ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT, SURAT vs. ANUPA JIGNESH AMIN, SURAT

आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These four appeals by the Revenue emanate from the separate orders passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), all dated 27.08.2024, by the Commissioner of Income-tax (Appeals)-4, Surat [in short “the CIT(A)”] for assessment years (AYs) 2013-14 to 2015-16, which in turn arise from the separate assessment orders passed by the Assessing Officer (in short, ‘AO’) dated 17.02.2022, 07.03.2022 and 22.02.2022. All the appeals are interconnected, and hence with the consent of parties, appeals were clubbed and heard together and are decided by common order for the sake of convenience and brevity. 2. The Revenue have raised following grounds of appeals are as under: ITA No.1107/SRT/2024 (AY 2014-15) “1) On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.74,87,000/- made by the AO u/s 68 of the I.T. Act on account of unexplained cash credit in the form of accommodation entries observing that the appellant had repaid the entire loans in the subsequent years which is not disputed by the AO and under the circumstances, such unsecured loans cannot be added u/s 68 of the I.T. Act despite the fact that the loan were claimed to be received from the persons in which name income tax records were artificially created by Sadhani Brothers and such creditors having minimal incomes, and having no genuine business transactions in their return of income filed.

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.37,435/- made by AO on account of unaccounted commission paid for availing accommodation entry of unsecured loan without appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.1,08,000/- made by the on account of disallowances of interest expenses claimed on the bogus unsecured loan. 4) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 2.1 ITA No.1108/SRT/2024 (AY 2015-16) “1) On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.15,88,000/- made by the AO u/s 68 of the I.T. Act on account of unexplained cash credit in the form of accommodation entries observing that the appellant had repaid the entire loans in the subsequent years which is not disputed by the AO and under the circumstances, such unsecured loans cannot be added u/s 68 of the I.T. Act despite the fact that the loan were claimed to be received from the persons in which name income tax records were artificially created by Sadhani Brothers and such creditors having minimal incomes, and having no genuine business transactions in their return of income filed. 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.7,904/- made by AO on account of unaccounted commission paid for availing accommodation entry of unsecured loan without appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.10,10,991/- made by the on account of disallowances of interest expenses claimed on the bogus unsecured loan. 4) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.”

2.2 ITA No.1109/SRT/2024 (AY 2013-14)

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises “1) On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.39,00,000/- made by the AO u/s 68 of the I.T. Act on account of unexplained cash credit in the form of accommodation entries observing that the appellant had repaid the entire loans in the subsequent years which is not disputed by the AO and under the circumstances, such unsecured loans cannot be added u/s 68 of the I.T. Act despite the fact that the loan were claimed to be received from the persons in which name income tax records were artificially created by Sadhani Brothers and such creditors having minimal incomes, and having no genuine business transactions in their return of income filed. 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.19,500/- made by AO on account of unaccounted commission paid for availing accommodation entry of unsecured loan without appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.12,658/- made by the on account of disallowances of interest expenses claimed on the bogus unsecured loan. 4) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.”

2.3 ITA No.1111/SRT/2024 (AY 2013-14) “1) On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.76,50,000/- made by the AO u/s 68 of the I.T. Act on account of unexplained cash credit in the form of accommodation entries observing that the appellant had repaid the entire loans in the subsequent years which is not disputed by the AO and under the circumstances, such unsecured loans cannot be added u/s 68 of the I.T. Act despite the fact that the loan were claimed to be received from the persons in which name income tax records were artificially created by Sadhani Brothers and such creditors having minimal incomes, and having no genuine business transactions in their return of income filed. 2) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.38,250/- made by AO on account of unaccounted commission paid for availing accommodation entry of unsecured loan without

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises appreciating the fact that the assessee has obtained unsecured loan in the form of accommodation entries. 3) On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.59,455/- made by the on account of disallowances of interest expenses claimed on the bogus unsecured loan. 4) The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.”

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises 4. For appreciation of facts, ITA No. 1108/Srt/2024 is treated as “lead” case. Facts of the case in brief are that assessee filed his return of income for AY 2015-16 on 30.03.2016 declaring total income at Rs.Nil. Assessment u/s 143(3) was framed on 19.12.2017 determining total income at Rs.4,16,61,750/-. Thereafter, information was received from Investigation Wing, Surat that a search and seizure operation u/s 132 of the Act was carried out at the residential premises of Sadhani Brothers. Survey u/s 133A of the Act was also carried out at the office premises of Sadhani Brothers. Various incriminating documents were impounded as per Annexures-B/193, B/211, B/217, , B/263, B/534, B/594, B/611, B/621, B/623, B/637, B/642, B/644, B/647, B/682, B/692, B/708, B/732, B/783, etc. These Annexures are part of artificially created income-tax records of 873 persons whose bank accounts and income-tax records were managed and maintained by Sadhani Brothers. As per the Annexures, the assessee had obtained unsecured loan of Rs.1,11,47,457/- from 18 concerns of Sadhani Brothers. Shri Darshan P. Sadhani, in his statement u/s 132(4) and 131(1A), admitted that his source of income is commission income by filing income-tax returns of clients and providing accommodation entries to persons whoever required it on commission basis. On the basis of above information, the case of assessee was reopened u/s 147 of the Act after obtaining prior approval of Ld.PCIT (Central) Surat u/s 151(1) of the Act. In response to notice u/s 148, assessee filed return on 14.05.2021 declaring the original total income at Rs.Nil. The AO provided

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises reasons for reopening, relevant seized materials and statement of Shri Darshana P. Sadhani to the assessee. After issuing various statutory and show cause notices, AO added Rs.15,88,000/- on account of unexplained unsecured loan. He added Rs.10,10,991/- towards interest expenses on the alleged unsecured loans. He also added Rs.7,940/-, being 0.5% of the above unsecured loan towards unaccounted commission expense. 4.1 Aggrieved by the addition made in assessment order, assessee filed appeal before CIT(A). The assessee challenged validity of reopening u/s 147 of the Act as well as merits of the additions. It was submitted before him that the loans were received through banking channel and appellant had given all required details including PAN, confirmation of loan, returns of income, bank statements to the AO; but AO did not accept these details and made the addition. It was also submitted that all loans of Rs.15,88,000/- were repaid through banking channel in the subsequent FY 2015-16 (A.Y 2016-17), which has been accepted by AO. These loans were received in the normal course of business for short period and were repaid shortly. The appellant filed various details to prove the identity, creditworthiness and genuineness of unsecured loans, which was noted by the CIT(A). The details of loans received and repaid are also given in a table at pages 13 and 14 of the appellate order. The appellant relied on the decision of Hon’ble jurisdictional High Court in case of CIT vs. Ayachi Chandrashekhar Narsangji (2014) 42 taxmann.com 251 (Guj) and PCIT vs. Ambe Tradecorp (P.) Ltd. (2022) 145 taxmann.com 27 (Guj) and

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises submitted that once repayment of loan is accepted by the Department, addition u/s 68 cannot be made. The submission of the assessee is reproduced at pages 4 to 8 and 10 to 15 of the appellate order. The decision of the CIT(A) on addition of unsecured loan of Rs.15,88,000/- u/s 68 of the Act is at para-7 to 7.7 of the appellate order. The CIT(A) deleted the said addition on the ground that these loans were repaid in the subsequent FY 2015-16 (A.Y 2016- 17), which has not been disputed by AO. The CIT(A) also deleted the other two additions of Rs.10,10,991/- and Rs.7,940/- towards interest expenses on bogus unsecured loans and commission expense incurred for obtaining the said bogus loans.

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises been filed before lower authorities and relied on various decisions in support of the action of the CIT(A). He submitted that the assessee has discharged the primary onus cast on him u/s 68 of the Act by filing details such as (i) name, address and PAN of the depositors, (ii) confirmation of the depositors, (iii) ITR acknowledgment of the depositors, (iv) computation of total income, (v) balance of the depositors and (vi) relevant extract of bank statements. The Ld. AR submitted that AO relied on statement of Sadhani Brothers, who is the tax consultant of various parties. Hence, their statement cannot be treated as evidence, particularly when statement of lenders, recorded if any, are no brought on record. The assessee was not allowed to cross-examine Sadhani Brothers. The affidavits of lenders relied upon by AO were not supplied to the assessee. Even content of the affidavits is not reproduced in the assessment order. In absence of such details, it is apparent that the assessee has not been implicated by the impugned lenders. The Ld. AR further submitted that the so- called incriminating materials are in fact income-tax record of the lenders and do not constitute incriminating materials in the strict sense of the search provisions. No evidence was found that assessee paid cash against receipt of cheques from lenders. The Revenue has not brought any material on record to prove that the persons are mere name lenders and their income-tax records are not showing true state of affairs. The CIT(A), therefore, rightly deleted addition of Rs.15,88,000/-.The Ld. AR relied on the decisions in cases of (i) DCIT vs. Rohini Builders – SLP(C) 9155 of 201 (SC) (ii) DCIT vs. Rohini Builders 256 ITR

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises 30 (Guj), (iii) PCIT vs. D&H Enterprise 72 taxmann.com 91 (Guj), (iv) CIT vs. Apex Therm Packaging (P.) Ltd. 42 Taxmann.Com 473 (Guj), (v) ITO vs. Shanti Enterprise 71 taxmann.com 275 (Guj), (vi) CIT vs. Ranachhod Jivabhai Nakhava 21 taxmann.com 159 (Guj) and (vii) Nemi Chand Kothari vs. CIT 264 ITR 254 (Guj.). He also submitted that assessee has repaid the entire loan of Rs.15,88,000/- to the concerned lenders in the immediately succeeding AY. The Ld. AR submitted that the CIT(A) has rightly deleted addition in respect of repaid loans which is supported by decisions of Hon’ble jurisdictional High Court in case of Ayachi Chandrashekhar Narsangji (supra) and Ambe Tradecorp (P.) Ltd. (supra). He further submitted that the CIT(A) has rightly deleted the interest of Rs.10,10,991 on such unsecured loans since the addition of unsecured loans was deleted. The CIT(A) has also rightly deleted the estimated commission expenses of Rs.7,940/- because he has allowed relief in respect of the addition of bogus loans u/s 68 of the Act. The Ld. AR also submitted that the Co-ordinate Bench of this Tribunal had decided similar issue in favour of the assessee in the case of ACIT vs. Bharatbhai Kanjibhai Kakadiya in ITA Nos. 391 and 312/SRT/2023 for AY 2016-17 dated 24.03.2025.

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises additional ground regarding validity of reopening u/s 147 of the Act which was confirmed by the CIT(A). 8. Since jurisdictional issue on validity of reopening u/s 147 by issue of notice u/s 148 of the Act has been raised by the appellant, it would be proper to decide the same before proceeding to decide the issues on merit. On the basis of information received from the Investigation Wing, Surat that search and seizure operation u/s 132 and survey action u/s 133A of the Act were carried out in cases of Sadhani Brothers, which resulted in collection of evidences revealing that the group was providing accommodation entries of unsecured loans and that appellant had taken bogus loans from 18 parties to the extent of Rs.1,11,47,457/-, the case was reopened u/s 147 of the Act. The AO has discussed about the incriminating materials in pages-2 and 3 of the assessment order. The case was reopened after obtaining prior approval of the PCIT(Central), Surat u/s 151(1) of the Act. In response to the notice u/s 148, assessee filed his return of income on 14.05.2021 declaring Rs.Nil income. The AO provided reasons for reopening to the assessee. Thereafter, assessee filed various details in response to the notices issued to him by AO. The AO completed assessment u/s 147 of the Act on 07.03.2022. During appellate proceedings before CIT(A), the AR of the appellant had also raised the ground on the impugned issue. The CIT(A) dismissed the ground by observing that there was adequate materials available with the AO to form a reasonable belief that income of the appellant had escaped income. During the

