FILCO TRADE CENTRE PVT. LTD.,AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1), AHMEDABAD
What did the Tribunal hold?
The Tribunal held that the reopening of assessment was valid as fresh information was received after the original assessment. However, regarding the additions for unsecured loans, the matter was set aside to the AO for fresh adjudication in some cases, while in others, the CIT(A)'s deletion of additions was upheld.
What were the facts?
The assessee received unsecured loans from entities suspected of providing accommodation entries. The Assessing Officer (AO) reopened the assessment and made additions for these loans, which were upheld by the CIT(A). The assessee argued that the loans were genuine and repaid, and that the reopening was invalid.
What were the issues?
The key issues were the validity of reopening the assessment and the genuineness of unsecured loans received by the assessee, along with consequential disallowances and penalty proceedings.
Which sections of the Income-tax Act were involved?
Section 147,Section 68,Section 115BBE,Section 271(1)(c),Section 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
The six cross-appeals are filed by the Revenue and the Assessee against separate orders of National Faceless Appeal Centre (NFAC),
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 3
Delhi [hereinafter referred as the “CIT(A)”] all dated 27.11.2025 for the Assessment Years (A.Ys.) 2013-14, 2014-15 and 2015-16. The seventh appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi dated 25.11.2025 for the A.Y. 2012-13.
Since the issues involved in the seven appeals were identical, all the matters were heard together and are being disposed of vide this common order for the sake of convenience.
ITA No. 219/Ahd/2026: A.Y 2012-13
The grounds taken by the assessee in this appeal are as under:
The Ld. CIT(A) has erred in law and on facts of the case in upholding reopening of assessment u/s. 147of the Act which is bad in law and without jurisdiction. 2. The Ld. CIT(A) has erred in law and on facts in confirming addition of unsecured loan of Rs. 1,85,00,000/- u/s 68 of the Act even after substantiating genuineness, creditworthiness and identity. 3. The Ld. CIT(A) has erred in law and on facts in confirming consequential disallowance of interest expenditure of Rs.11,72,959/- on such alleged cash credit. 4. The Ld. CIT(A) has erred in law and on facts in not appreciating thatno addition u/s 68 of the Act can be made when the amount in question is repaid. 5. The learned CIT(A) has erred in law and on facts of the case in confirming invoking of provisions of Section 115BBE of the Act. 6. The Ld. CIT(A) and Ld. AO have erred in passing the order without providing opportunity to cross-examine. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Ld. CIT(A) and Ld. AO have passed the order without properly appreciating the facts and they further erred in grossly ignoring various submissions,
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 4 explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. Their actions in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 8. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s. 234A/B/C/D of the Act. 9. The learned AO has erred in law and on facts in in initiating penalty proceedings Section271(1)(c) of the Act. Under section 271(1)(c) of the Act. 10. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of appeal.
The 1st ground pertains to reopening of the case. Shri Tushar Hemani, the Ld. Sr. Counsel, appearing for the assessee submitted that the case of the assessee was reopened on the basis of information received from Assistant Commissioner of Income Tax, Central Circle – 2(4), Ahmedabad pertaining to M/s. Aayurshi Infraprojects Pvt. Ltd. and M/s. Monisha Infraprojects Pvt. Ltd., who were found to be engaged in providing accommodation entries. He submitted that the loan taken from these two entities was duly examined by AO in the course of original assessment completed u/s. 143(3) of the Income Tax Act, [hereinafter referred as “the Act”], on 03.03.2015 and no addition was made in this regard. According to the Ld. Sr. Counsel, there was no failure on the part of the assessee to fully and truly disclose all material facts and, therefore, the reopening was not permissible. He further submitted that the evidences were already available with the AO at the time of framing of the original assessment and further that the case was reopened on borrowed satisfaction.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 5 5. Per contra, Shri Kalpesh Rupavatiya, the Ld. Sr.-DR supported the order of the lower authorities.
We have considered the rival submissions. It is found that the fresh information was received by the AO on 29.04.2015, whereas the original assessment was completed on 03.03.2015. Therefore, the submission of the assessee that the information was already available with the AO at the time of framing of original assessment is not found correct. The fact that M/s. Aayurshi Infraprojects Pvt. Ltd. and M/s. Monisha Infraprojects Pvt. Ltd. were engaged in providing accommodation entries, was duly admitted by them in the course of their respective assessment proceeding. The Directors of the both the companies had also filed affidavit to this effect and in their statements they had provided details of the beneficiaries who had taken entries through these two companies. Considering this categorical admission of the two loan creditors, the AO had rightly reopened the case on the basis of information which was received after the completion of original assessment. We do not find any merit in the legal issues raised by the assessee regarding the validity of the reopening of the assessment. Hence, this ground is dismissed.
Ground No. 2 pertains to addition of Rs. 1.85 crores on account of unexplained loan. The assessee had received loan of Rs. 25,00,000/- and Rs. 20,00,000/- from M/s. Aayurshi Infraprojects Pvt. Ltd. and M/s. Monisha Infraprojects Pvt Ltd., respectively, during the year. The AO found that certain other loans were also taken during the year and the total fresh loan of Rs. 1.85 crores was taken from five entities. The AO was not satisfied about the credit worthiness and genuineness of these loans,
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 6 considering the allegation of the accommodation entries. Accordingly, addition of Rs. 1.85 crores was made by the AO, which was upheld by the Ld. CIT(A). The Ld. Sr. Counsel submitted that the assessee had brought on record evidences to establish the identity, credit worthiness of lenders and genuineness of the transactions by furnishing confirmation ledger, ITR of lenders, bank statement etc. Under the circumstances, the AO was not correct in making the addition. He further submitted that the contention of the assessee regarding repayment of loan in the subsequent year was also not considered by the lower authorities.
Per contra, the Ld. SR-DR submitted that the assessee had admitted before the Ld. CIT(A) that loans and advances received from the entry operators was to the extent of Rs. 95,00,000/- only and had requested that addition may be restricted to that amount.
We have considered the rival submissions. The initial information received by the AO in this year was in respect of loan of Rs. 45,00,000/- taken from M/s. Monisha Infraprojects Pvt Ltd. and M/s. Aayurshi Infraprojects Pvt. Ltd. In the course of assessment, further information was received regarding accommodation entries of Rs. 50,00,000/- taken from three entities namely Mainak Comtrade pvt. Ltd., Pranatpal Tradelink Pvt Ltd. and Alton Infrastrcuture Pvt. Ltd. The AO, however, found that total fresh loan obtained from these five entities was to the extent of Rs. 1.85 crores and accordingly he had made the addition for the entire amount. The assessee has contended before the lower authorities that majority of these loans were repaid through account pay cheques in the subsequent years and this fact was never examined. It has been held by
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 7 Hon’ble Gujarat High Court in the case of CIT Vs. Ayachi Chandrashekhar Narsangji [42 taxmann.com 251], that when the Department accepts the repayment of loan in a subsequent year, the original loan cannot be treated as unexplained cash credit. Further it was held in the case of PCIT Vs. Ambe Tradecorp (P.) Ltd. [145 taxmann.com 27(Guj.)], that where the assessee furnished necessary material to prove identity of the lenders and the loan was repaid in subsequent years, even the ingredients of credit worthiness and genuineness were deemed satisfied and, therefore, no addition u/s. 68 of the Act could be made.
Following the decision of the Jurisdictional High Court, we deem it proper to set aside the matter to the file of the Jurisdictional AO with a direction to verify the repayment of loan in the subsequent year(s) as contended by the assessee. If it is found that the loans stand repaid then no addition u/s. 68 of the Act is required to be made in the current year. The AO is directed to re-adjudicate the matter after carrying out the necessary verification and allowing a proper opportunity of being heard to the assessee. The assessee is also directed to produce the necessary evidences regarding repayment of loan before the AO. In the result, the ground taken by the assessee is allowed for statistical purpose.
The next ground pertains to disallowance of interest of Rs. 11,72,959/- on the alleged cash credits. Since the issue of addition in respect of loans is set aside to the file of the AO, this issue is also set aside for re-adjudication after first deciding the issue regarding addition in respect of unsecured loans. This ground is also allowed for statistical purpose.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 8 12. The other grounds taken by the assessee are general in nature and do not require adjudication.
In the result, the appeal of the assessee is partly allowed for statistical purpose.
ITA No. 103/Ahd/2026 & ITA No. 220/Ahd/2026: A.Y 2013-14
The brief facts of the case are that the assessee had filed its return of income for A.Y. 2013-14 declaring income of Rs. 88,69,773/-. The original assessment was completed u/s. 143(3) of the Act at total income of Rs. 93,31,210/-. Subsequently, the case of the assessee was reopened on the basis of information received by the AO from Investigation Wing regarding accommodation entries of Rs. 63,95,890/- and Rs. 67,77,223/- in the form of fictitious loan from Jignesh Shah and M/s Dishman Pharmaceutical & Chemicals Ltd. (hereinafter referred as “DISHMAN”). In the course of assessment, the AO had noticed that apart from DISHMAN, the assessee had obtained fresh loans from other parties as well. The assessee did not make any compliance in the course of assessment proceeding and no materials were furnished before the AO to establish the identity, credit worthiness and genuineness of the loan transactions. The AO had made inquiries u/s. 133(6) of the Act in respect of loan transactions. He accepted the genuineness of loan of Rs. 5.09 crores taken from L&T Finance. However, the AO was not satisfied about the credit worthiness and genuineness of fresh loan taken during the year from six other parties, totalling to Rs. 5,35,75,000/-. Accordingly, the loan taken from the six parties including DISHMAN was treated as unexplained
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 9 cash credit and added to income. Further, the AO had disallowed interest payment of Rs. 97,34,281/- in respect of loan taken from 28 parties. Accordingly, the assessment was completed u/s. 147 r.w.s. 144B of the Act on 31.03.2022 at total income of Rs. 7,26,40,491/-.
Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A), vide the impugned order and the appeal of the assessee was partly allowed. The Ld. CIT(A) while upholding the addition in respect of loan of Rs. 66,00,000/- taken from DISHMAN had deleted the balance addition of Rs. 4,69,75,000/- taken from five other parties. The disallowance of interest was restricted to Rs. 17,73,694/- only, by the Ld. CIT(A).
Now, both the Revenue as well as the Assessee are in appeal before us. The following grounds have been taken in these appeals:
ITA No. 103/Ahd/2026 (Revenue)
"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting addition of Rs. 4,69,75,000/-out of total addition of Rs. 5,35,75,000/- on account of unexplained cash credit u/s. 68 rws 115BBE, without appreciating the fact that the assessee has avalled accommodation entries in the form of fictitious loans from Shri Jignesh Shah and Dishman Pharmaceuticals & Chemicals Ltd. ?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance of interest expenses to Rs. 17,73,694/- without appreciating the fact that the said payment was proved to be non-genuine and without any business exigencies?"
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 10
Whether on the facts and in the circumstances of the case and in law, the Id.CIT(A) has erred in ignoring the fact that the assessee has transacted with Jignesh Shah and Sanjay Shah Group and the Dishman Group, who is into the business of providing accommodation entries?" 4. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary." 5. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored
ITA No. 220/Ahd/2026 (Assessee)
The Ld. CIT(A) has erred in law and on facts of the case in upholding reopening of assessment u/s. 147of the Act which is bad in law and without jurisdiction.
The Ld. CIT(A) has erred in law and on facts in confirming impugned addition of unsecured loan of Rs.66,00,000/- from Dishman Carbogen Amcis Ltd. (DCAL) (earlier known as Dishman Pharmaceuticals and Chemicals Ltd.) u/s 68 of the Act even after substantiating genuineness, creditworthiness and identity.
The Ld. CIT(A) has erred in law and on facts in confirming consequential disallowance of interest expenditure Rs. 17,73,694/-on such alleged cash credit.
The Ld. CIT(A) has erred in law and on facts in not appreciating that no addition u/s 68 of the Act can be made when the amount in question is repaid.
The learned CIT(A) has erred in law and on facts of the case in confirming invoking of provisions of Section 115BBE of the Act.
The Ld. CIT(A) and Ld. AO have erred in passing the order without providing opportunity to cross-examine. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
7 The Ld. CIT(A) and Ld. AO have passed the order without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 11 the impugned order. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 8. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/./C/D of the Act. 9. The Ld. AO has erred in law and on facts in initiating penalty proceedings under section 271(1)(c) of the Act. 10. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time or before the hearing of this appeal.
Reopening of the case:
The First ground taken by the assessee pertains to reopening of the case. Shri Tushar Hemani, the Ld. Sr. Counsel appearing for the assessee, submitted that the AO had reopened the case on the basis of information received from Investigation Wing regarding availment of fictitious loan from Shri Jignesh Shah and DISHMAN, which were allegedly engaged in providing accommodation entries. He submitted that no independent inquiry was carried out by the AO to reach a prima facie satisfaction that the assessee’s transactions with such entities were not genuine. The AO had treated the information received from the Investigation Wing as sacrosanct without placing any record or corroborative evidence and thus the case was reopened on borrowed satisfaction, which was not permissible under law.
Per contra, Shri Kiran Unavekar, the Ld. CIT-DR submitted that the Investigation Wing had merely forwarded the findings of the search conducted in the case of Sanjay Shah and Jignesh Shah Group. In the course of search, incriminating digital and documentary evidences were
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 12 found, which revealed that Sanjay Shah and Jignesh Shah were providing accommodation entries by way of synchronised trading in shares of various listed companies, resulting in generation of bogus LTCG. Shri Sanjay Shah and Jignesh Shah had admitted of having provided accommodation entries in the form of bogus LTCG and unsecured loans. The Ld. CIT-DR submitted that subsequently a search was also conducted in DISHMAN Group of Ahmedabad, wherein it was found that DISHMAN was indulged in huge transactions of bogus loans and advances against exchange of cash. He further submitted that Jignesh Shah and Sanjay Shah had duly admitted the factum of providing accommodation entries and the name of the assessee was appearing as beneficiary. The AO had, therefore, rightly recorded his reasons incorporating all the facts in detail and had drawn his conclusion that the income of the assessee had escaped assessment. The Ld. CIT-DR submitted that this was not a case of borrowed satisfaction, rather the AO had carefully gone through the evidences found in the course of search in the case of Sanjay Shah/Jignesh Shah and DISHMAN Group and recorded his own satisfaction. The Ld. CIT-DR further submitted that the AO had also addressed the objection of the assessee on the reopening by passing a detailed order dated 27.12.2021 which was reproduced in the assessment order. He, therefore, strongly supported the order of the AO on the issue of reopening.
We have considered the rival submissions. A copy of the reason recorded by the AO is found reproduced in the assessment order. A perusal of the reason as recorded, shows that the AO had referred in considerable detail to the information received from the Investigation Wing
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 13 concerning the search conducted in the cases of Shri Sanjay Shah & Shri Jignesh Shah and the search conducted in the Dishman Group. The reason further refers to the alleged modus operandi of accommodation entries, the material allegedly found during the searches, statements of persons, digital data and other incriminating material. The AO thereafter specifically recorded that, according to the information received, the assessee was one of the beneficiaries who had obtained accommodation entries of Rs.63,95,890/- and Rs.67,77,223/- in the form of fictitious loans from Shri Jignesh Shah and Dishman Pharmaceuticals and Chemicals Ltd., respectively. Thus, insofar as the existence of tangible material and the nexus between such material and the assessee are concerned, the reasons cannot be said to be wholly bereft of material. The AO had before him specific information identifying the assessee as a beneficiary and specifying the amounts and the alleged entry-providers. The principle that the formation of belief must have a live link with tangible material is, therefore, found satisfied in the present case. The law does not require the Assessing Officer, at the stage of recording of reason, to finally establish the escapement of income; what is required is a bona fide formation of belief on the basis of relevant material, which is found satisfied in the present case.
The contention of the Ld. Senior Counsel is that the reopening was founded merely on borrowed satisfaction. The reasons recorded by the AO do not merely reproduce the communication from the Investigation Wing. The AO has identified the assessee as a beneficiary, quantified the alleged accommodation entries and recorded his conclusion that income chargeable to tax had escaped assessment. The Investigation Wing had
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 14 merely forwarded the findings of the search conducted in the case Sanjay Shah and Jignesh Shah as well as DISHMAN Group. The AO had independently gone through the findings of the search and, thereafter, recorded his reason that the income had escaped assessment. We do not find any evidence of borrowed satisfaction in the present case. Further, the evidences recovered in the course of search at Sanjay Shah/Jignesh Shah and DISHMAN Group were explicit, wherein they have admitted about providing accommodation entries to various beneficiaries. In view of this categorical admission on the part of the Sanjay Shah/Jignesh Shah, there was no requirement for any further inquiry at the stage of reopening of the case. The ground taken by the assessee on the issue of reopening is found to be devoid of merits. Therefore, the ground is dismissed.
Ground No. 2 of the assessee's appeal and Ground No. 1 of the Revenue's appeal – Addition on account of unsecured loans u/s 68: The AO had made the addition of Rs. 5,35,75,000/- in respect of fresh loans taken during the year from the following six parties:
i. Bhavya D Shah – Rs 30,80,000/- ii. Deepa Hitesh Shah – Rs. 2,32,55,000/- iii. Deepak M Shah - Rs. 14,50,000/- iv. Dishman Pharmaceuticals Ltd. – Rs. 66,00,000/- v. Hitesh N Shah - Rs. 3,20,000/- vi. Kinnery Ben D Shah - Rs. 1,88,70,000/-
Shri Tushar Hemani, the Ld. Sr. Counsel explained that the loan taken from DISHMAN was to the extent of Rs. 66,00,000/- only and the balance amount of Rs. 4,69,75,000/- pertained to loans received from Directors and related parties. He explained that the Ld. CIT(A) had
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 15 restricted the addition to the loan of Rs. 66,00,000/- from DISHMAN and had rightly deleted the addition for the balance amount taken from Directors and related parties, after considering the evidences placed before him. He submitted that the assessee had brought on record the evidences to establish the identity, credit-worthiness of lenders and genuineness of transactions by placing on record confirmation ledgers, Income Tax Return of lenders, bank statement of the assessee as well as the lenders and financial statement of all the lenders. Therefore, the Ld. CIT(A) was not correct in sustaining the addition of Rs. 66,00,000/- in respect of loans taken from DISHMAN. He further submitted that the assessee was not allowed any opportunity to cross-examine the persons whose statement was relied upon by the AO. The Ld. Sr. Counsel further submitted that merely because some of the creditors did not respond to the notice u/s. 133(6) issued by the AO, the assessee cannot be penalized for non-compliance of unconnected third party. He contended that the AO did not make any further efforts to make independent inquiries. He further submitted that the issue of loan taken from DISHMAN was examined in other cases also and the addition made in respect of such loans was deleted by the Tribunal, for which he placed reliance on the following decisions.
i. Maruti Multichem Pvt. Ltd. vs. DCIT [ITA No. 1644/Ahd/2025] ii. Budhiman enterprise pvt. Ltd vs. ITO [ ita no. 1513 and 1516/ahd/2025
The Ld. Sr. Counsel, submitted that, considering the facts of the case and the evidences brought on record, the addition for loan of Rs. 66,00,000/- taken from DISHMAN should also have been deleted by the Ld. CIT(A).
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 16 23. Per contra, Shri Kiran Unavekar, the Ld. CIT-DR submitted that the assessee did not make any compliance before the AO and no material was brought on record to establish the identity, genuineness and credit worthiness of the loan transactions. He submitted that merely because loan of Rs. 4,69,75,000/- was taken from Directors and the relatives, the Ld. CIT(A) was not correct in deleting the addition. The Ld. CIT-DR further submitted that the Ld. CIT(A) had considered the fresh evidences brought on record before him in respect of loan taken from the Directors and relatives and allowed the relief on that basis, without allowing any opportunity to the AO and without obtaining his remand report. Regarding loan of Rs. 66,00,000/- taken from DISHMAN, the Ld. CIT-DR pointed out that the assessee had itself made a request before the Ld. CIT(A) that the addition in respect of loans may be restricted to Rs. 66,00,000/- received from DISHMAN Group.
We have considered the rival submissions and carefully perused the material available on record. The AO had made an addition of Rs.5,35,75,000/- u/s 68 of the Act in respect of fresh unsecured loans received during the year from the six parties. The AO had made the addition for the reason that the assessee didn’t make any compliance during the assessment proceedings and had not furnished any material to establish the identity and creditworthiness of the lenders and the genuineness of the transactions. Before the learned CIT(A), the assessee furnished documentary material in support of the loans, stated to comprise confirmations, ledger accounts, income-tax returns of the lenders, bank statements of the assessee as well as the lenders and financial statements of the lenders. On consideration thereof, the learned CIT(A)
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 17 had deleted the addition of Rs.4,69,75,000/- relating to five parties and sustained the addition of Rs.66,00,000/- relating to DISHMAN. The assessee has challenged the sustenance of the addition of Rs.66,00,000/- , whereas the Revenue has challenged deletion of the addition of Rs.4,69,75,000/-.
Loan of Rs.66,00,000/- from DISHMAN
So far as addition in respect of loan of Rs.66,00,000/- received from DISHMAN is concerned, the AO had treated this credit as unexplained primarily in the backdrop of the information received from the Investigation Wing concerning the search conducted in the DISHMAN Group and the alleged modus operandi of providing accommodation entries in the form of loans and advances against cash. The reasons recorded for reopening also specifically identified the assessee as a beneficiary of an alleged accommodation entry of Rs.67,77,223/- from Dishman Pharmaceuticals and Chemicals Ltd. The assessment proceeding thereafter resulted in an addition of Rs.66,00,000/- in respect of the loan actually reflected in the assessee's books. The learned Senior Counsel has submitted that the assessee had furnished evidence demonstrating the identity, creditworthiness and genuineness of the lender and that the transaction was through banking channels. It has further been contended that the assessee was not afforded an opportunity to cross-examine the persons whose statements were relied upon by the Department.
We find that this aspect requires careful examination because the allegation against DISHMAN is not founded merely upon the failure of the assessee to furnish documents. There is specific investigation material indicating that DISHMAN was engaged in providing accommodation
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 18 entries. Thus, the documentary evidence relating to this loan has to be considered together with the specific adverse material, if any, connecting the assessee's particular transaction with the alleged accommodation- entry mechanism. We also take note of the submission of the learned CIT- DR that the assessee itself had requested before the learned CIT(A) that the addition be restricted to Rs.66,00,000/- received from DISHMAN. Such submission, however, cannot by itself dispense with examination of the substantive question whether the particular credit is satisfactorily explained u/s 68 of the Act, particularly when the assessee has subsequently challenged the sustenance of the addition before us. The mere fact that the lender was allegedly involved in accommodation entries cannot automatically result in an addition in the hands of every person who received a loan from that entity. The Revenue must establish the nexus between the particular credit appearing in the assessee's books and the alleged accommodation-entry arrangement. Conversely, where specific adverse material establishes such nexus, the mere production of banking documents may not, by itself, be sufficient. The documentary evidence and the surrounding circumstances, therefore, require a composite examination.
Having regard to the totality of the facts, we are of the considered view that the issue relating to the loan of Rs.66,00,000/- from DISHMAN requires fresh examination by the Assessing Officer. The restoration of this matter is considered appropriate also because the assessee did not participate in the assessment proceedings, the material relied upon by the Revenue emanated from investigation/search proceedings concerning a third party and the documentary evidence subsequently relied upon by the assessee requires verification in the light of the adverse material.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 19 Accordingly, the addition of Rs.66,00,000/- is set aside to the file of the Assessing Officer for fresh adjudication. The AO shall confront the assessee with all adverse materials against this particular loan transaction and shall deal with the assessee's submissions in accordance with law. The AO shall also examine the documentary evidences furnished by the assessee concerning the loan, including the confirmation, bank statements, financial statements, income-tax particulars and ledger accounts, and shall thereafter determine, on the basis of the entire material, whether the assessee has satisfactorily explained the credit within the meaning of section 68 of the Act. Needless to say, the AO shall not be influenced by any observation made herein on the ultimate genuineness or otherwise of the transaction.
Five Loans aggregating to Rs. 4,69,75,000/-
It is an admitted position that assessee did not furnish any documentary evidence in respect of these loan transactions before the AO in the course of assessment proceeding. As per the finding given by the AO, notice u/s. 133(6) of the Act was issued to loan creditors. However, the AO has not mentioned anything about the compliance of the loan creditors to the said notices. The Ld. CIT(A) has allowed relief considering the fact that the assessee had brought on record before him the copy of replies submitted by the lenders. From the materials brought on record, it is not evident as to when the lenders had filed their reply before the AO. The Ld. CIT(A) should have obtained a report from the AO about the receipt of online submissions by the lenders before allowing relief on that basis. The contention of the assessee that the loan taken from these creditors was subsequently repaid, was verified neither by the
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 20 AO nor by the Ld. CIT(A). The Ld. CIT(A) was guided by the fact that the loans were taken from the Directors and their relatives, which had no link with information for accommodation entry, received by the AO. Mere relationship of the assessee with certain lenders, cannot by itself establish or disprove the genuineness of the credits. The statutory requirement u/s. 68 of the Act has to be examined with reference to the facts and evidence concerning each individual credit. From the materials on record, it is evident that the assessee had failed to comply before the AO in respect of the loan transactions and the Ld. CIT(A) had allowed the relief to the assessee without examining the correctness of the materials brought on record before him. In the interest of substantial justice, therefore, the issue relating to 5 loans aggregating Rs. 4,69,75,000/- is also restored to the file of the Assessing Officer for fresh adjudication. The assessee shall furnish all documentary evidences in support of each loan including confirmation, PAN, copy of ITR, bank statement or any other relevant material. The AO shall also examine the factum of repayment of these loans as contended by the assessee. If the loans stand repaid, then no addition in respect of repaid loans is called for. The assessee shall be allowed adequate opportunity of being heard and the matter should be decided afresh in accordance with law. The Revenue’s ground challenging the deletion of addition of five loans aggregating Rs. 4,69,75,000/- is allowed for statistical purpose.
Accordingly, Ground No. 2 of the assessee's appeal and Ground No. 1 of the Revenue's appeal is allowed for statistical purposes.
Ground No. 3 of the assessee's appeal and Ground No. 2 of the Revenue's appeal – Disallowance of interest expenditure: As
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 21 mentioned earlier, the AO had disallowed interest of Rs. 97,34,281/- in respect of loan taken from 28 parties. The Ld. CIT(A), however, had restricted the addition for loan of Rs. 17,73,694/- taken from 11 entities. The finding of the Ld. CIT(A) in this regard is reproduced below:
“6.2. During the course of appeal proceedings, appellant submitted that AO discussed the non-genuine loans in the assessment order, received from the following entities: (a) various companies namely (1) Alton Infrastructure Pvt Ltd, (2) Krutarth Projects Private Limited (3) Monisha Infrastructure Pvt Ltd., (4) Pranatpal Tradelink Pvt Ltd, (5) Varchas Infrastructure Pvt Ltd managed and control by the Jignesh Shah and Sanjay Shah, and (b) Dishman Pharmaceutical & Chemicals Ltd and (c) fresh Loan taken during the year from (1) Bhavya D Shah (2) Deepak Hitesh Shah (3) Deepak m shah (4) Hitesh N Shah (5) Kinneryben D Shah
6.3 Appellant submitted that AO had concluded that the loans received from the above mentioned 11 entities were not genuine. However, while disallowing the interest paid on loans, AO disallowed the interest expenses paid to 28 entities, instead of restricting them to 11 entities. Appellant submitted that evidences are produced before the AO to prove the genuineness of the interest claim. Appellant requested that the disallowance of interest amounting to Rs.97,34,281/- may be deleted.
6.4 Appellant's submissions were carefully considered. As submitted by the appellant, AO discussed the non-genuine loan transactions from 11 entities as mentioned above in para 6.2 of this order. However, AO disallowed the entire interest claim on various other entities also. The action of the AO is not correct to the extent of disallowing interest claim with respect to 17 other entities, which were not established as non-genuine. Further, the interest paid to the directors and their relatives should also be allowed, since the addition made u/s 68, on account of loans received from them, is deleted vide para 5.8 of this order.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 22 Thus, the interest expenditure claimed in respect of the following entities only had to be disallowed
Alton Infrastructure Pvt Ltd - Rs. 1,90,865/- 2. Krutarth Project Pvt Ltd - Rs.1,14,089/- 3. Monisha Infrastructure Pvt Ltd - Rs.2,50,367/- 4. Pranatpal Tradelink Pvt Ltd - Rs.4,60,882/- 5.Varchas Infrastructure Pvt Ltd- Rs.5,60,576/- 6. Dishman Group - Rs. 1,96,915/- Total - Rs. 17.73,694/-
In view of the above, the disallowance of interest is restricted to Rs.17,73,694/- and disallowance of Rs.79,60,587/- is deleted. The appeal on this ground is partly-allowed.
We have considered the rival submissions and perused the orders of the authorities below. The AO had disallowed interest expenditure of Rs.97,34,281/- pertaining to loans obtained from 28 parties. The learned CIT(A), however, restricted the disallowance to Rs.17,73,694/- pertaining to six entities. The learned CIT(A) recorded that the AO had discussed the alleged non-genuine loan transactions in respect of 11 entities, whereas the interest expenditure had been disallowed in respect of 28 entities. According to the learned CIT(A), the disallowance could not extend to the remaining 17 entities in respect of which no finding of non-genuineness was recorded by the AO. The learned CIT(A) further held that interest paid to the directors and their relatives was allowable since the additions made u/s 68 in respect of the corresponding loans had been deleted. The Revenue has challenged the deletion of interest disallowance to the extent of Rs.79,60,587/-, whereas the assessee has challenged the sustenance of Rs.17,73,694/-.
At the outset, we find that the disallowance of interest expenditure is consequential and linked with the genuineness and allowability of the
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 23 underlying loan transactions. As noted, while adjudicating Ground No. 2 of the assessee and Ground No. 1 of the Revenue, the issue relating to the unsecured loans aggregating to Rs.5,35,75,000/-, including the loan of Rs.66,00,000/- from DISHMAN and the balance loan from five other parties, has been restored to the file of the Assessing Officer for fresh examination. The question whether interest paid on a particular loan is allowable cannot, therefore, be conclusively determined independently of the determination of the genuineness and allowability of the corresponding loan transaction. If, upon fresh examination, the underlying loan is found to be genuine and the interest expenditure is otherwise allowable in accordance with law, this issue would require consideration on its own merits. We, therefore, deem it appropriate to restore this issue also to the file of the AO. The AO shall examine the interest expenditure on a lender-wise basis and correlate the same with the corresponding loan transaction and thereafter determine the allowability of the interest expenditure in accordance with law. Where the corresponding loan is found to be genuine and the assessee establishes that the interest expenditure was incurred wholly and exclusively for the purposes of its business and satisfies the other applicable statutory conditions, the claim should be allowed as per law and vice-versa. Accordingly, the disallowance of interest expenditure is set aside to the file of the AO for fresh adjudication in accordance with the directions contained herein.
Accordingly, Ground No. 3 of the assessee and Ground No. 2 of the Revenue are allowed for statistical purposes.
The other grounds taken by the Assessee as well Revenue are only supporting grounds and do not require separate adjudication.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 24
In the result, the appeal of the Revenue is allowed for statistical purpose whereas the appeal of the Assessee is partly allowed for statistical purpose.
ITA No. 104/Ahd/2026 & ITA No. 221/Ahd/2026: A.Y 2014-15
The grounds taken by the Revenue in this appeal are as under:
Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting addition of Rs 80,01,108/- out of total addition of Rs. 1,45,15,000/- on account of unexplained cash credit u/s. 68 rws 115BBE, without appreciating the fact that the assessee has availed accommodation entries in the form of fictitious loans from Shri Jignesh Shah and Dishman Pharmaceuticals & Chemicals Ltd.?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance of interest expenses to Rs. 5,70,991/- without appreciating the fact that the said payment was proved to be non-genuine and without any business exigencies?" 3. Whether on the facts and in the circumstances of the case and in law, the Id CIT(A) has erred in ignoring the fact that the assessee has transacted with Jignesh Shah and Sanjay Shah Group and the Dishman Group, who is into the business of providing accommodation entries?"
"The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary." 5. "It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored?" 37. The assessee has taken the following grounds this appeal:
The Ld. CIT(A) has erred in law and on facts of the case in upholding reopening of assessment u/s. 147of the Act which is bad in law and without jurisdiction. 2. The Ld.CIT(A) has erred in law and on facts in making fresh addition of unsecured loan of Rs.65,13,892/-from Dishman Carbogen Amcis Ltd. (DCAL)
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 25
(earlier known as Dishman Pharmaceuticals and Chemicals Ltd.) u/s 68 of the Act even after substantiating genuineness, creditworthiness and identity. 3. The Ld. CIT(A) has erred in law and on facts in confirming disallowance of interest expenditure paid to Dishman Carbogen Amcis Ltd. (DCAL) (earlier known as Dishman Pharmaceuticals and Chemicals Ltd.) of Rs. 5,70,991/- treating the same as bogus. 4. The Ld. CIT(A) has erred in law and on facts in not appreciating that no addition u/s 68 of the Act can be made when the amount in question is repaid. 5. The learned CIT(A) has erred in law and on facts of the case in confirming invoking of provisions of Section 115BBE of the Act. 6. The Ld. CIT(A) and Ld. AO have erred in passing the order without providing opportunity to cross-examine. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Ld. CIT(A) and Ld. AO have passed the order without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 8. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO inlevying interest u/s. 234A/B/C/D of the Act. 9. The learned AO has erred in law and on facts in ininitiating penalty Section271(1)(c) of the Act. proceedings under 10. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
The AO had made addition of Rs. 1,45,15,000/- in respect of loan taken from seven persons who were Directors and the relatives, which were deleted by the Ld. CIT(A). However, the Ld. CIT(A) had enhanced the assessment in respect of the loan of Rs. 65,13,892/- taken from DISHMAN, which was discussed in the body of the assessment order but not finally added to the computation of income. The Ld. Sr. Counsel
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 26 appearing for the assessee submitted that the Ld. CIT(A) had enhanced the assessment without issuing any show cause notice u/s. 251(2) of the Act. He explained that this amount of Rs. 65,13,892/- did not represent any fresh loan rather a sum of Rs. 5,13,892/- represented interest paid on loan which was already separately disallowed by the AO. Thus, the addition of Rs. 65,13,892/- has resulted in double taxation.
We have considered the rival submissions. In the table as reproduced in para 4.2.12 of the assessment order, the sum of Rs. 65,13,892/- was reflected as “Dishman loans and advances.” Since the addition in respect of DISHMAN loan was made in the other years but not in this year, the Ld. CIT(A) had only corrected the mistake which was apparent in the order of the Assessing Officer. However, the contention of the assessee that the sum of Rs. 65,13,892/- did not represent any fresh loan but was only repayment of loan and payment of interest thereon, requires verification. Therefore, this issue is set aside to the file of the Assessing Officer, with a direction to verify whether the sum of Rs. 65,13,892/- represented repayment of loan and payment of interest to DISHMAN. If the submission of the assessee is found to be correct then no addition is called for in respect of this transaction. The AO should re- decide the matter after necessary verification and after allowing an opportunity of being heard to the assessee.
The other grounds taken by the Assessee and the grounds taken by the Revenue in these two appeals are identical to ITA No. 103/Ahd/2026 and 220/Ahd/2026 for A.Y. 2013-14. The decision taken by us in ITA No.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 27
103/Ahd/2026 and 220/Ahd/2026 is applicable mutatis mutandis to these tow appeals for A.Y. 2014-15 as well.
Accordingly, the appeal in ITA No. 104/Ahd/2026 is allowed for statistical purpose whereas the appeal in ITA No. 221/Ahd/2026 is partly allowed for statistical purpose.
ITA No. 157/Ahd/2026 & ITA No. 222/Ahd/2026: A.Y 2015-16
The grounds taken by the Revenue in this appeal are as under:
"Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was justified in deleting addition of Rs 6,41,00,000/-on account of unexplained cash credit u/s. 68 rws 115BBE, without appreciating the fact that the assessee has availed accommodation entries in the form of fictitious loans from Shri Jignesh Shah and Dishmar Pharmaceuticals & Chemicals Ltd.?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in restricting the disallowance of interest expenses to Rs. 14,05,082/-without appreciating the fact that the said payment was proved to be non-genuine and without any business exigencies?" 3. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in ignoring the fact that the assessee has transacted with Jignesh Shah and Sanjay Shah Group and the Dishman Group, who is into the business of providing accommodation entries?" 4. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was justified in deleting addition of Rs.34,12,692/ made u/s 68 of the Act, without appreciating the fact that the assessee made purchases from M/s Vikram Enterprise and M/s Mahavir Sales Corporation which were proved to be bogus and unexplained as the above two entities were paper concerns providing bogus entries to various unrelated entities?" 5. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 28
It is therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.
The grounds taken by the Assessee in its appeal are as under:
The Ld. CIT(A) has erred in law and on facts of the case in upholding reopening of assessment u/s. 147of the Act which is bad in law and without jurisdiction.
The Ld. CIT(A) has erred in law and on facts in confirming disallowance of interest expenditure paid to Alton Infrastructure Pvt Ltd of Rs. 1,66,451/- treating the same as bogus.
The Ld. CIT(A) has erred in law and on facts in confirming disallowance of interest expenditure paid to Pranatpal Tradelink Ltd.of Rs. 11,70,516/-treating the same as bogus.
Without prejudice, the Ld. CIT(A) has erred both in law and on facts in erroneously treating the interest expenditure paid to Pranatpal Tradelink Ltd. as 11,70,516/-, whereas the actual interest expenditure amounts to only Rs. 1,75,523/-
The learned CIT(A) has erred in law and on facts of the case in confirming invoking of provisions of Section 115BBE of the Act.
The Ld. CIT(A) and Ld. AO have erred in passing the order without providing opportunity to cross-examine. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
The Ld. CIT(A) and Ld. AO have passed the order without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. Their actions in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s. 234A/B/C/D of the Act.
The learned AO has erred in law and on facts in penalty in initiating Section 271(1)(c) of the Act.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 29 10. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 44. The grounds taken by the Revenue and the assessee in this year are identical to ITA No. 103/Ahd/2026 and 220/Ahd/2026 for A.Y. 2013- 14, except that the Revenue has taken an additional ground. The AO had made addition of Rs. 6,41,00,000/- in respect of fresh loans taken from six persons who were directors and their relatives. Following the decision as taken on this issue in ITA No. 103/Ahd/2026 for A.Y. 2013-14, this matter is set aside to the file of Assessing Officer for fresh adjudication.
