J R SHAH EXPORTS LIMITED,AHMEDABAD vs. THE ITO, WARD-2(1)(1), AHMEDABAD

PDF · subscribers
ITA 26/AHD/2026Status: DisposedITAT Ahmedabad02 June 2026AY 2018-196 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition was not justified as the assessee provided sales invoices, delivery challans, VAT/GST records, and bank statements, and the transactions were through banking channels. The Assessing Officer made the addition based on suspicion and conjecture without rejecting the assessee's books of account.

What were the facts?

The assessee's return for AY 2018-19 was processed, and reassessment was initiated based on information about accommodation entry providers. The Assessing Officer added Rs. 13,63,331/- as unexplained credit, treating it as accommodation entries.

What were the issues?

Whether the reassessment proceedings were validly initiated and whether the addition of Rs. 13,63,331/- as unexplained credit was justified when the assessee provided supporting documentation for genuine business transactions.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 68,Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD ‘SMC’ BENCH, AHMEDABAD

For Appellant: Shri Rupesh R. Shah, A.R
For Respondent: Shri Girish Parihar, Sr. DR
Hearing: 30.03.2026Pronounced: 02.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD ‘SMC’ BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.26/AHD/2026 (Assessment Year: 2018-19) M/s. J R Shah Exports Limited, Income Tax Officer, 3rd Floor, Simandhar Estate, Ward 2(1)(1), Ahmedabad, Opp. Old Gujarat High Court, Aaykar Bhavan, Vs. Ashram Road, Prahaladnagar, Ahmedabad - 380014 Ahmedabad-380015 PAN: AAACV5020C (Appellant) : (Respondent) Assessee by : Shri Rupesh R. Shah, A.R. Respondent by : Shri Girish Parihar, Sr. DR Date of Hearing : 30.03.2026 Date of Pronouncement : 02.06.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] dated 30.12.2025 for the Assessment Year (in short “AY”) 2018-19.

2.

The assessee has raised the following grounds of appeal: “1. Re-opening bad in law lack of valid jurisdiction 1.1 The learned CIT(A) has erred in law and on facts in confirming the reassessment proceedings-initiated u/s 147 of the Act. 1.2 The reassessment is based solely on third-party information without independent application of mind by the Assessing Officer.

ITA No.2136/AHD/2025 M/s. K R Solvent LLP 1.3 The mandatory conditions of section 148A were not complied with in letter and spirit, rendering the reassessment void ab initio. 2. Violation of principles of natural justice 2.1 The appellant was not provided proper opportunity to rebut the alleged investigation report relied upon by the AO. 2.2 No cross-examination of the alleged entry provider was allowed, despite specific request. 2.3 The entire assessment is framed mechanically, in violation of Articles 14 and 265 of the Constitution of India. 3. Addition of ₹13,63,331/- unjustified and illegal 3.1 The learned authorities erred in treating genuine sales receipts as unexplained income. 3.2 The transactions were supported by:  Sales invoices  Delivery challans  VAT/CST returns  Ledger confirmations  Bank statements 3.3 Merely because the parties were later alleged to be accommodation entry providers, genuine business transactions cannot be disallowed. 4. Books of account not rejected 4.1 The appellant's books were duly audited u/s 44AB. 4.2 No defect was pointed out in books of account. 4.3 Without rejecting books u/s 145(3), no addition could be made. 5. Addition based on suspicion, not evidence 5.1 The impugned addition is based on presumptions, conjectures and suspicion. 5.2 No incriminating material belonging to the appellant was found. 5.3 Burden of proof discharged by the appellant was wrongly ignored.

ITA No.2136/AHD/2025 M/s. K R Solvent LLP 6. No finding that money belonged to appellant 6.1 There is no finding that the alleged amount represented unaccounted income of the appellant. 6.2 Banking channels, VAT records and quantitative details fully corroborate sales. 7. CIT(A) erred in confirming addition without independent reasoning 7.1 The learned CIT(A) merely reproduced the 7.1 assessment order. 7.2 No independent adjudication as mandated u/s 250(6) was carried out. 8. Levy of interest consequential 8.1 Interest levied u/s 234A/B/C is purely consequential and liable to be deleted. 9. General ground The appellant craves leave to add, alter or amend any ground at or before the time of hearing.”

3.

The assessee M/s J. R. Shah Exports Ltd. filed its return of income for A.Y. 2018-19 on 05.10.2018 declaring total income of Rs. 7,80,690/-. Subsequently, the return was processed under Section 143(1) of the Income Tax Act, 1961 on 03.04.2019. Information was received from ADIT(Investigation), Ahmedabad that a search under Section 132 of the Act was conducted in the case of Sanjay Govindram Agarwal (also known as Sanjay Tibrewal) on 12.04.2019. He was carrying his business of trading in bed sheets under the proprietary concern S. G. Corporation and Shri Laxmi Prints having the brand name Flemingo. Shri Sanjay Govindram Agarwal is also into the business of providing accommodation entries through other shell concerns to various persons such as cheque in lieu of cash and vice versa, providing cash loans etc. On going through such information, the Assessing Officer observed that the assessee i.e. M/s J. R. Shah Exports Ltd. was on such beneficiary of accommodation entry transactions aggregating Rs. 13,53,331/- through M/s Ganapati Textiles (Prop. Jigna Shah), Hanuman Fabrics (Prop. Alpa Shah) being associate persons/concerns of Shri Sanjay Tibrewal. Therefore, transaction

ITA No.2136/AHD/2025 M/s. K R Solvent LLP carried out by the assessee aggregating to Rs. 13,63,331/- for the particular year remains unexplained and the same requires to be taxed in hand as per the Assessing Officer. Notice under Section 148A(b) of the Income Tax Act, 1961 was issued to the assessee on 09.03.2022, which was duly served upon the assessee. There was no response from the assessee. The Assessing Officer passed order under Section 148A(d) of the Act on 29.03.2022 alongwith Notice u/s 148 of the Act. Section 142(1) notice dated 07.10.2022 and 24.01.2023 as well as show cause notice were issued by the Assessing Officer and the assessee replied the same. The Assessing Officer observed that the assessee has withdrawn Rs. 5,55,600/- from Ganapati Textiles accounts and Rs. 8,07,731/- form Hanuman Fabrics. But the assessee stated that the same was received from Devi Distributors without any confirmation/ substantive evidence and without producing its books of account and bank account statement, which was not accepted by the Assessing Officer. Therefore, the Assessing Officer treated the amount of Rs. 13,63,331/- as accommodation entry and added the same as unexplained credit u/s 68 of the Act.

4.

Being aggrieved by the Assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. AR submitted that as regards Ground No. 3, the CIT(A) erred in making addition of Rs.13,63,331/- as unexplained when the sales were genuine. The Ld. AR submitted that the assessee furnished sales invoices, delivery challans and transport evidence along with ledger confirmation, bank statements, VAT/GST records and quantitative details. All transactions were through banking channels. Merely because parties were alleged to be entry providers, the assessee’s genuine business transactions cannot be disallowed. The Ld. AR submitted that merely on suspicion the transaction cannot be treated as unexplained. When quantitative records are maintained, sales cannot be treated as bogus. As regards to Ground No. 4, the Ld. AR submitted that the Assessing Officer has not rejected the books of accounts of the Assessee. In fact, no defect was pointed out by the Assessing Officer regarding the books of account

ITA No.2136/AHD/2025 M/s. K R Solvent LLP of the assessee. No incriminating material belonging to the assessee was found. Burden of proof was discharged by the assessee and the same cannot be rebutted by the Revenue. The Ld. AR submitted that no independent adjudication has been made on facts or law by the Assessing Officer as well as by the CIT(A).

6.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

7.

Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has categorically mentioned in the reply before the Assessing Officer that the assessee did not made direct trading with Shri Sanjay Tibrewal. Besides this the assessee was having business with Devi Distributors P. Ltd. (Indore) and the cheques were received from the said party only by the assessee. The Revenue has not disputed that the assessee was having business with Devi Distributors. The cheque issued by Devi Distributors were from third party i.e. Hanuman fabrics and Ganapati Textiles with whom the assessee has not direct or indirect transactions. From the perusal of the records, it can be clearly seen that the assessee received the cheques from Devi distributors and the contra confirmation was also produced before the Assessing Officer. But the Assessing Officer failed to take cognizance of the same and observed incorrect fact on page 12 of the Assessment Order. The assessee also had transactions with M/s. S. V. Chemicals for which all the details as well as confirmations from the said party was produced before the Revenue authorities. Therefore, the Assessing Officer was not right in holding that the cheque was received from the third party can involve the assessee in the case of Sanjay Tibrewal who is accommodation entry provider. The Assessing Officer has not doubted the purchase from the other parties and the corresponding sale to that extended was also not doubted. Therefore, merely on suspicion and conjunctures/surmises, the addition cannot be done. The addition made by the Assessing Officer is not justified. Hence, Ground No. 3 and 4 are allowed. As regards to Ground No. 1 and 2, the same is not adjudicated at this juncture as the reopening is as per the procedure prescribed by the Income Tax Act, 1961 and the assessee was given full opportunity at the time of hearing.

ITA No.2136/AHD/2025 M/s. K R Solvent LLP 8. In result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 02.06.2026

Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated: 02.06.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Ahmedabad 5. Guard File By order,

Assistant Registrar/Sr.PS/PS ITAT, Ahmedabad Bench

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Latest GST High Court judgments

Search GST case law →