INCOME TAX OFFICER - 34(3)(5), MUMBAI vs. SNEHA MARKETING, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. No.6664/Mum/2025 (Assessment Year: 2012-13) Income Tax Officer Ward 34 Sneha Marketing (3) (5) 61/13, Bhawana Building, N.S. Road, 126, Kautilya Bhawan, G Block, Vs. Andheri West, Mumbai-400056 Bandra Kurla Complex, Bandra East, Mumbai-400051 PAN: AALFS8732Q Revenue - अपीलाथ� / Appellant Assessee-��थ�/ Respondent :

Assesseeby : Shri Bharat Kumar Revenueby : Shri Yaduraj Singh – SR. DR. : 08.04.2026 Date of Hearing : 08.06.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This instant appeal is filed by the Revenue challenging the order of Commissioner of Income Tax Appeals-49, Mumbai [in short, “the Ld. CIT(A)”] dated 30.07.2025 for the assessment year 2012-13 for the Assessment Year (AY) 2012-13 which in turn arises from the order u/s143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short, “the Act”) dated 20.12.2019 passed by Income Tax Officer - Ward 25(3)(4), Mumbai (in short, “Ld. AO”). The grounds of appeal raised by Revenue are as under:

ITA No. 6664/Mum/2025 Sneha Marketing “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the Assessing Officer for Rs.5,00,000/-on account of unsecured loan ignoring the fact that these unsecured loans are sham transactions fabricated by Shri Deepak Kailash Bavel, Director of M/s. Delight Diams Private Limited who is indulged in providing accommodation entries 2. Whether on the facts and circumstances of the present cuse the 1.d. CIT(A) has failed to appreciate the larger picture of the case wherein the unsecured loan was received by the assessee from M/s Delight Diam Private Limited which is indulged in providing bogus accommodation entrie. 3.Whether on the facts and circumstances of the present case the Ld. CIT(A) is perverse on the facts mentioned at para 7.2.1 of the appellate order. It was only after the completion of assessment us. 143 on 27/02/2015, the fact related to the accommodation entry which involved the entity, M/s Delight Diam Private Limited was made available to the assessing officer, based on which, after recording the reasons, the reopening proceedings were initiated in the instant case and subsequently, notice n/'s. 148 of the Act was issued on 28/03/2019. 4.Whether on the fact and in the circumstances of the case and in law, the Ld CIT(A) erred in deleting the disallowance of interest paid on unsecured loans of Rs.43,278- without appreciating that the assessee could not prove the genuineness of the loan transaction and creditworthiness of the lender before the Assessing Officer.”

ITA No. 6664/Mum/2025 Sneha Marketing 4. Regarding the addition u/s 68 for Rs.5,00,000/-: This issue has arisen when the Ld. AO has received some information from the Office of DDIT(Investigation) Unit-2, Surat emanating from the enquiries conducted in the case of Shri Deepak Kailash Babel, wherein it is revealed that the debit and credit transaction in the account of Shri Babel are in the nature of bogus and mere accommodation entries. Statements of Shri Deepak Kailash Babel were recorded along with Mr. Rajendra Lalchand Ranka, wherein Shri Deepak Kailash Babel has specifically mentioned that the company M/s. Delight Diam Pvt Ltd. is not involved in any business of diamond trading and that the company is only providing accommodation entries. The assessee was asked by the Ld. AO to explain the nature and source of loan of Rs.5,00,000/- taken by the assessee from M/s. Delight Diam Pvt Ltd., a company of Shri Deepak Kailash Babel, the accommodation provider. Ld. AO reproduced the statement of Shri Deepak Kailash Babel. As per Ld. AO, no such substantive evidence and details have been submitted by the assessee to justify that the said transaction was executed for any genuine work or purpose. Therefore, the assessee was again show-caused as to why such amount should not be added u/s 68 of the Act. The assessee submitted that its assessment for AY 2012-13 was already completed, copy of assessment order is also furnished and all the necessary details regarding loan were furnished before the Ld. AO. Further, loan was also repaid on 17.06.2017. Further, Shri Deepak Kailash Babel had also retracted from his statements, a copy of affidavit was also furnished before the Ld. AO and 3

