DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, AJMER, AJMER vs. MAHENDRA GINING AND PRESSING MILLS, AJMER

ITA 1566/JPR/2026Status: DisposedITAT Jaipur23 October 2026AY 2012-1311 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the addition of ₹12,55,000 under section 69A was not sustainable. The Revenue failed to demonstrate that the documentary evidence furnished by the assessee was effectively disproved or that any independent material established the receipt as unexplained money. The Tribunal noted that the statement of Shri Vipin Garg, while relevant, did not, without a demonstrated nexus to the specific transaction and consideration of the assessee's evidence, conclusively prove non-genuineness. The AO relied on the statement and non-response to a section 133(6) notice but did not adequately controvert the documentary evidence. Crucially, the notice under section 133(6) was issued to Shri Vipin Garg, not M/s Shree Ram Trading Company, the actual transacting entity. Furthermore, the complete statement of Shri Vipin Garg was not furnished, and no cross-examination opportunity was given. The Tribunal also emphasized that section 69A applies to money not recorded in books, whereas the impugned amount was recorded as sales and received through banking channels. The Tribunal upheld the deletion of the addition, citing precedents where recorded sales are not treated as unexplained income based solely on third-party statements without corroboration. The grounds challenging the validity of reassessment proceedings were left undecided as the appeal failed on merits.

What were the facts?

The Revenue appealed the order of the Ld. CIT(A) for assessment year 2012-13. The core dispute was the deletion of an addition of ₹12,55,000 made by the Assessing Officer (AO) under section 69A of the Income Tax Act, 1961, which treated money received by the assessee from M/s Shree Ram Trading Company as unexplained. The AO had initiated reassessment proceedings under sections 147/148 based on information from the Investigation Wing and a statement from Shri Vipin Garg, who admitted to providing accommodation entries. The assessee claimed the amount represented sale proceeds of mustard oil, supported by invoices, transport receipts, weighment receipts, C-Form, and bank statements. The AO noted non-response to a section 133(6) notice and that a letter to Shri Vipin Garg was returned undelivered.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147/148 of the Income Tax Act, 1961, were valid, considering the AO's basis of information from the Investigation Wing and a section 131 statement establishing accommodation entries from concerns run by Shri Vipin Garg. 2. Whether the AO acted on borrowed satisfaction or independently formed a belief that income had escaped assessment, given the verification of the assessee's return and bank transactions. 3. Whether the addition of ₹12,55,000 under section 69A for unexplained money received through accommodation entries from M/s Shree Ram Trading Company was justified, despite the incriminating material from the Investigation Wing and Shri Vipin Garg's admission. 4. Whether the Ld. CIT(A) erred in accepting documentary evidence at face value without appreciating that the counterparty was a paper concern providing accommodation entries. 5. Whether the AO failed to bring corroborative evidence, ignoring that information from the Investigation Wing, a section 131 statement, and non-compliance to a section 133(6) notice collectively established the transaction's lack of genuineness. Assessee's arguments: The impugned sale was duly recorded in its books, consideration was received through banking channels, and it provided supporting documents. The AO failed to conduct effective enquiries or provide the complete statement of Shri Vipin Garg or an opportunity for cross-examination. Sales duly recorded in books cannot be treated as unexplained income solely on third-party information without corroboration. Revenue's arguments: The statement of Shri Vipin Garg, information from the Investigation Wing, and non-response to the section 133(6) notice established the transaction's lack of genuineness. Documents furnished by the assessee could not, by themselves, establish genuineness when the counterparty was an alleged entry provider.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 131,Section 69A,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” BENCH, JAIPUR

For Appellant: Shri P.C. Parwal,C.A
Hearing: 14.10.2026Pronounced: 23.10.2026

Per Shri Om Prakash Kant, AM :- This appeal by the Revenue is directed against order dated 20.03.2026, passed by the Ld. Addl./Joint Commissioner of Income Tax, Coimbatore (hereinafter referred to as “Ld. CIT(A)”) for assessment year 2012-13, raising following grounds:-

2 Asst. Year: 2012-13

1.

Whether on the facts and circumstances of the case and in law, the Ld. Addl./Joint CIT (A) has erred in holding that the proceedings initiated under section 147/148 of the Income Tax Act, 1961 were invalid, despite the fact that the Assessing Officer had tangible material in the form of information received from the Investigation Wing along

The order continues below.

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