SUMIT GAHLOT,MUMBAI vs. INCOME TAX OFFICER, WARD 2(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SHRI JAGADISH, ACCOUNTANT MEMBER ITA No.1109/Mum/2024 (Assessment Year: 2017-18)

Sumit Gahlot Vs. 1.National Faceless House No. 22, Ganesh Appeal Centre, Delhi Colony, Gulabpura, 2.Income Tax Officer, Bhilwara, Ward 2(2),Thane Rajasthan- 311021 Ashar IT Park, 6 th Floor, Road No. 16z, Wagle Industrial Estate, Thane (West), Thane PAN/GIR No. BQAPG9853L (Applicant) (Respondent) Assessee by None Revenue by Shri Swapnil Choudhari (SR. DR.) Date of Hearing 23.03.2026 Date of Pronouncement 29.04.2026 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dated 10.01.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2017-18. The following grounds are reproduced below:

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“In the facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the addition of Rs. 96,85,509/- on account of alleged undisclosed business income. 2. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 1,74,45,000/- on account of alleged unexplained cash credits u/s 68 of the IT Act, 1961. 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) failed to consider and appreciate the submissions of the Appellant. 4. In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not applying the principles of natural justice. 5. The Appellant craves leave to add/alter any of the grounds of”

2.1 On the other hand, the Ld. DR present in the court is ready with the arguments; therefore, we have decided to proceed with the hearing of the appeal ex parte.

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CIT(A) in upholding the additions made by the AO. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

5.2 Findings and decision:

I have carefully considered the facts of the case as well as submissions filed by the appellant. I find no force in the arguments of the Appellant. The AO has clearly brought out the facts in Assessee's case which clearly establish that the business carried on by the Assessee is a sham business. The paperwork has been carefully crafted and the entire operation is planned in the name of a person to give various type of entries to various persons. However, a basic thing which stands out in case of Assessee is that

The Assessee lives in Bhilwara, carries on business in Surat but has the only bank account in Vile Parle, Mumbai and he transfers huge amount of cash from Surat to Mumbai for deposit in the bank there.

On the face of it, the above observation may seem trivial, but if we examine closely, will any normal businessman do that. Even the bank Bharat co-

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operative bank has a branch in Surat with IFSC code BCBM0000083 and the cash could have been very easily deposited there. The Assessee can argue that there is no law against doing so, but the fundamental issue here is that 'Does it pass the test of pre-ponderance of probabilities?'. Definitely not.

The Assessee has only submitted self-created paperwork (e.g. the books of accounts and invoices) as evidence, but none of it is independently verifiable. Accordingly, the same is not considered credible and authentic. The Assessing Officer has noted the following about the business of the Assessee:-

 He was doing a small grocery business in 2014-15 filing Return of Income u/s 44AD, and in scrutiny even this business was found to be fake.  To verify sales of Assessee, confirmations were sought u/ 133(6) from seven(7) parties on test check basis to whom the assessee claimed to have made sales during the year consideration. However, response was received from only two parties and that to found to be incomplete as the said parties failed to furnish the entire details as called for.  It was noticed that after every single or multiple credits, there was a corresponding debit entry was found leaving the minimum balance in the bank account. This pattern was found in the entire bank account statement of assessee clearly reflecting that the assessee was engaged in the business of providing accommodation entries and no genuine business activities carried by the assessee for the year under consideration.  It has been submitted by the Assessee that the bank account has transactions of sale of diamonds and those related to loan & advances which were also repaid in the same financial year. However, he has failed to furnish the party wise loan and advances given and repayment received during the F.Y. 2016-17 to substantiate his above claim. He could not even differentiate as to which transactions are sales and which are loans.  Is the Assessee in a business of money lending also. Not likely as he comes across a person of meagre means returning small income and

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having negligible bank balances. How can he transact in loans of crores of rupees?

All the above only points to a well-crafted accommodation entry provider with prior planning. The business of the Assessee is clearly a sham enterprise. Accordingly, the addition of Rs.96,85,509/- made by the AO on account of net profit from business income is hereby confirmed and the ground of appeal No.1 is thus dismissed.