ITA No. 6664/Mum/2025 Sneha Marketing requested that no adverse inference for such genuine transaction can be drawn simply on the basis of statement of a third party. The assessee also requested for cross-examination of the party, which was provided to the assessee, however, on the given date for cross-examination i.e., on 09.12.2019 Shri Deepak Kailash Babel had not attended the Office of Ld. AO. Thus, the cross-examination could not be conducted. 5. Ld. AO further relying on the information received from DDIT that the said company was indulged in providing accommodation entries had made the addition of Rs.5,00,000/- u/s 68 and also of the amount of interest / TDS amounting to Rs.43,278/- pertaining to the same transaction. 6. At the outset, Ld. Senior DR representing the Revenue submitted that the Ld. AO has rightly made the disallowance, as it was proved that the company from which the assessee has received a loan of Rs.5,00,000/- was a bogus entity, involved in the business of accommodation entries. Regarding repayment of loan and retraction from the statement by Shri Deepak Kailash Babel, it is submitted by the Ld. DR that such actions subsequent to the original action or after the addition made in the hands of assessee, cannot change the nature of the transaction. The information provided by the Investigation Wing was after conducting exhaustive enquiries as well as recording of statements of the key persons of the bogus concerns. Further the transaction through banking channels cannot turn the transactions sacrosanct. Ld. DR also referred to page no.9 of the

ITA No. 6664/Mum/2025 Sneha Marketing assessee’s paper book, stating that the confirmation placed in the paper book was unsigned, therefore, the same cannot be relied upon. 7. Per contra, Ld. AR of the assessee submitted that the issue has been examined by the Ld. CIT(A) and has held that – “I have considered the submissions of the appellant. I find that AO has not recorded how there was a failure on the part of appellant to disclose duly and fully all material needed for assessment. In fact, on perusal of reasons for re- opening, the AO has mentioned that no assessment was made and the return was only processed u/s 143(1) of the Act which is contrary to the facts. It also appears from the submission of appellant that it did not get an opportunity to cross- examine Shri Deepak Kailash Babel. In the appellate proceeding, the appellant has produced the confirmation from the lender party and also stated that the loan was repaid by it on 17.06.2017, much before the enquiry conducted by the DDIT, Surat. The loan was received through banking channel, the loan was assessed to tax and had returned income of Rs.1,08,514/- for assessment year 2012-13.”

ITA No. 6664/Mum/2025 Sneha Marketing provisions of law thus are called for and had been rightly deleted by the Ld. CIT(A).

ITA No. 6664/Mum/2025 Sneha Marketing issued under sub-section (1) of section 142or section 148 or to disclose fully and truly all material facts necessary for assessment, for the relevant year. We find that in the present case, the last limb of 1st Proviso to Section 147 10. was not adhered by the Ld. AO, as no facts could be brought on record to establish that there was any failure on the part of assessee in disclosing of fully and truly all material facts necessary for the relevant assessment. 11. Under such circumstances, we concur with the findings of the Ld. CIT(A). Consequently, the addition deleted by the Ld. CIT(A) is found to be on right footings. We accordingly upheld the order of Ld. CIT(A) on this legal aspect. On merits of the case, assessee has repaid loan which though, cannot be conclusive or change the character of the transaction. Further, the financials of the assessee- company are found to be of peculiar fashion as of a company, who is involved in the transaction of bogus accommodation entries. Further, the financials furnished before us needs a thorough examination before arriving at any conclusion. Therefore, we are not making any remark on the merits of the case. Be that as it may, since the assessee succeeds on legal aspect in terms of 1st 12. Proviso to Section 147, we find substance in the decision of Ld. CIT(A) to that extent and accordingly, we uphold his decision to vacate the additions u/s 68 as well as consequential addition of Rs.43,278/- on account of interest / TDS paid and claimed by the assessee on the subjected transaction.

ITA No. 6664/Mum/2025 Sneha Marketing 13. The grounds of appeal of Revenue, therefore, are partly allowed in above terms. 14. In result, the appeal of Revenue is partly allowed, in above terms. Order pronounced in the open court on 08-06-2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (ARUN KHODPIA) Judicial Member Accountant Member

Mumbai, Dated : 08-06-2026. Ankit K., Sr. PS

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

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai