ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-25, DELHI, DELHI vs. MAS ADVISORY SERVICES PRIVATE LIMITED, DELHI

per settlement. Hence, the addition made by AO treating this transaction as accommodation entry is not sustainable on facts and merits of the case and is directed to be deleted. As such, these grounds of appeal are allowed. 6. Ground No. 7: pertains to the contention of appellant regarding addition of Rs. 60,000/- u/s 69C of the Act on account of presumptive commission paid to avail accommodation entry. However, as adjudicated in ground nos. 6 & 6.1 above that the transaction of Rs. 20 Lacs was not any accommodation entry; the consequential commission addition is found to be based on mere presumption without any evidence of expenditure cogent or circumstantial. Such addition lacks merit and cannot be sustained. Therefore, this ground of appeal is also allowed. 7. Since the quantum of additions made by AO are deleted in the adjudication above, remaining grounds of appeal become academic in nature and are therefore not adjudicated upon. 8. In the result, the appeal of the appellant is hereby allowed. 5. Aggrieved , the Revenue has now filed an appeal with the Tribunal. At the outset, the Ld. Sr. DR submitted that this appeal is not covered under low tax effect circular issued by Revenue , as the additions have been made on the grounds that the assessee is beneficiary of accommodation entries provided by one of the entities controlled by Mr. Deepak Agarwal. It was submitted that said Mr. Deepak Agarwal and Mr. Himanshu Verma were engaged in controlling more than 300 non-descript entities who were engaged in organized tax evasion by providing various types of accommodation entries. Reliance was placed on clause 3.1(h) of the Circular No. 5/2024 dated 15th March, 2024 issued by CBDT. It was submitted that the assessee received accommodation entry of Rs. 20,00,000/- from M/s Pine View Portfolio Consultants Private Limited on 12.02.2019 , and the same was claimed to have been re-paid in October, 2023 i.e. after more than 4 years and also after notice u/s 148 dated 31.03.2023 was issued by the Revenue wherein assessment was re-opened. It was submitted by ld. Sr. DR that the assessee has claimed before ld. CIT(A) that it filed reply dated 20.03.2024 before the AO , but no such reply was filed and the AO never considered such aforesaid reply before finalizing assessment . It was submitted that there is no mention of the aforesaid reply dated 20.03.2024 in the assessment order. It was submitted that the ld. CIT(A) did not gave opportunity to the AO

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to consider the said reply dated 20.03.2024 and to give his comments, before adjudicating appeal and granting relief to the assessee. It was submitted that ld. CIT(A) made enquiry u/s 133(6) with Pine View Portfolio Consultants , and arrived at decision granting relief to the assessee, without confronting the same for rebuttal to the AO. The Ld. Sr. DR relied upon the order of the Tribunal in the case of ACIT v. Bhawani Finvest Private Limited in ITA No.6303/Del/2025 vide order dated 25th March, 2026, wherein under similar circumstances with respect to the same searches conducted by Revenue on 17.11.2021 u/s 132 on entry operators namely Mr. Deepak Agarwal and Mr. Himanshu Verma , the Division Bench of the Tribunal upheld reassessment made by the AO and as confirmed by ld. CIT(A) by upholding the additions made by the authorities below, by holding as held as under: “8. We have heard rival submission in the light of material available on records. We have noted that the Id. AO has vividly demonstrated in his assessment order extracted hereinabove that the assessee was having connections with accommodation entry providers. We have also noted that the ld. AO has extensively brought out in the assessment order while analyzing statements of entry providers Shri HimanshuVerma and Shri Deepak Agarwal and their employees Ms. Sonia, etc that a web of shell company was created to route accommodation entries and that the assessee was beneficiary of one such company. On the issue of justification of loan qua its repayment, we have noted that a co-ordinate Bench of the Mumbai Tribunal in the case of J.K. Global (supra) held as under:- "..7. Considering the facts of the case in toto and in the light of the decisions of the coordinate bench (supra), we have no hesitation in confirming the addition made u/s 68 of the Act for the captioned Assessment years. The contention of the Id. counsel that the loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense.... 9. Thus, we have noted that the argument of the assessee regarding the justification of impugned loan of Rs.2 crores on account of repayment cannot be accepted. In respectful compliance to the decision of Hon'ble Mumbai Tribunal in the case of J.K Global(supra), we are of the considered view that the relief accorded by the Id

