PRASPACK INDUSTRIES PVT. LTD.,MEHSANA vs. THE ACIT, CIRCLE, MEHSANA

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ITA 2681/AHD/2025Status: DisposedITAT Ahmedabad20 May 2026AY 2012-138 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Revenue failed to factually demonstrate that the assessee received an accommodation entry. The Tribunal also noted that the assessee was not supplied with the statement of a key witness and cross-examination was not allowed.

What were the facts?

The assessee received an amount of Rs. 35,75,000/- from Falguni Enterprises, which the Assessing Officer (AO) treated as an accommodation entry. The assessee contended that the amount was received towards outstanding dues from sales made in the preceding year.

What were the issues?

Whether the amount received from Falguni Enterprises constituted an accommodation entry, and if the principles of natural justice were violated by not providing the witness statement and cross-examination.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 131,Section 154,Section 250,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE

For Appellant: Shri Vishnubhai Patel, AR, Shri Abhijit, Sr.DR
For Respondent: Shri Abhijit, Sr.DR
Hearing: 16/03/2026Pronounced: 20/05/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 2681/Ahd/2025 (िनधा�रण वष� / Assessment Year : 2012-13) बनाम/ Praspack Industries Pvt. The ACIT Circle, Mehsana Ltd. Vs. Plot No.32, Nr. Pharma Lab, Santej Vadsar Road, Santej, Kalol, Mehsana, Gujarat - 382721 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAFCP5643L (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Vishnubhai Patel, AR ��यथ� क� ओर से/Respondent by : Shri Abhijit, Sr.DR Date of Hearing 16/03/2026 Date of Pronouncement 20/05/2026 (आदेश)/ORDER PER ANNAPURNA GUPTA, AM:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 16.09.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2012-13.

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 2 – 2. The grounds of appeal raised by the assessee are as under:

“1. The ld.CIT (a) grossly erred on facts and in laws in upholding the addition made by the ld.AO, where the addition made had not been in the nature of accommodation entries. 2. Without prejudice to above. The ld.CIT (a) ought to have restrict the addition to the extent of GP rate on so called unaccounted turnover.” 3. Brief facts relating to the case are that the assessee company was engaged in the business of manufacturing of Flexible Packaging bags and had filed its return of income for the impugned year i.e. A.Y. 2012-13, declaring total income at Rs.2,22,00,520/-. The case was selected for scrutiny and assessment framed u/s.143(3) of the Act determining the total income at Rs.2,29,99,180/-. Subsequently, order u/s.154 of the Act was passed revising the income to Rs.2,44,84,790/-. Later information was received from DDIT, (Inv.), Unit-6(4), Mumbai that the assessee had received accommodation entry of Rs.35,75,000/- from Falguni Enterprises during the year. Accordingly, case of the assessee was reopened u/s.147 of the Act by issuing notice u/s.148 of the Act. During assessment proceedings, information gathered from Investigation revealed that Shri Dilip Jayantilal Shah, Director of M/s. Arpita Tradelink Private Limited admitted in statement u/s.131 of the Act that the Company was engaged in providing accommodation bills without actual trading and earning only commission income. Similar pattern of routine of funds was also noted in the bank account of

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 3 – Falguni Enterprises. The assessee was noted to have received accommodation entries of Rs.35,75,000/- from Falguni Enterprises during the year. In response to show cause notice, the assessee failed to furnish documentary evidences to prove the genuineness of the transaction. The assessee only submitted certain bills pertaining to preceding assessment year i.e. A.Y. 2011-12. Therefore, in the absence of supporting evidences, the AO held that the entries of Rs.35,75,000/- were accommodation entry and added the same to the income of the assessee.

4.

