DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2 1 1 AHMEDABAD, AHMEDABAD vs. L.R. FABRICS PRIVATE LIMITED, AHMEDABAD

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ITA 2587/AHD/2025Status: DisposedITAT Ahmedabad22 July 2026AY 2016-177 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, stating that the Assessing Officer failed to provide specific details of the alleged accommodation entries despite the assessee's denial and requests for substantiation. No evidence was brought on record to prove the transactions.

What were the facts?

The Revenue appealed against the CIT(A)'s order which partly allowed the assessee's appeal. The Assessing Officer had made additions for alleged accommodation entries based on information from the Investigation Wing.

What were the issues?

Whether the CIT(A) erred in deleting additions for unexplained cash credits without proper substantiation by the Assessing Officer. Whether the Assessing Officer provided sufficient evidence to prove accommodation entries.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 142(1),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Ms Astha Maniar, AR
For Respondent: Shri Amit Pratap Singh, SR-DR
Hearing: 14.07.2026Pronounced: 22.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

These two appeals are filed by the Revenue against the separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] both dated 10.11.2025 for the Assessment Years (A.Y.) 2016-17 and 2017-18 respectively in the proceeding u/s 147 r.w.s 144B of the Income Tax Act [hereinafter referred as “the Act”]. Both the matters were heard together and are being disposed of vide this common order for the sake of convenience.

2.

We will first take up the appeal in ITA No. 2587/Ahd/2025 for the A.Y. 2016-17

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 2

ITA No. 2587/Ahd/2025, A.Y. 2016-17

3.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2016-17 on 14.10.2016 declaring total income of Rs.98,82,970/-. The case of the assessee was reopened on the basis of information received that the assessee had taken accommodation entry amounting to Rs. 2,79,62,213/- from one Shri Sanjay Govindram Agrawal and the concerns controlled by him. The AO had issued a notice u/s. 148 of the Act on 30.03.2021 recording his reason. In the course of assessment proceeding addition of Rs. 2,79,62,213/- was made in respect of accommodation entries taken by the assessee and the assessment was completed u/s. 147 r.w.s. 144B of the Act on 30.03.2022 at total income of Rs. 3,78,45,183/-.

4.

Aggrieved with the order of 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.

5.

Now the Revenue is in appeal before us. The following grounds have been taken in this appeal:

1.

Whether the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,79,62,213/- on account of unexplained cash credits u/s. 68 of the Act without appreciating the facts of the case. 2. Whether the Ld. CIT(A) has failed to appreciate the fact that the additions were made on the basis of credible information from Investigation Wing that the assessee was a beneficiary of accommodation entries provided by Sanjay Govnidram Agrawal (also known as Sanjay Tibrewal of ST) who is into the business of providing accommodation entries, without any business activity. 3. The appellant craves leave to amend or alter any ground of add a new ground, which may be necessary. 4. It is therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 3

6.

All the grounds taken by the Revenue pertain to addition of Rs. 2,79,62,213/- on account of unexplained cash credit in the form of accommodation entries. Shri Amit Pratap Singh, the Ld. SR-DR explained that a search was conducted u/s. 132 of the Act on 12.04.2019 at the premises of one Shri Sanjay Govindram Agrawal and from the documents recovered from his premises, it transpired that he was involved in providing accommodation entries to various beneficiaries and was charging commission. From the documents seized from the premise of Shri Sanjay Govindram Agrawal, it transpired that the assessee had taken fictitious loan of Rs. 5,28,000/- from an entity managed and controlled by Shri Sanjay Govindram Agrawal. Further, bogus accommodation entry of Rs. 4,05,000/- was taken from Dishman Pharmaceutical Pvt. Ltd. In addition to these two specific transactions, loan transaction evidences for other accommodation entries were also found and the total bogus entries taken by the assessee during the year was to the extent of Rs.2,79,62,213/-. The Ld. SR-DR submitted that the entire accommodation entry of Rs. 2,79,62,213/- was held as unexplained income from the assessee as the same was in the nature of accommodation entry. He submitted that the Ld. CIT(A) was not correct in deleting the addition, considering the evidences found during the search.

7.

Per Contra, Ms. Astha Maniar, the Ld. AR submitted that the assessee did not have any transaction with Shri Sanjay Govindram Agrawal, Dishman Pharmaceutical Pvt. Ltd or any other entity with whom the accommodation entry was alleged by the AO. She submitted that the exact details of the amount received from different entities was not provided to the assessee in spite of specific requisition made by the

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 4 assessee on different dates. Considering these facts, the Ld. CIT(A) had rightly deleted the addition. The Ld. AR strongly supported the order of the Ld. CIT(A).

8.

We have considered the rival submissions. It is found that the case of the assessee was reopened on the basis of information received by the AO that the assessee has taken accommodation entry of Rs. 2,79,62,213/- from the concerns controlled by Shri Sanjay Govindram Agarwal. A copy of the reason recorded by the AO and the communications made by the assessee in this respect has been brought on record in the paper-book filed by the assessee. It is found from the notice u/s 142(1) of the Act dated 12.02.2022 that the AO had mentioned the following specific transactions of loan taken by the assessee from the following persons which were in the nature of accommodation entry:

1.

Shri Jignesh Shah : Rs.1,07,00,000/- 2. Shri Sanjay Govindram Agarwal: Rs.5,28,000/- 3. Dishman Pharmaceutical Pvt. Ltd: Rs.4,05,000/- However, in the reason the AO had recorded that the assessee had taken total accommodation entry of Rs. 2,79,62,213/- from different concerns. The exact detail of the accommodation entries of Rs. 2,79,62,213/- as mentioned in the reason recorded by the AO, is not found available on record. The assessee vide letter dated 31.08.2021 had informed the AO that it did not have any transaction with Jignesh Shah, Sanjay Govindram Agarwal and Dishman Pharmaceutical Pvt. Ltd. The assessee had also requested to provide the break- up of total amount of accommodation entry as mentioned in the reason of the AO, the details of transactions, parties, date, cheque No. so that the notices sent by the AO could be complied. However, those details were not provided to the assessee.

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 5 When the assessee had categorically denied that no transaction was made with Jignesh Shah, Sanjay Govindram Agrwal and Dishman Pharmaceutical Pvt. Ltd, the AO should have brought on record the specific materials, on the basis of which he had concluded the assessee had obtained accommodation entries. The AO had mechanically made the addition without even giving the complete break-up of accommodation entries of Rs. 2,79,62,213 in the assessment order. Even before us, the Revenue has been unable to place any evidence in this regard. Under the circumstances, we do not find any reason to interfere with the order of the Ld. CIT(A). No material has been brought on record to establish as to how the sum of Rs. 2,79,62,213/-, which was denied by the assessee, was in the nature of accommodation entry. When the assessee had denied the transactions, it was obligatory on the part of AO to bring evidences on record to establish that the assessee had actually made these transactions. In the absence of any such material on record, the Ld. CIT(A) had rightly deleted the addition, on proper appreciation of facts of the case. Accordingly, the order of the Ld. CIT(A) is upheld. The grounds taken by the Revenue are dismissed.

9.

In the result, the appeal of the Revenue is dismissed.

ITA No. 2588/Ahd/2025, A.Y. 2017-18

10.

The Revenue has taken the following grounds in this appeal:

1.

Whether the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,19,79,070/- on account of unexplained cash credits u/s 68 of the Act without appreciating the facts of the case?" 2. Whether the Ld. CIT(A) has failed to appreciate the fact that the additions were made on the basis of credible information from Investigation Wing that the assessee was a beneficiary of accommodation entries provided by Sanjay Govindram Agrawal (also known as Sanjay Tibrewal or ST)

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 6 who is into the business of providing accommodation entries, without any business activity?" 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary." 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored" 11. The facts involved in this appeal are identical to ITA No. 2587/Ahd/2025, for A.Y. 2016-17. The case of the assessee for A.Y. 2017-18 was reopened on the basis of information that it had obtained accommodation entries of Rs. 3,19,79,040/- from the entities controlled by Shri Jignesh Shah. Neither the break-up of the accommodation entries such as names of the concerns, amount, date etc. is available in the assessment order, nor these details were ever provided to the assessee in spite of specific requisition made by the assessee on numerous occasions. The assessee had denied having any transaction with Shri Jignesh Shah or the entities controlled by him. The Ld. CIT(A) had, therefore, rightly deleted the addition. The findings given by us in ITA No. 2587/Ahd/2025, for A.Y. 2016-17 is applicable mutatis mutandis to the present appeal as well. Accordingly, the order of the Ld. CIT(A) is upheld and the grounds taken by the Revenue are dismissed.

12.

In the final result, both the appeals of the Revenue are dismissed.

Order pronounced in the Court on 22/07/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 22nd July, 2026 Neelesh, Sr. PS (True Copy)

ITA Nos. 2587 & 2588/Ahd/2025 DCIT Vs L R Fabrics Private Limited, AY- 2016-17 & 2017-18 7

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/सहायक उप सहायक पंजीकार उप उप सहायक सहायक पंजीकार पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अहमदाबाद / ITAT, Ahmedabad आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण अहमदाबाद अहमदाबाद

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