DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT, SURAT vs. SHRI GORDHANBHAI RANCHHODBHAI ASODARIA, SURAT

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ITA 254/SRT/2025Status: DisposedITAT Surat08 May 2026AY 2013-146 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the unsecured loan was repaid in the subsequent assessment year, the addition under Section 68 was not sustainable. Following the jurisdictional High Court's precedent, the assessee could not be considered to have benefitted from an accommodation entry.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting additions made on account of unsecured loans treated as accommodation entries. The assessee had received an unsecured loan, which was later repaid with interest in a subsequent assessment year.

What were the issues?

Whether additions on account of unsecured loans treated as accommodation entries are sustainable when the loan is repaid in a subsequent year. Whether the assessee benefitted from an accommodation entry if the loan was repaid.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: Shri T.R. Senthil Kumar & Shri Ratnesh Nandan Sahay

Hearing: 30.04.2026Pronounced: 08.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT Before: Shri T.R. Senthil Kumar, Judicial Member & Shri Ratnesh Nandan Sahay, Accountant Member

ITA No: 254/SRT/2025 Assessment Year: 2013-14

DCIT, Vs Shri Gordhanbhai Central Circle – 3, Ranchhodbhai Asodaria, Surat 8, Raghuvir Bungalow, City Light Road, Parle Point, Surat - 395007 PAN: ABAPA6910G (Appellant) (Respondent) Assessee Represented : Shri Manish J. Shah, AR Revenue Represented : Shri Ajay Uke, Sr. DR Date of hearing : 30.04.2026 Date of pronouncement : 08.05.2026 आदेश/ORDER PER, T.R. SENTHIL KUMAR, JM:

This appeal is filed by the Revenue as against the appellate order dated 13.12.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the reassessment order passed under section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the AY 2013-14.

I.T.A Nos.254/SRT/2025/AY.2013-14 2 DCIT vs. Gordhanbhai Ranchhodbhai Asodaria

2.

Brief facts of the case are that the assessee is an individual and filed his return of income for the assessment year 2013-14 declaring total income at Rs.3,11,890/-. A search action was carried out in the case of K Star Group of Surat on 17.08.2016, wherein it was noticed that Shri Vasant Keshavlal Thakkar was engaged in providing accommodation entries, who had provided accommodation entries to K Star Group and some other parties. During the search action, various incriminating documents and digital data were found and seized and it revealed that the appellant was one of the beneficiaries in availing bogus entries of unsecured loan from Shri Vasant Thakkar. The case was reopened after recording the reasons by issuing notice u/s 148 of the Act on 20.07.2021. In response assessee filed Return of Income declaring total income at Rs.3,11,890/-. The Assessing Officer (in short, ‘the AO’) completed re-assessment u/s 148 of the Act on 06.03.2022, determining total income at Rs.11,27,970/-. The AO made three additions, namely, (i) Rs.8,00,000/- towards unexplained unsecured loans u/s 68 r.w.s. 115BBE of the Act, (ii) Rs.4,077/- towards interest expenses on alleged unsecured loan and (iii) Rs.12,000/- towards unaccounted commission expenses paid @1.5%.

3.

Aggrieved against the reassessment order, the assessee filed appeal before the CIT(A) who deleted the additions made by the A.O. on the ground that the unsecured loan was repaid with interest in subsequent assessment year by observing as follows:

“….6.1. I have gone through the assessment order and the submissions made by the AR of the appellant. I have also considered the judicial pronouncements relied upon by the appellant. This ground is regarding addition made on account of unsecured loan of Rs.8,16,077/- availed by the appellant, which includes three additions i.e. addition of

I.T.A Nos.254/SRT/2025/AY.2013-14 3 DCIT vs. Gordhanbhai Ranchhodbhai Asodaria

Rs.8,00,000/- which is unsecured loan treated as accommodation entries; disallowance of interest expenses amounting to Rs. 4,077/-and addition of alleged unaccounted expenses amounting to Rs. 12,000/-. During the Appellate Proceedings, the appellant contended that the AO has not provided show cause notice during the assessment proceedings and cited various case laws. The appellant also submitted that details of unsecured loan received were filed and also given independently by the loan provider before the AO and hence, the identity, creditworthiness and genuineness were proved. Various case laws were cited in pages 11-26 of submission. The appellant also contended that when the repayment of unsecured loans are made and accepted, no addition u/s 68 can be made. 6.2 On technical grounds, the appellant also submitted that notice w/s. 148 of the Act was issued on wrong information and name of the appellant was not reflected in the issues emerging out of documents seized during Search in the case of Shri Vasant Keshavlal Thakkar. Further, copy of statement relied upon and other corroborative evidence were not provided to the appellant. 6.3 In my considered view, the AO has correctly invoked provisions of law to initiate re-assessment proceedings. However, a crucial aspect has not been taken into account that the unsecured loan has been repaid. This fact cannot be denied that the appellant has already fulfilled 3 basis criteria to discharge its onus by proving the identity, creditworthiness and genuineness of the transactions. It is also a settled law that once the repayment of loan is accepted by the Department, then addition cannot be made on acceptance of the same unsecured loans. In such case, the addition u/s 68 of such loans received cannot be made. This is as per Hon'ble Gujarat High Court decision in the case of CIT Vs Ayachi Chandrashekhar Narsangji (2014) 42 taxmann.com 251 (Guj), Being jurisdictional Hon'ble High Court, the judgment is binding on me. Hence, the addition of Rs.8,00,000/- is directed to be deleted. Therefore, interest expenses and unaccounted commission expenses too on the same loan are also directed to be deleted. Ground No. 1 is allowed.”

