BHUMIKA PATEL,KOLKATA vs. ITO WARD 29(1), KOLKATA

This appeal by the assessee is directed against the order dated 17.03.2025 passed by the NFAC [in short CIT(A)] under section 250 of the Income-tax Act, 1961.

Brief Facts are that the case of the assessee was reopened under Section 147 of the Income-tax Act, 1961, on the basis of information received from the ADIT (Investigation), Rajkot. It was reported that M/s. Bhoomidev Credit Corporation Ltd. was engaged in providing accommodation entries, and the assessee was identified as one of the beneficiaries. As per the investigation findings that, a cash amount of ₹75 lakhs was deposited in the books of M/s. Bhoomidev Credit Corporation Ltd., and an amount of ₹66,14,712 appeared as an outstanding loan in its balance sheet in the name of the assessee. Based on this information, the AO recorded reasons to believe that Bhumika Patel income chargeable to tax had escaped assessment and, after obtaining due approval, issued notice under Section 148. Subsequent notices under Sections 143(2) and 142(1) were also issued. In response, the assessee submitted computation of income, profit and loss account, balance sheet, contract notes, and bank statements. The AO treated ₹25,00,000 as unexplained cash credit under Section 68 and ₹3,14,712 as interest paid, disallowed on the ground of being not substantiated. The AO held that the assessee was a beneficiary of accommodation entries and framed the reassessment under Section 147/143(3) of the Act.

Dissatisfied with the above order, assessee went in appeal before the Ld. CIT(A) where the assessee contended that the reopening itself was bad in law, as the reasons recorded referred to a loan of ₹66,14,712, while the addition made was only ₹25,00,000. It was submitted that the sum of ₹38,00,000 had been received in the preceding financial year relevant to A.Y. 2009–10 and had already been subject to scrutiny. Subsequent to the alleged addition of Rs. 38,00,000/relief had been granted to the assessee by the Ld. CIT(A) in A.Y. 2009–10 vide order dated 05.02.2024, accepting the loan as genuine on the basis of confirmation and audited financial statements of M/s. Bhoomidev Credit Corporation Ltd. It was argued that the balance ₹25,00,000 and the related interest of ₹3,14,712 pertained to the same lender and were part of a continuing financial arrangement, and thus should be treated similarly. The assessee also pointed out that, once the earlier year’s loan from the same lender was accepted as genuine, disallowing the current year’s loan without fresh adverse material was legally untenable. However, the CIT(A) confirmed the AO’s addition on the ground that for the assessment year under consideration, the lender did not appear or provide confirmation.