DODHIA PRADEEP MEGHJI,MUMBAI vs. DCIT-CC-3, THANE, MUMBAI

आदेश / ORDER PER BENCH: These ten appeals are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), arising out of assessment orders framed by the Assessing Officer under section 143(3) read with sections 153A / 153C of the Income Tax Act, 1961. Since common issues are involved in the present seven appeals, they were heard together and are being disposed of by way of this consolidated order for the sake of convenience. 2. Common facts emerging from the record are such that a search and seizure action under section 132 of the Act was carried out in the group cases, pursuant to which proceedings

4 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others under section 153A / 153C were initiated in the cases of the present assessees. Consequent thereto, the Assessing Officer framed assessments under section 143(3) read with sections 153A / 153C for the respective assessment years. 3. From a perusal of the assessment orders, it is observed that the Assessing Officer made additions under section 68 of the Act in respect of unsecured loans / Share Capital received by the assessees from certain corporate entities. The Assessing Officer noted that the said lender companies were allegedly engaged in providing accommodation entries and did not possess adequate financial capacity. The additions were made treating such loans as unexplained cash credits, primarily based on information received from the investigation wing and the alleged modus operandi of entry providers. In some cases interest paid on such loans were also disallowed and added to the income of respective assessees. 4. During the course of assessment proceedings, the assessees furnished documentary evidences including confirmations, PAN details, bank statements, financial statements of the lender companies and details of transactions carried out through banking channels. It was contended that the identity and creditworthiness of the lenders and the genuineness of the transactions stood duly established. It was further submitted that the loans were repaid in subsequent years through banking channels and there was no involvement of cash in the transactions.

5 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others However, the Assessing Officer did not accept the aforesaid contentions. The Assessing Officer held that mere filing of documentary evidences was not sufficient to discharge the onus cast under section 68 of the Act. It was further observed that the surrounding circumstances and investigation findings indicated that the lender entities were part of a network of shell companies used for providing accommodation entries. Accordingly, the unsecured loans were treated as unexplained cash credits and additions were made in the hands of the respective assessees. Where the assessee could not provide the details of interest paid, the interest was also added to the total income.

Particulars AY 2014–15 AY 2016–17 AY 2019–20 Assessee Ritesh Returned Rs.4,96,910/- Rs. 6,38,250/- — Mansukhlal Income as per Dodhia HUF return filed u/s 139(1) on 02.07.2015 and 28.07.2016 Date of Order 06.12.2022 06.12.2022 — of Assessing 29.11.2024 29.11.2024 Officer and CIT(A) Vinam — Rs. — Finance Pvt. 50,00,000/- Ltd. Crabel — Rs. — Distributors 25,00,000/- Pvt. Ltd. Interest Paid (Interest not Rs. 1,12,500/- added) Value Added Rs.50,00,000/- — —

6 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Merchants Pvt. Ltd. Frank — Rs. — Mercantile Pvt. 15,00,000/- Ltd. Northeast — Rs. — Tradelink Pvt. 25,00,000/- Ltd. Interest Paid (Interest not Rs. 1,11,986/- added) — Other Interest — Paid Rs. 44,573/- Total Rs. — Additions 1,15,00,000/- Assessed — Rs. — Income 1,21,82,823/- (approx.) Dodhia Returned Rs.4,71,500/- Rs. 7,68,270/- — Pradeep Income as per Meghji return filed u/s 139(1) on 29.11.2014 and 28.02.2018 Date of Order 06.12.2022 08.12.2022 — of Assessing 29.11.2024 29.11.2024 Officer Vinam — Rs. — Finance Pvt. 50,00,000/- Ltd. Bagdevi Rs.25,00,000/- Suppliers Pvt. Ltd. Value Added Rs.15,00,000/- Merchants Pvt. Ltd. Agomoni Rs.10,00,000/- Commercial Pvt. Ltd. Total Rs. 50,00,000/- Rs. — Additions 50,00,000/-

7 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Assessed Rs. 54,71,500/- Rs. — Income 57,68,270/- Rekha Returned — Rs. 9,25,670/- — Pradeep Income as per Dodhia return filed u/s 139(1) on 05.02.2018 Date of Order — 28.09.2021 — of Assessing 27.12.2024 Officer and CIT(A) Vinam — Rs. — Finance Pvt. 1,00,00,000/- Ltd. Total — Rs. — Additions 1,00,00,000/- — — Assessed Rs. Income 1,09,25,670/- Mansukhlal Returned Rs. 3,19,780/- Rs. 8,83,150/- — Meghji Income as per Dodhia HUF return filed u/s 139(1) on 29.11.2014 and 15.10.2016 Date of Order 15.12.2022 15.12.2022 — of Assessing 29.11.2024 29.11.2024 Officer and CIT(A) Vinam — Rs. — Finance Pvt. 20,00,000/- Ltd. Manyata — Rs. — Merchants 30,00,000/- Pvt. Ltd. Jatadhari Rs. 20,00,000/- — — Commercial Pvt. Ltd. Agomoni Rs. 30,00,000/- — Commercial Pvt. Ltd. Total Rs. 50,00,000/- Rs. — Additions 50,00,000/- Assessed Rs. 53,19,750/- Rs. — Income 58,83,150/-

8 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Dodhia AY: AY: AY: 2016-17 2017-18 2019-20 Chem Tex Returned Rs.90,010/- Rs.1,71,940/- NIL Pvt. Ltd. Income as per Rs. return filed 3,33,28,139/- u/s 139(1) on 27.09.2016, (under MAT) 29.10.2017 and 27.10.2019 Date of Order 27.09.2021 27.09.2021 27.09.2021 of Assessing 26.12.2024 26.12.2024 26.12.2024 Officer and CIT(A) Vinam Rs. 2,80,00,000/- Rs. Finance Pvt. 1,40,00,000/- — Ltd. – Rs. 2,67,534/- Unsecured Rs.2,67,534/- Loan Interest Paid Vinam Rs. 4,00,00,000/- Rs. Finance Pvt. 2,50,00,000/- Ltd. – Equity Share Ashish — — Rs. Synthetics Pvt. 40,00,000/- Ltd. Rs. Interest Paid 6,00,000/- Total Rs. Rs. Rs. Additions 6,80,00,000/- 3,92,67,534/- 48,67,534/- Rs.6,80,90,010/- Assessed Rs. Rs. Income 3,94,39,474/- 48,67,534/-

9 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others genuine or paper entities and that the evidences produced by the assessees were insufficient to discharge the burden under section 68 of the Act. The appellate authority concurred with the Assessing Officer that the transactions represented accommodation entries and therefore the additions were justified.

The loans were received through normal banking channels; i.

Complete documentary evidences including confirmations, ii. PAN details and financial statements of the lenders were furnished;

The lender companies were duly incorporated entities and iii. were assessed to tax;

The loans were repaid in subsequent years; iv.

There was no evidence of any cash transaction; v.

In certain years, no incriminating material was found during vi. the course of search;

The additions were made merely on the basis of third-party vii. information without independent verification.

10 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others grounds are substantially identical, except that the lenders and the amounts involved. For the sake of convenience and brevity, the appeal in the case of Pradeep Meghji Dodhia for A.Y. 2014– 15 (ITA No.172/Mum/2025) and A.Y. 2016-17 (ITA No.171/Mum/2025) have been taken as the lead case, and the facts and grounds raised therein are being referred to for adjudication of all the connected appeals.

Grounds of Appeal in ITA No. 171/Mum/2025 for A.Y. 2016–17 are : 1. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- u/s 68 of the Act made by the Ld. Assessing Officer in the assessment order passed u/s 143(3) r.w.s 153C of the Income Tax Act dated 06.12.2022 on account of unsecured loans received by the appellant from M/s Vinam Finance Pvt. Ltd. which were treated as unexplained cash credits though the appellant had duly discharged its onus under section 68, by submitting all the relevant documentary evidences to prove identity and creditworthiness of the lender company and genuineness of the transactions. 2. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- ignoring the fact that the loans taken stood duly repaid in subsequent years much before the date of search which proves fact that loans taken were genuine. 3. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- on account of unsecured loans without there being any evidence of cash paid at the time of receipt of alleged non-genuine unsecured loans and without there being any evidence of cash received at the time of repayment of alleged non-genuine unsecured loans from / to M/s Vinam Finance Pvt. Ltd. 4. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- by holding the above- mentioned company as paper /shell/non-genuine entity even though

11 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others the company was MCA Active both at the time of taking of such loans and at the time of repayment of the loans. 5. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- despite the fact that the assessment for AY 2016-17 had attained finality and no assessment or reassessment was pending as on the date of search that could be abated particularly in view of the fact no incriminating material was found during the course of search & seizure action. 6. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not quashing the assessment order wherein the Assessing Officer has made addition solely on the basis of information received from other sources and without making any enquiries on his own. 7. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not quashing the assessment order and deleting the addition made even when the Ld. Assessing Officer did not follow the basic principles of natural justice by - (i) supplying the appellant with materials collected at its back, (ii) supplying copies of all relevant statements of third parties, (iii) supplying copies of reports of Investigation and (iv) affording opportunity to cross examine the third parties whose statement was relied upon to draw inference against the appellant, despite specific request made by the appellant in response to show cause notice filed by the Appellant. 8. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- even though no unaccounted assets in the form of cash, jewellery or stock were found. 9. The appellant craves leave to add to, alter, amend, modify and /or delete all or any of the foregoing grounds of appeal. Grounds of Appeal in ITA No. 172/Mum/2025 for A.Y. 2014–15 are: 1. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in

12 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others upholding the addition of Rs. 50,00,000/- u/s 68 of the Act made by the Ld. Assessing Officer in the assessment order passed u/s 143(3) r.w.s 153C of the Income Tax Act dated 06.12.2022 on account of unsecured loans received by the appellant from the following three companies (i) M/s Value Added Merchants Pvt. Ltd. (ii) M/s Bagdevi Suppliers Pvt. Ltd. (iii) M/s Agomoni Commercial Pvt. Ltd. which were treated as unexplained cash credits though the appellant had duly discharged its onus under section 68, by submitting all the relevant documentary evidences to prove identity and creditworthiness of the lender companies and genuineness of the transactions. 2. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- ignoring the fact that the loans taken stood duly repaid in subsequent years much before the date of search which proves fact that loans taken were genuine. 3. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- on account of unsecured loans without there being any evidence of cash paid at the time of receipt of alleged non-genuine unsecured loans and without there being any evidence of cash received at the time of repayment of alleged non-genuine unsecured loans from / to these abovementioned companies. 4. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- by holding the above- mentioned companies as paper /shell/non-genuine entity even though these companies were MCA Active both at the time of taking of such loans and at the time of repayment of the loans. 5. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- despite the fact that the assessment for AY 2014-15 had attained finality and no assessment or reassessment was pending as on the date of search that could be

13 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others abated particularly in view of the fact no incriminating material was found during the course of search & seizure action. 6. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not quashing the assessment order wherein the Assessing Officer has made addition solely on the basis of information received from other sources and without making any enquiries on his own. 7. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in not quashing the assessment order and deleting the addition made even when the Ld. Assessing Officer did not follow the basic principles of natural justice by – (i) supplying the appellant with materials collected at its back, (ii) supplying copies of all relevant statements of third parties, (iii) supplying copies of reports of Investigation and (iv) affording opportunity to cross examine the third parties whose statement was relied upon to draw inference against the appellant, despite specific request made by the appellant in response to show cause notice filed by the Appellant. 8. On the facts and in the circumstances of the appellant’s case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 50,00,000/- even though no unaccounted assets in the form of cash, jewellery or stock were found. 9. The appellant craves leave to add to, alter, amend, modify and /or delete all or any of the foregoing grounds of appeal. 9. During the course of hearing before us, while taking ITA No. 172/Mum/2025 as the lead case, the learned Authorised Representative (AR) submitted that the issues arising in the present bunch of appeals are squarely covered in favour of the assessee by the decisions of the co-ordinate benches of the Tribunal in group cases arising out of identical facts and circumstances. In support of the above contention, the learned

14 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others AR placed reliance on the orders of the Tribunal in the following cases:  Vasupujya Filaments Pvt. Ltd. in ITA No. 876/Mum/2025  Dodhia Filaments Pvt Ltd. in ITA No. 795/Mum/2025  Bhadresh Mansukhlal Dodhia vs. DCIT in ITA No. 2218/Mum/2025 10. It was submitted that in these cases, the Co-ordinate Bench, after considering identical additions made under section 68 of the Act on account of unsecured loans received from alleged accommodation entry providers, has deleted the additions both on legal grounds as well as on merits. 11. The learned AR drew our attention to the findings of the co- ordinate bench in the case of Bhadresh Mansukhlal Dodhia (supra), wherein the co-ordinate bench has held that where the reassessment itself is not valid in law or where the addition is made without any incriminating material, the same is liable to be deleted. It was further held that where the loan transactions were duly recorded in the books and stood repaid, and such repayment was not disputed by the Revenue, the addition under section 68 is not sustainable. 12. It was further contended that the facts of the present appeals are identical inasmuch as: (i) the additions have been made on the basis of information received from the Investigation Wing without any independent enquiry;

15 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others (ii) no incriminating material has been found during the course of search; (iii) the assessee has discharged the onus under section 68 by furnishing documentary evidences; and (iv) the loans in question have been repaid through banking channels, which fact has not been disputed by the Assessing Officer. 13. On the strength of the above decisions, it was submitted that the issue is no longer res integra and the additions sustained by the learned CIT(A) deserve to be deleted. 14. Taking us through various decisions of the co-ordinate benches, the learned AR pointed out that the parties from whom the assessee had borrowed the impugned amounts in the present appeals are the very same entities which had been examined by the Co-ordinate Bench in the earlier group cases. It was submitted that the pattern of transactions, the identity of the lender entities, and the nature of additions made under section 68 are identical to those considered in the said decisions. The learned AR emphasised that the co-ordinate benches, after detailed examination of these very lender entities, have consistently held that the additions made merely on the basis of general information from the Investigation Wing, without bringing any independent adverse material on record, are not sustainable. It was thus contended that since the present appeals involve the

16 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others same set of lender entities and identical factual matrix, the issue stands squarely covered in favour of the assessees. 15. Referring to para 32 of the order of the learned CIT(A), the learned AR submitted that the entire addition has been sustained primarily on the ground that the assessee could not produce the directors of the alleged lender companies before the Assessing Officer. It was submitted that the learned CIT(A), while confirming the addition, has observed that the assessee had filed documentary evidences only at the fag end of the assessment proceedings and had not rebutted the findings of the Investigation Wing, Kolkata, wherein the lender companies were alleged to be engaged in providing accommodation entries. The learned CIT(A) further noted that despite a specific direction by the Assessing Officer, the assessee failed to produce the directors of the creditor companies, and even during the appellate proceedings no request was made for any further enquiry or for producing such directors. 16. The learned AR submitted that on the basis of the above observations, the learned CIT(A) concluded that the assessee had relied merely on what has been termed as ―make-believe documentation‖, such as ITR acknowledgements, bank statements and financial statements, which, according to the learned CIT(A), were insufficient to discharge the onus cast upon the assessee under section 68 of the Act. Accordingly, the learned CIT(A) upheld the action of the Assessing Officer in treating the unsecured loans received from M/s Value Added Merchants Pvt.

17 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Ltd., M/s Agomoni Commercial Pvt. Ltd. and M/s Bagdevi Suppliers Pvt. Ltd. as accommodation entries and confirmed the addition of Rs. 50,00,000/-. 17. The learned AR, however, contended that the conclusion drawn by the learned CIT(A) is erroneous in law and on facts, inasmuch as the assessee had duly discharged the primary onus cast upon it under section 68 by furnishing all necessary documentary evidences, and the non-production of directors, by itself, cannot be made the sole basis for sustaining the addition. 18. Referring to paras 3.5, 9.2, 4.1, 4.2, 4.4, 4.5 and 4.6 of the order of the co-ordinate bench in the case of Bhadresh Mansukhlal Dodhia (HUF) – ITA NO.117 to 119/MUM/2025, the learned AR submitted that the Co-ordinate Bench, after detailed examination of the seized material and the findings of the lower authorities, has categorically held that no incriminating material, within the meaning of section 153C of the Act, was found in relation to the impugned additions. The learned AR drew our attention to the findings of the Co-ordinate Bench wherein it has been observed that the alleged seized documents merely contained entries of loans which were already duly recorded in the regular books of account and formed part of the return of income filed by the assessee, and therefore, such entries could not be regarded as incriminating material. 19. It was further pointed out that even the notings in the seized documents, such as the remark ―return‖, were interpreted by the Assessing Officer without any supporting evidence, and no

18 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others independent enquiry was conducted to substantiate the allegation that any unaccounted cash was involved. The Co- ordinate Bench has recorded a finding that such assumptions, in the absence of corroborative material, remain purely speculative and cannot form the basis of an addition. The learned AR also relied upon the finding of the Tribunal that a statement recorded under section 132(4), in the absence of any supporting documentary evidence, does not constitute incriminating material for the purpose of making additions in proceedings under section 153C. 20. Further, referring to para 4.6 of the said order, it was submitted that the Co-ordinate Bench has categorically held that even if the genuineness of the loan transactions could be examined during post-search or regular assessment proceedings, the same would not convert a duly recorded transaction into incriminating material for the purpose of section 153C proceedings. The learned AR emphasised that the Tribunal has ultimately recorded a clear finding that neither the assessment order nor the order of the learned CIT(A) contained any reference to specific incriminating material relatable to the impugned additions, and accordingly, following the judgment of the Hon’ble Supreme Court in Abhisar Buildwell Pvt. Ltd.(149 taxmann.com 399), the additions were held to be unsustainable in law. 21. On the strength of the above findings, it was submitted that since the present appeals are based on identical seized material

19 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others and identical additions under section 68, the issue is squarely covered in favour of the assessees and no addition could be sustained in the absence of incriminating material. 22. The learned AR further invited our attention to para 3 of the order of the learned CIT(A), wherein the learned CIT(A), while adjudicating the ground challenging the validity of proceedings under section 153C of the Act, has placed reliance upon the very same material which has been examined by the co-ordinate bench in the earlier group cases. It was submitted that the learned CIT(A), in the said paragraph, has referred to the seized documents and the findings of the Assessing Officer to uphold the assumption of jurisdiction under section 153C. However, the learned AR contended that the nature of such material is identical to that considered by the co-ordinate bench in the decisions relied upon, wherein it has been categorically held that such material does not constitute incriminating material within the meaning of section 153C. 23. The learned AR submitted that in the case of Dodhia Chem Tex Pvt. Ltd., the assessment has been framed under section 153A of the Act in the absence of any incriminating material found during the course of search. It was contended that the additions made by the Assessing Officer are not based on any material seized during search proceedings but are founded merely on post-search enquiries, statements and general information received from the Investigation Wing.

20 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 24. In the case of Dodhia Chem Tex Pvt. Ltd., the learned AR placed reliance on the decisions of the co-ordinate benches in the group cases and submitted that the factual matrix in the present appeals is identical. It was pointed out that the share application money received by the assessee stood duly allotted in subsequent years, and similarly, the loans received were repaid through banking channels in subsequent years. It was further contended that no evidence of any cash trail has been brought on record by the Assessing Officer to establish that the impugned transactions represent accommodation entries. The learned AR also emphasised that none of the seized material or alleged incriminating documents contains any reference to the assessee so as to directly link it with the alleged accommodation entry providers. 25. It was thus submitted that, in respect of unabated assessments, the settled legal position is that no addition can be made under section 153A in the absence of incriminating material found during search. The learned AR contended that since no such incriminating material pertaining to the impugned transactions has been brought on record, the very foundation of the addition is unsustainable in law. 26. The learned AR referring to decision of Co-ordinate Benches submitted that once the very same material has already been judicially examined by the co-ordinate bench and held to be non- incriminating, the reliance placed by the learned CIT(A) on such

21 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others material for sustaining the jurisdiction under section 153C is misconceived and contrary to the settled position of law. 27. It was accordingly contended that the issue relating to the validity of proceedings under section 153C or 153A, based on identical seized material, stands squarely covered in favour of the assessees by the decisions of the co-ordinate bench, and therefore, the assumption of jurisdiction itself deserves to be held as invalid. 28. The learned Departmental Representative (DR), on the other hand, invited our attention to the order sheet entries (dated 25.02.2025 and 15.10.2025), wherein the Bench had specifically directed verification on the aspect of existence of incriminating material in the form of alleged cash transactions routed through the entities. 29. Referring to the statement recorded under section 132(4) of Shri Bhadresh Mansukhlal Dodhia, the learned DR placed particular reliance on the answer to Question No. 70/72, wherein it has been stated that the group had cash available from various sources and, in order to introduce such cash into the books of account, entries were taken through M/s Vinam Finance Pvt. Ltd., and the funds were brought into the books by way of accommodation entries against equivalent cash. 30. The learned DR submitted that the aforesaid statement clearly establishes that the lender entities were merely conduit or paper companies and cash belonging to the assessee group was

22 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others routed through such entities. Therefore, the DR contended that the loan transactions recorded in the books were not genuine but represented accommodation entries. 31. It was further contended that such a categorical admission recorded during the course of search proceedings constitutes direct incriminating material, and therefore, the case squarely falls within the ambit of section 153C of the Act. According to the learned DR, the reliance placed by the assessee on absence of incriminating material is misconceived, as the statement itself, coupled with the seized material and satisfaction note referring to ledger accounts of such entities, forms a complete chain of evidence justifying the addition. 32. The learned DR thus submitted that the findings recorded by the Assessing Officer and confirmed by the learned CIT(A), treating the impugned loans as accommodation entries and making addition under section 68 of the Act, are fully supported by the incriminating material found during the course of search and do not call for any interference. 33. In the case of Dodhia Chem Tex Pvt. Ltd., the learned DR, controverting the submissions of the learned AR, invited our attention to the alleged incriminating material as referred to by the Assessing Officer in the notice issued under section 142(1), placed at page nos. 46 to 51 of the paper book where the Assessing Officer primarily referred to certain loose papers and transactional details purportedly seized during the course of survey/search proceedings in the case of Dodhia Chemtex Pvt.

23 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Ltd., including entries relating to share application money received from Vinam Finance Pvt. Ltd. in different financial years. The learned AR pointed out that the shares were issued at a substantial premium of Rs. 990/- per share despite the assessee not having any significant business activity. It was submitted that the financial statements reveal that the primary source of income of the assessee was profit from mutual funds and not from any substantive operational activity, thereby casting serious doubt on the justification for such high premium. The learned DR further highlighted that the shares were issued within a short span of approximately three months, and no valuation report or supporting material justifying the premium charged was placed on record. It was thus contended that the absence of any credible valuation coupled with lack of business activity indicates that the share premium lacks commercial justification and reinforces the inference that the transactions are not genuine. 34. The learned DR further submitted that the contention of the assessee that merely because documentary evidences have been furnished and the loan has been repaid, the same should be treated as genuine, is wholly misconceived and contrary to the settled position of law. In support of the above proposition, the learned DR placed reliance on the decision of the co-ordinate bench in the case of J.K. Global in ITA Nos. 3260, 3259 & 3258/Mum/2023 and invited our attention to para 7 of the said order, wherein the Bench has categorically held as under:

24 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others “...the contention of the ld. counsel that the loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense.” 35. Placing reliance on the above finding, the learned DR submitted that the mere existence of documentation such as bank statements, confirmations, financial statements, or even repayment of loan, cannot be considered as conclusive proof of genuineness when the surrounding circumstances and material on record establish that the transaction is in the nature of accommodation entry. It was thus contended that once it is demonstrated, on the basis of investigation and statements recorded during search, that the lender entities are paper companies engaged in providing accommodation entries, the entire edifice of the assessee’s claim collapses, and the repayment of such loans does not validate the transaction. Accordingly, the addition made under section 68 of the Act deserves to be sustained.

25 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others ground that such opportunity was not granted, thereby resulting in violation of principles of natural justice. The learned DR submitted that in the present case, no such request for cross- examination has been made by the assessee either during the course of assessment proceedings or before the learned CIT(A). It was further contended that the assessee has not disputed the material gathered by the Investigation Wing nor sought any opportunity to confront the same. Accordingly, it was argued that the ratio of the decision in the case of Bhadresh Dodhia cannot be applied in the present case, as the factual foundation, particularly with regard to denial of cross-examination, is absent. The learned DR thus submitted that the reliance placed by the assessee on the said decision is misplaced and does not advance the case of the assessee. 37. In rejoinder, the learned AR submitted that the learned DR has not explained how decisions of the co-ordinate benches as relied on by the assessee are not applicable to present cases under consideration. The learned AR further submitted that the reliance placed by the learned DR on the statement recorded during the course of search is misplaced, inasmuch as the said statement of Shri Bhadresh Dodhia has been subsequently retracted, and the learned DR has not addressed this crucial aspect. It was contended that as per settled judicial principles, a retracted statement, in the absence of independent corroborative material, cannot form the sole basis for making an addition. The learned AR submitted that in the present cases, the Assessing

26 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Officer has not brought on record any independent incriminating material and has solely relied upon the statement recorded during search proceedings. The learned AR further submitted that the assessee had furnished complete documentary evidences in support of the loan transactions, including confirmations, bank statements and financial details of the lenders, which have not been found to be false or non-genuine by the lower authorities. 38. Distinguishing the decision relied upon by the learned DR, the learned AR submitted that in the said case, the addition was sustained in the absence of supporting documentary evidences, whereas in the present cases, all primary evidences have been duly furnished and remain uncontroverted. 39. It was thus submitted that the reliance placed by the learned DR on the said decision is misplaced, and the additions made under section 68 of the Act, being based solely on a retracted statement without any corroborative material, are not sustainable in law. 40. We have carefully considered the rival submissions, perused the assessment orders, the appellate orders of the learned CIT(A), the material placed on record, including the documents referred to in the notice issued under section 142(1) (PB page nos. 46 to 51), the order sheet entries recorded by this Bench, and the judicial precedents relied upon by both the parties. From a comprehensive consideration of the record, the assessment orders, the appellate findings, the order sheet entries of this

27 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Bench, and the grounds raised by the assessees across all appeals, it emerges that the controversy is not confined to a singular issue but involves a cluster of interrelated legal and factual questions which can be succinctly crystallised as under: (a) Whether additions under section 68 can be sustained merely on the basis of statements recorded during search, in the absence of corroborative material; (b) What is the evidentiary value of statements recorded under section 132(4), particularly when such statements stand subsequently retracted; (c) Whether reliance on third-party statements, without affording effective opportunity of cross-examination, vitiates the addition; (d) Whether, in proceedings under section 153C, additions can be sustained in respect of completed assessments in the absence of any incriminating material found during the course of search; (e) Whether documentary evidences furnished by the assessees to discharge the onus under section 68 can be disregarded without any independent enquiry or rebuttal by the Revenue. (f) Whether the material referred to by the Assessing Officer in the notice under section 142(1), comprising loose papers

28 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others and tabulated entries, constitutes incriminating material in the eyes of law. 41. On perusal of the assessment orders across all the appeals, it is evident that the additions have been made predominantly on the basis of statements recorded under section 132(4), inputs received from the Investigation Wing alleging accommodation entries, and general observations regarding the financial capacity of the lender entities. The learned DR has, in addition, relied upon the documents referred to in the notice issued under section 142(1), wherein reference has been made to certain loose papers (Bundle Nos. 1 to 6 and 11) and tabulated details of share application money received from entities such as Vinam Finance Pvt. Ltd. 42. However, a careful examination of the said material reveals that the same merely contains entries relating to financial transactions, including receipt of share application money through banking channels and corresponding ledger entries. There is no demonstrable evidence therein of any unaccounted cash trail, circulation of cash, or any material establishing that the transactions represent accommodation entries. The very tenor of the notice under section 142(1), which calls upon the assessee to reconcile the entries with its books of account, indicates that the transactions are traceable to recorded books and are not per se incriminating in nature. 43. Thus, significantly, no material has been brought on record to demonstrate that any unaccounted cash belonging to the

29 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others assessees was discovered during the course of search, nor is there any seized document evidencing an actual cash trail, nor any material directly establishing that the impugned loans or share application monies represent accommodation entries. The additions are, therefore, not founded on incriminating material found during search, but are the result of post-search inference drawn on the basis of statements and third-party information. 44. It is a well-settled legal proposition that a statement recorded under section 132(4) constitutes a relevant piece of evidence; however, the same is not conclusive and cannot, by itself, form the sole basis of addition unless it is supported by cogent and independent corroborative material. Where such a statement is subsequently retracted, the evidentiary value thereof stands substantially diluted, and the burden shifts heavily upon the Revenue to establish its correctness by bringing on record credible supporting evidence. 45. At this juncture, it would be apposite to advert to the order sheet entries recorded during the course of hearing before this Bench. The order sheet entry dated 25.02.2025 clearly records that, in view of the retraction of the statement of Shri Bhadresh Mansukhlal Dodhia, the Bench deemed it necessary to test the veracity of such statement through cross-examination and specifically directed the Assessing Officer to facilitate the same, while also calling upon the Assessing Officer to report whether any incriminating material evidencing cash transactions or hawala entries was found during search.

30 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 46. However, as recorded in the subsequent order sheet entry dated 15.10.2025, the learned CIT-DR informed the Bench that the Assessing Officer had expressed his inability to comply with the directions of the Bench to facilitate cross-examination of Shri Bhadresh Dodhia. It was further recorded that despite the specific directions of the Bench, neither cross-examination was conducted nor any corroborative material was brought on record. The matters were thereafter released from part-heard. 47. The cumulative effect of the above order sheet entries is that the evidentiary deficiencies noted by the Bench, particularly with respect to retracted statements and absence of corroboration, remained unaddressed despite specific judicial directions. The failure of the Revenue to produce the witness for cross- examination or to substantiate the statements with independent material materially weakens the evidentiary foundation of the additions. 48. In the present case, it is not in dispute that the statements relied upon by the Assessing Officer have been subsequently retracted. In absence of any corroborative material, such retracted statements lose their probative value and cannot be treated as conclusive evidence. Further, we find that no independent material has been brought on record to demonstrate any nexus between the assessees and alleged entry operators, nor any movement of unaccounted cash, nor any falsity in the documentary evidences furnished by the assessees.

31 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 49. The assessees, on the other hand, have placed on record confirmations, bank statements, financial statements of lenders, and other supporting evidences. These evidences have not been found to be false or fabricated by the Assessing Officer. No independent enquiry has been conducted to dislodge the same. 50. The above position stands fortified by the findings of the co- ordinate benches in the group cases. In the case of BhadreshMansukhlal Dodhia (HUF), the Co-ordinate Bench has elaborately examined the very same set of seized material, statements and additions, and has laid down the governing ratio in paras 4 to 9 of the order, which directly apply to the present appeals. 51. On a perusal of the said decision, it is observed that the Co- ordinate Bench, after analysing the seized material, recorded that the alleged incriminating documents merely contained entries which were already duly recorded in the regular books of account and formed part of the financial statements. The Co-ordinate Bench categorically held that entries which are part of regular books cannot assume the character of incriminating material merely because they appear in seized documents. Further, dealing with the reliance placed by the Assessing Officer on statements recorded under section 132(4), the Co-ordinate Bench held that such statements, in the absence of supporting documentary evidence, do not constitute incriminating material and cannot be made the sole basis of addition.

32 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 52. The Co-ordinate Bench further examined the interpretation placed by the Assessing Officer on the seized material and recorded a categorical finding that the conclusions drawn were based on assumptions and not on any tangible evidence. It was specifically noted that even basic factual assertions such as alleged cash transactions were not borne out from the seized material and were merely inferred by the Assessing Officer without any supporting evidence. 53. More importantly, the Co-ordinate Bench held that the burden squarely lies upon the Revenue to establish, through independent enquiry and corroborative material, the existence of any unaccounted cash or accommodation entry. In absence of such enquiry, any addition made merely on the basis of presumption or third-party information cannot be sustained in law. The Co-ordinate Bench also drew a clear distinction between incriminating material found during search and post-search enquiries, holding that subsequent investigation cannot cure the foundational defect of absence of incriminating material for the purposes of section 153C or 153A. 54. The Co-ordinate Bench thereafter, placing reliance on the judgment of the Hon’ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd., held that in respect of unabated assessments, no addition can be made in the absence of incriminating material found during the course of search. 55. The aforesaid ratio stands further strengthened by the subsequent consolidated decision in the case of Dodhia

33 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others Filaments Pvt. Ltd. and connected appeals, wherein the Tribunal has dealt with identical additions based on statements, investigation wing reports and alleged accommodation entries. The Co-ordinate Bench, after examining the entire material, has held that the Assessing Officer had placed predominant reliance on post-search investigation reports and statements of alleged entry operators without bringing any direct material on record linking the assessee with any unaccounted cash transactions. 56. It was further held that statements recorded during search or during investigation, without being subjected to cross- examination, cannot be relied upon to fasten tax liability. It was also held that failure of the Assessing Officer to provide copies of statements and to grant opportunity of cross-examination constitutes a clear violation of principles of natural justice. The Co-ordinate Bench finally held that additions under section 68 cannot be sustained merely on the basis of generalised findings of the Investigation Wing regarding alleged shell entities. 57. Similarly, in the case of Vasupujya Filaments, the Co- ordinate Bench, while dealing with identical issues arising from the same search, has recorded that the Assessing Officer had relied extensively on statements of group persons and alleged entry operators, as well as investigation reports, to conclude that the loans were accommodation entries. However, the Co-ordinate Bench noted that no incriminating material was found during search specifically relating to the loans in question, the statements relied upon were general in nature and not supported

34 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others by seized material and the additions were made primarily on the basis of post-search enquiries and third-party information. The Co-ordinate Bench thus held that such additions, being unsupported by incriminating material and based on untested statements, are unsustainable. 58. Further, in the individual case of Bhadresh Mansukhlal Dodhia (ITA No. 2218/Mum/2025), the Co-ordinate Bench has reiterated that additions made under section 68 solely on the basis of statements of third parties and investigation reports, without furnishing such material to the assessee and without granting opportunity of cross-examination, are liable to be deleted. The Co-ordinate Bench specifically noted that reliance on retracted statements, in absence of corroboration, cannot sustain an addition and that denial of cross-examination vitiates the assessment proceedings. 59. The learned DR placed reliance on the decision of the co- ordinate bench in the case of J.K. Global to contend that once a transaction is established as an accommodation entry, the existence of supporting documents or subsequent repayment would not validate its genuineness. The emphasis was on the principle that repayment is merely a recycling of funds and does not cure the inherent defect in such transactions. 60. We have considered the aforesaid reliance. In our view, the ratio of the said decision is clearly contingent upon the foundational finding that the impugned transactions are, in fact, accommodation entries established on the basis of cogent

35 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others material. In absence of such foundational evidence, the said principle cannot be mechanically applied. In the present case, as would be discussed in subsequent paragraphs, the Revenue has not brought on record any independent material to conclusively demonstrate that the impugned loans represent accommodation entries. 61. The contention that the decisions in the case of Bhadresh Mansukhlal Dodhia (HUF) and other group concerns are distinguishable on account of absence of request for cross- examination is also not acceptable. The core ratio of those decisions is not confined merely to denial of cross-examination but extends to the broader principle that additions cannot be sustained solely on the basis of statements and generalised investigation reports, in absence of corroborative incriminating material. 62. Accordingly, the reliance placed by the learned DR does not advance the case of the Revenue in the facts of the present appeals. 63. Similarly, the contentions raised in respect of share premium in the case of Dodhia Chem Tex Pvt. Ltd., including absence of business activity and lack of valuation report, may at best give rise to suspicion; however, in absence of cogent evidence establishing that the share application money represents unexplained income of the assessee, such factors alone cannot justify addition under section 68, particularly in proceedings

36 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others governed by section 153A/153C where the requirement of incriminating material assumes critical significance. 64. From the cumulative reading of the above decisions of the co-ordinate benches in the same group, the following settled principles clearly emerge: i. A statement recorded under section 132(4), in absence of corroborative documentary evidence, does not constitute incriminating material and cannot be the sole basis of addition; ii. Entries already recorded in the regular books of account cannot be treated as incriminating merely because they are found in seized material; iii. Additions based on generalised investigation reports or third-party statements, without independent enquiry and nexus with the assessee, are unsustainable; iv. Denial of cross-examination of persons whose statements are relied upon renders the addition vitiated in law; v. In respect of unabated assessments, absence of incriminating material found during search is fatal to the addition; vi. Post-search enquiries or subsequent investigation cannot substitute the statutory requirement of incriminating material for the purpose of section 153C/153A.

37 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 65. Applying the aforesaid binding principles to the facts of the present case, which arise from the same search, involve the same set of alleged lenders and are founded on identical statements and investigation reports, we find that the factual and legal matrix is indistinguishable. Therefore, respectfully following the consistent view taken by the co-ordinate benches in the group cases, the additions made in the present appeals, being unsupported by incriminating material and based primarily on retracted and uncorroborated statements, cannot be sustained in law. 66. Before parting, it would also be pertinent to deal with the submission of the learned AR that all the lender/share applicant companies are existing and active entities. In this regard, the learned AR has placed on record extracts from the MCA portal evidencing that such companies are ―Active‖ as per statutory records, along with details of their paid-up capital and financial statements as per the last available balance sheet filings. 67. On consideration of the said material, we find that the status of the companies as ―Active‖ on the MCA portal, coupled with their statutory filings and existence of financial data, constitutes a relevant piece of evidentiary material in support of the identity and existence of such entities. The Revenue has not brought on record any contrary material to demonstrate that these entities are non-existent or fictitious. 68. While it is true that mere registration or active status under the Companies Act is not, by itself, conclusive proof of

38 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others genuineness of transactions, the same cannot be disregarded altogether, particularly in the absence of any material to show that such entities are sham or bogus. In the present case, no independent enquiry has been conducted by the Assessing Officer to disprove the existence of these entities or to establish that the financial particulars available in the public domain are incorrect. 69. In fact, when this aspect is considered in conjunction with the documentary evidences furnished by the assessees, absence of any cash trail, lack of incriminating material, and failure of the Revenue to bring on record any cogent material to establish that the transactions are accommodation entries, the evidentiary value of such MCA records assumes significance. 70. Accordingly, the submission of the learned AR in this regard lends further support to the conclusion that the additions made by the Assessing Officer are not sustainable in law. 71. The disallowance of interest in the present cases is intrinsically linked with the additions made under section 68 of the Act in respect of the very same unsecured loans. The Assessing Officer has proceeded on the premise that since the loans are alleged to be non-genuine and in the nature of accommodation entries, the interest claimed thereon is also not allowable. 72. In view of our detailed findings hereinabove, wherein the additions under section 68 have been held to be unsustainable for want of incriminating material, absence of corroboration,

39 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others reliance on retracted statements and failure to establish any nexus with unaccounted cash, the very foundation on which the disallowance of interest rests ceases to survive. 73. It is a settled proposition that where the principal amount itself is accepted or cannot be treated as unexplained, the consequential disallowance of interest thereon cannot be sustained merely on suspicion. Once the loan transactions are not held to be bogus, the interest expenditure incurred thereon, being otherwise supported by documentary evidences such as loan confirmations, bank transactions and deduction of tax at source, is allowable in accordance with law. 74. Further, no independent finding has been recorded by the Assessing Officer to demonstrate that the interest expenditure is not incurred wholly and exclusively for the purposes of business or that the same is excessive or unreasonable within the meaning of section 40A(2)(b). It is also pertinent to note that no material has been brought on record to establish that the interest payments made by the assessees have been routed back in cash or have resulted in any cash trail so as to indicate a circular movement of unaccounted funds. Nor has any defect been pointed out in the documentary evidences furnished by the assessees in support of such interest expenditure. 75. Accordingly, in the absence of any independent basis for disallowance, and the additions under section 68 having been deleted, the disallowance of interest on such unsecured loans cannot be sustained and is hereby directed to be deleted.

40 IT(SS)A No. 172/Mum/2025 & Others Dodhia Pradeep Meghji & Others 76. In the result, all the appeals filed by the assessee are allowed.

Order pronounced in the open court on 07.04.2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 07/04/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai