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“accommodation entry”

Cash Credits & Unexplained ItemsSection 68Section 684,509 judgments

The decision most relied on for accommodation entry is Sumati Dayal v. CIT (214 ITR 801), cited in 1,967 judgments on BharatTax.

Leading authorities on accommodation entry

Sumati Dayal v. CIT
214 ITR 801 · 1995 · Supreme Court
1,967
citing judgments

The Revenue is entitled to look behind the apparent form of a transaction to discover its true nature, applying the test of human probabilities and surrounding circumstances. If transactions defy logic or are unnatural, they can be treated as bogus, even if supported by some documentation, especially in cases of cash credits or unexplained investments.

McDowell & Co. Ltd. v. CTO
154 ITR 148 · 1985 · Supreme Court
741
citing judgments

The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.

CIT v. Bholanath Poly Fab. Pvt. Ltd.
355 ITR 290 · 2013 · High Court
712
citing judgments

If an assessee makes purchases from bogus parties, but the underlying goods are genuinely acquired and sold, only the profit margin embedded in such purchases, and not the entire value of the bogus purchases, should be added to the assessee's income.

(Central)-1 v. NRA Iron & Steel (P) Ltd.
103 Taxmann.com 48 · 2019 · Supreme Court
696
citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.
342 ITR 169 · 2012 · High Court
658
citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

CIT v. Nikunj Exim Enterprises Pvt. Ltd.
372 ITR 619 · 2015 · High Court
391
citing judgments

Transactions defying human probability cannot be applied to isolated purchases if sales are accepted as genuine, and purchases cannot be disallowed without considering the entire transaction and documentary evidence. Failure to produce parties in an assessment proceeding may not be fatal to the assessee.

PCIT v. RMG Polyvinyl (I) Ltd.
396 ITR 5 · 2017 · High Court
272
citing judgments

Reassessment based solely on information from the Investigation Wing, without the Assessing Officer conducting further inquiry or demonstrating an independent application of mind, is unjustified and invalid.

N.K. Proteins Ltd. v. DCIT
84 Taxmann.com 195 · 2017 · Supreme Court
204
citing judgments

When purchases are found to be entirely bogus and based on fictitious invoices from non-existent or unconfirmed suppliers, the entire amount of such purchases is liable to be added back as unexplained expenditure, not merely a percentage thereof.

Judgments citing accommodation entry

Harsh Comtrade Pvt Ltd, Surat vs. Income Tax Officer, Ward 5(4), Kolkata

In the result, appeal of the assessee is partly allowed for statistical purposes

ITA 225/KOL/2024[2012-13]Status: DisposedITAT Kolkata01 Jul 2025AY 2012-13

Bench: Shri George Mathanआयकर अपील सं/Ita No.225/Kol/2024 (नििाारण वर्ा / Assessment Year :2012-2013) Harsh Comtrade Private Limited, Vs Ito, Ward-5(4), Kolkata 1/A, Stuti Apartment, Near Ashok Panhouse, City Light, Surat, Gujarat Pan No. :Aabcg 8847 C (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) : Shri Mehul Shah, Ar नििााररती की ओर से /Assessee By राजस्व की ओर से /Revenue By : Shri S.B. Chakraborthy, Addl. Cit-Sr.Dr सुनवाई की तारीख / Date Of Hearing : 01/07/2025 घोषणा की तारीख/Date Of Pronouncement : 01/07/2025 आदेश / O R D E R This Is An Appeal Filed By The Assessee Against The Order Of The Ld Cit(A), National Faceless Appeal Centre (Nfac), Delhi, Dated 28.12.2023, Passed In Din & Order No.Itba/Nfac/S/250/2023-24/1059161646(1) For The Assessment Year 2012-2013. 2. Shri Mehul Shah, Ld. Ar Appeared On Behalf Of The Assessee & Shri S.B.Chakraborthy, Ld.Sr. Dr Appeared On Behalf Of The Revenue. 3. At The Time Of Hearing, Ld. Ar Submitted That He Has Filed Written Submissions Before The Tribunal Which Has Been Placed In The Paper Book At Pages 90 To 104 Which Reads As Follows :- Before Income Tax Appellate Tribunal, Kolkata - 'Smc' Bench In The Case Of Harsh Comtrade Pvt. Ltd Sub: Written Submission For A.Y. 2012-13 Ref: Assessee'S Appeal No. 225/Kol/2024 Date Of Hearing: 21.08.2024 May It Please To Your Honour 1. In This Case, The Case Is Re-Opened On The Basis Of Reasons For Reopening Recorded On 23.03.2018. The Same Is Reproduced

For Respondent: Shri S.B. Chakraborthy, Addl. CIT-Sr.DR
Section 148

cannot add or supplement the reasons of re- opening during assessment proceedings. f. There are no words used in the reasons for reopening like "accommodation entry" or "cash" g. There is no reference of third party statement against the assessee in the reasons and in fact even during scrutiny proceedings ... from the DIT(I). After writing about information received, the AO "jumped to the conclusion that said tabulated instrument are in the nature of accommodation entry." This was done without further verification, examination or any other exercise. The ITAT also noted that the AO "has not mentioned nature of transaction

Annu Anil Agrawal, Mumbai vs. Assistant Commissioner of Income-Tax, Central Circle 4(4), Mumbai

In the result, the appeal of the assessee is allowed

ITA 5473/MUM/2024[2011-2012]Status: DisposedITAT Mumbai01 Jul 2025AY 2011-2012

Bench: Shri Sandeep Gosain & Shri Prabhash Shankarआयकर अपील सुं./Ita No. 5473/Mum/2024 (नििाारण वर्ा / Assessment Year :2011-12) Annu Anil Agrawal V/S. Acit Cc 4(3), Mumbai Due C-3401/3402 Oberoi बिाम To Restructuring Current Esquire, Mohan Gokhale Jurisdiction Of Appellant Road, Off W. E. Highway, Lies With Acit 41(4)(1), Oberoi Garden City, Mumbai Goregaon East, Mumbai- Kautilya Bhawan, Bkc, 400063 Bandra (E), Mumbai- 400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Admpa0248F Appellant/अपीलार्थी Respondent/प्रनिवादी ..

For Appellant: Shri Suchek Anchaliya, Ms. RubyFor Respondent: Shri Aditya Rai
Section 10(38)Section 250Section 68Section 69

upholding addition just on the basis of information received from DGIT (Inv.) Kolkata wherein it was mentioned that large number of beneficiaries has taken accommodation entries by way of transacting in penny stocks by manipulating the stock market, however P a g e | 3 A.Y. 2011-12 Annu Anil Agrawal ... said investigation report along with other tangible material on records on the basis of which he has ascertain that the appellant has taken accommodation entry, however the same was not provided to the appellant and hence assessment proceedings was completed on the back of the appellant without providing adequate opportunity