DCIT CIRCLE-4(1)(1), AHMEDABAD, VEJALPUR vs. SHREE NAKODA TEXFAB PRIVATE LIMITED, AHMEDABAD

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ITA 2233/AHD/2025Status: HeardITAT Ahmedabad29 May 2026AY 2019-205 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee had provided sufficient explanation for the credits, including ledger accounts, sale bills, and bank statements, demonstrating genuine sales transactions. The AO had not confronted the assessee with contrary evidence, and the CIT(A)'s deletion of the addition was justified.

What were the facts?

The Assessing Officer (AO) made an addition of ₹1,15,80,664/- under Section 68 of the Income Tax Act, treating it as unexplained cash credit. This was based on information that the assessee was a beneficiary of accommodation entries from entities controlled by Sanjay Tibrewal, whose premises were searched. The CIT(A) partly allowed the assessee's appeal.

What were the issues?

Whether the cash credits treated as unexplained under Section 68 were supported by genuine sales transactions, and if the AO had properly confronted the assessee with evidence to the contrary.

Which sections of the Income-tax Act were involved?

Section 68,Section 132,Section 147,Section 148,Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH

Before: Dr. BRR Kumar & Ms. Suchitra Kamble

For Appellant: Shri S. N. Divatia, A.R. &, Shri Samir Vora, A.R
For Respondent: Shri VeerabadramVislavath, Sr. D.R

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member ITA No. 2233/Ahd/2025 Assessment Year 2019-20

The DCIT, Shree Nakoda Texfab Circle-4(1)(1) Pvt. Ltd. Ahmedabad Vs 77, Maliya New Cloth (Appellant) Market, O/S Raipur Gate, Sarangpur, Ahmedabad PAN: AANCS3442C (Respondent)

Assessee by: Shri S. N. Divatia, A.R. & Shri Samir Vora, A.R. Revenue by: Shri VeerabadramVislavath, Sr. D.R.

Date of hearing : 23-03-2026 Date of pronouncement : 29-05-2026 आदेश/ORDER Per Suchitra Kamble, Judicial Member:

This is an appeal filed against the order dated 02-09- 2025 passed by National Faceless Appeal Centre, (NFAC), Delhi for assessment year 2019-20

2.

The grounds of appeal are as under:- “(a) The Ld. CIT(A) has erred in deleting the addition of ₹1,15,80,664/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961, treating the same as unexplained cash credits, without properly appreciating the facts of the case and material evidence gathered during assessment proceedings.

I.T.A No. 2233/Ahd/2025 Shree Nakoda Texfab Pvt. Ltd, A.Y. 2019-20

(b) The Ld. CIT(A) has failed to appreciate that the findings of the Assessing Officer were based on credible information and corroborated evidences collected during investigation, which conclusively established the assessee's involvement in the accommodation entry network. (c) The appellant craves leave to add, alter and or to amend all or any of ground before the final hearing of appeal.”

3.

The information in the case of the assessee has been flagged on INSIGHT Portal in accordance with the Risk Management Strategy formulated by the CBDT. In the instant case, information that a search action u/s. 132 of the Act was carried out on 12.04.2019 in the case of Shri Sanjay Govindram Agrawal, (also known as Sanjay Tibrewal). During the course of search action, various documents relating to financial transactions were found and seized which further established that Sanjay Tibrewal was involved in the business of providing accommodation entries On verification of the details received from the Investigation Wing, it is noticed that the assessee M/s Shree Nakoda Texfab Pvt Ltd is one of the beneficiaries who have carried out various transactions to the tune of Rs.1,15,80,664/- with the various entities controlled and operated by Shri Sanjay Tibrewal during the FY 2018-19. The case was reopened u/s147 and notice u/s.148 issued to the assessee on 25.03.2023. During the assessment proceeding the submission filed by the assessee has been duly considered by the AO but the same is not found acceptable. Hence, the AO completed the assessment proceeding u/s.147 rws 144B of the Act by making an addition of Rs. 1,15,80,664/-

I.T.A No. 2233/Ahd/2025 Shree Nakoda Texfab Pvt. Ltd, A.Y. 2019-20 towards cash credit u/s.68 of the Act. The total income of the assessee assessed at Rs.2, 16,77,954/-.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

The ld. D.R. submitted that the CIT(A) was not right in deleting the addition of Rs. 1,15,80,664/- made by the Assessing Officer u/s. 68 of the Act treating the same as unexplained cash credit without properly appreciating the material evidence gathered during assessment proceedings and was relied by the Assessing Officer at the time of assessment proceedings. The ld. D.R. submitted that the documentary evidences submitted by the assessee shown expenditure. The fact that the income assessed from transaction itself related to the search upon Sajay Timbrewal. The ld. D.R. further submitted that the assessee did not disclose all the details and therefore the addition made by the Assessing Officer was justified. The details of having transactions with Human Fabrics and Narayan & Company was also not explained by the assessee through proper confirmations from the parties to whom the assessee sold the goods. In fact, statement reflects similar entry related to M/s. Narayan & Company and it is not sufficient evidence.

6.

The ld. A.R. submitted that the assessee explained that the said amount was received from the customers against

I.T.A No. 2233/Ahd/2025 Shree Nakoda Texfab Pvt. Ltd, A.Y. 2019-20 the sales and the same was duly credited to sale account of the annual financial account. Thus, it was explained source of the said amount from Narayan & Company and sales from Hanuman Fabrics. The assessee also furnished copy of ledger account, sale bills, bank statement in respect of the three parties Niraj Textile Mill, Vedant Enterprise and Vedant Fashion. The ld. A.R. relied upon the decision of Hon’ble Bombay High Court case of PCIT vs. Nitin Ramdev Lahia along with following decisions. Thus, the ld. A.R. submitted that since the Assessing Officer had not disputed the corresponding sales transaction, purchases also could not be held bogus.

We have heard both the parties and perused all the 7. relevant material available on record. The reply dated 18- 03-2023 to the Assessing Officer during the assessment proceedings categorically mentions that the assessee did not involve in any accommodation entry from Narayan and Company as well as Hanuman Fabrics. In fact, the assessee did not have any account in the name of M/s. Narayan and Company as well as Hanuman Fabrics in his books of account. The ld. A.R. categorically mentions that the assessee received the payments against the genuine sales made to its customer from Niraj Textile Mills, Vedant Enterprise and Vednat fashion. The details of these purchases were also given by the assessee from page no. 112 to 122 of the paper book which was reflected in the ledger accounts maintained by the assessee as well as in the bank statement of the assessee during the relevant period.

I.T.A No. 2233/Ahd/2025 Shree Nakoda Texfab Pvt. Ltd, A.Y. 2019-20 Thus, the assessee has explained all the purchases made by the parties which were not at all confronted by the Assessing Officer. Thus, the addition deleted to the extent of the CIT(A) was justified and there is no need to interfere with the findings of the CIT(A). Thus, the appeal of the Revenue is dismissed.

8.

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

Order pronounced in the open court on 29-05-2026

Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad: Dated 29/05/2026 a.k. TRUE COPY आदेश की �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद

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