JT.COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-4(1), MUMBAI vs. RAKESH VIRENDRA SINGH, MUMBAI

Since all the issues involved in these appeals are common and identical and belong to the same assessee, they have been clubbed, heard together, and a consolidated order is being passed for the sake of convenience and brevity. Firstly, we shall take ITA No. 689/Mum/2026 for A.Y. 2017–18 as the lead case, and the facts narrated therein are being considered. The Revenue has raised the following grounds of appeal:

As per the facts of the present case, the original return of income was filed on 27.10.2017 declaring total income of Rs. 75,89,340/-. The assessee filed revised returns of income on 30.05.2018 and 22.08.2018 declaring total income at Rs. 75,89,340/- respectively. Thereafter, a search and seizure action under Section 132 of the Act was carried out in the case of One World Group of cases on 06.11.2019. During the course of the search proceedings, it was noticed that various One World Group entities had shown purchases and sales from and to entities controlled and managed by one Rajesh G. Mehta. In the statement recorded on oath, Rajesh G. Mehta admitted that he was only providing bogus sales and purchase bills to various entities and that there was no actual supply of goods. In his statement, Rajesh Mehta also provided details of the entities controlled and managed by him, and M/s. Aneri Fincap Ltd. was one of the entities controlled and managed by him.

During the course of assessment proceedings in the case of M/s. Aneri Fincap Ltd., which was found to be a paper company not carrying on any genuine business activity and engaged in providing bogus accommodation entries to various beneficiaries, it was submitted by them that M/s. Krishna Enterprises and Rakesh V. Singh were among the beneficiaries of the bogus entries provided by them. It was further admitted that accommodation entries to the tune of Rs. 24,74,877/- and Rs. 16,74,575/- were provided by M/s. Aneri Fincap Ltd. to M/s. Krishna Enterprises and to Rakesh V. Singh respectively. From these facts, it was

Thereafter, during the course of assessment proceedings, after issuing statutory notices and seeking replies from the assessee, additions under Section 68 of the Act and disallowance under Section 37 on account of interest expenses were made. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The learned CIT(A) partly allowed the appeal of the assessee by deleting the additions. Aggrieved by the said order, the Revenue has now preferred the present appeal before us on the grounds mentioned hereinabove.

All the grounds raised by the Revenue are interrelated and interconnected and relate to challenging the order of the learned CIT(A) in deleting the additions made under Section 68 of the Act and deleting the disallowance under Section 37 of the Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

We have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we notice that the learned DR appearing on behalf of the Revenue, while relying upon the order of the AO, contested the order passed by the Ld. CIT(A) deleting the additions. In this regard, it was specifically argued that there was credible evidence received by the AO from the Investigation Wing which proved that M/s.

The Ld. DR further argued that the material gathered during the search and seizure action revealed that M/s. Aneri Fincap Ltd. used to provide accommodation loans/paper transactions. Thus, according to the Revenue, the additions made by the AO could not have been deleted by the Ld. CIT(A). It was further argued that proceedings under Sections 131 and 133(6) of the Act had been initiated and that the AO had conducted independent inquiries, including deputation of the Inspector for physical verification, who reported that no such entity was found existing at the given address. It was also submitted that summons were issued to the directors of M/s. Aneri Fincap Ltd. The Revenue further contended that the Ld. CIT(A) had disregarded the statement of Rajesh Mehta, who categorically admitted that M/s. Aneri Fincap Ltd. was managed and controlled by him and that no genuine business activities were carried out by the said company. Lastly, it was submitted that the order passed by the Ld. CIT(A) be set aside and that of the AO be restored.

On the other hand, the Ld. AR appearing on behalf of the assessee, while placing reliance upon the order passed by the Ld. CIT(A), drew our attention to the documents placed on record and relied upon by the assessee.

After hearing the counsel for both the parties at length, we noticed that during the course of assessment proceedings the assessee was asked to provide details of its transactions with M/s. Aneri Fincap Ltd. In response,

We further noticed that the Ld. CIT(A) had adjudicated these grounds raised by the Revenue in detail in paragraphs 8 to 8.11 of the impugned order and the same is reproduced herein below:

After hearing the arguments advanced by both parties, we found that information in this case was received from the Investigation Wing alleging that the assessee had taken bogus unsecured loans from M/s. Aneri Fincap Ltd. (“AFL”) and M/s. VRB Capital Services India Ltd. (“VRB”) and had debited interest thereon from AYs 2016-17 to 2019-20. Accordingly, year- wise additions were made by the AO on account of unexplained credit under Section 68 of the Act and additions under Section 37 on account of interest paid against loans taken from the above-mentioned parties. Apart from this, the AO had also made additions on account of brokerage expenses under Section 69C of the Act for AYs 2016-17 and 2019-20.

