SURESH PRABHULAL KABRA,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-1(1)(3),, AHMEDABAD

At the outset itself it was stated that the issue arising in all the appeals of the assessee was common, pertaining to the addition made on account of alleged accommodation entry taken by the assessee. Therefore, all the appeals were taken up together for hearing and are being disposed of vide this common consolidated order.

The quantum of accommodation entry alleged to have been taken by the assessee in each year is as under:

It was contended that undoubtedly the information in possession of the Department pertained to accommodation entries taken by M/s. Kabra & Co. but the dispute is whether M/s. Kabra & Co. was proprietorship concern of the assessee in his individual capacity or the proprietorship concern of the assessee’s HUF.

During the course of hearing before us Ld.Counsel for the assessee pointed out that in succeeding years i.e. A.Y. 2019-20 & 2020-21, the case of the assessee in his individual capacity was reopened for the same reasons as in the years impugned before us, i.e on the basis of information that M/s. Kabra & Co. had taken accommodation entry from certain accommodation entry providers. He pointed out that during assessment proceedings in the said years, the assessee had again pointed out that M/s. Kabra & Co. was the proprietorship concern of the assessee’s HUF and this fact was verified by the AO and no addition accordingly made in the said years i.e. A.Ys. 2019-20 & 2020-21, in the hands of the assessee. He pointed out that the assessment orders for these two years record the noting by the AO of passing on the relevant information of accommodation entry having received by the Kabra to 833/Ahd/2023 [Suresh Prabhulal Kabra vs. ITO] A.Ys. 2014-15 to 2017-18 - 4 – & Co. to the AO of the assessee’s HUF for taking necessary action after acknowledging the assessee’s contention that M/s. Kabra & Co. was the proprietorship concern of the assessee’s HUF.

On 04-03-2025 when the matter was heard at length and this plea was raised by the assessee, the Ld.DR pleaded that an opportunity be given to the AO for verifying the fact of M/s Kabra & Co being the proprietorship concern of the assesses HUF, contending that the facts of each year may vary. The Bench accordingly directed the DR to seek a report from the AO regarding veracity of the contention raised by the assessee that the bank account in which the alleged accommodation entry was stated to be received by the assessee pertained to the HUF of the assessee. The DR was directed to submit the AO’s report on 16th April, 2025. The said order sheet entry reads as under:

Thereafter, the matter came up for hearing on four occasions in the intervening period, when on two occasions i.e. 16.04.2025 and 06.05.2025, the Ld. CIT.DR sought some more time to comply with the direction of the Bench. Thereafter, finally when the matter came for hearing on 09th July, 2025, the Ld. DR stated that he was unable to come up with any such report from the AO. It was, therefore, considered fit to grant no more opportunity to the Department to make its submission on this factual aspect considering the fact that several opportunities had already been granted.

In the light of the above, it stands, as a matter of fact, on record that M/s. Kabra & Co. is the proprietorship concern of the assessee’s HUF and not proprietorship concern of the assessee in his individual capacity. This fact has been acknowledged by the AO in the assessment order passed in the case of the assessee for A.Y. 2019-20 after making due verification from the bank itself on issuing notice u/s.133(6) of the Act. We have also noted that the assessee in the said case in A.Y. 2019-20 had submitted a letter from the Bank acknowledging its mistake of having linked the PAN no. of the assessee in his individual capacity to the bank account of the M/s. Kabra & Co., when actually it was the proprietorship concern of the assessee’s HUF and the PAN no. of the assessee HUF ought to have been assigned to the said bank to 833/Ahd/2023 [Suresh Prabhulal Kabra vs. ITO] A.Ys. 2014-15 to 2017-18 - 6 – account. The Department in the present case has failed to controvert the aforesaid fact before us despite ample opportunity given during the course of hearing before us. In the light of the same, we are inclined to agree with the Ld. Counsel for the assessee that the addition made in the hands of the assessee in all the four years do not pertain to the assessee but to the assessee’s HUF, which was the proprietorship concern of M/s. Kabra & Co. and in whose bank account i.e. in the bank account of the Kabra & Co. the alleged accommodation entry had been received as per the information available with the Department.

In view of the above, the addition made in the hands of the assessee in all four years, i.e A.Y 2014-15 to A.Y 2017-18, amounting to Rs.17,16,95,541/-, Rs.18,86,73,700/-, Rs.24,65,97,112/- & Rs.15,29,66,545/-; respectively, is directed to be deleted.

In the result, all four appeals filed by the assessee are allowed as above.