The matter was carried in appeal where the assessee reiterated that it had entered into the transaction of sale of goods with Falguni Enterprises in the preceding assessment year i.e. A.Y. 2011-12 and not in the impugned assessment year. The quantum of goods sold to Falguni Enterprises in A.Y. 2011-12, it was stated was Rs.82.02 Lakhs and the assessee during the year had only received outstanding amount. The assessee in support of its contention furnished copy of ledger account of Falguni Enterprises in its books, bank statement of the assessee reflecting the receipts during the year as well as copy of sale bills and delivery challan of the preceding year transactions. The assessee further pointed out that the gross profits had improved from 11.9% in the preceding year to 12.52% in the current year which establishes that the business result were consistent and genuine. The assessee contended that the AO had not controverted the evidences furnished and merely on assumptions and on the basis of

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 4 –

statement of third party had made addition. It was also argued that the statement of Shri Dilip Jayantilal Shah was not supplied nor was cross examination allowed which vitiated the addition. The Ld. CIT(A) after considering the submissions of the assessee held that the assessee had failed to substantiate its contentions that sales were made to Falguni Enterprises in the preceding assessment year alone and he further noted the deficiencies in the sale invoices furnished by the assessee. Accordingly, in the absence of contemporaneous and corroborative evidences filed by the assessee, he confirmed the addition made by the AO of Rs.35.75Lakhs as mere accommodation entry. His findings in this regard are contained at para 8.5.3 to 8.5.7 of the order as under:

“8.5.3 I have carefully considered the facts and submissions. It is seen from the assessment order and assessment records that the AO, Shri Dilip J. Shah in his statement recorded u/s 131, mentioned that Arpita trade links for which he is director is involved in providing accommodation bills without carrying out genuine trading activity. He stated that no actual transfer of goods are carried out, only bills are provided to other companies for commission of Rs 10 paise on Rs 100/-. The AO noted that Sri Dilip J. Shah is associated with Falguni Enterprises in whose bank account similar transactions are carried by him. During the course of assessment proceedings, the appellant though argued that amount received during the year is on account of amount receivable from Falguni at the end of last year wrt sales made by appellant with that concern, failed to furnish confirmation from either Falguni enterprises or Sri Dilip J. Shah stating that sales claims to have been made by appellant during previous assessment year are genuine sale transactions, payment made during the year is wrt actual business transactions but not accommodation entries provided by the concern. 8.5.4 It is noticed that during assessment proceedings, the appellant produced few sale bills of F.Y. 2010-11 relevant to A.Y. 2011-12 in the name of Falguni enterprises, which did not pertain to the year under consideration. The appellant failed to submit previous year's

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 5 –

financial statements, books of accounts to substantiate that sales made to Falguni are recorded in its books during that year, proof for payment received during the year, to establish outstanding balance in appellant's books etc nor were VAT returns produced to establish that sales were actually made to M/s Falguni Enterprises in the preceding years. 8.5.5 Further, serious deficiencies were noticed in the evidences furnished by the appellant. From the sales invoices, it is seen that no vehicle number was mentioned and only the name "Bhavana Transport" was stated. Even on the lorry receipts, the details of transport vehicle were not mentioned. Sale bills are only signed by appellant. The appellant also failed to furnish evidence of actual payment made towards transport charges. Delivery challans were not furnished in support of actual delivery of goods. This evidence becomes very important especially in view of statement of SRI Dilip J shah that no actual delivery of goods takes place except providing accommodation entries to beneficiaries. Moreover, in the sale invoices the address of M/s Falguni Enterprises was shown as Bhumi Residency, Mahavir Nagar, Dahisar, Kandivali (W), Mumbai, whereas the goods were purportedly dispatched to Vasai, Thane, which is about 30 kms away. Even in the lorry receipts, only "Vasai" was mentioned without exact delivery address. In absence of proper address how transporter has delivered goods to Falguni is not known. These discrepancies clearly cast doubt on the genuineness of the sales transactions claimed. 8.5.6 In absence of contemporaneous and corroborative evidences such as VAT returns, transport details, delivery challans, confirmations from the party or proof of outstanding balance carried forward, the appellant has failed to establish that the receipts of Rs. 35.75.000/- during A.Y. 2012-13 were against genuine sales of earlier year. The Hon'ble Supreme Court in CIT v. Durga Prasad More (82 ITR 540) and Sumati Dayal v. CIT (214 ITR 801) has laid down that taxing authorities are entitled to look into surrounding circumstances and apply the test of human probabilities to determine genuineness. In the present case, the admission of Shri Dilip J. Shah that Falguni Enterprises was engaged in providing accommodation entries, coupled with the above discrepancies in the appellant's documents, fully supports the AO's conclusion that the impugned receipts were not genuine. The Argument of appellant that recording of bogus sales does not result in any benefit to any assessee when entire sales turnover is credited to profit and loss account can't be accepted since by recording bogus sales, the asessee only offers gross profit on

