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Facts
The AO reopened the assessment based on search and seizure action concerning Mr. Vipul Vidur Bhatt and related entities, alleging accommodation entries. Additions were made under Section 68 for bogus transactions, including loans from M/s. P. Saji Textiles Ltd. and M/s. Santoshima Leased Finance & Investment Ltd.
Held
The Tribunal held that the addition for the loan from M/s. P. Saji Textiles Ltd. was rightly confirmed as it was found to be an accommodation entry. However, the addition for the loan from M/s. Santoshima Leased Finance & Investment Ltd. was deleted as it was an opening balance from a prior year.
Key Issues
Whether the addition for loans treated as bogus accommodation entries is sustainable, and if an opening balance from a previous year can be added in the current assessment year.
Sections Cited
143, 147, 68, 132
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2013-14 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 17.02.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 143 r.w.s 147 of the Income-tax Act,1961 (hereinafter “the Act”) on 27.12.2017.
The brief facts of the case are that the A.O has reopened the assessment on the basis of search and seizure action conducted u/s. 132 of the Act, in the case of Mr. Vipul Vidur Bhatt and his related entities, viz. (1) M/s. Sunrise Asian Ltd., (2) M/s. Sampada Chemicals Ltd., (3) M/s. P. Saji Textiles Ltd., (4) M/s. Shyam Alcohol and Chemicals Ltd., and (5) M/s. Shipra Fabrics Pvt. Ltd., among others.
During the course of the search proceedings, Mr. Vipul Vidur Bhatt admitted that he was engaged in the business of providing accommodation entries through the above entities in lieu of commission. Based on this information, the A.O. treated certain transactions of the assessee as bogus and made an addition of Rs.1,10,44,000/- u/s. 68 of the Act. The A.O also disallowed alleged bogus transactions pertaining to (i) M/s. P. Saji Textiles Ltd. – Rs.5,00,000/-, (ii) M/s. Shipra Fabrics Pvt. Ltd., Rs. 10,00,000/-, and (iii) M/s. B.K. Dyeing & Printing – Rs. 4,81,708/-. On appeal, the Ld. CIT(A) called for a remand report from the A.O and, after due consideration, confirmed the addition of loans in respect of M/s. P. Saji Textiles Ltd. of Rs. 5,00,000/- and M/s. Santoshima Leased Finance & Investment Ltd. of Rs. 10,00,000/-, which were found to have been taken by the assessee. The remaining additions were deleted.
Aggrieved, the assessee has preferred this appeal before us against the sustained addition of Rs. 15,00,000/-.
The Ld. Authorized Representative (A.R) for the assessee submitted that the impugned additions were made solely based on the statement of Mr. Vipul Vidur Bhatt, which was subsequently retracted.
It was further submitted that the transaction with M/s. P. Saji Textiles Ltd. was genuine and fully supported by documents. As regards the loan from M/s. Santoshima Leased Finance & Investment Ltd., the Ld. A.R. contended that it represented an opening balance and, therefore, no addition could be made in the assessment year under consideration.
The Ld. Departmental Representative (D.R), on the other hand, supported the findings of the Ld. CIT(A) and submitted that the additions were made after detailed verification, including consideration of seized materials and remand report. It was contended that the order of the Ld. CIT(A) was well-reasoned and required no interference.
We have heard the rival submissions and perused the materials available on record. The A.O. has made additions of Rs 19,81,708/- in respect of alleged bogus transactions as under:
Name of the party Opening Balance Amount transacted Interest during financial year paid 2012-2013 P. Saji Textiles 0 5,00,000 54,120 Santoshima Lease Ltd. 10,00,000 0 0 Shipra Fabrics P. Ltd. 0 10,00,000 1,08,570 B.K. Dyeing & Printing 0 4,81,708 0 Total 19,81,708 1,62,690
The Ld. CIT(A) confirmed the addition of Rs.5,00,000/- in respect of M/s. P.Saji Textiles Ltd. and Rs.10,00,000/- in respect of M/s.
Santoshima Leased Finance & Investment Ltd. As regards the loan of Rs.5,00,000/- from M/s. P. Saji Textiles Ltd., the Ld CIT(A) has confirmed the addition based on the evidence that loan was just accommodation entry and therefore not genuine. We are in complete agreement with the order of Ld CIT(A) and therefore same is upheld.
As regard to addition of loan of Rs.10,00,000/- from M/s.
Santoshima Leased Finance & Investment Ltd confirmed by Ld CIT(A), it is evident that the loan is an opening balance and not a fresh loan taken during the relevant financial year. The assessee had also furnished a reconciliation statement before the Ld. CIT(A) confirming this fact. Despite this, the Ld. CIT(A) has confirmed the addition.
Since the loan from M/s. Santoshima Leased Finance & Investment Ltd. pertains to an earlier year and not the year under consideration, the addition of Rs.10,00,000/- cannot be sustained and is, therefore, directed to be deleted.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced on 08th day of October, 2025 at Chennai.