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BSAS INFOTECH LIMITED,SURAT vs DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1)(1), SURAT, SURAT | BharatTax

BSAS INFOTECH LIMITED,SURAT vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1)(1), SURAT, SURAT

ITA 225/SRT/2024Status: DisposedITAT Surat15 July 2025AY 2015-16Bench: SHRI SIDDHARTHA NAUTIYAL (Judicial Member), SHRI BIJAYANANDA PRUSETH (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee company received unsecured loans which were allegedly from shell companies and treated as accommodation entries. The Assessing Officer added these amounts to the assessee's income, along with commission expenses. The CIT(A) confirmed these additions. The assessee appealed.

Held

The Tribunal held that the assessee had discharged the onus by providing confirmations, loan agreements, bank statements, and evidence of repayment. Relying on various judicial precedents, it was concluded that when loans are repaid through banking channels, Section 68 of the Income Tax Act is not attracted. The Tribunal found that the assessee's documents sufficiently proved the identity, genuineness, and creditworthiness of the lenders.

Key Issues

Whether the unsecured loans and related commission expenses, treated as accommodation entries, can be added to the assessee's income under Section 68 and 69 of the Income Tax Act, especially when the loans were repaid through banking channels.

Sections Cited

68, 147, 148, 69, 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI BIJAYANANDA PRUSETH

For Appellant: Shri P M Jagasheth, CA

For Respondent: Shri Ajay Uke, Sr. DR

O R D E R PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

These are appeals filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide orders dated 12.01.2024 passed for A.Ys. 2011-12, 2015-16 and 2016-17. Since common facts and issues are involved for all the years under consideration before us, all the appeals are being taken up together.

2.

The assessee has raised the following grounds of appeal:

(A.Y. 2011-12) “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in re-opening the assessment u/s.147 of the Act, 1961 and issuing notice u/s. 148 of the Income tax Act, 1961.

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 2–

2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.50,00,000/- on account of unsecured loan as alleged accommodation entry in form of unsecured loan received from the shell/bogus company M/s. Vanguard Jewels Limited controlled by entry operator, Shri Pravin Kumar Jain is treated as unaccounted u/s.68 of the Income Tax Act, 1961.

3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.1,00,000/-on account of commission expenses for arrange for such accommodation entries in form of unsecured loan u/s. 69 of the Income Tax Act, 1961.

3.

The brief facts of the case are that the assesee company filed it’s return of income for A.Y. 2011-12 declaring total income of Rs. 2,25,570/-. The case of the assessee was reopened on the basis of information received from Investigation Wing, Mumbai after obtaining necessary approval under Section 148 of the Act. During the course of re-assessment proceedings, the Assessing Officer noted that on perusal of details furnished by the assessee company, it is seen that the assessee company had received unsecured loan amounting to Rs. 50,00,000/- from M/s. Vanguard Jewels Pvt. Ltd. during the impugned year under consideration. The Assessing Officer noted that he was in possession of information received from Investigation Wing, Mumbai in which search and seizure action under Section 132 of the Act was carried out in the case of Shri Pravin Kumar Jain and other, which resulted in collection of evidences which proved that Shri Pravin Kumar Jain and others, through BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 4– various benami concerns provide accommodation entries to various parties in respect of bogus unsecured loans and bogus purchases. As per list available with the Assessing Officer, he was of the view that the assessee company had received accommodation entries in the form of unsecured loans amounting to Rs. 50,00,000/- from a concern, M/s. Vanguard Jewels Pvt. Ltd. of Pravin Kumar Jain Group, a Mumbai based entry operator. On further investigation, the Assessing Officer noted that the said company M/s. Vanguard Jewels Pvt. Ltd. was having no financial position and was clearly not in a position to advance a sum of Rs. 50,00,000/- to the assessee company. Further, certain notices were also issued to the lender company, which were returned unserved by the Postal Department, which also caused serious doubts on the identity, genuineness and creditworthiness of the lender. During the course of assessment proceedings, the assessee submitted that a crucial aspect in this case is that the assessee had taken loan from M/s. Vanguard Jewels Pvt. Ltd. amounting to Rs. 50,00,000/- on 15.07.2010, but the assessee had also repaid this loan back to the lender company within the same Financial Year on 31.03.2011. Accordingly, the assessee submitted that since the loan was received and repaid back by the assessee company to the lender within the same Financial Year and that also through banking channels, it is clear that provisions of Section 68 of the Act are not attracted in the instant case. However, the Assessing Officer did not agree with the contentions of the assessee and added a sum of Rs. 50,00,000/- as income of the assessee under Section 68 of the Act, with the following observations:

