INCOME TAX OFFICER, 1(1)(3), AHMEDABAD, AHMEDABAD vs. SHWETA MANISH JAIN, AHMEDABAD

The brief facts of the case are that the assessee, Smt. Shweta Manish Jain, a proprietor engaged in trading activities, filed her return of income on 21.09.2018 declaring business income. Based on information received from the Investigation Wing asserting that she had received accommodation entries from Shri Kirit D. Patel, the Assessing Officer reopened the assessment under section 147 and completed the reassessment under section 147 r.w.s. 144B of the Act vide order dated 21.03.2023. During reassessment, the Assessing Officer held that the assessee had allegedly received bogus accommodation entries amounting to Rs. 10,00,059/- from the said party and held that the assessee failed to furnish corroborative proof to rebut the allegation.

The Department is in appeal before us against the order passed by CIT(Appeals) allowing the appeal of the assessee.

We have heard the rival contentions and perused the material on record.

In view of the above facts, the material brought on record, and the detailed reasoning given by the Ld. CIT(Appeals), we find no justification ITO vs. Shweta Manish Jain Asst.Year –2018-19 - 4– to interfere with the findings recorded by the CIT(Appeals). The Ld. CIT(Appeals) has correctly observed that the addition of Rs. 10,00,059/- under section 69C of the Act was made solely on the basis of generic information from the Investigation Wing without any primary evidence establishing that the assessee had entered into any transaction with Shri Kirit D. Patel during the relevant assessment year. The Assessing Officer did not confront the assessee with any specific document, bank entry, ledger extract, or statement forming the foundation of the alleged accommodation entry. The settled legal position, as reiterated in Andaman Timber Industries v. CCE (2015) 281 CTR 241 (SC), is that denial of cross-examination of third-party statements relied upon by the revenue vitiates the assessment. The law on this issue is well settled that third-party loose sheets, unsigned digital data or uncorroborated documents cannot be used as evidence against an assessee unless supported by independent evidence, and unless the assessee is offered cross examination of the persons whose statements or documents are relied upon. The Hon'ble Gujarat High Court in Kaushik Nanubhai Majithia [Tax Appeal No. 20 of 2024, dated 29.01.2024] held that an unsigned Excel sheet seized from a third party has no evidentiary value and cannot form the basis of an addition unless it is shown to be corroborated and linked to the assessee. Similarly, in ITO v. Bharat A. Mehta [2015] 60 taxmann.com 31 (Gujarat), the Court held that entries or notings in the books of another person showing alleged on-money payments cannot justify additions in the hands of an assessee without cogent evidence demonstrating actual payment. In the case of Dy. CIT, ITO vs. Shweta Manish Jain Asst.Year –2018-19 - 5– Central v. Mahalaxmi Infracontract Ltd. [2025] 173 taxmann.com 399 (Ahmedabad - Trib.), the Ahmedabad ITAT held that where Assessing Officer made addition under section 69C of the Act on ground that assessee had paid interest in cash to a third-party, since said addition was made solely on basis of unsigned Excel sheets recovered from premises of third party, without any further corroborative evidence, same was to be deleted. In the case of Pradeep Amrutlal Runwal v. Tax Recovery Officer [2014] 47 taxmann.com 293/149 ITD 548 (Pune - Trib.), the ITAT held that where the Assessing Officer made additions in the case of the assessee on the basis of notings in loose papers found during the search proceedings in case of third party against the name of assessee, as there was no evidence to suggest that payments were made by the assessee additions so made were not justified. In the case of Regency Mahavir Properties v. Asstt. CIT [2018] 89 taxmann.com 444/169 ITD 35 (Mumbai), the ITAT held that no addition under Section 69 can be made on the basis of documents being found from premises of third party in absence of any document evidencing the fact that assessee had paid any cash as on-money to said party for purchase of property. In the case of Vinit Ranawat v. Asstt. CIT [2017] 88 taxmann.com 428 (Pune-Trib.), the ITAT held that no addition can be made in the hands of the assessee on the basis of papers found with the third party when there was no business connection between the assessee and that third party. In the case of Rucha Consultancy LLP vs. Deputy Commissioner of Income-tax [2025] 174 taxmann.com 221 (Mumbai - Trib.)[07-04- 2025], ITAT held that where additions of Rs. 2.10 crores and Rs. 1.99 ITO vs. Shweta Manish Jain Asst.Year –2018-19 - 6– crores were made under sections 69A and 69C respectively on basis of a WhatsApp image found in phone of assessee’s personal assistant, which neither bore assessee’s name nor was corroborated by independent evidence, and no physical cash was found with assessee, said document was to be treated as a dumb document and impugned additions were to be deleted. In the case of Deputy Commissioner of Income-tax vs. Abhipush Properties (P.) Ltd. [2025] 180 taxmann.com 799 (Ahmedabad -Trib.)[25-11-2025], ITAT held that where Assessing Officer made additions under section 69C and 69B in reassessment proceedings treating difference between registered value and figures in an unsigned third-party Excel sheet as alleged on-money paid by assessee to purchase plot of land and construction of villa, but no independent evidence was brought on record to show that said Excel sheet belonged to assessee or that any amount of on-money was ever paid by assessee to developer, impugned reassessment order passed on basis of said unsigned Excel sheet was to be quashed.

The Ld. CIT(Appeals) in our view has correctly held that the assessee had placed documentary evidence on record such as bank statements, GST returns, purchase and sales registers, party-wise ledgers and reconciliation statements, none of which were found to be incorrect or misleading. In such circumstances, the addition made by the Assessing Officer is evidently based on conjectures and presumptions and cannot be sustained in law. We accordingly concur with the findings of the Ld. CIT(Appeals).

In light of these facts and the judicial precedents noted above, we uphold the decision of the Ld. CIT(Appeals) deleting the addition of Rs. 10,00,059/- made by the Assessing Officer.

There being no merit in the grounds raised by the Revenue, the appeal of the Department is dismissed.

In the result, the appeal filed by the Revenue is dismissed. This Order pronounced in Open Court on 11/12/2025