4.

Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal:

“1) On the facts and in the circumstances of the case and in low the Ld CIT(A) has erred in deleting the addition of 18,00,000/- made by the AD u/s 68 of The IT. Act on account of unexplained cash credit in the form of accommodation entries observing that the appellant had repaid the entire loans in the subsequent years which is not disputed by the AO and under the circumstances, such unsecured loans cannot be added u/s 68 of the IT. Act despite the fact that the loan were claimed to be received from the persons in which name income tax records were artificially created by Shri Vasant Thakkar and such creditors having minimal incomes, and having no Genuine Business Transactions in their Return of Income filed.

I.T.A Nos.254/SRT/2025/AY.2013-14 4 DCIT vs. Gordhanbhai Ranchhodbhai Asodaria

2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.4,077/- made by AO towards interest expenses on alleged unsecured loan without appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.12,000/- made by AO on account of unaccounted commission paid for availing accommodation entry of unsecured loan without appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 4) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 4.1. The Ld. Sr. DR appearing for the Revenue supported the order passed by the A.O. and requested to confirm the addition.

5.

Per contra, the Ld. Counsel appearing for the assessee filed a paper book containing 14 pages wherein assessee submitted that Confirmation from Gulabbhai M. Rathod for the unsecured loan given through Bank of India on 01-03-2013 and interest paid of Rs.4077/-. ITR filed for the Asst. Year 2013-14 his Balance Sheet and Profit and Loss as well as ITR for the Asst. Year 2015-16 where the loans amount was repaid on 18-02-2015 through RTGS banking channel of Rs.8,92,000/- and also Affidavit of Gulabbhai M. Rathod affirming the loan given by him and repayment paid by the assessee.

5.1 The Ld. Counsel relied upon the judgements of Jurisdictional High Court in the case PCIT vs. Ambe Tradecorp Pvt. Ltd., (2022) 145 taxmann.com 27 (Guj) and held that where assessee took loan from two parties and assessee had furnished requisite material

I.T.A Nos.254/SRT/2025/AY.2013-14 5 DCIT vs. Gordhanbhai Ranchhodbhai Asodaria

showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition u/s 68 could be made on account of such loan.

6.

We have heard rival submissions of both parties and perused the material available on record. The Jurisdictional High Court of Gujarat in the case of Ayachi Chandrashekhar Narsangji (supra) held that a department had accepted repayment of loan for subsequent year, no addition was to be made on account of cash credit. This view was confirmed in the subsequent judgment rendered by the Gujarat High Court in case of M/s Ambee Tradecorp (P.) Ltd. (cited supra). The facts in the present case are similar, and the entire loan is repaid by the assessee in the subsequent assessment year. Therefore, the additions made by the AO are not sustainable in law. As in the present case where the amounts have undoubtedly been repaid back, the assessee cannot be said to have benefitted in any way. The entire case of the Revenue against the assessee treating it as beneficiary of accommodation entry having been returned by the assessee. There can be no question, in such circumstances of treating the amount so received by the assessee as an accommodation entry. Even Ld. D.R. was unable to explain how in such circumstances the assessee could be said to have benefitted by an accommodation entry.

6.1. Respectfully following the judgment of Hon’ble Jurisdictional High Court in case of Ayachi Chandrashekhar Narsangji (supra), we are of the considered opinion that additions made by the Ld. A.O. are not sustainable in law. Therefore, the additions are hereby deleted.

I.T.A Nos.254/SRT/2025/AY.2013-14 6 DCIT vs. Gordhanbhai Ranchhodbhai Asodaria

7.

In the result, the appeal filed by the Revenue in ITA No.254/SRT/2025 for AY 2013-14 is hereby dismissed.

Order is pronounced in open court on 08/05/2026

Sd/- Sd/- (R. N. SAHAY) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat True Copy Dated 08/05/2026 SAMANTA आदेश क� ��त�ल�प 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 अपील�य अ�धकरण, सूरत

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