ITO-19(2)(4), MUMBAI vs. NARENDRA K RAWAL(HUF), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “B” BENCH,
MUMBAI
BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
&
SMT. RENU JAUHRI, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No. 6538/MUM/2024
(निर्धारण वर्ा / Assessment Year :2011-12)
आयकर अपील सं./ITA No. 6539/MUM/2024
(निर्धारण वर्ा / Assessment Year :2012-13)

ITO, 19(2)(4), Mumbai
507, 5th Floor, Piramal
Chambers, Maharashtra-
400012
v/s.
बिधम
Narendra K Rawal (HUF)
54 3, Jariwala Building,
Arther Road, Tardeo,
Maharashtra-400034
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AACHN4321B
Appellant/अपीलधर्थी
..
Respondent/प्रनिवधदी

निर्ााररती की ओर से /Assessee by:
Shri Sharwan Kumar Jha
रधजस्व की ओर से /Revenue by:
Shri Leyaqat Ali Aafaqui

सुिवधई की िधरीख / Date of Hearing
17.03.2025
घोर्णध की िधरीख/Date of Pronouncement
18.03.2025

आदेश / O R D E R

PER RENU JAUHRI [A.M.] :-

These appeals are filed by the revenue against the orders of the Learned
Commissioner of Income-tax (Appeals), Mumbai-51/National Faceless Appeal
Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 14.10.2024 passed u/s.
250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Years [A.Ys.] 2011-12 & 2012-13. P a g e | 2

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF)

AY 2012-13
“1. "Whether on the facts and circumstances of the case and in law, the Ld.
CIT(A) has erred in treating assessee as conduit and not a beneficiary of accommodation entry, thereby confirming the addition to 1% as against total addition of Rs. 68,11,700/- made by AG on account of non-genuine

P a g e | 3

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF) unexplained transaction with Shri. Vipul Bhatt, an entry operator, who has controlled, managed and operated almost 347 bogus entities and assessee was found beneficiary of bogus transactions?
2. Whether on the facts and circumstances of the case and in law, the id. CIT(A) has erred in treating assessee as conduit and not a beneficiary of accommodation entry of Rs. 68,11,700/-without considering the fact that, Mr.
Vipul bhatt, in his statement on oath has admitted that he is an entry operator and that controlled, managed and operated as many as 347 bogus entities which were used by for providing bogus accommodation entries for commission and the name of assessee was found to be one of beneficiary, indulged in shame transaction?
3. Whether on the facts and circumstances of the case and in law, the id. CIT(A) has erred in treating assessee as conduit and not a beneficiary of accommodation entry of Rs. 68,11,700/-without appreciating the fact that during the re-assessment proceedings the Appellant has failed to prove with documentary evidences that he was not a beneficiary of accommodation entries of bogus transaction, but was only used as a conduit by the Shn. Vipul
Bhatt, and has only received compensation, as commission in the shadow of such transactions?"
4. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) has erred in holding that percentage of commission 1% on whole amount of accommodation entries of Ra 58,11,700/-, is attributable to the assessee on account of acting as a conduit without appreciating the fact that was found to be one of beneficiary, indulged in shame transaction?"
5. The tax effect involved in the instant case is Rs. 21,25,250/-, which is below the prescribed limit as per CBDT's Circular F.No. 279/Misc.142/2007-TU(Pt) amended vide No 09/2024 dated 17.09.2004. However, this case falls under one of the exceptions specified in paragraph 3.1 I of the above stated Circular, wherein it is stated that in cases involving "Organized Tax Evaston" including cases of accommodation entry of bogus purchases, the decision to file appeal/SLP shall be taken on merit without regard to the tax effect and the monetary limit.
6. The appellant craves, leave to amend or alter any grounds or add a new ground which may be necessary.”

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF) conducted on 05.02.2016. Based on statements recorded of Shri Vipul Vidhur
Bhatt, during the course of the search, Ld. AO came to the conclusion that the assessee has taken accommodation entries from the group entities totalling to Rs. 50,06,180/-. This amount was, therefore, treated as bogus accommodation entries and added to the assessee’s income vide order u/s 144 r.w.s 147 dated
22.11.2018. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). Vide order dated 24.10.2024, Ld. CIT(A) held that Ld. AO is not correct in treating the assessee as a beneficiary and not a conduit as stated by Shri Vipul Bhatt in his statement on the basis of which the entire addition has been made. Accordingly, Ld. CIT(A) held that 1% of the accommodation entries provided through the assessee who was acting as a conduit should be taxed to income. The addition was, thus, restricted to Rs. 50,062/- (i.e. 1% Rs.
50,06,180/-_ and the balance was deleted.
Aggrieved with the order of Ld. CIT(A), the revenue is in appeal before the Tribunal.
5. It has been argued by the Ld. DR that there was no basis for Ld. CIT(A) to hold that the assessee was a conduit and not a beneficiary of accommodation entries of Rs. 50,06,180/-. No documentary evidence was furnished by the assessee before Ld. AO and Ld. CIT(A) to establish that he was not a beneficiary

P a g e | 5

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF) of accommodation entries but was only a conduit and had received only 1%
commission as compensation for the same.
6. Ld. AR, on the other hand, has strongly relied on the order of Ld. CIT(A) and argued that the entire case of Ld. AO is based on the statement of Shri Vipul
Vidhur Bhatt and no evidence has been brought on record to establish that the assessee is a beneficiary of the bogus accommodation entries.
7. We have heard the rival submissions and perused the material available before us. It is seen that neither before the Ld. AO nor during the appellate proceedings before Ld. CIT(A), the complete facts relating to the impugned transaction have been brought on record. In the absence of the requisite details and supporting documentary evidences regarding the mode of payment, nature of the transactions, utilisation of the funds received by the assessee and repayment thereof, it is not possible to decide whether the assessee was a beneficiary or merely a conduit. We, accordingly, deem it appropriate to restore the matter to the Ld. AO for examination of the nature of the transaction in question after giving due opportunity to the assessee. The assessee is also directed to furnish necessary documents in support of its claim before the Ld.
AO.
Accordingly, the appeal is allowed for statistical purposes.

P a g e | 6

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF)

ITA No. 6539/Mum/2024 for AY 2012-13
8. The grounds taken in this year are identical, therefore, this year is also restored to Ld. AO for a fresh decision after examination of relevant details and documents as in AY 2011-12. Needless to add, the assessee should also submit the requisite material in support of his contentions.
Accordingly, this appeal is also allowed for statistical purposes.
9. In the result, both the appeals of the revenue are allowed for statistical purposes.
Order pronounced in the open court on 18.03.2025. SANDEEP GOSAIN
RENU JAUHRI
(न्यधनयक सदस्य/JUDICIAL MEMBER)
(लेखधकधर सदस्य/ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai
दिन ुंक /Date 18.03.2025
अननकेत स ुंह र जपूत/ स्टेनो
आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT,
Mumbai
5. गार्ड फाईल / Guard file.
सत्यानित प्रनत ////

P a g e | 7

ITA No. 6538 & 6539/Mum/2024
A.Y. 2011-12 & 2012-13

Narendra K Rawal (HUF)

आदेशािुसार/ BY ORDER,

सहायक िंजीकार (Asstt.