DCIT Vs Henna Industries Pvt. Ltd. (ITAT Delhi)
The Revenue appealed against the order dated 15.07.2024 passed by the Commissioner of Income Tax (Appeals), New Delhi, arising from a reassessment order under Sections 143(3) read with 147 of the Income Tax Act, 1961 for Assessment Year 2012-13. The appeal challenged the deletion of an addition of ₹2 crore made under Section 68 of the Act.
The assessee, a private limited company engaged in manufacturing henna powder, powder hair dye and allied products under the brand name “Black Rose Kali Mehandi,” had originally filed its return declaring total income of ₹5,57,52,230. The original assessment under Section 143(3) resulted in additions, which were deleted in the first appellate proceedings. Subsequently, based on information received from the Investigation Wing, Faridabad, the Assessing Officer reopened the assessment under Sections 147 and 148, alleging that the assessee had received an accommodation entry of ₹8 crore from M/s PHV Securities Pvt. Ltd., which was alleged to be a bogus concern managed by Shri Himanshu Verma. The reassessment culminated in an addition of ₹2 crore under Section 68 on the ground that the amount represented an accommodation entry.
The Revenue argued before the Tribunal that M/s PHV Securities Pvt. Ltd. was a paper entity managed by Shri Himanshu Verma, who had admitted during search proceedings to providing accommodation entries through dummy entities. It was also submitted that physical verification revealed that the company was not functioning from its stated address and that the Memorandum of Understanding (MOU) and cancellation agreement relied upon by the assessee were afterthoughts. Reliance was placed on Sumati Dayal v. CIT in support of restoring the addition.
