RAJNISH SRIKISHAN GUPTA HUF,MUMBAI vs. INCOME TAX OFFICER WARD 20(3)(1), MUMBAI

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ITA 6096/MUM/2026Status: DisposedITAT Mumbai23 September 2026AY 2016-201710 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal observed that the confirmation from Kasturi Commodities Pvt. Ltd. showed an opening balance of Rs. 40 lac due for recovery. The Tribunal noted that neither the AO nor the CIT(A) had examined this aspect of the opening balance. The Tribunal found that the recovery of debt to the extent of Rs. 40 lac against the opening balance cannot be treated as an unexplained credit under Section 68, as it is not a fresh credit. However, the Tribunal also noted that there were fresh credits of Rs. 12.20 lac taken by the assessee from Kasturi Commodities Pvt. Ltd., the source of which had not been explained by the assessee before the AO and CIT(A). Additionally, a credit entry of Rs. 53,260/- dated May 5, 2015, representing interest on unsecured loan charged from Kasturi Commodities, was not disclosed by the assessee and remained undisclosed. In the interest of substantial justice, the Tribunal decided to restore both issues – the explanation of the source of Rs. 12.20 lac and proof of the outstanding opening balance of Rs. 40 lac – back to the file of the jurisdictional AO for proper examination and verification. The impugned direction for reconsideration is confined to the addition of Rs. 52,94,120/-.

What were the facts?

The assessee, Rajnish Srikishan Gupta HUF, is in appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2016-2017. The assessment was reopened under Section 147 of the Income Tax Act, 1961, based on information from the Investigation Wing's Insight Portal, alleging accommodation entry transactions aggregating to Rs. 52,94,120/- with M/s Kasturi Commodities Pvt. Ltd. The Assessing Officer (AO) made an addition of Rs. 52,94,120/- under Section 68 as unexplained cash credit. The CIT(A) upheld this addition. The assessee contended that the credits represented repayment of loans advanced to Kasturi Commodities Pvt. Ltd. in a prior year, along with interest, and that Rs. 12,20,000/- represented fresh loans taken from the company.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, was within the period of limitation and the reopening of the assessment was valid? 2. Whether the reassessment initiated solely on the basis of Insight Portal data, without independent verification by the AO, is bad in law? 3. Whether the addition of Rs. 52,94,120/- under Section 68 is sustainable without establishing a nexus between the sum and alleged accommodation entries? 4. Whether the credit entries representing repayment of loans advanced by the assessee to M/s Kasturi Commodities Pvt. Ltd. can be treated as unexplained cash credit under Section 68? 5. Whether the addition based on 'accommodation entries' is sustainable without the AO defining the expression in the assessment order? 6. Whether Section 115BBE was validly invoked without the AO identifying the specific section under which the addition was made? Assessee's Contentions: - The credit entries represent recovery of brought forward loans/advances of Rs. 40,00,000/- given to Kasturi Commodities Pvt. Ltd. in a preceding year, plus interest of Rs. 82,356/-. (Relied on confirmation and ledger account of Kasturi Commodities Pvt. Ltd., bank statements, balance sheet, capital account). - The repayment of loans cannot constitute an unexplained cash credit under Section 68. - The AO failed to establish a nexus between the sum and alleged accommodation entries. - The term 'accommodation entry' was not defined by the AO. - Section 115BBE cannot stand independently without identifying the primary charging section. Revenue's Contentions: - The facts relating to the opening balance of Rs. 40 lac remained unverified at the assessment stage. - The assessee failed to prove the genuineness of the fresh loan of Rs. 12,20,000/- taken from Kasturi Commodities Pvt. Ltd.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3),Section 68,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI RAKESH KUMAR LODHA

For Appellant: Shri Kirit S Sanghvi
For Respondent: Shri Giridharan SR. (A.R.)
Hearing: 07.09.2026Pronounced: 23.09.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER And SHRI RAKESH KUMAR LODHA, ACCOUNTANT MEMBER ITA No.6096/MUM/2026 Assessment Year: 2016-2017 RAJNISH SRIKISHAN INCOME TAX GUPTA HUF OFFICER WARD 20(3)(1) Jamuna Bunglow No.3, Vrindavan Housing Society, Vs. Piramal Chambers, Lal Deonar Farm Road, Deonar, Baug, Parel, Mumbai-400088 Mumbai- 400 012 Maharashtra Maharasthra PAN- AAAHR0731H (Appellant) (Respondent) Assessee Represented by :Shri Kirit S Sanghvi Revenue Represented by :Shri Giridharan SR. (A.R.)

Date of Hearing : 07.09.2026 Date of Pronouncement : 23.09.2026

O R D E R PER : Shri Rakesh Kumar Lodha, Accountant Member: This appeal has been preferred by the Assessee against the order dated 22.04.2026 passed by the learned Commissioner of Income Tax (Appeals)(in short Ld. Commissioner) under section 250

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017

of the Income-tax Act, 1961 (“the Act”), for the assessment year 2016-17, arising out of the assessment order passed under section 143(3)/147 of the Act.

2.

The Assessee raised the following grounds of appeal before us:

1.Validity of Reopening under Section 148 The Learned CIT(A)/NFAC erred in law and on facts in holding that the notice issued under Section 148 of the Income Tax Act, 1961 was within the period of limitation and that the reopening of the assessment was valid in law.

2.Reassessment Based on Borrowed Satisfaction – Insight Portal Data, No Independent Verification The Learned CIT(A)/NFAC erred in law and on facts in upholding the reassessment under Section 148, which was initiated solely on the basis of information available on the Insight Portal of the Income Tax Department placed by the Investigation Wing, without the Assessing Officer independently verifying such information, applying his own mind, or forming an independent satisfaction that income had escaped assessment. An action under Section 148 based entirely on borrowed satisfaction and unverified third party data is bad in law and the reassessment is liable to be annulled.

3.No Nexus Established between Rs. 52,94,120/- and Alleged Accommodation Entries The Learned CIT(A)/NFAC erred in law and on facts in confirming the addition of Rs. 52,94,120/- under Section 68 of the Act, when neither the Assessing Officer nor the CIT(A) demonstrated any nexus between the said sum and the alleged accommodation entries attributed to the appellant, in spite of the appellant specifically and repeatedly calling upon the Assessing Officer

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017

to establish such nexus. An addition unsupported by any demonstrated link between the amount and the alleged transaction is not sustainable in law and deserves to be deleted.

4.Appellant was the Lender, Repayment Cannot be Treated as Unexplained Cash Credit The Learned CIT(A)/NFAC erred in law and on facts in confirming the addition under Section 68, inasmuch as the appellant was at all material times the creditor, having advanced Rs. 40,00,000 to Ms. Kasturi Commodities Pvt. Ltd. in an earlier year. The credits appearing in the appellant's books represent repayment of monies lent, a debit balance in the lender's books cannot, in law, constitute an unexplained cash credit. The invocation of Section 68 is therefore misconceived and the addition deserves to be deleted.

5.Addition Based on Accommodation Entries, Expression Left Undefined and Unexplained The Learned CIT(A)/NFAC erred in law and on facts in confirming the addition made by the Assessing Officer on the basis of alleged accommodation entries, without the Assessing Officer having explained anywhere in the assessment order what the expression accommodation entry means in the context of the present case OR what specific transaction with Ms. Kasturi Commodities Pvt. Ltd. constituted such an entry. An addition that rests on an undefined and unexplained expression cannot be sustained and deserves to be deleted.

6.Section 115BBE Invoked Without Identifying the Specific Applicable Section The Learned CIT(A)/NFAC erred in law and on facts in confirming the application of Section 115BBE of the Income Tax Act, 1961, without the Assessing Officer having identified in the assessment order the specific provision under which the impugned addition was made. Section 115BBE is a charging provision that operates only as a consequence of a specific finding under one of the said sections; it cannot stand independently. Without such identification, the invocation

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017

of Section 115BBE is bad in law and the addition, if any, is liable to be taxed at normal rates.

7.The appellant craves leave to add, alter, amend, modify OR withdraw any of the foregoing grounds of appeal, and to raise such additional grounds as may be considered necessary and proper, at OR before the time of hearing.

3.

The brief relevant facts of the case are that the Assessee is HUF, its case was reopened under section 147 of the Act on the basis of information received by the Assessing Officer (hereinafter 'AO') from the Investigation Wing via the Insight Portal, which indicated that the appellant had engaged in accommodation entry transactions aggregating to Rs.52,94,120/- through M/s Kasturi Commodities Pvt. Ltd. A notice under section 148 was issued. The assessee furnished its return of income under Section 148 of the Act, declaring total income of Rs.2,07,660/-, and filed replies during the assessment proceedings. After considering the submissions, the AO concluded that the transaction of Rs. 52,94,120/- with M/s Kasturi Commodities Pvt. Ltd. was in the nature of an accommodation entry, that the claims of the appellant regarding loan and advances were non-genuine, and 4

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 accordingly made an addition of Rs. 52,94,120/- under section 68 of the Act as unexplained cash credit from undisclosed sources. Aggrieved by the said additions, assessee filed an appeal before the Ld. Commissioner of Income Tax (Appeals), disputing the additions. The First Appellate Authority, after thoughtful examination of submissions on the issue of additions u/s 68 of the Act upheld the addition of Rs.52,94,120/-.

