INCOME TAX OFFICER WARD 1 JHUNJHUNU, JHUNJHUNU vs. BAGARIA TRADE IMPEX, CHURU

ITA 696/JPR/2025Status: DisposedITAT Jaipur29 September 2025AY 2013-1443 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee failed to establish the essential three ingredients prescribed under Section 68 of the Income Tax Act, 1961, namely, identity of creditors, genuineness of the transaction, and creditworthiness of the party. The Tribunal emphasized that even if a loan or borrowing is squared up within the year, it can still be tested under Section 68, especially in cases of accommodation entries. The Tribunal found the NFAC's decision to be erroneous regarding the applicability of Section 153C, stating that the case fell under Section 148. Relying on the principle of substance over form and the Supreme Court's decision in PCIT, Central-3 vs. Abhisar Buildwell (P.) Ltd., the Tribunal concluded that the AO's action was sustained. The NFAC's order was set aside as it was silent on the merits and relied solely on technicalities. The addition of Rs. 5,05,77,100/- made by the AO under Section 68 was upheld. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The Revenue is in appeal against the orders of the NFAC, Delhi, for Assessment Years 2013-14 and 2014-15. The assessee, Bagaria Trade Impex, filed its return of income for AY 2013-14 at Rs. 18,49,16,450/-. The case was selected for scrutiny, and during assessment proceedings under Section 143(3) of the Income Tax Act, 1961, the Assessing Officer (AO) made an addition of Rs. 5,05,77,100/- under Section 68 on account of unsecured loans. The assessee had obtained unsecured loans from various parties, which were also squared up during the year. The NFAC allowed the assessee's appeal on a jurisdictional issue without delving into the merits. The Revenue's appeals challenge the NFAC's decision to quash reassessment proceedings and ignore information regarding accommodation entries.

What were the issues?

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) is justified in quashing the entire reassessment proceedings under Section 147 of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) is justified in ignoring the facts that credible information regarding accommodation entry is available on record? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the assessee's appeal without appreciating that the AO recorded reasons after analyzing available information? 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) is justified in quashing the notice under Section 143(2) of the Act and consequently the assessment proceedings, where jurisdiction was transferred? 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) (NFAC) is justified in deleting the addition of Rs. 5,05,77,100/- made under Section 68 of the Act on account of unsecured loans? Assessee's contentions: The judgment does not record specific contentions from the assessee. The NFAC allowed the appeal on a jurisdictional issue. Revenue's contentions: The NFAC erred in quashing reassessment proceedings and ignoring credible information about accommodation entries. The AO had recorded reasons after analyzing available information. The NFAC was also incorrect in quashing the notice under Section 143(2) and the subsequent assessment proceedings due to a jurisdictional transfer. The addition made under Section 68 was justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(2),Section 143(3),Section 68,Section 153C,Section 148

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Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR

Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL

For Appellant: Mr. Sandeep Goel, Adv., Ld. AR
Hearing: 11/09/2025Pronounced: 29/09/2025

PER GAGAN GOYAL, A.M:

These three appeals by revenue are directed against the order of NFAC, Delhi dated 27.02.2025 & 25.02.2025 passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act'). The revenue has raised the following grounds of appeal: -

The revenue has raised the following grounds of appeal vide ITA No. 695/JPR/2025 for A.Y 2013-14 as under:

1.

Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) (NFAC) is justified in quashing the entire reassessment proceedings u/s 147. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT (A) (NFAC) is justified in ignoring the facts that credible information

The order continues below.

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