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Facts
The assessee's appeal is against the CIT(A)'s order confirming an addition made by the AO on account of an alleged accommodation entry of Rs. 15,50,450/- from Mehta Group for AY 2016-17. The AO re-opened the assessment u/s. 147 based on search material suggesting Mehta Group provided bogus entries.
Held
The Tribunal held that the AO failed to examine the details of transactions provided by the assessee and made additions solely based on information from the Investigation Wing. The addition was not sustainable as the AO did not identify specific suspicious entries.
Key Issues
Whether the addition made by the AO on account of alleged accommodation entry, without proper verification of transactions and identification of specific bogus entries, is sustainable?
Sections Cited
147, 250, 153C
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Shri Makarand V. Mahadeokar
"ी संजय गग", "ाियक सद" एवं "ी मकरंद वसंत महादेवकर, लेखा सद" के सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं / Year : 2016-17 Shree Saraswati Education The ITO (Exemption) बनाम/ Sansthan Palanpur – 385 001 v/s. At & Post Rajpur Taluka Kadi Mehsana – 382 740 (Gujarat) "थायी लेखा सं./PAN: AAITS 3179 G (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Divyakant Parikh, AR Revenue by : Shri R.P. Rastogi, CIT-DR सुनवाई की तारीख/Date of Hearing : 20/08/2025 घोषणा की तारीख /Date of Pronouncement: 28/08/2025 आदेश/O R D E R
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 02/12/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2016-2017. Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17 2
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. That the TDS was duly deducted on the interest paid for the amounts which were taken as loan and the same were fully refunded during relevant assessment year itself. The assessee produced the ledger account of Mehta Group in its books of accounts. It was pleaded that all the loan transactions were routed through banking channel. The AO, instead of examining ledger account and the details of transactions furnished by the assessee, stuck his stand that as per the information available, the assessee had taken an accommodation entry of Rs.15.50 lakhs from Mehta Group. He, therefore, made the addition of the said amount into the income of the assessee. The Ld.CIT(A) confirmed the additions made by the AO. Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17 3
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 4 doubt, the AO could have examined all the entries from the Mehta Group but no such enquiry was made during the course of assessment proceedings. Under the circumstances, the impugned addition is not sustainable and the same is hereby ordered to be deleted.
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.