4.

Before us, the learned authorized representative of the Assessee submitted; confirmation and ledger account of Kasturi Commodities Private Limited (paper book page 3-4), bank statement containing the credit entries being receipts from Kasturi Commodities Private Limited, balance sheet, capital account, along with computation of total income.

5.

Through these documents, it is contended that credit entries appearing in the Union Bank of India represents the recovery of brought forward outstanding loans / advances from Kasturi Commodities Private Limited. The assessee had

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 given loans of Rs. 40 lac in preceding previous year. Charged interest thereupon, during the year interest of Rs.82,356/- charged from company. The confirmation also reflecting that b/f balance of Rs.40 lac and corresponding receipts during the year through bank account. Therefore, out of total receipts of Rs.53,02,356/- from Kasturi Commodities Pvt Ltd appearing in the confirmation, Rs.40,82,356/- was against principal outstanding and interest for the year. However, Rs.12,20,000/- have been taken as loans/ advance from that company.

6.

It is also stated that assessee has charged interest of Rs.82,356/- on the outstanding opening balance of ₹40 Lac, the borrower has deducted TDS of Rs.8,236/-, and Assessee has claimed that TDS in return of income. The AR of the Assessee has accepted Rs 12.20 lac being loan from Kasturi Commodities Pvt Ltd and reported in the Balance Sheet as unsecured loan, so, to the extent of Rs 40 lac, there cannot be any addition u/s 68 of the Act, as it was not credit taken during the year. 6

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 7. Per contra, Ld. DR submitted that, the facts relating to opening balance of Rs.40 lac remained unverified at the assessment stage, and Assessee failed to prove the genuineness fresh loan of Rs.12,20,000/- taken by Assessee from same person.

8.

We have considered the rival submissions and perused material available on record, observed that confirmation showing opening balance of Rs.40 lac due for recovery, however, neither the assessing officer nor Ld. Commissioner of Income Tax (Appeals) have examined that aspect of opening balance. The ledger statement, balance sheet as on 31st March 2016 etc, placed for verification of availability of opening outstanding debt of Rs.40 lac and closing balance being an unsecured loan of Rs.12,20,000/- taken during the year by the Assessee from Kasturi Commodities Private Limited.

9.

While examining the computation of total income qua confirmation of Kasturi Commodities Private Limited, it is

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 noticed that assessee recovered outstanding loans from company against opening balance of Rs 40 lac, such, recovery of debt is out of the ambit of provisions of section 68 of the Act. Also find that a credit entry of Rs 53,260/- dated 5th May 2015 in said confirmation, being interest on unsecured loan charged from Kasturi Commodities, has not been disclosed by assessee in its return of income, so, that remained undisclosed.

10.

In view of the factual matrix, there are certain facts require proper examination, verification through evidences and documents relied upon by the assessee. As far as recovery from debtors to the extent of Rs.40 lac against opening balance is concerned, we observed that this recovery of debt cannot be treated as unexplained credit u/s 68 of the Act, as fresh credit u/s 68, in the hands of the assessee. Apart from that claim of recovery of opening balance of Rs.40 lac by the assessee, we noticed that there were fresh credits of Rs.12.20 lac taken by assessee, and source thereof has not been explained by the assessee, before the assessing officer 8

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 and CIT(A). Therefore, we observed that, in the interest of substantial justice, another opportunity may be given to assessee, to explain the source of Rs.12.20 lac and prove the outstanding opening balance of loan of Rs.40 lac to get the relief from addition to that extent before the assessing officer.

11.

Under the circumstances, it would appropriate to restore both issues back to the file of jurisdictional assessing officer.

12.

In view of the above findings, the AO is directed to consider the explanation, documents, evidence and carry out requisite examination and verification.

13.

Both the parties agreed to restore the matter back to the file of the assessing officer, who shall provide a reasonable opportunity of being heard to the Assessee, the impugned direction for reconsideration shall remain confined to the impugned addition of Rs. 52,94,120/-.

ITA NO.6096-M-2026 RAJNISH SRIKISHAN GUPTA HUF AY 2016-2017 14. In the result, the appeal filed by the Assessee stands allowed for statistical purposes.

Order pronounced in the open court on 23.09.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (RAKESH KUMAR LODHA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated:23.09.2026 Sharath, Private Secretary. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.

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