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CIT(A) is not based upon correct understanding of the facts of the case. We, therefore, set-aside the order of the Id. CIT(A) and confirm the addition of Rs.2 crores made by the ld. AO. Similarly, we also confirm the addition made by the AO of Rs.15,06,164/- on account of interest and of Rs.6 lakhs on account of commission. The appeal of the Revenue is therefore allowed.” 5.2 The ld. Counsel for the assessee submitted that addition of Rs.20,00,000/- has been made with respect to amount received towards business from Pine View Portfolio Consultants Private Limited . It was submitted that Section 69A is not attracted. My attention is drawn to page 71 of PB , and it was submitted that there is no mention of Section 69A in the notice dated 06.03.2024 issued by the AO u/s 142(1). It was submitted that statement of Mr. Deepak Agarwal was not provided to the assessee by department. It was submitted that reasons recorded for reopening of the assessment were duly provided by department. It was submitted that vide reply dated 20.03.2024 all the documents concerning business agreement, ledger account , confirmation , settlement agreement and communication between the assessee and Pine View were duly filed before the AO. The ld. Counsel for the assessee was directed to file said reply dated 20.03.2024 purported to have been filed before the AO during reassessment proceedings, before the Bench. The assessee later filed paper book containing 85 pages, which are replies submitted before ld. CIT(A), in which said reply dated 20.03.3024 claimed to have been filed before the AO is enclosed at page 14-142/PB(placed on record). 6. I have heard the contentions of both the parties and perused the materials available on record. I have observed that search and seizure operations were conducted by Revenue u/s 132 of the Act on 17.11.2021 in the case of Galaxy Group ,Shri Pradeep Indra Prasad Agrawalla(Founder of Galaxy Group) and also in the case of Sh. Deepak Agarwal and Shri Himanshu Verma, alleged entry operators. I have observed that detailed coordinated investigations were carried out by the Department , wherein it was unraveled consequent to investigation that Sh. Himanshu Verma and Shri Deepak Agarwal were alleged accommodation entity providers in lieu of cash and commission. It was also unraveled consequent to

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detailed investigations carried out by department, that they were controlling and managing more than 300 non-distinct entities (listed by the AO in his assessment order), which were allegedly web of dummy/shell companies incorporated to provide bogus accommodation entries in lieu of cash and commission and both of them were working in tandem. Pine View is one of the listed company at S.No. 110 of the list of accommodation entry provider companies controlled and managed by Mr. Deepak Agarwal and Mr. Himanshi Verma. The Department has concluded that these entities do not have adequate capital, had meager assets and had meager business turn over. There was huge share premium reflected in their books of accounts which donot justify their assets and turnovers. They were having very few employees , and main activities of these non-distinct entities were to provide various types of accommodation entries in lieu of commission and cash. It also transpired that there are cross holding by these companies, which were undertaken to boost their net-worth with a view to provide more accommodation entries . It was unraveled consequent to investigations carried out by Revenue that these two entry providers namely Mr. Deepak Agarwal and Mr. Himanshu Verma were acting in tandem while running this 300 non distinct entities who were engaged in providing various types of accommodation entries in lieu of cash and commission. While undertaking physical verification of these entities controlled and managed by Mr. Deepak Agarwal and Mr. Himanshu Verma, it was also unraveled that these entities were not found at the address mentioned of these entities on record. It also emerges during investigations that these two entry operators were regularly incorporating new companies to be used as non-distinct entities for routing accommodation entries. Various statements were recorded by the Department during search operations and post search investigations of these aforesaid persons , their key employees/relatives , professionals , as well employees of Galaxy Group ( details in the preceding para’s of this order), and after detailed investigation it was concluded

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by Revenue that these persons namely Mr. Deepak Agarwal and Mr. Himanshu Verma were engaged in providing bogus accommodation entry in lieu of commission and cash through web of 300 shell/dummy companies and both of them are working in tandem. It has also transpired that the assessee is also beneficiary of alleged bogus accommodation entry by way of loan of Rs.20,00,000/- received by the assessee in February, 2019 through banking channel. The Department has provided to the assessee the incriminating material by way of ledger account of the assessee in the books of account of Pine View Portfolio Consultants Private Limited(“Pine View”) along with reason recorded for reopening of the assessment. As per Revenue, the assessee did not file any details before the AO wrt aforesaid loan amount of Rs. 20,00,000/- raised by it from Pine View, which Revenue is alleging is an entity controlled by accommodation entry provider Mr. Deepak Agarwal. The assessee is contending that it filed details before the AO on 20.03.2024. The assessee has claimed to have enclosed aforesaid reply before ld. CIT(A). The same is now filed before the Bench. This reply does not bear any signature and stamp of the AO(placed in paper book/page 14-42/reply filed before ld. CIT(A)). Thus, this is a disputed fact. In any case, The AO did not consider this reply dated 20.03.2024 , while passing reassessment order u/s 147. It was incumbent on ld. CIT(A) to have forwarded this reply before the AO for its comments before adjudicating appeal as it is a disputed fact, but the same was not done by ld. CIT(A). Reference is drawn to provisions of Section 250(2)(b) of the 1961 Act. Principles of natural justice are breached. In this reply, the assessee is contending that the transaction of Rs. 20,00,000/- from Pine View was towards business transaction, while the AO treated it as loan raised by the assessee from Pine View. The copies of agreement etc are filed. None of the documents /agreements so filed before the Tribunal are on stamp paper, as no stamp duty is paid for entering into business agreement nor for entering into settlement agreement by the assessee

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with Pine View. The agreement is of June, 2019 which contained a promise to invest Rs. 50,00,000/- by Pine View in share trading activities with assessee, and to bear the fruits of share trading. The agreement is not fully implemented, as only first tranche of Rs. 20,00,000/- and thereafter second tranche of Rs. 30,00,000/- was never paid. This required enquiry by ld. CIT(A) as to whether it was a genuine default or a deliberately undertaken to circumvent the completeness of transaction. Then comes the settlement agreement to repay initial amount of Rs. 20,00,000/- by the assessee to Pine View in October, 2023 without any interest etc. . The repayment was made by the assessee in October, 2023 i.e. after gap of more than 4 years without any profit sharing and/or interest. The said repayment was made after issuance of notice u/s 148 dated 31.03.2023 i.e. when the assessee was allegedly cornered as there were investigations launched by Revenue against web of shell companies /entities operated by Mr. Deepak Agarwal and Mr. Himasnhu Verma, alleged accommodation entry providers. The ld. CIT(A) did not look into various aspects surrounding the deal and the allegations of amount being provided by accommodation entry operators. Even whether SEBI approval for entering into share trading business in partnership was obtained by the parties or not, or whether the entire scheme violated SEBI rules and regulations as well Securities Contract Regulation Act or any other applicable law, was not looked into by ld. CIT(A). The ld. CIT(A) called for information from Pine View u/s 133(6) of the 1961 Act , and decided the issue in favour of the assessee on the grounds that the amount of Rs. 20,00,000/- was advanced through banking channel and the Balance Sheet has advance of Rs. 65,00,000/- as at 31.03.2019 , while there was bank balance of Rs. 87.25 lacs on 11.02.2019 available with Pine View . Several findings of Revenue surrounding these companies were not looked into by ld. CIT(A) nor rebutted by ld. CIT(A), before giving relief to the assessee. The ld. CIT(A) never confronted AO with the result of such enquiry u/s 133(6). There are two parties before ld. CIT(A),

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and it was incumbent on ld. CIT(A) to have confronted the AO with the material relied upon by ld. CIT(A) while adjudicating the appeal of the assessee. The ld. CIT(A) did not considered various statements recorded by Revenue wherein it has transpired after detailed investigation that Mr. Deepak Agarwal and Mr. Himanshu Verma are entry operators running a web of 300 companies who are engaged in providing various types of accommodation entries. The ld. CIT(A) before granting relief to the assessee did not consider that the Revenue has conducted detailed investigations as to functioning of these entities such as having negligible capital, meager turnover, huge premium raised by these companies which is not justified vis-à-vis their intrinstic worth, non traceability of these companies at the furnished addresses on record, non compliances by these companies and their Directors to the summons issued by the Revenue apart from the incriminating material seized during the search conducted by Revenue such as whatsapp messages/chats and statements recorded during search and post search investigations.These non-distinct companies such as Pine View and their directors did not responded to the summons issued by Revenue, while they were undertaking settlement agreement with the assessee in October, 2023. These companies were not traced at their given addresses while investigations were conducted by Revenue, while the assessee entered into agreement of settlement on October, 2023. These aspects were not looked into by ld. CIT(A). It is pertinent to mention here that the employees of these entry operators, employees of galaxy Group, professionals as well as son of Sh. Deepak Agarwal (detailed in preceding para’s of this order) admitted while recording statements that these entities were engaged in providing different types of accommodation entries in lieu of cash and commission. The ld. CIT(A) did not look into this fact that it is only when the notice u/s 148 was issued by the AO in March 2023, then the assessee came forward to repay the amount in October, 2023 to create an evidence to protect itself against substantive additions and other consequences which may follow. These

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aspects were not looked into by ld. CIT(A). Further, after detailed investigations , the Revenue has unraveled that these are non-distinct entities which are created solely for the purposes of providing different types of accommodation entries in lieu of cash and commission. It was unraveled by Revenue that these companies have meager turnover, meager fixed assets, very less employees, huge premium was raised which does not justify their intrinstic worth, the companies have cross holdings to boost their capital in order to provide more accommodation entries and for circular rotation of funds. None of the above findings are rebutted by the assessee nor addressed by ld. CIT(A) while granting relief to the assessee. I , therefore, hold that appellate order passed by ld. CIT(A) is not sustainable and accordingly, I set aside the order passed by ld. CIT(A), and restore the matter back to the file of ld. CIT(A) for denovo adjudication of the appeal of the assessee on merits in accordance with law, after giving due opportunity to both the parties in accordance with principles of natural justice. The ld. CIT(A) shall admit additional evidences filed by the assessee in its defense and adjudicate the same on merits in accordance with law. It is also observed that the assessee also raised legal/jurisdictional grounds before ld. CIT(A) in its first appeal filed before ld. CIT(A), and ld. CIT(A) is directed to adjudicate all the grounds raised by the assessee. I clarify that I have not commented on the merits of issue in appeal.I order accordingly. 7. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order is pronounced in the Open Court on 22.06.2026 S- Sd/- -/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 22.06.2026