AMIT CHHAGANLAL JAIN,VADODARA vs. THE INCOME TAX OFFICER, WARD-4(1)(7), VADODARA

4. It was found during investigation that both (Jignesh S Shah and Sanjay Shah) are managing and controlling multiple companies and concerns, which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Various concerns were found to be nonexistent at their addresses as per Inspector report. The directors of companies/persons in whose names the said concerns are registered admitted by way of filing affidavits that the companies/ concerns are not carrying out genuine business activities and are engaged into providing accommodation entries through Jignesh S Shah. Furthermore, other kind of Digital Data including incriminating MS Excel files, incriminating Word Files, Whatsapp Chats/Images and documents including Khata-Bahis were also found and duly analyzed. Stamps and bank accounts of .various persons/entities were also found in possession of accommodation entry provider duo. During recording of their statements and by filing affidavits, various dummy directors admitted that they were merely signing documents on directions of accommodation entry provider duo. They admitted of being involved in providing accommodation entries of LTCG, Loss, and Unsecured Loans etc. Data analysis coupled with circumstantial evidences led to discovery that 15 BSE listed scrips have been used for 3 generating bogus LTCG and contrived losses. During investigation, sample trail of funds was also established. The duo also admitted being involved in providing accommodation entries including bogus LTCG and contrived losses. As per information, The assessee was benefitted out of fictitious loan to the tune of Rs.61,75,297/- during the year under consideration. Hence, the assessment of the year under consideration was re-opened U/s 147 of the IT Act 1961. Notice u/s 148 was issued on 31.03.2021. In response, the assessee has filed his return on 26.04.2021. Subsequently, notice u/s 143(2) was issued on 02.08.2021. There after notices u/s 142(1) of the LT. Act, 1961 was issued to the assessee on 16.02.2022 asking assessee to file necessary details on the points as asked for the notices issued.

4. It was based on this information that re-assessment proceedings were initiated on the assessee by issuing notice under section 148 of the Act and the addition made on account of the alleged accommodation entry taken by the assessee by way of unsecured loan amounting to Rs.61,75,297/- which was confirmed by the ld.CIT(A).

The contention of the ld.counsel for the assessee before us was that the assessee had pleaded and demonstrated to the AO that no unsecured loan was taken by the assessee during the year, and this fact was confirmed by the AO also when he noted in his order at page no.2 that the submissions of the assessee have been scrutinized and found that the assessee has not taken this fictitious loans amounting to Rs.61,75,297/- in his books of accounts. He contended that despite noting so, the AO still went on to hold that the assessee had taken fictitious loans during the year which remained unexplained, and added the same to the income of the assessee. He contended that the ld.CIT(A) though did not controvert the finding of the AO that no such fictitious loan was found to be taken by the assessee, he went a step further and contended that onus was on the assessee to show that it had taken loan during the year, and the assessee having not discharged the onus, therefore, the addition needed to be confirmed. In this regard, he drew our attention to the finding of the ld.CIT(A) at page 6-7 of his order as under: The observation of the Assessing Officer is that based on the investigation report, appellant is one of the beneficiary who had taken fictitious loan through the accommodation entry provider and as a result of search in the premises of the following individuals, the Assessing Officer proceeded to make the addition and the gist of the investigation report is reproduced below: search u/s132 was launched on 11.09.2018 in the case of Jignesh Shah and Sanjay Shah of Ahmedabad (J$SS hereinafter). The search resulted into seizure of unaccounted cash of Rs.19.37 Crores (related to accommodation entries and commission earned thereon) along with incriminating digital as well as documentary evidences.

as could be seen from the bank account. In this regard, it is pointed out that the appellant was a partner in a firm and the above sum was routed through the individual bank account or firm's account was not known at the time of scrutiny proceedings. Appellant has submitted copy of two bank accounts which is having not even 15 entries in his savings bank account and the deposit of money in this bank account were very meagre. Appellant has received interest and remuneration from the firm. Appellant has also received share of profit from the firm. But there are no entries in the bank account for receipt of the said money. Hence, the appellant did not furnish the source for the entire amount received by him the year under consideration which gives rise to the probability of not furnishing other bank accounts if any held by him. Thus, the onus is on the appellant to prove with bank accounts and map the entries with his own account and there are two entries in Indian Overseas bank, one of which is a debit entry and the amount was paid to Shri Nakoda Metals and the other entry is a credit entry from Shubh Metal. Further the appellant did not furnish the name of the firm in which the appellant is a partner and the mode of receipt of remuneration and interest and share income. Since even these details are not figuring in the bank account, details reflecting the loan transaction as mentioned in the Investigation Report was also not furnished by the appellant. Further, the investigation report prepared by the investigation team was done after making many enquiries and collecting the statistical data and other details about the entry providers and observed that the appellant is one of the beneficiaries who has taken fictitious loan from the group companies of Jignesh Shah. Since the documentary evidences were not fully furnished by the appellant even at the time of appellate proceedings other than the statement that there was no business transaction between the appellant and Jignesh Shah, it is held that the fictitious transaction with Jignesh Shah was not conclusively proved by the appellant and the Investigation Report was prepared based on the confirmation of Jignesh Shah for having entered into a fictitious transaction with the appellant and it was clearly stated that he is one of the beneficiaries and there are catena of judicial precedents to hold that findings given in the investigation report are concrete information based on so many enquiries and collection of data which cannot be stated to be incorrect at any point of time.

6 7. We have heard contentions of the both the parties and gone through the orders of the authority below. We do not find any merit in the addition made by the AO and confirmed by the ld.CIT(A) of alleged accommodation entry of unsecured loan of Rs.61.75 lakhs taken by the assessee during the impugned year. As pointed out by the ld.counsel for the assessee, it is an admitted fact that no loan was taken by the assessee during the year.

Order pronounced in the Court on 27th February, 2025 at Ahmedabad.