactions in FY 2006-07, werefound to be non-genuine by the AO are different. A tabular statement settingout list of companies, which were considered by the learned ITAT in thecontext of additions made in AY 2006-07 and the additions made in AY2007-08 are set out below: 11.It is apparent from the above that a finding as to the genuineness ofthe companies from whom the assessee had availed credit in the FY 2005 –06 relevant to AY 2006-07 cannot be a foundation for a finding that thecompanies from whom the assessee had availed the credit in FY 2006 – 07relevant to AY 2007 – 08 are genuine. The learned ITAT has not examinedthe capacity or the creditworthiness of eight companies which were notsubject matter of examination in the proceedings relating to the earlierassessment years [AY 2006 – 07]. 12.Accordingly, the present appeal is allowed and the impugned order tothe extent that it relates to AY 2007 – 08 is set aside. The matter is remanded to the learned ITAT to consider afresh. Pending applications shallalso stand disposed of. VIBHU BAKHRU, J APRIL 01, 2025/tr TEJAS KARIA, J Click here to check corrigendum, if any