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 6 –

bogus sales to tax while converting unaccounted income equivalent to bogus sale volume as accounted money. 8.5.7 In view of the above facts and legal position, I hold that the AO was justified in treating the receipts from M/s Falguni Enterprises as accommodation entries in the absence of any confirmation from the concerned party regarding genuineness of transaction conducted with appellant and making addition of Rs.35,75,000/- to the total income of the appellant. Accordingly, Ground No. 2 is dismissed.”

5.

Ld. Counsel for the assessee reiterated the contention made before the lower authorities while Ld. DR relied on the orders of the authorities below.

6.

We have heard both the parties and have gone through the orders of the authorities below. The allegation of the Department, we have noted, is that the assessee was the beneficiary of accommodation entry from one Falguni Enterprises of Rs.35.75 lacs. The nature of the accommodation entry is revealed in para 8.3 of the Ld. CIT(A)’s order wherein Shri Dilip Jayantilal Shah’s statement admitted that his company was engaged in providing accommodation bills without actual trading and earning only commission income. Clearly as per the information with the Department, the assessee had availed accommodation entry by way of bogus bills/transactions entered in its books of accounts. In the present case, the assessee, we find, has categorically denied entering into any transaction of purchase/sale with Falguni Enterprises during the impugned year except that of receipt of money that too amounting to Rs.82.02 lacs, which the assessee claimed was on account of payment of outstanding dues by Falguni

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 7 – Enterprises. The assessee, we have noted, corroborated the said facts by furnishing ledger account of Falguni Enterprises in its Books of accounts. The Revenue, we find, has not established how the assessee received accommodation entry of Rs.35.75 lacs. The Revenue has failed to factually demonstrate the fact of the assessee having received accommodation entry of Rs.35.75 lacs during the year. The revenue has not controverted the contention of the assessee that it neither purchased nor sold any goods to Falguni Enterprises. The Revenue has also been unable to controvert the fact demonstrated by the assessee that its transaction with Falguni during the year was on account of receipt of outstanding dues which were not to the tune of Rs.35.75 lacs but amounted to Rs.82.02 lacs.

7.

The allegation is of the Revenue that the assessee had received accommodation entry of Rs.35.75 lacs from Falguni enterprises during the year by way of bogus billing, therefore the onus was on the Revenue to demonstrate factually the said transaction having been entered into by the assessee, which we find the Revenue has miserably failed. The entire case of the Revenue rests on information received from investigation wing, which the Revenue has made no effort to demonstrate its truth/existence. The addition made therefore is merely based on assumptions and presumptions and therefore, we hold, is not sustainable.

ITA No.2681/Ahd/2025 [Praspack Industries Pvt. Ltd. vs. ACIT] A.Y. 2012-13 - 8 –

8.

Even otherwise, the assessee was neither supplied with the statement of Shri Dilip Jayantilal Shah nor was cross examination allowed, which goes against the principles of natural justice.

9.

In the light of the above, we see no reason for making any addition in the hands of the assessee in the impugned year on account of any alleged accommodation entry available by the assessee from Falguni Enterprises. The addition made to the income of the assessee Rs.35.75Lakhs is, accordingly, directed to be deleted.

10.

In the result, appeal filed by the assessee is allowed.

This Order pronounced on 20/05/2026

Sd/- Sd/- (SUCHITRA KAMBLE) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 20/05/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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