KAIZEN IMPEX,MUMBAI vs. INCOME TAX OFFICER 41(3)(1), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JM AND SHRI ARUN KHODPIA, AM ITA No.3168/Mum/2026 (Assessment Year: 2009-10) Kaizen Impex Income Tax Officer Ward C-807, Upvan, Upper Govind 41(3)(1) Mumbai Vs. Nagar, Kautilya Bhavan, Bandra (East) Malad (East) Mumbai 400051 Mumbai 400051 PAN/GIR No. AADFK2800R (Appellant -अपीलाथ�) (Respondent- ��थ�) :

Assessee by : Shri. Hemant Vora Respondent by : Smt. B. Brahma Vidya – SR. DR

Date of Hearing : 14.05.2026 Date of Pronouncement : 25.05.2026

O R D E R Per Arun Khodpia, AM: The instant appeal is preferred by the assessee, against the order of Commissioner of Income Tax (Appeals), ADDL/JCIT (A)Panji, (in short, ‘ld.CIT(A)’), dated 30.01.2026, for the Assessment Year 2007-08, which in turn arises from the assessment order u/s. 143(3) read with section 147 of the Income Tax Act, 1961 (in short‘ the Act’),passed by Income Tax Officer- 30(2)(4), Mumbai, dated 14.03.2016.

“1. On the facts and in the circumstances of the case in law and on facts, the learned AO erred in adding a total sum of Rs.35,00,000/-/-being alleged non-genuine loans taken from M/s. Impex Gems, even though all documents to prove the genuineness of the loans and identity and creditworthiness of the lenders were filed during the course of assessment. As stated above the re-assessment proceedings are also invalid.

its return of income on 29.07.2009,declaring total loss of Rs. 3,59,215/-. Based

on a search and seizure action u/s. 132, carried out in the case of Bhanwarlal

Jain Group, dated 03.10.2013, as per information circulated from DGIT

Investigation Mumbai, it is revealed that the said group was engaged in the

business of providing accommodation entries in the form of bogus unsecured

loans, bogus purchases and bogus capital gains etc. The assessee was found to

be the beneficiary, having received unsecured loan fromone of the bogus

concerns operated and controlled by the said group.

received an accommodation entry in the form of unsecured loan for Rs.

35,00,000/-/-. After considering the statement of Shri. Bhanwarlal Jain,

recorded during the search, the Ld. Assessing Officer was of the opinion that the amount received by the assessee from unsecured loan was nothing but was

an accommodation entry only. The assessee was called for, to furnish the

explanation regarding the aforesaid transaction. In response, the partner of the

assessee submitted a letter dated 31.03.2015, with copy of ITR for Assessment

Year 2009-10, requesting to treat the same as ITR u/s. 48 of the Act. Further,

necessary details were furnished by the assessee. The Ld. AO further described

complete modus operandi and operational working of the Banwarlal Jain Group

at length in his order and had finally made an addition of Rs. 35,00,000/-

treating the same as unexplained cash credit of the assessee.

assessee preferred an appeal before the Ld.CIT(A), wherein the assessee

challenged the validity of the reassessment proceedings, as well as, justification

of the addition u/s. 68 of the Act. But, on both the grounds, the contentions and

submissions are not considered satisfactory, thus, are rejected by the

Ld.CIT(A).

appeal before us. 7. At the outset, the Learned Counsel for the assessee submitted that the assessee

had received the genuine unsecured loans for the purpose of its business during the year under consideration from Ms. Impex Gems. It is further submitted that