6.2 Findings and decision:

I have carefully considered the facts of the case as well as submissions filed by the appellant. I find no force in the arguments of the Appellant. In deciding the ground of appeal no. 1 it has been clearly established that the business of the Assessee is sham and that he is merely a conduitaccommodation entry provider. These operations have been

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established over past few years and the supporting documentation created by professionals. Fast-forward to the date of demonetization, 08.11.2016, and there are many people with surplus unaccounted cash. The same operator is a convenient tool to channelize this unaccounted cash as well. The edifice of huge cash sales in the period 01.11.2016 to 07.11.2016 is built up, and the corresponding cash is deposited in a bank in Mumbai. Several things are noticeable in the whole operation :-

 The Assessee has never made any cash sales before or after this period during the year or even in any of the preceding or subsequent years. The accommodation entry providers are generally vary of cash deposits.  The cash sales are made to persons all over India, from Surat to Chandigarh to Rampur (UP) to Kishangarh (Rajasthan), but the cash is received in Surat.  All the cash sales are below 2 lakhs to escape the vagaries of section 269ST of the Income-Tax Act.  In some cases PAN of persons is given, but all these PAN holders are non-filers of the Return of Income.  Then this cash is physically transferred to Mumbai to be deposited in a bank in Vile Parle as is there are no banking facilities in Surat. This is highly improbable.

All this indicates that a pre-existing accommodation entry network was utilized to channelize the unaccounted cash of the beneficiaries. The case laws cited by the Appellant have been considered but they are distinguishable on facts from the instant case. Accordingly, the addition of Rs. 1,74,45,000/- made by the AO on account of undisclosed cash deposit is confirmed. Thus, the grounds of appeal No.2 and 3are dismissed.

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existing accommodation entry network was utilised to channelise unaccounted cash. Therefore, the additions were rightly upheld.

I have carefully considered the facts of the case as well as submissions filed by the appellant. The additional ground of appeal is admitted. However, this contention of the Appellant is not tenable at all. It is clearly stipulated that the amended provisions of section 115BBE are applicable from assessment year 2017-18 onwards. This has been held by various High Courts, and most notably IN THE ITAT RAJKOT BENCH in the case of Vijubha Jitubha Jadeja v. Principal Commissioner of Income-tax, [2023] 154 taxmann.com 615 (Rajkot - Trib.), wherein it was held as under:-

Section 68, read with sections 115BBE and 263, of the Income-tax Act, 1961-Cash credit (Revision) - Assessment year 2017-18-An assessment order was passed in case of assessee making addition under section 68 on account of unexplained sundry creditors Pr. Commissioner invoked revision on ground that addition made by Assessing Officer on account of unexplained sundry creditors under section 68 was ought to be subjected to tax at higher rate as prescribed under section 115BBE as opposed to Assessing Officer having subjected same to tax on normal rate Whether Assessing Officer having made addition under section 68, taxing it at rate prescribed under section 155BBE was a natural corollary and, therefore, non-invocation of section 115BBE on addition made on account of unexplained sundry creditors under section 68 was an error in order of Assessing Officer causing prejudice to revenue Held, yes Whether, therefore, impugned invocation of revision jurisdiction was justified - Held, yes [Paras 7.3, 7.5, 8,8.1 and 8.3] [In favour of revenue]

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The facts of the Assessee's case are similar. The case case laws cited by the Appellant have been considered but these are distinguishible on facts from the Assessee's case. Accordingly, the additional ground of appeal raised by the appellant during the appellate proceedings stands dismissed.

Order pronounced in the open court on 29.04.2026

Sd/- Sd/- (JAGADISH) (SANDEEP GOSAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER

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Mumbai, Dated 29/04/2026 RY, Sr. PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलार्थी / The Appellant 1. प्रत्यर्थी / The Respondent. 2. संबंधित आयकर आयुक्त / The CIT(A) 3. आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण,मुम्बई/ DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy//

उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai