CHANDRIKA MANSUKHLAL DODHIA,BHIWANDI vs. DCIT-CC-3, THANE, THANE

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ITSSA 199/MUM/2025Status: DisposedITAT Mumbai15 April 2025AY 2016-1712 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 1,00,00,000/- on account of unsecured loans could not be made in the hands of the assessee without the aid of any incriminating material found from the premises of the assessee during the search and seizure operation. The Tribunal referred to the provisions of Section 132(4) and Section 158BB(1) read with Section 158B(b) of the Act, stating that a statement recorded under Section 132(4) can be used in evidence for a block assessment only if it is made in the context of other evidence or material discovered during the search. A statement not relatable to any incriminating document or material found during the search cannot, by itself, trigger a block assessment. The undisclosed income must be computed based on evidence and material found during the search. The Tribunal set aside the finding of the Ld. CIT(A) on this issue and allowed Ground No. 5 of the assessee's appeal. Consequently, since the addition was deleted, other grounds challenging the merit of the addition were rendered academic and not adjudicated upon.

What were the facts?

The assessee, Chandrika Mansukhlal Dodhia, filed an appeal against the order dated 27.12.2024 passed by the Commissioner of Income-tax (Appeals) – Pune. The appeal pertains to Assessment Year 2016-17. The core of the dispute is an addition of Rs. 1,00,00,000/- made by the Assessing Officer under Section 68 read with Section 115BBE of the Income Tax Act, 1961. This addition was on account of unsecured loans received from M/s Vinam Finance Pvt. Ltd., which were treated as unexplained cash credits. The Assessing Officer passed the order under Section 143(3) read with Section 153A of the Act on 28.09.2021. The assessee contends that they discharged their onus under Section 68 by providing documentary evidence for the identity, creditworthiness, and genuineness of the lender and the transactions.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the addition of Rs. 1,00,00,000/- on account of unsecured loans from M/s Vinam Finance Pvt. Ltd. was validly made, considering the assessee's submission of documentary evidence for identity, creditworthiness, and genuineness of the lender and transactions, as required under Section 68 read with Section 115BBE of the Income Tax Act, 1961. Assessee's contentions: The assessee argued that they had duly discharged their onus under Section 68 by submitting all relevant documentary evidence. They also contended that the loans were genuine as they were repaid in subsequent years before the date of search. Furthermore, they argued that there was no evidence of cash paid at the time of receipt or repayment of the loans, and M/s Vinam Finance Pvt. Ltd. was an MCA Active company. The assessment order was also challenged for being based solely on information from other sources without independent inquiry and for relying on retracted statements. The assessee also argued that the assessment for AY 2016-17 had attained finality and no reassessment was pending at the time of search, especially since no incriminating material was found. Revenue's contentions: The judgment does not record specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 143(3),Section 153A,Section 132(4),Section 158BB(1),Section 158B(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY

For Appellant: Mr. R.A. Dhyani, CIT-DR
Hearing: 15/04/2025

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 27.12.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – Pune [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:

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 1,00,00,000/- u/s 68 r.w.s.

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 2 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

115BBE of the Act made by the Ld. Assessing Officer in the 115BBE of the Act made by the Ld. Assessing Officer in the 115BBE of the Act made by the Ld. Assessing Officer in the assessment order passed u/s 143(3) r.w.s 153A of the Income order passed u/s 143(3) r.w.s 153A of the Income order passed u/s 143(3) r.w.s 153A of the Income Tax Act dated 28.09.2021 on account of unsecured loans Tax Act dated 28.09.2021 on account of unsecured loans Tax Act dated 28.09.2021 on account of unsecured loans received by the appellant of from M/s Vinam Finance Pvt. Ltd received by the appellant of from M/s Vinam Finance Pvt. Ltd received by the appellant of from M/s Vinam Finance Pvt. Ltd which were treated as unexplained cash credits though the which were treated as unexplained cash credits though the which were treated as unexplained cash credits though the appellant had duly discharged it appellant had duly discharged its onus under section 68, by s onus under section 68, by submitting all the relevant documentary evidences to prove submitting all the relevant documentary evidences to prove submitting all the relevant documentary evidences to prove identity and creditworthiness of the lender company and identity and creditworthiness of the lender company and identity and creditworthiness of the lender company and genuineness of the transactions. genuineness of the transactions. 2. On the facts and in the circumstances of the appellant's case 2. On the facts and in the circumstances of the appellant's case 2. On the facts and in the circumstances of the appellant's case and in law, the and in law, the Ld Commissioner of Income Tax (Appeals) erred Ld Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs 1,00,00,000/ in upholding the addition of Rs 1,00,00,000/- ignoring the fact ignoring the fact that the loans taken stood duly repaid in subsequent years much that the loans taken stood duly repaid in subsequent years much that the loans taken stood duly repaid in subsequent years much before the date of search which proves fact that loans taken were before the date of search which proves fact that loans taken were 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 the facts and in the circumstances of the appellant's case the facts and in the circumstances of the appellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs 1,00,00,000/ in upholding the addition of Rs 1,00,00,000/- on account of on account of unsecured loans without there being any evidence of cash paid unsecured loans without there being any evidence of cash paid unsecured loans without there being any evidence of cash paid at the time of receipt of alleged non of receipt of alleged non-genuine unsecured loans and genuine unsecured loans and without there being any evidence of cash received at the time of without there being any evidence of cash received at the time of without there being any evidence of cash received at the time of repayment of alleged non repayment of alleged non-genuine unsecured loans from / to M/s genuine unsecured loans from / to M/s Vinam Finance Pvt. Ltd. Vinam Finance Pvt. Ltd. 4. On the facts and in the circumstances of the ap 4. On the facts and in the circumstances of the appellant's case pellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 1,00,00,000/ in upholding the addition of Rs. 1,00,00,000/- by holding the by holding the above-mentioned companies as paper /shell/non mentioned companies as paper /shell/non-genuine entity genuine entity even though the company was MCA Active both at the time even though the company was MCA Active both at the time even though the company was MCA Active both at the time of taking of such loans/and at the time of repayment of the loans. taking of such loans/and at the time of repayment of the loans. 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 On the facts and in the circumstances of the appellant's case On the facts and in the circumstances of the appellant's case and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs 1,00,00,000/ in upholding the addition of Rs 1,00,00,000/- despite the fac despite the fact that the assessment for AY 2016 that the assessment for AY 2016-17 had attained finality and no 17 had attained finality and no assessment or reassessment was pending as on the date of assessment or reassessment was pending as on the date of assessment or reassessment was pending as on the date of search that could be abated particularly in view of the fact no search that could be abated particularly in view of the fact no search that could be abated particularly in view of the fact no incriminating material was found during the course of search & incriminating material was found during the course of search & incriminating material was found during the course of search & seizure action. e action. 6. On the facts and in the circumstances of the appellant's case 6. On the facts and in the circumstances of the appellant's case 6. On the facts and in the circumstances of the appellant's case and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred in not quashing the assessment order wherein the Assessing in not quashing the assessment order wherein the Assessing in not quashing the assessment order wherein the Assessing Officer has made addition solely on the basis of information Officer has made addition solely on the basis of information Officer has made addition solely on the basis of information

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 3 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

received from other sources and without making any enquiries on received from other sources and without making any enquiries on 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 7. On the facts and in the circumstances of the appellant's case 7. On the facts and in the circumstances of the appellant's case and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred and in law, the Ld Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs 1,00,00,000/ in upholding the addition of Rs 1,00,00,000/- despite t despite the fact that the Assessing Officer relied on the retracted statements of that the Assessing Officer relied on the retracted statements of that the Assessing Officer relied on the retracted statements of Shri Bhavik Jhakaria, Shri Minesh Dodhia, Shri Pradeep Dodhia Shri Bhavik Jhakaria, Shri Minesh Dodhia, Shri Pradeep Dodhia Shri Bhavik Jhakaria, Shri Minesh Dodhia, Shri Pradeep Dodhia and Shri Bhadresh Dwodhia. and Shri Bhadresh Dwodhia. 8. On the facts and in the circumstances of the appellant's case 8. On the facts and in the circumstances of the appellant's case 8. On the facts and in the circumstances of the appellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred ner of Income Tax (Appeals) erred in not quashing the assessment order and deleting the addition in not quashing the assessment order and deleting the addition in not quashing the assessment order and deleting the addition made even when the Ld. Assessing Officer did not follow the made even when the Ld. Assessing Officer did not follow the made even when the Ld. Assessing Officer did not follow the basic principles of natural justice by basic principles of natural justice by (i) supplying the appellant with materials collected at its supplying the appellant with materials collected at its supplying the appellant with materials collected at its back, (ii) supplying copies of all relevant statements of third parties, supplying copies of all relevant statements of third parties, supplying copies of all relevant statements of third parties, (iii) supplying copies of reports of Investigation and supplying copies of reports of Investigation and (iv) affording opportunity to cross examine the third parties affording opportunity to cross examine the third parties affording opportunity to cross examine the third parties whose statement was relied upon to draw inference against the whose statement was relied upon to draw inference against the whose statement was relied upon to draw inference against the appellant, despite specific request made by the appellant in ellant, despite specific request made by the appellant in ellant, despite specific request made by the appellant in response to show cause notice filed by the Appellant. response to show cause notice filed by the Appellant. 9. On the facts and in the circumstances of the appellant's case 9. On the facts and in the circumstances of the appellant's case 9. On the facts and in the circumstances of the appellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred Commissioner of Income Tax (Appeals) erred in upholding the in upholding the addition of Rs 1,00,00,000/- even though no even though no unaccounted assets in the form of cash, jewellery or stock were unaccounted assets in the form of cash, jewellery or stock were unaccounted assets in the form of cash, jewellery or stock were found. 10. On the facts and in the circumstances of the appellant's case 10. On the facts and in the circumstances of the appellant's case 10. On the facts and in the circumstances of the appellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred Commissioner of Income Tax (Appeals) erred in upholding the levy of interest u/s g the levy of interest u/s 234B & 234C of the Income 234B & 234C of the Income Tax Act, 1961. Tax Act, 1961. 11. On the facts and in the circumstances of the appellant's case 11. On the facts and in the circumstances of the appellant's case 11. On the facts and in the circumstances of the appellant's case and in law, the Ld. and in law, the Ld. Commissioner of Income Tax (Appeals) erred Commissioner of Income Tax (Appeals) erred in upholding the initiation of penalty u/s 271(1)(c) of the in upholding the initiation of penalty u/s 271(1)(c) of the in upholding the initiation of penalty u/s 271(1)(c) of the Income Tax Act, 1961. Tax Act, 1961. 12. The appellant craves leave to add to, alter, amend, modify 12. The appellant craves leave to add to, alter, amend, modify 12. The appellant craves leave to add to, alter, amend, modify and /or delete all or any of the foregoing grounds and /or delete all or any of the foregoing grounds of appeal. appeal.

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 4 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

2.

Briefly stated facts of the case are that assessee is an Briefly stated facts of the case are that assessee is an Briefly stated facts of the case are that assessee is an individual and filed her return of income for th individual and filed her return of income for the assessment year e assessment year under consideration on 15.10.2016 declaring total income at under consideration on 15.10.2016 declaring total income at under consideration on 15.10.2016 declaring total income at Rs.10,22,160/-. Subsequently, a search and seizure operation u/s . Subsequently, a search and seizure operation u/s . Subsequently, a search and seizure operation u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) was carried out tax Act, 1961 (in short ‘the Act’) was carried out tax Act, 1961 (in short ‘the Act’) was carried out on the premises of the Dodhia group of cases including the on the premises of the Dodhia group of cases on the premises of the Dodhia group of cases premises of the assessee on 27.11.2019. Consequently, notice u/s premises of the assessee on 27.11.2019. Consequently, notice u/s premises of the assessee on 27.11.2019. Consequently, notice u/s 153A of the Act was issued for the year under consideration asking 153A of the Act was issued for the year under consideration asking 153A of the Act was issued for the year under consideration asking the assessee to file return of income. In response, the assessee filed the assessee to file return of income. In response, the assessee filed the assessee to file return of income. In response, the assessee filed return of income on 28.01.2021 declari return of income on 28.01.2021 declaring total income ng total income at Rs.10,22,160/-, i.e. the income , i.e. the income which was declared in the original which was declared in the original return of the income. Subsequently, statutory notices under the Act return of the income. Subsequently, statutory notices under the Act return of the income. Subsequently, statutory notices under the Act were issued and the assessee was asked to justify why the were issued and the assessee was asked to justify why the were issued and the assessee was asked to justify why the unsecured loan of Rs.1 crores received from unsecured loan of Rs.1 crores received from Vinam Finance Pvt. Vinam Finance Pvt. Ltd. be treated as unexplained cash credit in terms of section 68 of Ltd. be treated as unexplained cash credit in terms of section 68 of Ltd. be treated as unexplained cash credit in terms of section 68 of the Act. In view of no response on the part of the assessee, the the Act. In view of no response on the part of the assessee, the the Act. In view of no response on the part of the assessee, the Assessing Officer treated the unsecured loan of Rs. 1 crores Assessing Officer treated the unsecured loan of Rs. 1 crores Assessing Officer treated the unsecured loan of Rs. 1 crores received from Vinam Finance Pvt. Ltd. as u received from Vinam Finance Pvt. Ltd. as unexplained cash credit in nexplained cash credit in terms of section 68 of the Act vide his order u/s 153A of the Act terms of section 68 of the Act vide his order u/s 153A of the Act terms of section 68 of the Act vide his order u/s 153A of the Act dated 25.09.2021.

3.

On further appeal, the assessee challenged the proceedings for On further appeal, the assessee challenged the proceedings for On further appeal, the assessee challenged the proceedings for the year under consideration on the ground that no incriminating the year under consideration on the ground that no incriminating the year under consideration on the ground that no incriminating material was found or seized from the premises of the assessee qua ound or seized from the premises of the assessee qua ound or seized from the premises of the assessee qua

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 5 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

the year under consideration. The said legal ground has been the year under consideration. The said legal ground has been the year under consideration. The said legal ground has been adjudicated by the Ld. CIT(A) observing as under: adjudicated by the Ld. CIT(A) observing as under:

8.

For the year under consideration, the appellant had raised a 8. For the year under consideration, the appellant had raised a 8. For the year under consideration, the appellant had raised a technical ground (ground no. technical ground (ground no. 1 and 3) that no addition could have 1 and 3) that no addition could have been made by the AO in the absence of any incriminating been made by the AO in the absence of any incriminating been made by the AO in the absence of any incriminating material found during the search material found during the search operation. In this regard, the operation. In this regard, the appellant has submitted that in the assessment order, the AO appellant has submitted that in the assessment order, the AO appellant has submitted that in the assessment order, the AO has not referred to any incriminating has not referred to any incriminating material suggesting that the material suggesting that the appellant has received any accommodation entry during the year appellant has received any accommodation entry during the year appellant has received any accommodation entry during the year under consideration. The appellant has further argued that it is a consideration. The appellant has further argued that it is a consideration. The appellant has further argued that it is a well-settled legal position that while completing the assessment settled legal position that while completing the assessment settled legal position that while completing the assessment u/s. 153A of the Act, the AO ca u/s. 153A of the Act, the AO cannot make any addition if no nnot make any addition if no incriminating material was found during the search. Since the incriminating material was found during the search. Since the incriminating material was found during the search. Since the present case falls in the category of unabated assessment, the present case falls in the category of unabated assessment, the present case falls in the category of unabated assessment, the AO could not have made any addition while completing the AO could not have made any addition while completing the AO could not have made any addition while completing the assessment u/s. 153A of the Act. In this conn assessment u/s. 153A of the Act. In this conn assessment u/s. 153A of the Act. In this connection, the appellant has relied on the decision of Hon'ble Supreme Court in appellant has relied on the decision of Hon'ble Supreme Court in appellant has relied on the decision of Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwe se of PCIT vs. Abhisar Buildwe (P) Ltd. 149 taxmann.com (P) Ltd. 149 taxmann.com 399 (SC). Findings 9. I have considered the facts of the case and the submissions 9. I have considered the facts of the case and the submissions 9. I have considered the facts of the case and the submissions made by the appellant. It is seen t made by the appellant. It is seen that during the search hat during the search operation, the residence of one of the directors of M/s. Vinam operation, the residence of one of the directors of M/s. Vinam operation, the residence of one of the directors of M/s. Vinam Finance Pvt. Ltd. namely Shri Minesh Dhodia was covered u/s. Finance Pvt. Ltd. namely Shri Minesh Dhodia was covered u/s. Finance Pvt. Ltd. namely Shri Minesh Dhodia was covered u/s. 132 of the Act and the statement of another director Shri Bhavik 132 of the Act and the statement of another director Shri Bhavik 132 of the Act and the statement of another director Shri Bhavik Jakharia was recorded and it was found that t Jakharia was recorded and it was found that these persons hese persons were dummy directors. Although, the statement of Shri Minesh were dummy directors. Although, the statement of Shri Minesh were dummy directors. Although, the statement of Shri Minesh Dhodia as well as Shri Bhavik Jhkharia has not been reproduced Dhodia as well as Shri Bhavik Jhkharia has not been reproduced Dhodia as well as Shri Bhavik Jhkharia has not been reproduced in the assessment order but it is seen that many other entities of in the assessment order but it is seen that many other entities of in the assessment order but it is seen that many other entities of Dodhia group had received accommodation entries from Dodhia group had received accommodation entries from Dodhia group had received accommodation entries from M/s Vinam Finance and the AO has reproduced these statements in Vinam Finance and the AO has reproduced these statements in Vinam Finance and the AO has reproduced these statements in relevant assessment orders. One of such assessment orders was relevant assessment orders. One of such assessment orders was relevant assessment orders. One of such assessment orders was issued in the case of M/s Dodhia Chemtax Private Limited (AY issued in the case of M/s Dodhia Chemtax Private Limited (AY issued in the case of M/s Dodhia Chemtax Private Limited (AY 2016-17) wherein the AO has extensively discussed the findings 17) wherein the AO has extensively discussed the findings 17) wherein the AO has extensively discussed the findings of search w.r.t. accommodation entries received from M/s Vinam arch w.r.t. accommodation entries received from M/s Vinam arch w.r.t. accommodation entries received from M/s Vinam Finance Pvt Limited. Finance Pvt Limited. 10. The statement of Shri Minesh Dhodia and Shri Bhavik 10. The statement of Shri Minesh Dhodia and Shri Bhavik 10. The statement of Shri Minesh Dhodia and Shri Bhavik Jhkharia clearly suggest that they were dummy directors and Jhkharia clearly suggest that they were dummy directors and Jhkharia clearly suggest that they were dummy directors and did not have any knowledge about the company. Furthermore, did not have any knowledge about the company. Furthermore, did not have any knowledge about the company. Furthermore, the said company was earlier managed by Shri Sushil Goel, a e said company was earlier managed by Shri Sushil Goel, a e said company was earlier managed by Shri Sushil Goel, a known accommodation entry operator and the shares of M/s. known accommodation entry operator and the shares of M/s. known accommodation entry operator and the shares of M/s.

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 6 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

Vinam Finance were acquired by Dodhia Group from the Vinam Finance were acquired by Dodhia Group from the Vinam Finance were acquired by Dodhia Group from the accommodation entry operators. The statement of Shri Bhadresh accommodation entry operators. The statement of Shri Bhadresh accommodation entry operators. The statement of Shri Bhadresh Dhodia was also recorded Dhodia was also recorded u/s. 132(4) of the Act wherein in reply u/s. 132(4) of the Act wherein in reply to question no. 70, Shri Bhadresh Dodhia accepted that Dodhia to question no. 70, Shri Bhadresh Dodhia accepted that Dodhia to question no. 70, Shri Bhadresh Dodhia accepted that Dodhia Group was having cash available from various sources which Group was having cash available from various sources which Group was having cash available from various sources which was routed to books of accounts of various entities, through M/s. was routed to books of accounts of various entities, through M/s. was routed to books of accounts of various entities, through M/s. Vinam Finance Pvt. Ltd. In re Vinam Finance Pvt. Ltd. In reply to question no. 72, Shri ply to question no. 72, Shri Bhadresh Dodhia accepted that amount of Rs.43 crores Bhadresh Dodhia accepted that amount of Rs.43 crores Bhadresh Dodhia accepted that amount of Rs.43 crores approximately was routed through the said company. approximately was routed through the said company. 11. The above discussion clearly suggests that incriminating The above discussion clearly suggests that incriminating The above discussion clearly suggests that incriminating material regarding the accommodation entries was found during material regarding the accommodation entries was found during material regarding the accommodation entries was found during the search and therefore the contention of the appellant that no the search and therefore the contention of the appellant that no the search and therefore the contention of the appellant that no incriminating material was found during the search is incorrect. incriminating material was found during the search is incorrect. incriminating material was found during the search is incorrect. Accordingly, Accordingly, Accordingly, the the the ground ground ground no. no. no. 1 1 1 and and and 3 3 3 raised raised raised by by by the the the appellant are are DISMISSED.” 4. Further, the Ld. CIT(A) also rejected the contention of the Further, the Ld. CIT(A) also rejected the contention of the Further, the Ld. CIT(A) also rejected the contention of the assessee on the merit. The Ld. CIT(A) also rejected the contention of assessee on the merit. The Ld. CIT(A) also rejected the contention of assessee on the merit. The Ld. CIT(A) also rejected the contention of non-providing of the cross providing of the cross-examination of the person who stated of examination of the person who stated of providing accommodation entry to the assessee. The Ld. CIT(A) also providing accommodation entry to the assessee. The Ld. CIT( providing accommodation entry to the assessee. The Ld. CIT( rejected the contention of retraction of statement by Shri Bhavik rejected the contention of retraction of statement rejected the contention of retraction of statement Jhkharia, Shri Minesh Dhodia and Shri Bhadresh Dhodia. The Ld. nesh Dhodia and Shri Bhadresh Dhodia. The Ld. nesh Dhodia and Shri Bhadresh Dhodia. The Ld. CIT(A) recorded that one of the director of M/s Vinam Finance Pvt. CIT(A) recorded that one of the director of M/s Vinam Finance Pvt. CIT(A) recorded that one of the director of M/s Vinam Finance Pvt. Ltd. namely Shri Minesh Dhodia was covered u/s 132 of the Act Ltd. namely Shri Minesh Dhodia was covered u/s 132 Ltd. namely Shri Minesh Dhodia was covered u/s 132 and his statement was recorded and his statement was recorded. Further statement of another urther statement of another director Bhavik Jhkharia was also referred and it was found that director Bhavik Jhkharia was also referred and it was found that director Bhavik Jhkharia was also referred and it was found that those persons were dummy directors. The Ld. CIT(A) noted that the dummy directors. The Ld. CIT(A) noted that the dummy directors. The Ld. CIT(A) noted that the said company was also managed by Shri Sushil Goel a known said company was also managed by Shri Sushil Goel a k said company was also managed by Shri Sushil Goel a k accommodation entry operator and the shares of M/s Vinam accommodation entry operator and the shares of M/s Vinam accommodation entry operator and the shares of M/s Vinam Finance were acquired by Dodhia Group from the accommodation Finance were acquired by Dodhia Group from the accommodation Finance were acquired by Dodhia Group from the accommodation entry operators. The Ld. CIT(A) further referred to entry operators. The Ld. CIT(A) further referred to statement of statement of Shri Bhadresh Dhodia, which , which was also recorded u/s 132(4) of the Act was also recorded u/s 132(4) of the Act

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 7 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

wherein in reply to question No. 70, he accepted that Dodhia group wherein in reply to question No. 70, he accepted that Dodhia group wherein in reply to question No. 70, he accepted that Dodhia group was having availability of cash availability of cash from various sources which was from various sources which was routed to the books of accounts of various entities, through M/s books of accounts of various entities, through M/s books of accounts of various entities, through M/s Vinam Finance Pvt. Ltd. In reply to question No. 72, Shri Bhadresh Vinam Finance Pvt. Ltd. In reply to question No. 72, Shri Bha Vinam Finance Pvt. Ltd. In reply to question No. 72, Shri Bha Dodhia accepted that amount of Rs.43 crores approximately was Dodhia accepted that amount of Rs.43 crores approximately was Dodhia accepted that amount of Rs.43 crores approximately was routed through the said company. routed through the said company.

5.

Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 56 and also containing pages 1 to 56 and also a compilation of the legal compilation of the legal decisions relied upon. decisions relied upon.

5.1 Before us, the Ld. counsel for the assessee first of all referred Before us, the Ld. counsel for the assessee first of all referred Before us, the Ld. counsel for the assessee first of all referred to the ground No. 5 of the appeal and submitted that no to the ground No. 5 of the appeal and submitted that no to the ground No. 5 of the appeal and submitted that no incriminating material was found from the premises of the assessee incriminating material was found from the premises of the assessee incriminating material was found from the premises of the assessee qua the assessment year under consideration. The Ld. counsel qua the assessment year under consideration. The Ld. counsel qua the assessment year under consideration. The Ld. counsel submitted that the Assessing Officer and the Ld. CIT(A) has tted that the Assessing Officer and the Ld. CIT(A) has tted that the Assessing Officer and the Ld. CIT(A) has sustained the addition of the unsecured loan merely on the basis of sustained the addition of the unsecured loan merely on the basis of sustained the addition of the unsecured loan merely on the basis of statement of three person statement of three persons namely Shri Minesh Dhodia, Shri namely Shri Minesh Dhodia, Shri Bhadresh Dodhia and Shri Bhadresh Dodhia and Shri Bhavik Jhakharia. These statements . These statements also have not been recorded from the premises of the assessee and been recorded from the premises of the assessee and been recorded from the premises of the assessee and therefore, neither any incriminating material found from the therefore, neither any incriminating material found from the therefore, neither any incriminating material found from the premises of the assessee nor any statement premises of the assessee nor any statement of assessee of assessee u/s 132(4) of the Act has been recorded in relation to allegation of the has been recorded in relation to allegation of the has been recorded in relation to allegation of the accommodation entry of loan received from the Vinam Finance Pvt. ntry of loan received from the Vinam Finance Pvt. ntry of loan received from the Vinam Finance Pvt. Ltd. The Ld. counsel therefore accordingly relied on the decision of Ltd. The Ld. counsel therefore accordingly relied on the decision of Ltd. The Ld. counsel therefore accordingly relied on the decision of the Hon’ble Supreme Court in the case of PCIT v. Abhisar Builwell the Hon’ble Supreme Court in the case of PCIT v. Abhisar Builwell the Hon’ble Supreme Court in the case of PCIT v. Abhisar Builwell

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 8 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

Pvt. Ltd. 149 taxmann.com 399 (SC) and submitted that no Pvt. Ltd. 149 taxmann.com 399 (SC) and submitted that no Pvt. Ltd. 149 taxmann.com 399 (SC) and submitted that no addition can be made qua the year under consideration in respect e made qua the year under consideration in respect e made qua the year under consideration in respect of unexplained cash credit in absence of any incriminating material of unexplained cash credit in absence of any incriminating material of unexplained cash credit in absence of any incriminating material found.

6.

We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. The Hon’ble Delhi High Court in . The Hon’ble Delhi High Court in the case of Kabul Chawla he case of Kabul Chawla [2016] 380 ITR 573 (Delhi) [2016] 380 ITR 573 (Delhi) held that in case of unabated assessments, no additions could have been made case of unabated assessments, no additions could have been made case of unabated assessments, no additions could have been made without the aid of the incriminating material. In the case of the without the aid of the incriminating material. In the case of the without the aid of the incriminating material. In the case of the assessee search was conducted on 27.11.2019. T ch was conducted on 27.11.2019. The original retu he original return of income in the case of income in the case for year under consideration was for year under consideration was filed on 15.10.2016 and therefore, notice u/s 1 15.10.2016 and therefore, notice u/s 143(2) of the Act ) of the Act for selection of the case could have of the case could have been issued up to 30.09.2017 and since no issued up to 30.09.2017 and since no such notice was issued therefore, limitation for issue of notice u/s such notice was issued therefore, limitation for issue such notice was issued therefore, limitation for issue 143(2) of the Act had Act had already expired before the date of already expired before the date of execution of search, hence there was no pendency of the scrutiny assessment on search, hence there was no pendency of the scrutiny assessment search, hence there was no pendency of the scrutiny assessment the date of search. Therefore, the assessment year is in the category herefore, the assessment year is in the category herefore, the assessment year is in the category of the unabated assessment. The rati of the unabated assessment. The ratio in the case of Kabul Chawla o in the case of Kabul Chawla (supra) has been upheld in the case of Abhisar Buildwell Pvt. Ltd. upheld in the case of Abhisar Buildwell Pvt. Ltd. upheld in the case of Abhisar Buildwell Pvt. Ltd. (supra) therefore, in the unabated assessment year only addition (supra) therefore, in the unabated assessment year only addition (supra) therefore, in the unabated assessment year only addition could be made on the basis of incriminating material found from could be made on the basis of incriminating material found from could be made on the basis of incriminating material found from the premises of the assessee. the premises of the assessee. In the case of the assessee, the In the case of the assessee, the addition of Rs. 1 crores has been made in respect of unsecured loan addition of Rs. 1 crores has been made in respect of unsecured loan addition of Rs. 1 crores has been made in respect of unsecured loan of Rs. 1 crores received from M/s Vinam Finance Pvt. Ltd. The lower of Rs. 1 crores received from M/s Vinam Finance Pvt. Ltd. The lower of Rs. 1 crores received from M/s Vinam Finance Pvt. Ltd. The lower

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 9 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

authorities in the impugned order have only mentioned the fact of authorities in the impugned order have only mentioned the fact of authorities in the impugned order have only mentioned the fact of statements of Shri Mi statements of Shri Minesh Dodhia, Shri Bhavik Jhkharia and Shri nesh Dodhia, Shri Bhavik Jhkharia and Shri Bhadresh Dhodia. The Ld. CIT(A) has specifically mentioned to the Bhadresh Dhodia. The Ld. CIT(A) has specifically mentioned to the Bhadresh Dhodia. The Ld. CIT(A) has specifically mentioned to the statement u/s 132(4) of the Act Shri Bhadresh Dhodhia justifying statement u/s 132(4) of the Act Shri Bhadresh Dhodhia justifying statement u/s 132(4) of the Act Shri Bhadresh Dhodhia justifying the addition the unsecured loan in the case of the assessee. the addition the unsecured loan in the case of the assessee. the addition the unsecured loan in the case of the assessee.

6.1 The Ld. Departme The Ld. Departmental Representative (DR) on the other hand ntal Representative (DR) on the other hand before us, submitted that the statement recorded u/s 132(4) of the before us, submitted that the statement recorded u/s 132(4) of the before us, submitted that the statement recorded u/s 132(4) of the Act referred by the Ld. CIT(A) are in the nature of the incriminating Act referred by the Ld. CIT(A) are in the nature of the incriminating Act referred by the Ld. CIT(A) are in the nature of the incriminating material and therefore, the addition in the hands of the assessee material and therefore, the addition in the hands of the assessee material and therefore, the addition in the hands of the assessee should have been sustained. However, it is evident that there is no e been sustained. However, it is evident that there is no e been sustained. However, it is evident that there is no reference of any incriminating material or documents either from reference of any incriminating material or documents either from reference of any incriminating material or documents either from the premises of the assessee or from any other premises covered the premises of the assessee or from any other premises covered the premises of the assessee or from any other premises covered under the search in relation to addition of the unsecured loan under the search in relation to addition of the unsecured loan under the search in relation to addition of the unsecured loan except the statement of three persons which have been referred by the statement of three persons which have been referred by the statement of three persons which have been referred by the Ld. CIT(A) but the Hon’ble Delhi High Court in the case of PCIT the Ld. CIT(A) but the Hon’ble Delhi High Court in the case of the Ld. CIT(A) but the Hon’ble Delhi High Court in the case of v. Harjeev Agarwal in ITA No. Agarwal in ITA No. 8/20004 have held that statement have held that statement recorded u/s 134(4) could not u/s 134(4) could not be considered as ed as incriminating material unless corroborated by any incriminating evidence found unless corroborated by any incriminating evidence found unless corroborated by any incriminating evidence found. The relevant finding of the Hon’ble High Court (supra) id The relevant finding of the Hon’ble High Court (supra) id The relevant finding of the Hon’ble High Court (supra) id reproduced as under: reproduced as under:

20.

In our view, a plain reading of Section 158BB(1) of the Act does not 20. In our view, a plain reading of of the Act does not contemplate computing of undisclosed income solely on the basis of a contemplate computing of undisclosed income solely on the basis of a contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a statement recorded during the search. The words "evidence found as a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded result of search" would not take within its sweep statements recorded result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded seizure operations. However, the statements recorded seizure operations. However, the statements recorded

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 10 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

would certainly constitute information and if such information is relatable would certainly constitute information and if such information is relatable would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly to the evidence or material found during search, the same could certainly to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act be used in evidence in any proceedings under the Act as expressly be used in evidence in any proceedings under the Act mandated by virtue of the explanation to Section 132(4) mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to However, such statements on a standalone basis without reference to However, such statements on a standalone basis without reference to any other material discovered during search and seizure any other material discovered during search and seizure operations any other material discovered during search and seizure would not empower the AO to make a block assessment merely because would not empower the AO to make a block assessment merely because would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. any admission was made by the Assessee during search operation. any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates t 21. A plain reading of of the Act indicates that the authorized officer is empowered to examine on oath any person who is authorized officer is empowered to examine on oath any person who is authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, found in possession or control of any books of accounts, documents, found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The money, bullion, jewellery or any other valuable article or thing. The money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4) Section 132 (4), which was inserted by the Direct , which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of that a person may be examined not only in respect of the books of that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in accounts or other documents found as a re sult of search but also in respect of all matters relevant for the purposes of any investigation respect of all matters relevant for the purposes of any investigation respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, connected with any proceeding under the Act. However, as stated earlier, connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in a statement on oath can only be recorded of a person who is found in a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the ks of accounts, documents, assets, etc. Plainly, the ks of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the intention of the Parliament is to permit such examination only where the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are books of accounts, documents and assets possessed by a person are books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. relevant for the purposes of the investigation being undertaken. Now, if relevant for the purposes of the investigation being undertaken. the provisions of Section 132(4) Section 132(4) of the Act are read in the context of the Act are read in the context of Section 158BB(1) Section 158BB(1) read with Section 158B(b) of the Act, it is at once of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be clear that a statement recorded under of the Act can be used in evidence for making a block assessment only if the said used in evidence for making a block assessment only if the said used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any during the search. A statement of a person, which is not relatable to any during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure incriminating document or material found during search and seizure incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The u operation cannot, by itself, trigger a block assessment. The undisclosed operation cannot, by itself, trigger a block assessment. The u income of an Assessee has to be computed on the basis of evidence and income of an Assessee has to be computed on the basis of evidence and income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under material found during search. The statement recorded under Section material found during search. The statement recorded under 132(4) of the Act may also be used for making the assess of the Act may also be used for making the assess of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus unearthed or found during search. In other words, there must be a nexus unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during between the statement recorded and the evidence/material found during between the statement recorded and the evidence/material found during

Chandrika Mansukhlal Dodhia Chandrika Mansukhlal Dodhia 11 IT(SS)A 199/MUM/2025 IT(SS)A 199/MUM/2025

search in order to for an assessment to be based on the statement search in order to for an asse ssment to be based on the statement recorded. 6.2 In view of above discussion, we set aside the finding of the Ld. In view of above discussion, we set aside the finding of the Ld. In view of above discussion, we set aside the finding of the Ld. CIT(A) on the issue in dispute and hold that no addition in respect CIT(A) on the issue in dispute and hold that no addition in respect CIT(A) on the issue in dispute and hold that no addition in respect of unsecured loan of Rs. 1 crores could be made in the hands of the of unsecured loan of Rs. 1 crores could be made in the hands of the of unsecured loan of Rs. 1 crores could be made in the hands of the assessee without aid of see without aid of any incriminating material found from the premises of the assessee premises of the assessee. The ground No. 5 of the appeal of the . The ground No. 5 of the appeal of the assessee is accordingly allowed. assessee is accordingly allowed.

6.3 Since we have already upheld that no addition in respect of Since we have already upheld that no addition in respect of Since we have already upheld that no addition in respect of unsecured loan of Rs.1 lakh unsecured loan of Rs.1 lakh could have been made in the hands of been made in the hands of the assessee, therefore, the other grounds raised by the assessee the assessee, therefore, the other grounds raised by the assessee the assessee, therefore, the other grounds raised by the assessee challenging the merit of the addition are rendered merely academic challenging the merit of the addition are rendered merely academic challenging the merit of the addition are rendered merely academic and therefore, we are not required to adjudicate upon at this stage. and therefore, we are not required to adjudicate upon at this stage. and therefore, we are not required to adjudicate upon at this stage.

7.

In the result, the In the result, the appeal of the assessee is allowed. appeal of the assessee is allowed.

Order pronounced in the open Court on nounced in the open Court on 15/04/2025. /04/2025. Sd/ Sd/- Sd/- (RAHUL CHAUDHARY) (RAHUL CHAUDHARY (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 15/04/2025 Rahul Sharma, Sr. P.S.

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

BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai

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