the loan taken in May 2008 and was repaid in the month of July/August 2009. It

is also submitted that interest was also paid by the assessee and TDS was

deducted on payment of interest payment.To substantiate, such factual aspects

the Ld.AR had drew our attention to page no. 57 of the assessee’s paper book

(APB), consisting the copy bank statement of Impex Gems, the lender, in

IndusInd bank, showing that Rs. 35,00,000/- has been transferred to assessee by

the way of a cheque No. 054811 on 07.05.2008. Further, from the audited

balance sheet of the Impex Gems placed in the APB at page no. 69, as per

‘Schedule D’ “loans and advances” are reflating at Rs. 7,74,93,202/-, including

Rs. 35,00,000/- granted to the assessee. The Ld. AR further drew our attention

to Page No. 56 of the Assessee’s paperbook consisting of confirmation by the

Impex Gems, wherein an amount of Rs. 2,83,932/- was charged as interest on

the aforesaid loan and TDS deducted for Rs. 2,9,245/-. Further on perusal of

the account statement of the assessee in the books of ‘Impex Gems’furnished at

Page No. 59 of APB, it is apparent that the loan was re-paid by the assessee back on 28th July, 8th August and 14th August 2009, in installments of Rs. 12

Lakhs, Rs. 12 Lakhs and Rs.11 Lakhs, respectively. Further, in FY 2009-10

also an interest of Rs. 1,05,854/- was debited and the TDS of Rs. 10,585/- was

deducted. All the aforesaid transactions are further substantiated with the bank statements of Ms. Impex Gems for the respective period. Based on aforesaid

submissions, it was the prayer that the loan was received for the genuine

business needs of the assessee and repaid in subsequent year with interest,

therefore no addition can be made treating the same as unexplained cash credit

in the books of the assessee. 8. The Ld. AR further placed his reliance on the decisions in the case of Reliance

Corporation Vs. Income Tax Officer in ITA No. 1069/Mum/2017 Vide order

dated 12.04.2017, wherein the ‘D’ Bench of ITAT Mumbai, had answered the

question regarding accommodation entries in the form of unsecured loans

received from a concern belonging to Bhawarlal Jain Group and held that,once

the assessee had filed confirmation letters from creditors, pan of creditors, bank

statements of the creditors and form no. 16 for TDS on interest, profit and loss

accounts and balance sheet including ledgers from the creditors and ITR, the

onus cast upon the assessee is discharged,so far as the three main ingredients of

Section 68 i.e. Identity and creditworthiness of creditors and genuineness of

transactions are concerned. Therefore, relying on the various decisions made by

the Hon’ble Apex Courts and various High Courts, had held that the addition in

such circumstances cannot be sustained.

DCIT(CC) 1(3), Mumbai Vs. Jainam Investments in ITA No.

6099/Mum/2016 Vide Order dated 10.08.2018. Wherein the issue of

accommodation entries has been discussed at length and the name of the

concern ‘Impex Gems’, which is also the entity in question in the present case

from whom the accommodation entries are received by the assessee has been

dealt with. In that case also, the assessee has furnished the details like PAN of

the creditors, constitution and address of the creditors, income-tax return,

confirmation letters, audited financials, relevant bank statements, details of

interest paid to the creditors and TDS deducted and paid andthe Tribunal hold

that the addition u/s. 68 is not warranted considering the facts of the case.

documents requisite for satisfaction of Provisions under Section 68 of the Act.

The entire addition has been made on the basis of the general statements

recorded in the case of Bhanwarlal Jain Group. No evidence whatsoever has

been brought on record by the Assessing Officer to establish that any cash was

paid by the appellant. It is also submitted that the loan was taken for short

tenure on 07.05.2008 and the same was repaid in the month of July and August

2019. Therefore, the assumption that with regard to accommodation entries and

rooting of assessee’s own cash is ruled out. It was the submissions that, if it

would have been an accommodation entry, there was no necessity for the

assessee to repay the same with interest within a short tenure. The Ld. AR also placed his reliance, various decisions of the ITAT Mumbai and has furnished

the gist findings in such cases as under:-

“3)Income Tax Officer 25(3)(5), Mumbai vs Vikram Muktilal Vora

ITA 842/Mum/2017, ITAT Mumbai

Gist of the Case:

The appellant has submitted sufficient evidences during the assessment before the A.O. The assessment was reopened on the basis of Investigation report that appellant has taken accommodation entry of loan from Bhanwarlal Jain Group and solely relied upon the statements of Bhanwarlal Jain. The A.O. did not carry out any worthwhile independent inquiry in the matter. He has totally ignored the documentary evidences submitted by the appellant. Without pointing out any lacuna in the evidences submitted by the appellant, the sources and the genuineness cannot be doubted. Therefore, the decision of the A.O. treating the same as bogus or non-genuine transactions is not in order and cannot be justified. The AO is accordingly directed to delete the addition.

4)ITO-32(2)(3), Mumbai vs. Manjula B Hedpara

(ITA: 4669/Mum/2017) SMC Bench, Order dated 17.05.2018

Gist of the Case: The Assessing Officer has despite noting that there were overwhelming evidences that the amount of loan claimed by the Assessee was received from bogus entity floated by Bhanwarlal Jain group did not bother to issue any notice whatsoever to the lender in this case.

Thereafter, after committing this fatal error the Assessing Officer proceeded to refer to the case of Bhanwarlal Jain group and reject the contention of the assessee.

5)Shree Naresh Hiren vs. Income Tax Officer 30(2)(4), Mumbai,

ITA: 1236/Mum/2017, ITAT Mumbai Gist of the Case :

The Assessing Officer did not examine various documents furnished by the assessee and did not show that the said documents are not reliable.

Instead the Assessing Officer has totally placed reliance on the statement given by Mr. Bhanwarlal Jain, which is claimed to have been retracted. The assessee has discharged burden

of proof placed upon its shoulders u/s. 68 of the Act, the learned CIT(A) was not justified in confirming the addition by simply placing reliance on the statement given by Mr. Bhanwarlal Jain. The various documents furnished by the assessee, in fact, militate against the statement given by Shri Bhanwarlal Jain. Accordingly, the order passed by the learned CIT(A) is set aside and the Assessing Officer is directed to delete the addition.

6)D.C.I.T Circle-5(2)(2) vs. M/s. Manish Flour Mills Pvt. Ltd.

ITA NO. 6729/MUM/2016

Date of Pronouncement: 24.10.2018

Gist of the Case:

Assessing Officer made addition by placing reliance merely on the statements of Shri Bhanwarlal Jain Group which were recorded u/s. 132(4) of the Act. No independent enquiry was carried out by the Assessing Officer, he has not brought any corroborative evidence to substantiate that the transactions are non-genuine. Assessee provider various evidences to establish that the transactions are genuine. creditors are identifiable and credit worthiness is proved.

The assessee has discharged the initial onus of proving genuineness of the transactions u/s. 68 of the Act. Even the creditors have responded to the notices issued u/s. 133(6) of the Act and confirmed the genuineness of the transactions with the assessee, therefore once the initial onus is discharged by the assessee the burden shifts to the Revenue to disprove the claim of the assessee.

We notice that all the loans were taken through banking channels and the repayments for the same was also made through banking channels. The loans were repaid after paying interest and deducting TDS. The Assessing Officer ignored the documentary evidences submitted by the assessee and has exclusively relied on statements of third party in making the addition. In spite of request by the assessee the Assessing Officer did not provide any cross-examination of the parties who have made the submissions.

On a careful reading of the order of the Ld.CIT(A), we do not find any infirmity in the order passed in deleting the addition made u/s. 68 of the Act and the consequential interest on the credits.

Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue.

7) Neminath Mumbai Shelter vs DCIT, CentralCircle-1(3), Mumbai ITA No(s). 2554, 2885, 2952, 3526 & 3527/Mum/2018 (Assessment Year(s): 2009-10 to 2011-12, 2013-14 & 2014-15) dated 07/06/2021

The assessee was stated to have received accommodation entries for loans amounting to Rs. 3.75 crores from benami concerns managed and controlled by Shri. Bhanwarlal Jain and his associates-cum-employees.

Held that:

...a perusal of the orders of the lower authorities reveal that the A.O had not even sought to verify the authenticity of the loan transactions in question by issuing any notices under Sec. 133(6) of the Act. In our considered view, in case the A.O had any doubts as regards either the identity and creditworthiness of the aforesaid lenders or the genuineness of the loan transactions, then, in order to dispel the same he would have made necessary verifications by either summoning the details in exercise of the powers vested with him under Sec. 133(6) or directing the assessee to furnish further documentary evidence. However, we find that the A.O had neither carried out any verifications on his own nor directed the assessee to clarify any further aspects pertaining to the authenticity of the loan transactions in question."

