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Facts
The assessee received a loan of Rs. 20,52,866/- from M/s Aneri Fincap Ltd., which was alleged to be an accommodation entry. The Assessing Officer treated this loan as unexplained money under Section 69A and added it to the assessee's income. Additionally, commission expenses of Rs. 11,085/- and interest expenses of Rs. 43,940/- were added/disallowed.
Held
The Tribunal held that the loan from M/s Aneri Fincap Ltd. was indeed an accommodation entry, as supported by the admission of its controller. Consequently, the addition of the loan amount as unexplained money, the commission, and the disallowance of interest were upheld. The Tribunal also noted that Section 68 was the appropriate section for addition of credits in books, but the misapplication of Section 69A did not vitiate the addition.
Key Issues
Whether the loan received by the assessee was a genuine transaction or an accommodation entry, and consequently, whether the additions made and disallowances upheld by the lower authorities were justified. Also, whether the Assessing Officer wrongly invoked Section 69A instead of Section 68.
Sections Cited
69A, 69C, 37, 68, 143(3), 115JB, 148, 148A, 132(4)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 10.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds:
1. Addition made under section 69A of the Income Tax Act, 1961 ('the Act') (Rs. 20,52,866/-)
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. On the facts and in the circumstances of the case and 1.1 On the facts and in the circumstances of the case and 1.1 On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Tax (Appeals), National Faceless Appeal Center (hereinafter referred as 'Ld. CIT(A)') erred in upholding the Center (hereinafter referred as 'Ld. CIT(A)') erred in upholding the Center (hereinafter referred as 'Ld. CIT(A)') erred in upholding the receipt of loan from M/s. Aneri Fincap Limited aggregating to receipt of loan from M/s. Aneri Fincap Limited aggregating to receipt of loan from M/s. Aneri Fincap Limited aggregating to Rs.20,00,000/ Rs.20,00,000/- as "unexplained money" and taxing an amount of Rs. ng an amount of Rs. 20,52,866/- under section 69A of the Act. under section 69A of the Act. 1.2 On the facts and circumstances of the case and in law, the Id. 1.2 On the facts and circumstances of the case and in law, the Id. 1.2 On the facts and circumstances of the case and in law, the Id. CIT(A) erred in upholding the addition under section 69A when the CIT(A) erred in upholding the addition under section 69A when the CIT(A) erred in upholding the addition under section 69A when the assessee was not found to be the owner of any unexplained assessee was not found to be the owner of any unexplained assessee was not found to be the owner of any unexplained money which has not been recorded in the books of account. which has not been recorded in the books of account. 1.3 On the facts and circumstances of the case and in law, the Id. 1.3 On the facts and circumstances of the case and in law, the Id. 1.3 On the facts and circumstances of the case and in law, the Id. CIT(A) erred in overlooking that in the statement on oath given by Mr. CIT(A) erred in overlooking that in the statement on oath given by Mr. CIT(A) erred in overlooking that in the statement on oath given by Mr. Rajesh Mehta, he has stated that the accommodation entries Rajesh Mehta, he has stated that the accommodation entries Rajesh Mehta, he has stated that the accommodation entries were provided by him on persuasion of Mr. Urvil Jani to OneWorld group provided by him on persuasion of Mr. Urvil Jani to OneWorld group provided by him on persuasion of Mr. Urvil Jani to OneWorld group entities and to the Pittie Group, and nowhere has he quoted the name entities and to the Pittie Group, and nowhere has he quoted the name entities and to the Pittie Group, and nowhere has he quoted the name of the appellant, nor is the appellant related to any of the entities of the appellant, nor is the appellant related to any of the entities of the appellant, nor is the appellant related to any of the entities quoted by him. quoted by him. 1.4 On the facts and circumstan 1.4 On the facts and circumstances of the case and in law, the Id. ces of the case and in law, the Id. CIT(A) erred in not appreciating that the Ld. Assessing Officer ['Ld. CIT(A) erred in not appreciating that the Ld. Assessing Officer ['Ld. CIT(A) erred in not appreciating that the Ld. Assessing Officer ['Ld. AO'] has disregarded all the relevant evidence including the details of AO'] has disregarded all the relevant evidence including the details of AO'] has disregarded all the relevant evidence including the details of all bank accounts, ledger copy of Aneri Fincorp Limited, bank all bank accounts, ledger copy of Aneri Fincorp Limited, bank all bank accounts, ledger copy of Aneri Fincorp Limited, bank statements highl statements highlighting the receipt and repayment of loan and ighting the receipt and repayment of loan and interest and financial statements of Aneri Fincorp Ltd filed with interest and financial statements of Aneri Fincorp Ltd filed with interest and financial statements of Aneri Fincorp Ltd filed with Registrar, without bringing on record any substantial contrary piece Registrar, without bringing on record any substantial contrary piece Registrar, without bringing on record any substantial contrary piece of evidence. 1.5 On the facts and circumstances of the case and in law, th 1.5 On the facts and circumstances of the case and in law, th 1.5 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the Ld. AO had neither CIT(A) erred in not appreciating that the Ld. AO had neither CIT(A) erred in not appreciating that the Ld. AO had neither independently applied his mind to the information received from the independently applied his mind to the information received from the independently applied his mind to the information received from the Investigation Wing; nor he conducted his own inquiry to record Investigation Wing; nor he conducted his own inquiry to record Investigation Wing; nor he conducted his own inquiry to record reasons as to on what basis and material, he came to concl reasons as to on what basis and material, he came to concl reasons as to on what basis and material, he came to conclusion that the appellant was indeed involved into accommodation entries. the appellant was indeed involved into accommodation entries. the appellant was indeed involved into accommodation entries. 1.6 On the facts and circumstances of the case and in law, the Ld. 1.6 On the facts and circumstances of the case and in law, the Ld. 1.6 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that no opportunity was CIT(A) erred in not appreciating the fact that no opportunity was CIT(A) erred in not appreciating the fact that no opportunity was given to the appellant to cross given to the appellant to cross-examine Mr. Rajesh Mehta leading to Mehta leading to gross violation of principle of natural justice. gross violation of principle of natural justice.
Unwarranted addition under section 69C of the Act [Rs. 11,085/ 2. Unwarranted addition under section 69C of the Act [Rs. 11,085/ 2. Unwarranted addition under section 69C of the Act [Rs. 11,085/-] 2.1 On the facts and in the circumstances of the case and in law, the 2.1 On the facts and in the circumstances of the case and in law, the 2.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition made by Ld. CIT(A) erred in upholding the addition made by Ld. CIT(A) erred in upholding the addition made by the Ld. AO of Rs.11,085/- under section 69C as unexplained expenditure. under section 69C as unexplained expenditure. under section 69C as unexplained expenditure.
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. On the facts and in the circumstances of the case and in law, the 2.2 On the facts and in the circumstances of the case and in law, the 2.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the addition made by the Ld. AO relying Ld. CIT(A) erred in upholding the addition made by the Ld. AO relying Ld. CIT(A) erred in upholding the addition made by the Ld. AO relying on the statement of Mr. Rajesh Mehta and wit on the statement of Mr. Rajesh Mehta and without any corroborative hout any corroborative evidence whatsoever to foist on the assessee the alleged commission evidence whatsoever to foist on the assessee the alleged commission evidence whatsoever to foist on the assessee the alleged commission calculated at Rs. 11,085/ calculated at Rs. 11,085/-. 2.3 On the facts and in the circumstances of the case and in law, the 2.3 On the facts and in the circumstances of the case and in law, the 2.3 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is grossly unjustified in confirming the addition of Ld. CIT(A) is grossly unjustified in confirming the addition of Ld. CIT(A) is grossly unjustified in confirming the addition of Rs.11,085/- which is based purely on conjecture and surmises. which is based purely on conjecture and surmises. which is based purely on conjecture and surmises. 2.4 On the facts and in the circumstances of the case and in law, the 2.4 On the facts and in the circumstances of the case and in law, the 2.4 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the appellant had not Ld. CIT(A) erred in not appreciating that the appellant had not Ld. CIT(A) erred in not appreciating that the appellant had not incurred any expenditure in the nature of commission and there incurred any expenditure in the nature of commission and there incurred any expenditure in the nature of commission and there was no question of treating it as unexplained and confirming the no question of treating it as unexplained and confirming the no question of treating it as unexplained and confirming the disallowance. disallowance.
3. Disallowance of interest under section 37 of the Act [Rs. 43,940/ 3. Disallowance of interest under section 37 of the Act [Rs. 43,940/ 3. Disallowance of interest under section 37 of the Act [Rs. 43,940/-] 3.1 On the facts and in the circumstances of the case and in law, the 3.1 On the facts and in the circumstances of the case and in law, the 3.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the di Ld. CIT(A) erred in upholding the disallowance of the actual interest sallowance of the actual interest paid of Rs. 43,940/ paid of Rs. 43,940/- to Aneri Fincap Limited as expenses not for to Aneri Fincap Limited as expenses not for business purpose. business purpose. 3.2 On the facts and in the circumstances of the case and in law, the 3.2 On the facts and in the circumstances of the case and in law, the 3.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the disallowance solely on the ground Ld. CIT(A) erred in upholding the disallowance solely on the ground Ld. CIT(A) erred in upholding the disallowance solely on the ground that since the loan is non that since the loan is non-genuine consequently the interest paid on genuine consequently the interest paid on bogus loan is not allowable under section 37 of the Act. bogus loan is not allowable under section 37 of the Act. bogus loan is not allowable under section 37 of the Act. The appellant reserves the right to add to, alter or amplify the above The appellant reserves the right to add to, alter or amplify the above The appellant reserves the right to add to, alter or amplify the above grounds of appeal
, at any time before or at the time of app grounds of appeal, at any time before or at the time of app grounds of appeal, at any time before or at the time of appeal, to enable the Hon'ble Tribunal to decide the appeal in accordance with enable the Hon'ble Tribunal to decide the appeal in accordance with enable the Hon'ble Tribunal to decide the appeal in accordance with law.
2. Briefly stated, facts of the case are that Briefly stated, facts of the case are that the assessee filed its the assessee filed its return of income on 31.10.2018 declaring Nil income under the return of income on 31.10.2018 declaring Nil income under the return of income on 31.10.2018 declaring Nil income under the normal provisions of the Income normal provisions of the Income-tax Act, 1961 (“the Act”) and book tax Act, 1961 (“the Act”) and book profit of ₹2,31,37,524/ 2,31,37,524/- under section 115JB of the Act of the Act. The assessment under section 143(3) was comple assessment under section 143(3) was completed on 20.02.2021 ted on 20.02.2021 assessing total income at assessing total income at ₹2,60,29,692/-.
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. Subsequently, based on information flagged on the Insight Subsequently, based on information flagged on the Insight Subsequently, based on information flagged on the Insight Portal indicating that the assessee had received a loan of Portal indicating that the assessee had received a loan of Portal indicating that the assessee had received a loan of ₹20,52,866/- from M/s Aneri Fincap Ltd., an entity allegedly from M/s Aneri Fincap Ltd., an entity allegedly from M/s Aneri Fincap Ltd., an entity allegedly controlled by Shri Rajesh G. Mehta and engaged in providing Shri Rajesh G. Mehta and engaged in providing Shri Rajesh G. Mehta and engaged in providing accommodation entries, proceedings under the amended provisions accommodation entries, proceedings under the amended provisions accommodation entries, proceedings under the amended provisions of section 148 were initiated. of section 148 were initiated. The Assessing Officer issued notice The Assessing Officer issued notice u/s 148A(b) of the Act on 19.03.2022 and after considering the u/s 148A(b) of the Act on 19.03.2022 and after considering the u/s 148A(b) of the Act on 19.03.2022 and after considering the submission of the assessee issued order u/s 148A(d) of the Act e assessee issued order u/s 148A(d) of the Act e assessee issued order u/s 148A(d) of the Act followed by a notice u/s 148 of the Act on 07.04.2022. The followed by a notice u/s 148 of the Act on 07.04.2022. The followed by a notice u/s 148 of the Act on 07.04.2022. The reassessment reassessment reassessment was was was completed completed completed by by by the the the Assessing Assessing Assessing Officer Officer Officer on on on 18.03.2024 by way of making following additions: 18.03.2024 by way of making following additions:
(i) Addition of Rs.20,52,866/ (i) Addition of Rs.20,52,866/- u/s 69A of the Act treating loan Act treating loan from M/s Aneri Fincap Ltd. as unexplained money ; from M/s Aneri Fincap Ltd. as unexplained money ; from M/s Aneri Fincap Ltd. as unexplained money ;
(ii) Addition of Rs.11,085/ (ii) Addition of Rs.11,085/- u/s 69C of the Act as unexplained u/s 69C of the Act as unexplained expenditure towards commission for accommodation entry ; expenditure towards commission for accommodation entry ; expenditure towards commission for accommodation entry ; and (iii) disallowance of interest expenses of Rs.43,940/ (iii) disallowance of interest expenses of Rs.43,940/ (iii) disallowance of interest expenses of Rs.43,940/- u/s 37 of the Act. 3. 2.2 On further appeal, the assessee challenged the validity of the On further appeal, the assessee challenged the validity of the On further appeal, the assessee challenged the validity of the reassessment proceedings as well as addition on the merit but reassessment proceedings as well as addition on the merit but reassessment proceedings as well as addition on the merit but could not succeed. The Ld. CIT( The Ld. CIT(A) sustained the additions, holding A) sustained the additions, holding that the "facade of legitimacy" created by banking channels and that the "facade of legitimacy" created by banking channels and that the "facade of legitimacy" created by banking channels and ROC filings could not override the direct admission by the lender’s ROC filings could not override the direct admission by the lender’s ROC filings could not override the direct admission by the lender’s
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. controller regarding the bogus nature of the entity. The relevant controller regarding the bogus nature of the entity. controller regarding the bogus nature of the entity. finding of ld CIT(A) is reproduced s reproduced as under:
“5.3. Discussion and Findings I have carefully considered the 5.3. Discussion and Findings I have carefully considered the 5.3. Discussion and Findings I have carefully considered the assessment order, the submissions of the Appellant, the documents assessment order, the submissions of the Appellant, the documents assessment order, the submissions of the Appellant, the documents on record, and the judicial pronouncements cited. on record, and the judicial pronouncements cited. Re: Ground No. 1 Addition of 20,52,866/ Re: Ground No. 1 Addition of 20,52,866/- under Section under Section 69A The crux of the matter is the genuineness of the loan allegedly The crux of the matter is the genuineness of the loan allegedly The crux of the matter is the genuineness of the loan allegedly received from M/s Aneri Fincap Limited. The AO has treated this received from M/s Aneri Fincap Limited. The AO has treated this received from M/s Aneri Fincap Limited. The AO has treated this sum as unexplained money under Section 69A of the Act based on sum as unexplained money under Section 69A of the Act based on sum as unexplained money under Section 69A of the Act based on specific information that M/s Aneri Fincap Limited, controll specific information that M/s Aneri Fincap Limited, controll specific information that M/s Aneri Fincap Limited, controlled by Shri Rajesh G Mehta, was a paper company engaged in providing Shri Rajesh G Mehta, was a paper company engaged in providing Shri Rajesh G Mehta, was a paper company engaged in providing accommodation entries. accommodation entries. The Appellant's contention that the transaction was genuine, The Appellant's contention that the transaction was genuine, The Appellant's contention that the transaction was genuine, supported by bank entries, confirmations, and ROC documents, supported by bank entries, confirmations, and ROC documents, supported by bank entries, confirmations, and ROC documents, needs to be examined in the context of the needs to be examined in the context of the modus operandi of modus operandi of accommodation entry providers. It is a common practice for such accommodation entry providers. It is a common practice for such accommodation entry providers. It is a common practice for such entities to use banking channels and maintain basic documentation entities to use banking channels and maintain basic documentation entities to use banking channels and maintain basic documentation to create a facade of legitimacy. However, the true nature of such to create a facade of legitimacy. However, the true nature of such to create a facade of legitimacy. However, the true nature of such transactions is revealed through deeper i transactions is revealed through deeper investigation. In this case, the AO has relied on findings from a search action In this case, the AO has relied on findings from a search action In this case, the AO has relied on findings from a search action conducted on the "Oneworld Group" wherein Shri Rajesh G. Mehta, conducted on the "Oneworld Group" wherein Shri Rajesh G. Mehta, conducted on the "Oneworld Group" wherein Shri Rajesh G. Mehta, in a statement recorded on oath, admitted to controlling various in a statement recorded on oath, admitted to controlling various in a statement recorded on oath, admitted to controlling various entities, including M/s Aneri Fincap Limited. He entities, including M/s Aneri Fincap Limited. He specifically stated specifically stated that these entities exist on paper and are used for providing that these entities exist on paper and are used for providing that these entities exist on paper and are used for providing accommodation entries without any real business being carried out. accommodation entries without any real business being carried out. accommodation entries without any real business being carried out. The AO's order quotes Shri Mehta: "Sir, there is no business carried The AO's order quotes Shri Mehta: "Sir, there is no business carried The AO's order quotes Shri Mehta: "Sir, there is no business carried- out in these companies. The companies out in these companies. The companies exits on paper and are used exits on paper and are used by several persons to generate bogus value and bogus purchases. I by several persons to generate bogus value and bogus purchases. I by several persons to generate bogus value and bogus purchases. I get a commission in the range of 54 paise per 100 Rs. get a commission in the range of 54 paise per 100 Rs. get a commission in the range of 54 paise per 100 Rs. transaction...". transaction...". The Appellant's argument that Shri Mehta did not specifically name The Appellant's argument that Shri Mehta did not specifically name The Appellant's argument that Shri Mehta did not specifically name them is not entirely ac them is not entirely accurate in spirit. Shri Mehta identified M/s curate in spirit. Shri Mehta identified M/s Aneri Fincap Ltd. as one of his paper companies providing Aneri Fincap Ltd. as one of his paper companies providing Aneri Fincap Ltd. as one of his paper companies providing accommodation entries. The information available with accommodation entries. The information available with the accommodation entries. The information available with the the department (flagged on Insight Portal) specifically links the department (flagged on Insight Portal) specifically links the department (flagged on Insight Portal) specifically links the Appellant to a transaction of 20,5 Appellant to a transaction of 20,52,866/- with this very entity, M/s with this very entity, M/s Aneri Fincap Limited, terming it as a "Bogus Loan". The AO noted Aneri Fincap Limited, terming it as a "Bogus Loan". The AO noted Aneri Fincap Limited, terming it as a "Bogus Loan". The AO noted that while the assessee claimed a loan of 20,00,000/ that while the assessee claimed a loan of 20,00,000/ that while the assessee claimed a loan of 20,00,000/-, the information information information suggested suggested suggested a a a transaction transaction transaction of of of 20,52,866/-. 20,52,866/ 20,52,866/ This discrepancy itself raises questions. discrepancy itself raises questions.
Regarding the non arding the non-provision of cross-examination of Shri Rajesh G. examination of Shri Rajesh G. Mehta, while the principles of natural justice are paramount, their Mehta, while the principles of natural justice are paramount, their Mehta, while the principles of natural justice are paramount, their application depends on the facts of each case. The Hon'ble Supreme application depends on the facts of each case. The Hon'ble Supreme application depends on the facts of each case. The Hon'ble Supreme Court in Andaman Timber Industries vs. CCE did hold that Court in Andaman Timber Industries vs. CCE did hold that Court in Andaman Timber Industries vs. CCE did hold that not allowing cross allowing cross-examination is a serious flaw. However, it is also examination is a serious flaw. However, it is also settled law that statements recorded during survey/search settled law that statements recorded during survey/search settled law that statements recorded during survey/search operations have significant evidentiary value. The AO has relied not operations have significant evidentiary value. The AO has relied not operations have significant evidentiary value. The AO has relied not just on a simple statement but on an admission by Shri Meht just on a simple statement but on an admission by Shri Meht just on a simple statement but on an admission by Shri Mehta about the very nature of M/s Aneri Fincap Ltd., which was part of a about the very nature of M/s Aneri Fincap Ltd., which was part of a about the very nature of M/s Aneri Fincap Ltd., which was part of a larger investigation into accommodation entries. Shri Mehta clearly larger investigation into accommodation entries. Shri Mehta clearly larger investigation into accommodation entries. Shri Mehta clearly identified M/s Aneri Fincap Ltd as one of the companies he identified M/s Aneri Fincap Ltd as one of the companies he identified M/s Aneri Fincap Ltd as one of the companies he controlled for providing accommodation entries. The AO has controlled for providing accommodation entries. The AO has controlled for providing accommodation entries. The AO has explicitly stated that "Shri Rajesh G Mehta also confirmed on oath explicitly stated that "Shri Rajesh G Mehta also confirmed on oath explicitly stated that "Shri Rajesh G Mehta also confirmed on oath that there is no business carried out in these concerns, they exist on that there is no business carried out in these concerns, they exist on that there is no business carried out in these concerns, they exist on paper and are used for providing accommodation entries". This is a paper and are used for providing accommodation entries". This is a paper and are used for providing accommodation entries". This is a direct admission regarding the lender company used direct admission regarding the lender company used direct admission regarding the lender company used by the assessee. The documents furnished by the assessee, such as bank assessee. The documents furnished by the assessee, such as bank assessee. The documents furnished by the assessee, such as bank statements and confirmations, are not sufficient to discharge the statements and confirmations, are not sufficient to discharge the statements and confirmations, are not sufficient to discharge the onus in the face of such direct adverse evidence regarding the onus in the face of such direct adverse evidence regarding the onus in the face of such direct adverse evidence regarding the source. The Hon'ble Supreme Court in CIT vs. P. Mohanaka source. The Hon'ble Supreme Court in CIT vs. P. Mohanaka source. The Hon'ble Supreme Court in CIT vs. P. Mohanakala (2007) 291 ITR 278 (SC) observed that the documentation surrounding a 291 ITR 278 (SC) observed that the documentation surrounding a 291 ITR 278 (SC) observed that the documentation surrounding a transaction does not by itself establish its genuineness if the transaction does not by itself establish its genuineness if the transaction does not by itself establish its genuineness if the surrounding circumstances indicate otherwise. surrounding circumstances indicate otherwise. The reliance on CIT Vs. M/s. Odeon Builders Private Limited is The reliance on CIT Vs. M/s. Odeon Builders Private Limited is The reliance on CIT Vs. M/s. Odeon Builders Private Limited is distinguishable as in that case, the AO had not independently hable as in that case, the AO had not independently hable as in that case, the AO had not independently subjected the third subjected the third-party information to further verification. Here, party information to further verification. Here, the information regarding M/s Aneri Fincap Ltd. comes from a the information regarding M/s Aneri Fincap Ltd. comes from a the information regarding M/s Aneri Fincap Ltd. comes from a detailed investigation and a direct admission by its controller. The detailed investigation and a direct admission by its controller. The detailed investigation and a direct admission by its controller. The AO concluded that the assessee's documents were "the minimal ncluded that the assessee's documents were "the minimal ncluded that the assessee's documents were "the minimal documents prepared in order to legitimize the bogus transactions documents prepared in order to legitimize the bogus transactions documents prepared in order to legitimize the bogus transactions claimed". The argument of "full and true disclosure" during the original The argument of "full and true disclosure" during the original The argument of "full and true disclosure" during the original assessment does not prevent the AO from reopening the assessme assessment does not prevent the AO from reopening the assessme assessment does not prevent the AO from reopening the assessment if income has escaped assessment due to reasons that came to light if income has escaped assessment due to reasons that came to light if income has escaped assessment due to reasons that came to light subsequently, such as the specific investigation into M/s Aneri subsequently, such as the specific investigation into M/s Aneri subsequently, such as the specific investigation into M/s Aneri Fincap Limited providing accommodation entries. The information Fincap Limited providing accommodation entries. The information Fincap Limited providing accommodation entries. The information about M/s Aneri Fincap Limited being a paper concern contr about M/s Aneri Fincap Limited being a paper concern contr about M/s Aneri Fincap Limited being a paper concern controlled by Shri Rajesh G. Mehta for providing accommodation entries Shri Rajesh G. Mehta for providing accommodation entries Shri Rajesh G. Mehta for providing accommodation entries constitutes tangible material that came to the AO's notice constitutes tangible material that came to the AO's notice constitutes tangible material that came to the AO's notice subsequent to the original assessment. subsequent to the original assessment. The initial onus is on the assessee to establish the identity and The initial onus is on the assessee to establish the identity and The initial onus is on the assessee to establish the identity and creditworthiness of the l creditworthiness of the lender and the genuineness of the ender and the genuineness of the transaction. While identity might be established through ROC transaction. While identity might be established through ROC transaction. While identity might be established through ROC documents, documents, documents, creditworthiness creditworthiness creditworthiness and and and genuineness genuineness genuineness are are are critically critically critically
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. undermined when the lender entity is shown to be a paper company undermined when the lender entity is shown to be a paper company undermined when the lender entity is shown to be a paper company involved in providing accommodation en involved in providing accommodation entries, based on the sworn tries, based on the sworn testimony of its own controller. The repayment of the loan, even if testimony of its own controller. The repayment of the loan, even if testimony of its own controller. The repayment of the loan, even if true, does not automatically make a sham transaction genuine, as true, does not automatically make a sham transaction genuine, as true, does not automatically make a sham transaction genuine, as such routing of funds is often part of the accommodation entry such routing of funds is often part of the accommodation entry such routing of funds is often part of the accommodation entry mechanism. Given the specific admi Given the specific admission by Shri Rajesh G. Mehta regarding ssion by Shri Rajesh G. Mehta regarding M/s Aneri Fincap Ltd.'s involvement in providing accommodation M/s Aneri Fincap Ltd.'s involvement in providing accommodation M/s Aneri Fincap Ltd.'s involvement in providing accommodation entries and its lack of genuine business, the AO was justified in entries and its lack of genuine business, the AO was justified in entries and its lack of genuine business, the AO was justified in concluding that the explanation offered by the assessee regarding concluding that the explanation offered by the assessee regarding concluding that the explanation offered by the assessee regarding the source of the fun the source of the funds was not satisfactory. The amount of ds was not satisfactory. The amount of 20,52,866/- received from such an entity, which is specifically received from such an entity, which is specifically identified as providing bogus entries, is rightly treated as identified as providing bogus entries, is rightly treated as identified as providing bogus entries, is rightly treated as unexplained money under Section 69A of the Act. The findings of unexplained money under Section 69A of the Act. The findings of unexplained money under Section 69A of the Act. The findings of the AO are based on cogent m the AO are based on cogent material and a reasoned analysis of the aterial and a reasoned analysis of the facts and the statement of Shri Rajesh G. Mehta. facts and the statement of Shri Rajesh G. Mehta. Therefore, the addition of 20,52,866/ Therefore, the addition of 20,52,866/- under Section 69A is upheld. under Section 69A is upheld. Re: Ground No. 2 Re: Ground No. 2 - Addition of 11,085/- under Section 69C under Section 69C This addition represents the commission al This addition represents the commission allegedly paid by the legedly paid by the Appellant for availing the accommodation entry. Shri Rajesh G. Appellant for availing the accommodation entry. Shri Rajesh G. Appellant for availing the accommodation entry. Shri Rajesh G. Mehta, in his statement, admitted to receiving a commission for Mehta, in his statement, admitted to receiving a commission for Mehta, in his statement, admitted to receiving a commission for providing such entries, specifying a rate of "54 paise for every 100 providing such entries, specifying a rate of "54 paise for every 100 providing such entries, specifying a rate of "54 paise for every 100 rupees transaction". Once the principal rupees transaction". Once the principal transaction of 20,52,866/ transaction of 20,52,866/- is held to be an accommodation entry, the payment of commission is a held to be an accommodation entry, the payment of commission is a held to be an accommodation entry, the payment of commission is a natural corollary. Such commissions are invariably paid off natural corollary. Such commissions are invariably paid off natural corollary. Such commissions are invariably paid off-books and would not be routed through regular accounts. The AO's and would not be routed through regular accounts. The AO's and would not be routed through regular accounts. The AO's estimation of commission at 0.54% ( estimation of commission at 0.54% (54 paise per 100) on 54 paise per 100) on 20,52,866/-, amounting to 11,085/ , amounting to 11,085/- (20,52,866 * 0.0054), is based (20,52,866 * 0.0054), is based directly on Shri Mehta's admission. It is a reasonable inference directly on Shri Mehta's admission. It is a reasonable inference directly on Shri Mehta's admission. It is a reasonable inference drawn from the finding that the main transaction was bogus. The drawn from the finding that the main transaction was bogus. The drawn from the finding that the main transaction was bogus. The source of this expenditure remains unexp source of this expenditure remains unexplained. The Appellant's argument that the AO used "would have been paid" The Appellant's argument that the AO used "would have been paid" The Appellant's argument that the AO used "would have been paid" does not negate the addition. The AO, based on the evidence of Shri does not negate the addition. The AO, based on the evidence of Shri does not negate the addition. The AO, based on the evidence of Shri Mehta's modus operandi and standard commission rate, has Mehta's modus operandi and standard commission rate, has Mehta's modus operandi and standard commission rate, has concluded that such an expense was incurred. In matters of concluded that such an expense was incurred. In matters of concluded that such an expense was incurred. In matters of unexplained expenditure for illicit transactions, direct proof of unexplained expenditure for illicit transactions, direct proof of unexplained expenditure for illicit transactions, direct proof of payment is often difficult to obtain. The preponderance of payment is often difficult to obtain. The preponderance of payment is often difficult to obtain. The preponderance of probabilities points to such a payment. probabilities points to such a payment. Hence, the addition of 11,085/ Hence, the addition of 11,085/- under Section 69C is upheld. under Section 69C is upheld.
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. Re: Ground No. 3 Re: Ground No. 3 - Disallowance of Interest of 43,940/ nce of Interest of 43,940/- under Section 37 The disallowance of interest expenditure of 43,940/ The disallowance of interest expenditure of 43,940/- claimed on the claimed on the loan from M/s Aneri Fincap Limited is a direct consequence of the loan from M/s Aneri Fincap Limited is a direct consequence of the loan from M/s Aneri Fincap Limited is a direct consequence of the finding that the loan itself was not a genuine transaction but an finding that the loan itself was not a genuine transaction but an finding that the loan itself was not a genuine transaction but an accommodation entry. If the principal amount is treated as on entry. If the principal amount is treated as on entry. If the principal amount is treated as unexplained money under Section 69A, any interest paid on such a unexplained money under Section 69A, any interest paid on such a unexplained money under Section 69A, any interest paid on such a non-genuine loan cannot be considered as expenditure incurred for genuine loan cannot be considered as expenditure incurred for genuine loan cannot be considered as expenditure incurred for the purpose of business under Section 37 of the Act. The primary the purpose of business under Section 37 of the Act. The primary the purpose of business under Section 37 of the Act. The primary condition for allowance under Section 37 is that the expenditure r allowance under Section 37 is that the expenditure r allowance under Section 37 is that the expenditure must be laid out wholly and exclusively for the purposes of the must be laid out wholly and exclusively for the purposes of the must be laid out wholly and exclusively for the purposes of the business. Interest on a bogus loan does not meet this criterion. business. Interest on a bogus loan does not meet this criterion. business. Interest on a bogus loan does not meet this criterion. Therefore, the disallowance of 43,940/ Therefore, the disallowance of 43,940/- under Section 37 is also under Section 37 is also upheld. In conclusion, the submissions of the Appellant have been carefully In conclusion, the submissions of the Appellant have been carefully In conclusion, the submissions of the Appellant have been carefully considered. However, in light of the detailed investigation findings considered. However, in light of the detailed investigation findings considered. However, in light of the detailed investigation findings in the case of M/s Aneri Fincap Limited and the specific admission in the case of M/s Aneri Fincap Limited and the specific admission in the case of M/s Aneri Fincap Limited and the specific admission by Shri Rajesh G. Mehta regarding its operations as by Shri Rajesh G. Mehta regarding its operations as by Shri Rajesh G. Mehta regarding its operations as an accommodation entry provider, the explanations and documents accommodation entry provider, the explanations and documents accommodation entry provider, the explanations and documents provided by the Appellant do not sufficiently establish the provided by the Appellant do not sufficiently establish the provided by the Appellant do not sufficiently establish the genuineness of the loan transaction. The AO has provided a genuineness of the loan transaction. The AO has provided a genuineness of the loan transaction. The AO has provided a reasoned basis for the additions made. The case laws cited by the reasoned basis for the additions made. The case laws cited by the reasoned basis for the additions made. The case laws cited by the appellant are distinguishable on the facts and circumstances as nt are distinguishable on the facts and circumstances as nt are distinguishable on the facts and circumstances as discussed above. The AO's reliance on the statement of Shri Rajesh discussed above. The AO's reliance on the statement of Shri Rajesh discussed above. The AO's reliance on the statement of Shri Rajesh Mehta, who controlled M/s Aneri Fincap Ltd., is a critical piece of Mehta, who controlled M/s Aneri Fincap Ltd., is a critical piece of Mehta, who controlled M/s Aneri Fincap Ltd., is a critical piece of evidence directly implicating the lender company. evidence directly implicating the lender company. In view of the In view of the above discussion, the additions made by the above discussion, the additions made by the Assessing Officer are found to be justified. The assessment order Assessing Officer are found to be justified. The assessment order Assessing Officer are found to be justified. The assessment order dated March 18, 2024, is hereby confirmed, and the appeal is dated March 18, 2024, is hereby confirmed, and the appeal is dated March 18, 2024, is hereby confirmed, and the appeal is DISMISSED.”
Before us, the Ld. counsel Before us, the Ld. counsel for the assessee filed a Paper Book for the assessee filed a Paper Book containing pages 1 to 9 and relied on the submissions made before containing pages 1 to 9 and relied on the submissions made before containing pages 1 to 9 and relied on the submissions made before the lower authorities. the lower authorities.
In ground No. 1.1 and 1.2, the assessee is aggrieved with In ground No. 1.1 and 1.2, the assessee is aggrieved with In ground No. 1.1 and 1.2, the assessee is aggrieved with invoking of section 69A of the Act instead of section 68 of the Act. invoking of section 69A of the Act instead of section 68 of the Act. invoking of section 69A of the Act instead of section 68 of the Act. The primary contention of the assessee is that section 69A has been The primary contention of the assessee is that section 69A has been The primary contention of the assessee is that section 69A has been Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. wrongly invoked since the loan was duly recorded in the books of wrongly invoked since the loan was duly recorded in the books of wrongly invoked since the loan was duly recorded in the books of account. The ld Counsel for assessee submitted that in the case The ld Counsel for assessee submitted that in the case The ld Counsel for assessee submitted that in the case loan of Rs.20,52,866/ loan of Rs.20,52,866/- from M/s Aneri Fincap Ltd. was appe from M/s Aneri Fincap Ltd. was appearing in the books of accounts of the assessee and therefore, provisions of in the books of accounts of the assessee and therefore, provisions of in the books of accounts of the assessee and therefore, provisions of section 69A of the Act were not applicable. section 69A of the Act were not applicable. It is submitted that It is submitted that section 69A applies only where the assessee is found to be the section 69A applies only where the assessee is found to be the section 69A applies only where the assessee is found to be the owner of money not recorded in the books. The Revenue, on the owner of money not recorded in the books. The Revenu owner of money not recorded in the books. The Revenu other hand, contends that other hand, contends that both the Assessing Officer as well as the both the Assessing Officer as well as the Ld. CIT(A) has considered and informed the assessee to justify the Ld. CIT(A) has considered and informed the assessee to justify the Ld. CIT(A) has considered and informed the assessee to justify the loan received from M/s Aneri Fincap Ltd. , thus, loan received from M/s Aneri Fincap Ltd. , thus, the substance of the substance of the addition pertains to unexplained credit a the addition pertains to unexplained credit and therefore falls nd therefore falls within section 68, and mere misquotation of a statutory provision within section 68, and mere misquotation of a statutory provision within section 68, and mere misquotation of a statutory provision does not vitiate the addit does not vitiate the addition, when the assessee was also aware of when the assessee was also aware of the fact that provision of section 68 of the Act are relevant and the the fact that provision of section 68 of the Act are relevant and the the fact that provision of section 68 of the Act are relevant and the Assessing Officer has also raised Assessing Officer has also raised the queries treating the amount in the queries treating the amount in dispute received from M/s Aneri Fincap Ltd. as unsecured loan. dispute received from M/s Aneri Fincap Ltd. as unsecured loan. dispute received from M/s Aneri Fincap Ltd. as unsecured loan.
4.1 Having considered the submissions of the parties, we are of Having considered the submissions of the parties, we are of Having considered the submissions of the parties, we are of the opinion that the Assessing Officer and the Ld. CIT(A) has clearly the opinion that the Assessing Officer and the Ld. CIT(A) has clearly the opinion that the Assessing Officer and the Ld. CIT(A) has clearly brought on record that brought on record that loan of Rs.20,52,866/- shown to be received shown to be received from M/s Aneri Fincap Ltd. from M/s Aneri Fincap Ltd. was merely accommodation entry, i was merely accommodation entry, in view of statement of Shri Rajesh G. Mehta and therefore, clearly view of statement of Shri Rajesh G. Mehta and therefore, clearly view of statement of Shri Rajesh G. Mehta and therefore, clearly said loan was liable to be examined u/s 68 of the Act and not u/s said loan was liable to be examined u/s 68 of the Act and not u/s said loan was liable to be examined u/s 68 of the Act and not u/s 69A of the Act. The section 69A is relevant only when assessee is section 69A is relevant only when assessee is found to be owner of money found to be owner of money, bullion etc. which is not recorded in bullion etc. which is not recorded in Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. the books of accounts. Therefore, the Assessing Officer and Ld. the books of accounts. Therefore, the Assessing Officer and Ld. the books of accounts. Therefore, the Assessing Officer and Ld. CIT(A) has wrongly applied section 69A of the Act. CIT(A) has wrongly applied section 69A of the Act.
4.2 While we find merit in the Assessee's technical contention that While we find merit in the Assessee's technical contention that While we find merit in the Assessee's technical contention that Section 68 is the appropriate provision for sums credited in books, Section 68 is the appropriate provision for sums credited in books, Section 68 is the appropriate provision for sums credited in books, it is a settled principle of law that the it is a settled principle of law that the mere mention of a wrong mere mention of a wrong section does not vitiate an assessment section does not vitiate an assessment so long as the powe so long as the power to tax exists or the ingredients of the correct provision are satisfied the ingredients of the correct provision are satisfied and the ingredients of the correct provision are satisfied the Assessee was fully cognizant of the nature of the inquiry.. In the the Assessee was fully cognizant of the nature of the inquiry. the Assessee was fully cognizant of the nature of the inquiry. case entire enquiry by the Assessing Officer revolved around the case entire enquiry by the Assessing Officer revolved around the case entire enquiry by the Assessing Officer revolved around the genuineness, identity and creditworthiness genuineness, identity and creditworthiness of the lender of the lender — matters squarely falling within section 68. The assessee was fully aware of squarely falling within section 68. The assessee was fully aware of squarely falling within section 68. The assessee was fully aware of the nature of enquiry and responded accordingly. the nature of enquiry and responded accordingly. Consequently, we Consequently, we uphold the addition under the canopy of Section 68 of the Act, uphold the addition under the canopy of Section 68 of the Act, uphold the addition under the canopy of Section 68 of the Act, rejecting the plea to delete the a rejecting the plea to delete the addition on a mere technicality. ddition on a mere technicality. The ground Nos. 1.1 and 1.2 of the assessee of the assessee are . 1.1 and 1.2 of the assessee of the assessee are . 1.1 and 1.2 of the assessee of the assessee are accordingly dismissed. accordingly dismissed.
In ground No. 1.3 of the appeal, the assessee is aggrieved that In ground No. 1.3 of the appeal, the assessee is aggrieved that In ground No. 1.3 of the appeal, the assessee is aggrieved that Shri Rajesh G Mehta during his statement u/s 132(4) of the Act Shri Rajesh G Mehta during his statement u/s 132(4) of the Act Shri Rajesh G Mehta during his statement u/s 132(4) of the Act only stated of providing accommodation entry to the entities of the tated of providing accommodation entry to the entities of the tated of providing accommodation entry to the entities of the ‘One World Group’ and and ‘Pittie Group’ and not to the assessee, so ’ and not to the assessee, so according to the assessee, addition in the hands of assessee is not according to the assessee, addition in the hands of assessee is not according to the assessee, addition in the hands of assessee is not justified.
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. 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 record reveals that Shri The record reveals that Shri Rajesh G. Mehta categorically admitted controlling various paper Rajesh G. Mehta categorically admitted controlling various paper Rajesh G. Mehta categorically admitted controlling various paper entities, including M/s Aneri Fincap Ltd., and stated on oath that entities, including M/s Aneri Fincap Ltd., and stated on oath that entities, including M/s Aneri Fincap Ltd., and stated on oath that these entities existed only for providing accommodation entries ese entities existed only for providing accommodation entries ese entities existed only for providing accommodation entries without carrying out genuine business. Once it is admitted by the without carrying out genuine business. Once it is admitted by the without carrying out genuine business. Once it is admitted by the controlling person that the company in question was merely an controlling person that the company in question was merely an controlling person that the company in question was merely an accommodation entry provider with no real business activity, the accommodation entry provider with no real business activity, the accommodation entry provider with no real business activity, the character of the entity stands seriously impaired. The absence of a haracter of the entity stands seriously impaired. The absence of a haracter of the entity stands seriously impaired. The absence of a specific reference to the assessee does not exonerate the transaction specific reference to the assessee does not exonerate the transaction specific reference to the assessee does not exonerate the transaction and cannot bring M/s Aneri Fincap Ltd. out of entry providers. As cannot bring M/s Aneri Fincap Ltd. out of entry providers. As cannot bring M/s Aneri Fincap Ltd. out of entry providers. As the said company was not having any real business, the entry of the the said company was not having any real business, th the said company was not having any real business, th loan provided to the assessee also becomes in the nature of loan provided to the assessee also becomes in the nature of loan provided to the assessee also becomes in the nature of accommodation entry. accommodation entry. The critical fact is that the lender itself The critical fact is that the lender itself stands admitted to be a paper concern. If the lender has no genuine stands admitted to be a paper concern. If the lender has no genuine stands admitted to be a paper concern. If the lender has no genuine business existence, the loan transaction claimed business existence, the loan transaction claimed by the assessee by the assessee necessarily attracts strict scrutiny. necessarily attracts strict scrutiny. Once the source itself is proven Once the source itself is proven to be a conduit for laundering, the specific naming of a beneficiary to be a conduit for laundering, the specific naming of a beneficiary to be a conduit for laundering, the specific naming of a beneficiary becomes secondary to the established nature of the source. The becomes secondary to the established nature of the source. The becomes secondary to the established nature of the source. The "OneWorld" and "Pittie" groups were "OneWorld" and "Pittie" groups were merely examples of his merely examples of his clientele; his admission regarding the "shell" nature of the lender clientele; his admission regarding the "shell" nature of the lender clientele; his admission regarding the "shell" nature of the lender company remains a potent piece of evidence that the Assessee failed company remains a potent piece of evidence that the Assessee failed company remains a potent piece of evidence that the Assessee failed to rebut. Therefore, reliance placed by the assessee on some part of Therefore, reliance placed by the assessee on some part of Therefore, reliance placed by the assessee on some part of the statement of Shri Rajesh the statement of Shri Rajesh G Mehta cannot help. G Mehta cannot help. As far as statement of Urvil Jani Urvil Jani is concerned , his statement was with his statement was with Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. reference to accommodation entries obtained by reference to accommodation entries obtained by ‘One World Group One World Group’ company from Shri Rajesh G Mehta and therefore, his statement company from Shri Rajesh G Mehta and therefore, his statement company from Shri Rajesh G Mehta and therefore, his statement must be related to One World Group must be related to One World Group entities and cannot be entities and cannot be extended to the assessee. But as far as statement of Shri Rajesh G extended to the assessee. But as far as statement of Shri Rajesh G extended to the assessee. But as far as statement of Shri Rajesh G Mehta is concerned i.e. related to M/s Aneri Fincap Ltd., from Mehta is concerned i.e. related to M/s Aneri Fincap Ltd. Mehta is concerned i.e. related to M/s Aneri Fincap Ltd. whom the assessee has received entry of the unsecured loans, same whom the assessee has received entry of the unsecur whom the assessee has received entry of the unsecur can’t be ignored. Accordingly, the Accordingly, the ground No. 1.3 of the appeal of ground No. 1.3 of the appeal of the assessee is dismissed. the assessee is dismissed.
In ground Nos. 1.4 of the appeal, the . 1.4 of the appeal, the assessee submits assessee submits that Assessing Officer has disregarded the relevant evidences including Assessing Officer has disregarded the relevant evidence Assessing Officer has disregarded the relevant evidence details of bank account, ledger copy of the M/s Aneri Fincap Ltd. details of bank account, ledger copy of the M/s Aneri Fincap details of bank account, ledger copy of the M/s Aneri Fincap etc.
6.1 We have heard rival submissions of the parties an We have heard rival submissions of the parties an We have heard rival submissions of the parties and perused the relevant material the relevant material on record. The assessee was required to on record. The assessee was required to discharge its burden of proof in respect of identity, creditworthiness discharge its burden of proof in respect of identity, creditworthiness discharge its burden of proof in respect of identity, creditworthiness and genuineness of the transaction in relation t and genuineness of the transaction in relation to loan received from o loan received from M/s Aneri Fincap Ltd. It is contention of the assessee that assessee M/s Aneri Fincap Ltd. It is contention of the assessee that assessee M/s Aneri Fincap Ltd. It is contention of the assessee that assessee had filed bank account details, ledger copy of M/s Aneri Fincap had filed bank account details, ledger copy of M/s Aneri Fincap had filed bank account details, ledger copy of M/s Aneri Fincap Ltd., bank statement highlighting receipt and repayment of the loan Ltd., bank statement highlighting receipt and repayment of the loan Ltd., bank statement highlighting receipt and repayment of the loan and interest and financial stateme and interest and financial statement of M/s Aneri Finacap Ltd. filed Aneri Finacap Ltd. filed with Register of Companies of Companies. But in the light of the information . But in the light of the information gathered during the search on the Rajesh G Metha, wherein he gathered during the search on the Rajesh G Metha gathered during the search on the Rajesh G Metha himself admitted that Aneri Fincap Ltd. was not in any real himself admitted that Aneri Fincap Ltd. was not himself admitted that Aneri Fincap Ltd. was not business and was engaged in providin business and was engaged in providing accommodation entry g accommodation entry only,
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. the onus was on the assessee to establish whether M/s Aneri he onus was on the assessee to establish whether M/s Aneri he onus was on the assessee to establish whether M/s Aneri Fincap Ltd. was doing any real business and transaction was Fincap Ltd. was doing any real business and transaction was Fincap Ltd. was doing any real business and transaction was genuine but neither efforts were made by the assessee to produce efforts were made by the assessee to produce said party for verification of the Assessin said party for verification of the Assessing Officer g Officer nor brought substantive substantive substantive material material material demonstrating demonstrating demonstrating its its its financial financial financial capacity capacity capacity independent of entry operations, independent of entry operations, in order to discharge its burden of in order to discharge its burden of proof. Mere routing of funds through banking channels does not Mere routing of funds through banking channels does not Mere routing of funds through banking channels does not ipso facto establish genuineness. ipso facto establish genuineness.
6.2 The assessee has failed to demonstrate creditworthiness of ssessee has failed to demonstrate creditworthiness of ssessee has failed to demonstrate creditworthiness of said party. Before us also no details documentary evidence in Before us also no details documentary evidence in Before us also no details documentary evidence in support of creditworthiness have been filed. In the circumstances, support of creditworthiness have been filed. In the circumstances, support of creditworthiness have been filed. In the circumstances, we do not find any infirmity in the order of the Ld. CIT(A) in we do not find any infirmity in the order of the Ld. CIT(A) in we do not find any infirmity in the order of the Ld. CIT(A) in sustaining the addition treating the unsecured loan as explained g the addition treating the unsecured loan as explained g the addition treating the unsecured loan as explained cash credit.
In ground No. 1.6, the assessee has raised the issue that no In ground No. 1.6, the assessee has raised the issue that no In ground No. 1.6, the assessee has raised the issue that no opportunity was given to the assessee to cross given to the assessee to cross-examine Mr. Rajesh examine Mr. Rajesh G Mehta.
7.1 Having considered Having considered the facts and circumstances of the case, we the facts and circumstances of the case, we are of the opinion that inion that principles of natural justice require principles of natural justice require opportunity of cross- -examination where adverse material is relied examination where adverse material is relied upon. However, the present case stands on a slightly different upon. However, the present case stands on a slightly different upon. However, the present case stands on a slightly different footing. The addition is not made solely on the basis of the third n is not made solely on the basis of the third n is not made solely on the basis of the third- party statement but on the assessee’s failure to establish party statement but on the assessee’s failure to establish party statement but on the assessee’s failure to establish
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. creditworthiness and genuineness under section 68. The primary creditworthiness and genuineness under section 68. The primary creditworthiness and genuineness under section 68. The primary burden rests upon the assessee. The assessee, having transacted burden rests upon the assessee. The assessee, having transacted burden rests upon the assessee. The assessee, having transacted with the lender, was in with the lender, was in a position to produce it or substantiate its a position to produce it or substantiate its financial credentials. Having failed to discharge this statutory financial credentials. Having failed to discharge this statutory financial credentials. Having failed to discharge this statutory burden, it cannot shift the onus by merely demanding cross- burden, it cannot shift the onus by merely demanding cross burden, it cannot shift the onus by merely demanding cross examination. In the facts of the case, we do not find that denial of examination. In the facts of the case, we do not find that denial of examination. In the facts of the case, we do not find that denial of cross-examination vitiates the assessment.. vitiates the assessment.. Accordingly, the ground Accordingly, the ground No. 1.6 is dismissed. No. 1.6 is dismissed.
In ground No. 1.5 of the appeal, the assessee has raised the In ground No. 1.5 of the appeal, the assessee has raised the In ground No. 1.5 of the appeal, the assessee has raised the issue that while recording reasons to believe the Assessing Officer issue that while recording reasons to believe the Assessing Officer issue that while recording reasons to believe the Assessing Officer has not applied independent mind or nor conducted dependent mind or nor conducted dependent mind or nor conducted any inquiry to came came came to to to the the the conclusion conclusion conclusion that that that assessee assessee assessee was was was involved involved involved into into into accommodation entries. accommodation entries.
8.1 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. In the case, the reassessment has . In the case, the reassessment has been reopened under the amended been reopened under the amended provisions of section 148 of the provisions of section 148 of the Act where before issue of notice u/s 148 of the Act, under the Act where before issue of notice u/s 148 of the Act Act where before issue of notice u/s 148 of the Act section 148A(a) of the Act the material gathered by the Revenue is section 148A(a) of the Act the material gathered by the Revenue is section 148A(a) of the Act the material gathered by the Revenue is being provided to the assessee and thereafter notice u/s 148A(b) of being provided to the assessee and thereafter notice u/s 148A(b) of being provided to the assessee and thereafter notice u/s 148A(b) of the Act is issued askin the Act is issued asking the assessee to explain the said material. g the assessee to explain the said material. After considering the submission of the assessee, the Assessing After considering the submission of the assessee, the Assessing After considering the submission of the assessee, the Assessing Officer is required to pass order u/s 148A(d) of the Act holding that Officer is required to pass order u/s 148A(d) of the Act holding that Officer is required to pass order u/s 148A(d) of the Act holding that income escaped assessment and thereafter only notice u/s 148 of income escaped assessment and thereafter only notice u/s 148 of income escaped assessment and thereafter only notice u/s 148 of the Act is issued. In the entire procedure, the Assessing Officer sued. In the entire procedure, the Assessing Officer sued. In the entire procedure, the Assessing Officer
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. considering the material on record and the explanation of the considering the material on record and the explanation of the considering the material on record and the explanation of the assessee determine whe assessee determine whether income escaped assessment. ther income escaped assessment. We find that the AO followed the "due process" prescribed under the that the AO followed the "due process" prescribed under the that the AO followed the "due process" prescribed under the amended Section 148A. The information received was "tangible amended Section 148A. The information received was "tangible amended Section 148A. The information received was "tangible material" that suggested the escapement of income. The AO is not material" that suggested the escapement of income. The AO is not material" that suggested the escapement of income. The AO is not required to conduct a "mini required to conduct a "mini-trial" at the stage of reopening; trial" at the stage of reopening; he only needs to form a prima facie prima facie belief based on relevant material, which belief based on relevant material, which was clearly present here. was clearly present here. Since, the Assessing Officer has fo Since, the Assessing Officer has followed the due procedure of law the due procedure of law the ground of the assessee of non of the assessee of non- application of the mind or no inquiry application of the mind or no inquiry, are according are accordingly without any basis and liable to be dismissed basis and liable to be dismissed at threshold. The ground No. 1.5 of threshold. The ground No. 1.5 of the assessee is accordingly dismissed. the assessee is accordingly dismissed.
The ground No. 2 is in respect of commission income The ground No. 2 is in respect of commission income The ground No. 2 is in respect of commission income estimated on the accommodation entry received by the assessee. estimated on the accommodation entry received by the assessee. estimated on the accommodation entry received by the assessee. Once the primary transaction is held to be an accommodation Once the primary transaction is held to be an accommodation Once the primary transaction is held to be an accommodation entry, payment of commission becomes a reasonable and natural entry, payment of commission becomes a reasonable and natural entry, payment of commission becomes a reasonable and natural corollary. In matters involving clandestine transactions, direct corollary. In matters involving clandestine transactions, direct corollary. In matters involving clandestine transactions, direct evidence of commission is rarely available. The estimation is directly evidence of commission is rarely available. The estimation is directl evidence of commission is rarely available. The estimation is directl based on sworn admission regarding standard commission rates. based on sworn admission regarding standard commission rates. based on sworn admission regarding standard commission rates. We find no perversity in the addition of We find no perversity in the addition of ₹11,085/ - under section 69C. Ground No. 2 is dismissed. 69C. Ground No. 2 is dismissed.
As far as ground No. 3 of the appeal is concerned, As far as ground No. 3 of the appeal is concerned, As far as ground No. 3 of the appeal is concerned, Once the loan itself is held to be unexp loan itself is held to be unexplained under section 68, the interest lained under section 68, the interest claimed thereon cannot be regarded as expenditure incurred wholly claimed thereon cannot be regarded as expenditure incurred wholly claimed thereon cannot be regarded as expenditure incurred wholly
Bajaj International Realty Pvt. Ltd. Bajaj International Realty Pvt. Ltd. and exclusively for business purposes under section 37. The and exclusively for business purposes under section 37. The and exclusively for business purposes under section 37. The disallowance of ₹43,940/ 43,940/- is therefore consequential and justified. is therefore consequential and justified. Accordingly, we uphold t Accordingly, we uphold the finding of the lower authorities on th he finding of the lower authorities on the issue in dispute and dismiss issue in dispute and dismiss the ground No. 3 of the appeal of the the ground No. 3 of the appeal of the assessee.
In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on ounced in the open Court on 12/0 /03/2026.