ACIT 5(1)(1), MUMBAI vs. DINESH HARICHAND SHAH, MUMBAI

PER OM PRAKASH KANT, AM

These appeals by the Revenue for assessment years 2012-13
and 2013-14 are directed against two separate orders, both dated
10.01.2025. passed by the Ld. Commissioner of Income-tax
(Appeals) – 51, Mumbai and Ld. Additional/Joint Commissioner of Income-tax (Appeals) involved in both thes and disposed off by convenience.
2. Firstly, we take
ITA No. 3927/Mum/
reproduced as under 1. "Whether o law, the Ld.
25,00,000/- m genuine loan
Pvt. Ltd. ign gathered du investigation transactions c
2. "Whether o law, the Ld C
25,00,000/- m genuine loan
Pvt. Ltd. ignor
Court in the c
[2012] 18 tax when the ass out by the a copies of doc etc. will not s depth by appl
3. "Whether o law, the Ld C
25,00,000/- unsecured loa
Overseas Pvt nature of tra
M/s Olive Ov cannot be genuineness
Shr

) respectively. As common issu se appeals, therefore, same were way of this consolidated order up the appeal for assessment y
/2024. The grounds raised by t
:
on the facts and circumstances of the cas
CIT(A) has erred in deleting the additio made u/s 68 of the Income Tax Act towa shown to have received from M/s Olive O noring that, in consequence to the e uring the investigation conducted wing, Mumbai, the non-genuine nature clearly emerged?"
on the facts and circumstances of the cas
CIT(A) has erred in deleting the additio made u/s 68 of the Income Tax Act towa shown to have received from M/s Olive O ring the ratio laid down by the Hon'ble De case of CIT vs. Nova Promoters & Finleas xmann. com 217(Delhi) wherein it was h sessee happens to be beneficiary of racke accommodation entry providers, mere cuments like loan confirmation, Bank s suffice and that the evidence has to be ju lying the test of human probability?"
on the facts and circumstances of the cas
CIT(A) has erred in deleting the additio made u/s 68 of the Income Tax Act an shown to have been received from M t. Ltd. without appreciating that since th nsactions entered under the garb of loa verseas Ltd., a paper entity clearly em said that the assessee has subst of the said transaction and financial cap ri Dinesh Harichand Shah, year 2012-13 in the Revenue are se and in on of Rs.
ards non-
Overseas evidences by the of these se and in on of Rs.
ards non-
Overseas elhi High se (P) Ltd held that et carried filing of tatement udged in se and in on of Rs.
towards
M/s Olive he sham ans from merged, it tantiated pacity of the said lend provisions of s
4. "Whether o law, the Ld C
Rs. 4,50,379/
received fro appreciating shown to ha business exp
3. Briefly stated, f individual engaged in ferrous metals. For t its return of incom
Rs.5,84,238/-. The r tax Act, 1961 (in sho
3.1 Subsequently, s of the Director Gen pursuant to a search
Shri Pravin Kumar J revealed that Shri P were systematically e the nature of bogus capital, through a concerns. The statem the search, corrobora these concerns were Shr der to discharge the onus cast on it in section 68 of the Income tax Act, 1961.?"
on the facts and circumstances of the cas
CIT(A) has erred in deleting the disallow
/- made towards the loan shown to ha m
M/s
Olive
Overseas
Pvt.
Ltd.
that when the loan itself is bogus, the ve been paid towards it cannot be allo penditure?"
facts of the case are that the n the business of trading in fe he year under consideration, th me on 17.03.2013 declaring t eturn was processed u/s 143(1
rt ‘the Act’) on 18.05.2013. specific information was received neral of Income-tax (Investiga h and seizure action carried ou
Jain and his group concerns. T ravin Kumar Jain and his netw engaged in providing accommod purchases, sales, unsecured lo web of paper companies an ment of Shri Pravin Kumar Jain ated by seized digital evidence, mere fronts used for providing s ri Dinesh Harichand Shah, errous and non- he assessee filed total income at ) of the Income- d from the office ation), Mumbai, ut in the case of The investigation work of entities dation entries in oans, and share nd non-existent recorded during confirmed that such entries.

