DHARMIN MUKESH DOSHI,MUMBAI vs. ASSESSING OFFICER 41(2)(1) MUM, MUMBAI

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ITA 2956/MUM/2026Status: DisposedITAT Mumbai07 September 2026AY 2019-20206 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the lender, M/s Aarohi Creations LLP, had sufficient turnover and creditworthiness to provide the loan. Since the loan was repaid and the identity of the lender was established, the addition made by the AO was deleted.

What were the facts?

The Assessing Officer (AO) made an addition under Section 68 of the Income Tax Act based on information from an investigation wing regarding accommodation entries. The assessee had received a loan of Rs. 5 lakhs from M/s Aarohi Creations LLP, which was later repaid.

What were the issues?

Whether the addition made under Section 68 for an unsecured loan is justified when the lender's identity, creditworthiness, and genuineness of the transaction are established, and the loan has been repaid.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN

Pronounced: 07.09.2026

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. CIT APPEAL NFAC vide DIN: ITBA/NFAC/S/250/2025-26/1085344823(1) dated 30-Jan-2026 for the Assessment Year 2019-2020.The Assessee has raised the following grounds of appeal:

1) Show Cause Notice dated 18/12/2024 do not reveal any investigation/ evidence found by AO. We surmised the notice as below. AO only relied on the investigation of investigation wing no efforts were made by AO in the investigation and had not placed on record efforts made by himself and necessary evidence against assessee

2) No Proper Notice is given to assessee for assessment. No hearing or video conference was allowed to the assessee.

3) S. 68 is not applicable since evidence of lender name address PAN was disclosed and loan was received from banking channel and next year repaid by banking channel and Creditworthiness of lender explained

4) It is a settled law that it is mandatory for the Ld. AO to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of information of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal.

5) No regard of the retraction Affidavit filed by the Lender to the Income tax department.

6) Statement recorded U/S 132(4) evidence value in absence of incriminating material found do not constitute incriminating material without cross examination and when statement retracted by person who had given the statement U/S 132(4).

7) Department mainly said in order that Unsecured loan given against Cash payment and loan refund against cash is refunded but the assessee do not have such cash balance.

8) The loose sheet found are not evidence. No loose sheet or content of loose sheet was produced before the assessee.

9) Loan taken during the year and repaid in subsequent years. This type of transaction can in no way be considered as accommodation transaction as it is a simple transaction of borrowing and repayment of loan. It is submitted that the repayment of loan itself substantiates the genuineness of the loans.

10) The appellant craves leave to add/alter/modify/delete any or all grounds of appeal,

2.

The basic ground raised by the assessee relates to challenging the order of the Ld. CIT(A) in upholding the additions made by the AO under section 68 of the Income Tax Act. Therefore, I have decided to adjudicate this issue firstly.

3.

I have heard the counsels for both the parties, perused the material placed on record, judgment cited before me and also the order passed by the Revenue Authorities. From the records, I notice that information was received by the AO which originated from DDIT (Investigation), Mumbai, based on a search and seizure action conducted on 15-02-2022 in the case of Ramesh Chaurasia, Achal Chaurasia and the ARC Group. During the said search, certain incriminating material was found which goes to show that the said group was engaged in illegal online betting and gambling activities and was generating a large amount of unaccounted cash, which was routed through accommodation entries. The said fact, according to the Assessing Officer, indicated that Mukesh Kumar Khabya and Saurabh Sethi were entry operators who provided bogus unsecured loans and sale and purchase entries in lieu of cash. Therefore, their statements were recorded and, based on the said evidence, it was noticed that the assessee had entered into a transaction of Rs. 5 lakhs with M/s Aarohi Creations LLP and Mukesh Kumar Khabya during the year under consideration. Hence, an addition on the said ground was made in the case of the assessee under section 68 of the Income Tax Act, which was also sustained by the Ld. CIT(A).

4.

After having heard the counsels, I have perused the material placed on record in the shape of computation of income, original return of income, and supporting documentary evidence in the shape of ledger copy of Aarohi, Union Bank of India bank statements for 2018-19 and 2020-21, Lokesh Khabya's PAN and Aadhaar copy, Aarohi Creations LLP ROC Master Data, Aarohi Creations LLP ITRs for AYs 2019-20, 2020-21 & 2021-22, Aarohi Creations LLP Audited Accounts for FY 2018-19, Aarohi Creations LLP Bank Statements of IndusInd Bank and Kotak Bank, and Aarohi Creations LLP confirmations for FYs 2018-19, 2019-20 & 2020- 21.

5.

The loan availed by the assessee apparently stands repaid.

6.

From the records, I also notice that the lender, M/s Aarohi Creations LLP, had a turnover of Rs. 182.05 crores for Financial Year 2017-18 and Rs. 113.25 crores for Financial Year 2018-19, therefore, making it abundantly creditworthy to lend an amount of Rs. 5 lakhs. In this regard, reliance is being placed on the decisions in the cases of:

 Pr. CIT v. Ziauddin A. Siddique 443 ITR 273 (Bom. HC);  CIT v. Orissa Corporation (P.) Ltd. (1986) 159 ITR 78 (SC);  CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC);  CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC);  Commissioner of Income-tax-15 v. Haresh D. Mehta (2017) 86 taxmann.com 22 (Bom. HC);  ACIT 25(2) v. M/s H.K. Pujara Builders, ITA No. 3127/Mum/2017 (ITAT Mumbai);  Shri Ashish Pratap Doshi v. ACIT Circle-19(1), ITA No. 4921/Mum/2018 (ITAT Mumbai);  Hareshkumar Mafatial Shah v. ACIT 19(1), ITA No. 5439/MUM/2024 (ITAT Mumbai);  Haresh Dilip Vora, ITA No. 3646/MUM/2025 (ITAT Mumbai);

 DCIT v. Yardley Investment and Trading Company Pvt. Ltd., ITA No. 4725/MUM/2025 (ITAT Mumbai).

7.

Moreover, the said loan, as per the records, has been completely returned/repaid. Thus, at this stage, there is no dispute with regard to the identity of the lender, and as far as the creditworthiness and genuineness of the transaction are concerned, the turnover and the financials of Aarohi Creations LLP suggest that the said company had the creditworthiness to lend the said amount of Rs. 5 lakhs. Thus, considering these overall facts, I direct the AO to delete the additions.

8.

Since I have already deleted the addition made under section 68, the other grounds raised by the assessee do not require adjudication at this stage, as the same have become infructuous.

9.

In the result, appeal filed by the Assessee stands partly allowed.

Order pronounced in the open court on 07.09.2026.

Sd/- SANDEEP GOSAIN JUDICIAL MEMBER Mumbai Dated: 07.09.2026 RY-SrPS Copy to: DHARMIN MUKESH DOSHI, 133, GALA COMPLEX DIN DAYAL 1 UPADHYAY MARG,, MUMBAI-400080, MAHARASHTRA

ASSESSING OFFICER 41(2)(1) MUM, KAUTILYA BHAWAN BANDRA KURLA 2 COMPLEX, MUMBAI-400051, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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