During the course of assessment proceedings in the case of M/s. Aneri Fincap Ltd., it was found that the said entity was not carrying on any genuine business and was engaged only in providing bogus accommodation entries to various beneficiaries, and the assessee was alleged to be one of the beneficiaries of such bogus entries. Accordingly, the case of the assessee was reopened. It was also alleged that the assessee 12

In order to substantiate that the assessee had entered into genuine transactions, the assessee submitted copies of confirmation of accounts, extracts of books of account and bank statements, copies of audited financial statements of VRB and AFL, and details such as names, addresses, and PANs of the lenders.

It was also established that the assessee had taken loans through proper banking channels and repaid the same along with interest in subsequent years. Further, the assessee relied upon similar judicial precedents of the Coordinate Benches of the ITAT, wherein a consistent view had been taken deleting additions on account of unsecured loans and brokerage thereon from AFL, which was one of the parties from whom the assessee had also taken unsecured loans.

We also considered the decision of the Coordinate Bench of the ITAT in the case of ITO vs. SKA Tech Infra Pvt. Ltd. in ITA No. 4369/Mum/2024, wherein the Coordinate Bench had deleted the addition on account of unsecured loan and brokerage thereon from M/s. Aneri Fincap Ltd., which is one of the parties from whom the assessee had taken unsecured loans.

The assessee further submitted that the Coordinate Bench of the ITAT in the case of ACIT, Central Circle-2(1) vs. Fancy Devi vide ITA

The assessee further submitted that the issue of loans from M/s. VRB also stood on the same footing as the unsecured loans from M/s. AFL as decided by the Hon’ble ITAT. It was also reiterated that the loans were genuine and necessary evidences had already been submitted before the AO, which were neither rebutted by the AO nor subjected to any independent verification before making the impugned additions.

The assessee relied upon various judgments of Hon’ble Courts to contend that once the assessee had provided confirmations, copies of financial statements of the lenders, bank statements, names and addresses confirming the loan transactions, the primary burden cast upon the assessee under Section 68 of the Act stood discharged. Therefore, without bringing any contrary evidence on record and without providing an opportunity of cross-examination, the additions were not sustainable in the eyes of law. It was also submitted that no opportunity of cross-examination had been provided by the AO before making the additions. In this regard, reliance was placed upon various judicial precedents.

We noticed that the AO had made additions primarily on the basis of statements of Rajesh Mehta and Sanjay Shah. The relevant extracts of their statements have been reproduced in the assessment order. During the course of assessment proceedings, the AO relied upon the statements of the

It was claimed in the assessment order that the assessee had received bogus unsecured loans and had debited bogus expenditure on account of interest, but the statements relied upon did not contain the name of the assessee. Although the statements were confronted to the assessee, neither an opportunity of cross-examination was provided nor were the seized documents/material allegedly pertaining to the assessee supplied to it. Thus, such material cannot be considered as credible evidence unless corroborated by any other evidence or supported by independent inquiry during assessment proceedings.

Since the assessee, during the course of assessment proceedings, had provided confirmations, copies of financial statements of lenders, bank statements, names and addresses confirming the loan transactions, the primary burden cast upon the assessee under Section 68 of the Act stood discharged. In the absence of any contrary evidence and without providing an effective opportunity of cross-examination, the additions are not sustainable in the eyes of law.

The transactions were conducted entirely through proper banking channels and were supported by loan confirmations, details of interest payments along with TDS deductions, ledger accounts, and repayment details, all of which were submitted during the assessment proceedings.

It is noted that once the assessee had discharged its initial onus, nothing further was brought on record by the AO to challenge or contradict the assessee’s claims. Furthermore, there is no finding indicating that the evidence submitted by the assessee was unreliable or lacked credibility. The AO also failed to carry out any meaningful independent inquiries under Sections 133(6) or 131 of the Act, after the assessee had discharged the initial burden of proof. Therefore, as held by various Courts, the additions are not sustainable in the eyes of law.

Thus, relying upon the judgments of the Coordinate Benches of the ITAT in the cases of SKA Tech Infra Pvt. Ltd. and ACIT, Central Circle- 2(1) vs. Fancy Devi (supra), wherein similar additions on account of alleged bogus loans from M/s. AFL on identical facts were deleted, and considering the fact that the Ld. CIT(A) has passed a well-reasoned order, we find no infirmity in the same.

No new facts, circumstances, or documents have been brought on record by the Ld. DR in order to controvert or rebut the findings recorded by the Ld. CIT(A). Therefore, we see no reason to interfere with or deviate

As the facts and circumstances in these appeals are identical to ITA No. 689/Mum/2026 (Assessment Year: 2017-18) therefore, the decision rendered in above paragraphs would apply mutatis mutandis for these appeal also.

In the result, appeals filed by the Department stands dismissed.