Buniyad Chemicals Ltd. Vs ACIT (ITAT Mumbai)
In a recent ruling on October 18, 2024, the Income Tax Appellate Tribunal (ITAT) in Mumbai addressed the appeals filed by Buniyad Chemicals Ltd. against the orders of the Commissioner of Income Tax (Appeals) pertaining to assessment years 2003-04 and 2008-09. The appeals stem from a June 26, 2011, order and focus on several grounds concerning the validity of assessments and the treatment of unexplained bank deposits.
Background of the Case
Buniyad Chemicals Ltd., managed by Mukesh Chokshi and associates, was under scrutiny following a search operation conducted on November 25, 2009. The investigation revealed that the company was allegedly involved in facilitating and providing accommodation entries to various beneficiaries. The operations reportedly involved customers depositing cash and receiving cheques for amounts slightly less than their deposits, with the difference serving as commission for the company.
In the assessments, the Assessing Officer (AO) opined that the substantial deposits in the company’s bank accounts constituted unexplained cash credits under Section 68 of the Income Tax Act. Consequently, the AO added the entire amount of these deposits to the company’s taxable income, asserting that the company failed to substantiate the source of the funds deposited.