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises search/survey action at the premises of Sadhani Brothers, it was found that the said persons were engaged in providing accommodation entries by controlling and managing financial affairs of 873 persons/entities. The appellant had shown transactions of unsecured loans from the above concerns. Hence, the ground was dismissed by CIT(A). We do not find any infirmity in the order of CIT(A). The Hon’ble Supreme Court in case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd., 291 ITR 500 (SC) held that the expression “reason to believe” would mean cause or justification and cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. Whether material would conclusively prove escapement of income is not the concern at that stage. In view of the above facts and respectfully following the decision of Hon’ble Supreme Court cited supra, the additional ground raised by the appellant is dismissed. 9. Ground No. 1 of Revenue’s appeal pertains to addition of Rs.15,88,000/- u/s 68 of the Act towards the bogus unsecured loans. There is no dispute regarding the unsecured loans received by the assessee from 18 parties amounting to Rs.1,11,47,457/- including Rs.15,88,000/- during the subject year. However, assessee had repaid loans of Rs.15,88,000/- to the concerned parties in the next FY 2015-16 (AY 2016-17). The CIT(A) has deleted this amount by relying on the decisions of Hon’ble jurisdictional High Court in case of Ayachi Chandrashekhar Narsangji (supra) and Ambe Tradecorp (P.) Ltd. (supra). The Hon’ble Gujarat High Court in case of Ayachi Chanddrashekhar

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises Narsangji (supra) held that where Department has accepted repayment of loan in subsequent year, no addition was to be made in the current year on account of cash credit. Similarly, in case of Ambe Tradecorp (P.) Ltd. (supra), the Hon’ble court held that where assessee took loan from two parties and he has furnished requisites material showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition u/s 68 could be made on account of such loan. The repayment of loans in the present case has been accepted by the AO. The Ld. Sr-DR has not disputed above facts. Hence, following the binding decisions of Hon’ble jurisdictional High Court, we do not find any infirmity in the order of CIT(A) in deleting addition of Rs.15,88,000/-. We also find that co-ordinate Bench of this Tribunal under similar facts and circumstances of the case in Bharatbhai Kanjiobhai Kakadiya (supra) has decided the issue in favour of assessee. In view of the above, the ground No.1 is dismissed. 10. Ground No.2 and 3 of Revenue’s appeal are deletion of Rs.10,10,991/- towards interest expenses claimed on bogus unsecured loan and Rs.7,940/- on account of unaccounted commission paid for availing accommodation entry of unsecured loan. The CIT(A) has deleted both the additions by observing that the addition toward the bogus loans was deleted by him. Therefore, the corresponding disallowance of interest expenses debited in the profit and loss account cannot be sustained. He also deleted addition of Rs.7,940/- towards unaccounted commission expenses for the same reason. We have confirmed

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises the order of CIT(A) regarding the deletion of unsecured loans. Hence, there remains no basis to sustain the above two additions. Accordingly, we confirm the order of CIT(A) and dismiss both the grounds of Revenue. 11. In the result, appeal of Revenue is dismissed and additional ground raised by the assessee is also dismissed. ITA No.1107 & 1109 & 1111/SRT/2024 (AYs: 2014-15, 2013-14)

Sd/- Sd/- (SUCHITRA R KAMBLE) (BIJAYANANDA PRUSETH) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ ACCOUNTANT MEMBER सूरत /Surat �दनांक/ Date: 22/08/2025 Dkp Outsourcing Sr.P.S*

ITA Nos.1107-1109 & 1111/SRT/2024 (AYs 13-14 to 15-16 Amin Group & Massimo Enterprises

आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to :  अपीलाथ�/ The Appellant  ��यथ�/ The Respondent आयकर आयु�/ CIT  आयकर आयु� (अपील)/ The CIT(A)  िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT  गाड� फाईल/ Guard File  By order/आदेश से, // True copy // सहायक पंजीकार आयकर अपील�य अ�धकरण, सूरत