The repayment of loan exists as a strong mitigating circumstance and transcends all considerations. We thus find that the documents placed by the assessee before the Revenue authorities sufficiently discharge the onus towards the identity and genuineness of the transaction and creditworthiness of the lender contemplated under s.68 of the Act. 5.1 In the case of Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 (Gujarat), Hon'ble Gujarat High Court held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. 5.2 We further note that all details regarding the parties in respect of the loan transaction were duly submitted before the Revenue Authorities. The additions are proposed to be made on the basis of statement of by Shri Praveen Kumar Jain who stated that he was engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus share application money etc. The Department has made addition on the ground that the assessee company had received a sum of 1,00,00,000/- from M/s Nakshatra Business Private Limited (Hema trading company Private Limited), which was one of the companies operated by Shri Praveen Kumar Jain Group. However, apparently this figure too was incorrect since the Ld. CIT(Appeals) observed that the assessee had taken loan of Rs. 50 lakhs only and accordingly gave part relief to the assessee. We further note that the Tribunals on various occasions have deleted the additions made in respect of loans taken from the above entities which were later found be repaid back in subsequent years. In the case of Deepak Shah v. ACIT in ITA number 4206/Mumbai/2017, the Mumbai ITAT has on similar facts given relief to the assessee with the following observations: 5. Learned AR vehemently submitted that the order of learned CIT(A) upholding the order of the Assessing Officer is contrary to the law as order of the Assessing Officer was confirmed despite the fact that the assessee has filed all necessary evidence before the AO in the assessment proceedings. Learned AR submitted that by various communications to the Assessing Officer, the assessee filed necessary details submitting therein that the assessee has taken temporary business loans from three companies in the month of March 2012, which were repaid within a period ranging from two to six months duly corroborated with all necessary evidences such as copies of bank statements, ledger accounts, confirmations from the parties, their PANs etc. Learned AR submitted that vide letter dated 8.2.2017, the assessee informed the Assessing Officer on the date of hearing i.e. 9.2.2017 that the assessee is not in a position to attend hearing as the assessee is preoccupied in High Court on 9.2.2017, which was proved by learned AR by placing before the bench a copy of the order from High Court filed at page No. 34 of the paper book. Learned AR submitted that even notices were issued u/s. 133(6) by the Assessing Officer to these parties were duly responded by the said parties by drawing our attention to page No.38 to 40 of the paper book wherein all details as required by the Assessing Officer were duly filed. Thus, learned AR submitted that the assessee has filed copies of confirmations, ledger accounts, bank statements evidencing transactions through banking channel, ITRs, PAN and annual reports alongwith audited profit and loss accounts and balance sheets of these parties. Learned AR submitted that the assessee has repaid BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 11– loan within a span of two to six months.Thus, the Assessing Officer has totally failed to conduct any meaningful and objective investigation and merely relied on the statement of Shri Praveen Kumar Jain that they were engaged in the business of providing hawala entries though nowhere assessee's name was ever taken by the said person. Similarly, learned CIT(A) has affirmed the order of Assessing Officer by simply relied on the statement recorded in the course of search u/s. 132(4) of the Act and further harping on the fact that summons issued u/s. 131 were not complied with. Learned AR also referred to the decision of the Coordinate Bench in the case of ACIT Vs. Shreedham Builders (ITA No. 5589/Mum/2017 for A.Y. 2012-13), wherein all these three entities have lent money and the Coordinate Bench has taken the view that no addition to be made u/s. 68 of the Act as the assessee has duly discharged burden cast upon it u/s. 68 of the Act. Learned AR therefore prayed before the Bench that the order of learned CIT(A) may be set aside and the Assessing Officer be directed to deleted the addition.