The AO had also disallowed interest of Rs. 1,08,24,748/-. The Ld. Sr. Counsel submitted that Ld. CIT(A) had confirmed the disallowance of interest with respect to loan transactions with three entities namely Alton Infrastructure Pvt Ltd, Monisha Infrastructure Pvt. Ltd. and Pranatpal Tradelink Ltd to the extent of Rs. 14,05,082/-. He submitted that the Ld. CIT(A) has wrongly taken the figure of Rs. 11,70,516/- (amount belonging to Nageena Gems Pvt. Ltd.) for quantification instead of correct interest of Rs. 1,75,523/- pertaining to Pranatpal Tradelink Ltd. According to the assessee there was excessive disallowance of Rs. 9,94,993/- (14,05,082 – 4,10,089) due to this mistake. Following the decision as taken in ITA No. 103/Ahd/2026 for A.Y. 2013-14, the disallowance of interest is also set aside to the file of Assessing Officer for fresh adjudication. The AO shall verify the assessee’s contention regarding wrong disallowance of interest by Ld. CIT(A) in the case of Pranatpal Tradelink Ltd. after allowing an opportunity of being heard to the assessee.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 30
Additional Ground taken by Revenue
The AO had made an addition of Rs. 34,12,692/- in respect of accommodation entries received from M/s Maruti Enterprises in respect of bogus purchases which was deleted by the Ld. CIT(A). According to the assessee it had not made any transaction with Maruti Enterprises or Vikram Enterprises. The Ld. CIT(A) has given the following finding in this regard:
“8.4. Without making any further enquiries, AO made the addition of Rs.34,12,692/-u/s 69C of the Act. AO did not verify the purchases from the books of accounts of the appellant for the AY 2015-16, to establish that appellant had recorded purchases from the bogus entity for Rs.34,12,692/-. AO had neither verified the bank accounts of the appellant to show that appellant had paid the amount of Rs.34,12,692/- to the bogus entity. In the absence of any such evidence, brought on record, by the AO, the addition of Rs.34,12,692/- u/s 69C of the Act, cannot be sustained. The addition was made arbitrarily, without any basis and without bringing on record any evidence. In view of the above, the addition of Rs.34,12,692/- made u/s 69C of the Act is deleted. Appeal on these grounds is allowed. The Revenue has been unable to controvert the findings of the Ld. CIT(A). When the assessee had denied the transactions and the AO did not bring any evidence on record that the said alleged purchase of Rs. 34,12,692/- was debited in the books of accounts of the assessee, no addition was called for. The Ld. CIT(A) had rightly deleted the addition after correctly verifying the facts of the case. Accordingly, the decision of the Ld. CIT(A) is upheld and the ground taken by the Revenue is dismissed.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 31 47. The other grounds taken by the Assessee and the grounds taken by the Revenue in these two appeals are identical to ITA No. 103/Ahd/2026 and 220/Ahd/2026 for A.Y. 2013-14. The decision taken by us in ITA No. 103/Ahd/2026 and 220/Ahd/2026 is applicable mutatis mutandis to these two appeals for A.Y. 2015-16 as well.
Accordingly, the appeals in ITA No. 157/Ahd/2026 and ITA No. 222/Ahd/2026, both are partly allowed for statistical purpose.
The final outcome of the appeals is summarized in the table below:
S. ITA No. A.Y. Filed by Outcome No.
1 219/Ahd/2026 2012-13 Assessee Partly allowed for statistical purpose.
2 103/Ahd/2026 2013-14 Revenue Allowed for statistical purpose.
3 220/Ahd/2026 2013-14 Assessee Partly allowed for statistical purpose.
4 104/Ahd/2026 2014-15 Revenue Allowed for statistical purpose.
ITA Nos. 103, 104, 157/Ahd/2026 and 219, 220, 221 & 222/Ahd/2026 Filco Trade Centre Private Limited Vs. DCIT, AYs- 2012-13 to 2015-16 32
5 221/Ahd/2026 2014-15 Assessee Partly allowed for statistical purpose.
6 157/Ahd/2026 2015-16 Revenue Partly allowed for statistical purpose.
7 222/Ahd/2026 2015-16 Assessee Partly allowed for statistical purpose.
Order pronounced in the Court on 02/09/2026 at Ahmedabad.
Sd/- Sd/- (NARENDRA PRASAD SINHA) (SANJAY GARG) Judicial Member Accountant Member Dated – 02nd September, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file.
आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार
पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद
More judgments on Section 147
- ACIT Central Bilaspur, Bilaspur vs Arun Kumar Agrawal, SaktiITSSA 26/RPR/2025[2018-19]Status: Disposed21 Oct 2026AY 2018-19
- Vinod Agrawal, Kawardha vs Assisstant Commissioner of Income Tax…ITA 666/RPR/2026[2019-20]Status: Heard21 Oct 2026AY 2019-20
- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
- Tarunaben Maganlal Bhut, Navagam vs ITO Ward 2(2)(1), RajkotITA 673/RJT/2026[2024-25]Status: Disposed21 Oct 2026AY 2024-25
- Neo Incorporation, Rajkot vs DCIT Circle- 1(2), RajkotITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013
Recent GST High Court judgments
Search GST case law →- Satyavan vs. Commissioner Central Goods And Services Tax CommissionerUttarakhand · 4 Nov 2026
- Deepak Kumar Daiya vs. State Of West Bengal And Ors.Calcutta · 4 Nov 2026
- Mohammed Fazil vs. State Of ChhattisgarhChhattisgarh · 4 Nov 2026
- Tvl. Devaerakkam Mercy Mary vs. The Assistant Commissioner (St)Madras · 4 Nov 2026
- Procter And Gamble Health LTD vs. Union Of INDIATelangana · 4 Nov 2026