"22. We, thus, in the backdrop of our aforesaid deliberations are of the considered view that as the assessee had discharged the onus" that was cast upon it under Sec.68 of the Act, therefore, the A.O without rebutting the genuineness of the said loan transactions in question on the basis of supporting documents was in no way justified in treating the loans amounting to Rs. 3.75 crores received by the assessee from the aforementioned parties as unexplained cash credits under Sec. 68 of the Act. Accordingly, not finding favour with the view taken by the lower authorities, we herein set aside the order of the CIT(A) and vacate the addition of Rs. 3.75 crore made by the A.O." 11. In the back drop of the aforesaid submissions, it was the prayer by the Ld

AR that, under the identical facts and circumstances, following the ratio

emerging from the aforesaid decision, which is squarely applies in the

assessee’s case, the addition of Rs. 35,00,000/- made u/s. 68 along with the

consequential additions or disallowance are liable to be deleted. 12. Per contra Ld. Sr. DR representing the revenue submitted that, all the

necessary details were not furnished by the assessee before the Assessing

Officer like bank statements, Form 26AS of the Impex Gems etc., so as to

substantiate with the factual aspects. The orders of Revenue Authorities are,

therefore, deserves to be upheld.

record and the case laws relied upon the Ld. AR representing the assessee.

Admittedly, in the present case the loan was received by the assessee from M/s.

‘Impex Gems’, which undoubtedly is aentity related to Bhanwarlal Jain Group, wherein a search and seizure action was conducted by the department and found

that the assessee’s of said groupwere involved in the business of

accommodation entries.

necessary documents regarding the lender entity, like PAN No., Income Tax

Return, audited financials, Form 3CB, 3CB, confirmation letters, bank

statements etc. The Assessing Officer was not satisfied with the submissions of

the assessee. He made the addition of Rs. 35,00,000/- treating the unsecured

loan received as unexplained cash credit in the books of the assessee u/s. 68.

Being dissatisfied with the contentions and submissions made by the assessee,

the CIT(A) upheld the findings of the Assessing Officer. Before us, the Ld.AR

of the assessee furnished copies of all basic and primary documents for the

satisfaction of three main ingredients of Section 68 i.e. identity and

creditworthiness of the lender and genuineness of the transactions, as were

produced before the revenue authorities. On perusal of such evidence i.e.,

audited financials of the lender, bank statements, ledger accounts, confirmation

etc.,we find that the loan was received in the month of May 2008 and again

repaid in the month of July/Aug 2009, interest has been paid and lawful TDS

was deducted from such interest. The loan remains with the assessee for a

period of 14 months and the same was repaid in the total.

exchange of cash between these two parties. Further, repayment of loan dilutes

the basis of accommodation entries for generating unexplained cash credit,

which was done prior to initiation of impugned assessment. Once the basic

documents are furnished by the assessee, the onus shifts on the Assessing

Officer, if there was a doubt, he had the powers to conduct further independent

enquiries, which in present case are found to be missing at the assessment stage

and even at first appellate stage. Under such facts and circumstances, we find

substance in the submission of the Ld. AR that the assessee cannot be made to

prove the negative instance, which is doubted by the revenue authorities under

generalized observations. Whereas the corroborative evidence and facts on

record shows to the contrary.

following the jurisprudence referred by the assessee, are of the considered view

that, the addition made by the Ld. Assessing Officer based on generalized

observations emerging from the investigation report, without any independent

enquiry in the present case, vitiates the mandate of law and therefore the same

cannot stand good in the eyes of the law. We, accordingly, direct to set aside the order of the Ld.CIT(A) and to delete the entire addition of Rs. 35,00,000/-made

u/s. 68 of the Act vide Order u/s 143(3) dated 14.03.2016.

observations.

Order pronounced in the open court on .25.05.2026.

SSd/d/- Sd/- Sd/- Sd/- (BEENA PILLAI) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai; Dated: 25.05.2026 Aditi Pandare, Private Secretary

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai