DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2 1 1 AHMEDABAD, AHMEDABAD vs. KHUSHI ADVERTISING IDEAS PRIVATE LIMITED, AHMEDABAD

ITA 2200/AHD/2025Status: DisposedITAT Ahmedabad14 October 2026AY 2023-249 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 1.50 crores as unexplained expenditure under Section 69C was not sustainable on the material available on record. The Tribunal noted that while the assessee had regular business transactions with MEL, this did not, by itself, establish the genuineness of the disputed transaction. However, the addition was based on a WhatsApp communication between MEL employees and the statement of Shri Sanjay Singh. The Tribunal found that the WhatsApp communication, mentioning "1.5 ahmedabad khushi," lacked conclusive evidence to establish that the alleged cash was delivered to the assessee or its representative. The statement of Shri Sanjay Singh identified the recipient as "Ajay," but his identity and connection to the assessee were not established. There was no evidence that Ajay was an employee or agent of the assessee, nor any inquiry by the AO to link him to the assessee. The Tribunal also found that the alleged sequence of cash payment followed by a banking transfer did not, without corroboration, establish that the assessee received cash and routed it as alleged. The AO had not demonstrated, through examination of underlying records, that the specific expenditure was fictitious. The Tribunal also noted that the statement of Shri Amit Sharma was subsequently retracted. Ultimately, the Tribunal concluded that the AO had not established the identity of the cash recipient, their connection to the assessee, or the actual delivery of cash. The inference rested on interpretation of WhatsApp communication and alleged transaction sequence without necessary corroboration. Therefore, the CIT(A)'s deletion of the addition was upheld.

What were the facts?

The Revenue appealed against an order of the CIT(A) for Assessment Year 2023-24, which had deleted an addition of Rs. 1.50 crores made by the Assessing Officer (AO). The AO had added this amount as unexplained expenditure under Section 69C of the Income Tax Act. The addition was based on a search in the case of M/s. Miraj Group, where a WhatsApp chat from the mobile of Shri Amit Sharma, Director of M/s. Miraj Entertainment Ltd. (MEL), indicated a cash payment of Rs. 2 crores, with Rs. 1.5 crores paid to Khushi Advertising Ideas Private Limited (the assessee). Shri Sanjay Singh, in his statement under Section 132(4), confirmed the cash payment of Rs. 1.50 crores to the assessee through a person named Ajay. The AO concluded that this was an accommodation entry and the corresponding expense booked by the assessee was bogus.

What were the issues?

1. Whether the CIT(A) erred in deleting the addition of Rs. 1,50,00,000/- made by the AO as unexplained expenditure under Section 69C (read with Section 115BBE) of the Income-tax Act, by disregarding evidence of alleged accommodation entries unearthed during a search in the case of Miraj Group. Assessee's contentions: The assessee argued that no evidence of accommodation entries was found from its premises. The WhatsApp chat did not name the assessee or any of its personnel. The cash was allegedly paid to a person named Ajay, whose connection to the assessee was never established, and no inquiry was made to link him to the assessee. The addition was based on presumption without concrete evidence that the assessee received the cash. The assessee had regular transactions with MEL, totaling Rs. 17,89,95,245.76, and details of purchases and expenses were provided, with no evidence of bogus expenses. Revenue's contentions: The Revenue contended that the assessee had regular transactions with MEL. Documents seized revealed cash payment of Rs. 1.50 crores to the assessee, followed by a transfer of Rs. 1.47 crores to MEL through banking channels, with TDS deducted to give color of genuineness. This was an accommodation entry, and the expense booked by the assessee was bogus. The CIT(A) erred in deleting the addition without appreciating the facts and evidence.

Which sections of the Income-tax Act were involved?

Section 69C,Section 132(4),Section 115BBE,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Biren Shah, AR
For Respondent: Shri Amit Pratap Singh, SR-DR
Hearing: 23.09.2026Pronounced: 14.10.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal has been filed by the Revenue against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 17.09.2025 for the Assessment Year (A.Y.) 2023-24 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed its return of income for A.Y 2023-24 on 27.10.2023 declaring total income of Rs.14,56,80,130/-. The case was selected for scrutiny under CASS. A DCIT Vs Khushi Advertising Ideas Private Limited, AY- 2023-24 2 search was conduct

The order continues below.

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