However, bot books of acco this concern w his statement
Kumar Jain accommodatio operandi of pr
3.4 The AO s the genuinene party and it w along with ne the transacti evidences in findings of In recorded it w controlled an out any ge accommodatio had received above hawala
AO disallowe the Act to the 3.4 The Assessing claimed interest expe gross interest paid o from entities identifie
M/s Josh Trading P
(earlier Hema Tradin
Ltd. The assessee co exclusively for earni under section 57(iii) rejected this conte
Investigation Wing th the nature of accom
Shr th the books of accounts, bank details, ounts seized in the form of pen drive esta was run and operated by Shri Praveen Ku t recorded on oath u/s.132(4) of the Act, admitted that he was indulged i on entries and explained the comp roviding the entries.
tated that the onus lied on the assessee ess of the unsecured loan accepted from was incumbent on the assessee to produ ecessary documents to establish the gen ion. Thus, the assessee failed to pro respect of claim made by him. After go nvestigation Unit and statements of vari was clearly established that all the co d operated by Shri Praveen Jain were enuine business activity and were on entries only. The AO concluded that t bogus unsecured loan which he accep a entity amounting to Rs.25,00,000/-. T ed and added the sum of Rs. 25,00,000
total income of the assessee.”
Officer further noted that the enditure of Rs. 4,58,411/-, form of Rs. 12,13,115/-, on loans all ed as accommodation entry pro
Pvt. Ltd., M/s Nakshatra Bus ng Co. Pvt. Ltd.), and M/s Oliv ontended that the interest paid ing interest income and there
) of the Act. The Assessing O ention. Relying upon the fi hat the said loans were not genu mmodation entries, he held th ri Dinesh Harichand Shah, umar Jain. In Shri Praveen in providing plete modus e to establish m the relevant uce the party nuineness of ovide cogent oing through ious persons oncerns run, not carrying e providing the assessee ted from the Therefore, the 0/- u/s.68 of e assessee had ming part of the legedly obtained oviders, namely, siness Pvt. Ltd.
ve Overseas Pvt.
was wholly and efore deductible
Officer, however, indings of the uine but were in hat the interest claimed thereon was from fictitious trans
Rs. 4,58,411/- was d
3.5 Before the Ld. C judicial pronouncem cast upon him under filing on record the c financial statements balance sheet and pr elaborate considerati cited, arrived at the obtained from M/s O genuine transaction reproduced as under “7.13 Now co appellant ha statements of loan transact proved by the also be safely entire transac recorded in th in the fina creditworthine audited finan it had sufficie unsecured lo independent assessee, exc had in any c bring on reco
Shr not allowable, as it represented actions. Accordingly, the inter disallowed under section 57(iii) o
CIT(A), the assessee placed relia ments and contended that the r section 68 of the Act stood dul confirmation, copy of return of i of the lender, as well as the rofit and loss account. The Ld.
ion of the rival contentions and e conclusion that the loan of Olive Overseas Pvt. Ltd. bore the . The relevant finding of the :
oming to the facts of the case, it is obs as submitted the confirmation, ITR, au f the lender andrelevant bank statements tions. It is observed that the identity of e ITRs. Further, the genuineness of the t y concluded from the confirmations filed ction has been done through the banking he books of accounts of the assessee and ancial statements of the assessee.
ess or financial strength of the lender is p ncial statements of the lender wherein it is ent balance in its accounts to enable it oan. The AO on the other hand has inquiry to negate the explanation pr cept relying on the statement of Sh. Prav case been retracted. The AO has also no ord any specific reference made to the a ri Dinesh Harichand Shah, of the Act.
ance on various statutory onus ly discharged by income, audited assessee’s own
CIT(A), after an d the precedents
Rs.25,00,000/- e attributes of a e Ld. CIT(A) is served that the udited financial s to support the of the lender is transaction can d and since the channels, duly d duly reflected
Further, the proved from the s observed that to advance the not made any rovided by the vin Jain, which ot been able to assessee in any such stateme bring on reco coupled with two parties al was coupled w
4. Aggrieved with t appeal before us by w
4.1 In the grounds, ignored the evidences the Hon’ble Delhi Hig
Finlease (P) Ltd. (sup was a paper entity w also was not in the n
5. Before us, the application under Ru
Rules, 1963, vide le grounds. The substan
Circular No. 09 of 2
barred from filing the below Rs.60 lakhs; (i beyond the scope o legislative mandate; vitiated for want of j
No.1/2011 dated 31. income below Rs.20 l
Shr nt recorded. It is noted that the AO has n ord any evidence to show that the lo similar contra-transactions in cash. The lso does not lead us to an inference that with a contra cash transaction.”
the finding of the Ld. CIT(A), th way of raising grounds as reprod the Revenue is agitated that th s gathered during investigation, gh court in the case of CIT v. No pra), ignored that M/s Olive Ov without any financial capacity a ature of business expenditure.
learned counsel for the assess ule 27 of the Income Tax (App etter dated 07.05.2025, raisin nce of the application is that (i)
2024 dated 17.09.2024, the D e present appeal as the tax effe ii) that the issuance of exception f section 268A of the Act is and (iii) that the assessment juri iction, as in terms of CB
01.2011, the case of an assesse lakhs lies within the juri iction ri Dinesh Harichand Shah, duced above.
he Ld. CIT(A) has ignored ratio of ova Promoters &
verseas Pvt. Ltd.
and the interest see has filed an pellate Tribunal) ng certain legal in view of CBDT
Department was ect is admittedly ns by the Board contrary to the t order itself is BDT Instruction ee with returned n of the ITO and not the ACIT/DCIT.
order passed by the D
6. We have caref examined the applic reference, the text of “Responden against him
27. The resp support the o against him.”
6.1 The plain langu sine qua non for invo specific ground whic the authority below, may be pressed befo ultimately rendered i
27 is not a carte blan circumscribed by the expressly raised and stage of the first appe
6.2 Tested on this canvassed before us—
circular, the scope of in view of CBDT Instr
Shr

Accordingly, it was urged that DCIT is void ab initio.
fully considered the rival su cability of Rule 27 of the Ru the Rule reads as under:
nt may support order on ground m.
pondent, though he may not have app rder appealed against on any of the grou uage of Rule 27 admits of no oking the said Rule is that the ch, though decided against the has not been assailed in app ore the appellate forum in supp in his favour. Thus, the right co nche to introduce altogether ne e condition that such ground m d adjudicated against the res ellate authority.
anvil, we find that the issue
—relating to the applicability o f section 268A, and the juri ict ruction No.1/2011—were neithe ri Dinesh Harichand Shah, ules. For ready ds decided pealed, may unds decided ambiguity. The ere must exist a e respondent by peal by him, yet port of the order onferred by Rule ew issues, but is must have been pondent at the es sought to be of the tax effect tion of the DCIT er raised before, nor adjudicated upon finding adverse to th first appellate autho
Rule 27 to press fre adjudication before t otherwise would amo transgressing the con to enlarge the scope an altogether fresh adjudicated upon by 6.3 We also take no the assessment year
27
came to be 3928/Mum/2024. C approach herein. In v filed by the assessee maintainable and is a 7. We now turn to Broadly, the dispute
Rs.25,00,000/- as un
Income-tax Act, 1961
of interest paid on 57(iii) of the Act.
Shr n by, the learned CIT(A). There he assessee on these aspects at rity. In such circumstances, th sh issues which were never su the CIT(A) is plainly impermiss ount to enlarging the scope of nfines of Rule 27. The Rule 27
of appeal by permitting a respo h ground which was neith the authority below.
ote of the fact that in assessee r 2011-12, an identical applicat rejected by this Tribunal
Consistency demands that we a view of the foregoing discussion, e under Rule 27 of the Rules is accordingly rejected.
o the grounds of appeal raised b es pertain to two issues: (i) nexplained cash credit under s
1 (hereinafter ‘the Act’), and (ii) t such purportedly bogus loans ri Dinesh Harichand Shah, sible. To permit the appeal and is not intended ondent to set up her raised nor e’s own case for tion under Rule in ITA
No.
adopt the same
, the application s held to be not by the Revenue.
the addition of ection 68 of the the disallowance s under section 7.1 Before us, the l attention to the deci
3260, 3259 & 3258
wherein the Trib accommodation entr addition in respect o
The DR, however, al
Bench in Pravin Ku
7197/Mum/2018 an 2008-09 to 2014-15
Kumar Jain and S accommodation entri
7.2 In the instant c produced the alleged under section 68 of the search conduct observations of the operandi. While the a bank statements, an Overseas Pvt. Ltd., s lender is linked, even provider, the onus re with cogent evide genuineness of the tr
Shr earned Departmental Represent ision of this Tribunal in J.K. G
8/Mum/2023, for AYs 2010-1
unal had examined simil ries and had, in those case of the beneficiary of the accomm lso relied on the decisions of umar Jain & Pankaj Jain (ITA nd ITA Nos. 4977 to 4980/Mum
), wherein the Tribunal held t
Shri Pankaj Jain were indee ies.
case, it is apparent that the as d cash creditor to discharge its the Act, particularly in light of ted on Shri Pravin Kumar e Investigation Wing regardin assessee has placed reliance on nd audited financial statement uch documents alone cannot su n circumstantially, to an accom ests squarely on the assessee ence, the identity, creditwo ransaction.
ri Dinesh Harichand Shah, tative (DR) drew
Global (ITA Nos.
11 to 2012-13), ar claims of es, deleted the modation entry.
the Co-ordinate
A Nos. 7191 to m/2018, for AYs hat Shri Pravin ed providers of ssessee has not s statutory onus f the findings of Jain and the ng his modus n confirmations, ts of M/s Olive uffice. Once the mmodation entry to demonstrate, orthiness, and 7.3 The Hon’ble Del
Ltd. (supra), has con to be a beneficiary of submitted in the form documents must be human probability. M the assessee of its sta
7.4 The learned cou
Tribunal’s decision assessment year. How year, the loan was a party. The ratio of s facts of the year un section 68 of the Act of the lender is fact-s assessment year.
7.5 Further reliance ordinate Bench of K
(supra). However, in legal validity of the n facts and scope of a distinguishable from Shr lhi High Court, in Nova Promote sistently held that where an as f an accommodation entry rack m of confirmations, bank statem scrutinized with the applicatio
Mere production of documents atutory burden.
unsel for the assessee placed in the assessee’s own case wever, it is pertinent to note tha alleged to have been received f such decisions is therefore inap nder consideration, as the requ t to establish the identity and c specific and must be discharged e was placed on the decision of Kolkata in Aristocrat Residenc that case, the challenge pertain notice issued under section 148
adjudication in that case are the present proceedings.
ri Dinesh Harichand Shah, rs & Finlease (P) sessee is shown ket, the evidence ments, or similar on of the test of cannot absolve reliance on the for an earlier at in that earlier from a different pplicable to the uirement under creditworthiness d afresh for each the Hon’ble Co- ces LLP v. ITO ned solely to the 8 of the Act. The thus materially

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

Shr ded to :

BY ORDER

(Assistant Re

ITAT, Mu ri Dinesh Harichand Shah, gistrar) umbai