SHREE SARASWATI EDUCATION SANSTHAN,MEHSANA vs. THE ITO, EXEMPTION, PALANPUR

The assessee, in this appeal, has agitated against the action of the CIT(A) in confirming the addition of Rs.15,50,450/- made by the Assessing Officer on account of accommodation entry received from M/s.Mehta Group.

The brief facts of the case are that a search action was carried out at the premises of one Mehta Group on 30/07/2018. During the course of search, various incriminating materials were found and seized. It was revealed that the Mehta Group was indulged in giving accommodation entries to various parties in the shape of bogus loans and advances, etc. It was also noticed from the seized material that the said Mehta Group provided accommodation entries of Rs.15.50 lakhs to the assessee. The AO, upon information received, re-opened the assessment u/s.147 of the Act. During the assessment proceedings, the assessee pleaded that the assessee had not taken any accommodation entry from the Mehta Group. That in fact, the assessee had a running account with the Mehta Group and assessee used to take loan through banking channel from Mehta Group and paid interest thereupon. Asst.Year : 2016-17

We have heard the rival contentions of the Ld.Representatives of the parties and gone through the record. In this case, though there was information available to the AO that the assessee had taken an accommodation entry of Rs.15.50 lakhs from Mehta Group, however, on being asked to explain in this respect, the assessee furnished its ledger account showing various transactions entered into by the assessee with the Mehta Group. Under the circumstances, the AO was supposed to examine each of the transaction and come with the definite conclusion as to which of the transaction was bogus and what was the income of the assessee which had escaped assessment. The AO, despite of the records furnished before him, simply made the impugned addition solely based on the information received from the Investigation Wing. Though the initial information, in our view, may have triggered the AO to make necessary verifications and to examine the accounts of the assessee to verify as to whether the income of the assessee has escaped in assessment proceedings. However, the addition solely based on the said information was not warranted especially when the assessee had furnished all details of transaction/ledger account during the assessment proceedings. The AO, in this case, has miserably failed to come to a definite conclusion regarding as to which of the entry in the books of accounts of the assessee was suspicious or bogus and thereafter to call upon the assessee to explain such entry with evidence/confirmation, etc. The addition made merely on the basis of assumption that the assessee has received accommodation entries of Rs.15.50 lakhs, in our view, is not sustainable. The AO noted that the assessee has received accommodation entry of the amount of Rs.15.50 lakhs. However, he has not pointed as to which specific entry in the accounts of the assessee pertained to the alleged accommodation entry of Rs.15.50 lakhs and which specific entry out of the ledger containing so many entries, the assessee was required to explain. No Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17

Though the assessee has raised a legal ground contending that the AO ought to have initiated the proceedings u/s.153C of the Act, instead of 148 of the Act, we do not find it necessary to adjudicate this issue, at this stage, since the impugned addition has already been deleted by us on merits. Hence, the legal ground raised by the assessee is rendered academic in nature and the matter requires no further adjudication.

With the above observations, the appeal of the assessee is hereby allowed. Order pronounced in the Open Court on 28 /08/2025. (Makarand V. Mahadeokar) Accountant Member अहमदाबाद/Ahmedabad, िदनांक/Dated 28/08/2025

अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय #ितिनिध , अिधकरण