ACIT 19(3), MUMBAI, MUMBAI V. S.V. EXPORTS, MUMBAI

ITA 690/MUM/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which deleted the addition of Rs. 30,52,095 made under section 68 of the Income-Tax Act, 1961, concerning interest expenditure on unsecured loans. These loans were received from entities linked to Shri Bhawarlal Jain, who was implicated in facilitating fraudulent financial transactions. The revenue challenged the CIT(A)'s decision, arguing that the loans were from non-genuine entities involved in sham transactions. However, the ITAT dismissed the appeal, referencing a coordinate bench's earlier decisions which had similar facts and outcomes, thereby maintaining consistency in judicial decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668737 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Other Referred Cases: ITA Nos. 689, 691, & 692/Mum/2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: SUCHEK ANCHALIYA
• Keywords: Tax effect; Accommodation entries; Bogus
• Section: 147

Judgement Text

" |आयकर अपीलीय न्यायाधिकरण न्यायपीठ, म ुंबई| IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER आयकर अपील सुं./ITA No. 690/MUM/2025 (नििाारण वर्ा / Assessment Year :2008-09) ACIT 19(3), Mumbai Room No. 511, Piramal Chambers, Parel, Mumbai- 400012 v/s. बिाम S. V. Exports 67, Surya Kiran, Pangully, A K Marg, Mumbai-400036 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAFS6272L Appellant/अपीलार्थी .. Respondent/प्रनिवादी प्रनि आपत्ति सुं./ CO No. 40/MUM/2025 (Arising out of ITA No. 690/Mum/2025) (नििाारण वर्ा / Assessment Year :2008-09) S. V. Exports 67, Surya Kiran, Pangully, A K Marg, Mumbai- 400036 v/s. बिाम ACIT 19(3), Mumbai Room No. 511, Piramal Chambers, Parel, Mumbai- 400012 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAFS6272L Appellant/अपीलार्थी .. Respondent/प्रनिवादी निर्ााररती की ओर से /Assessee by: Mr. Suchek Anchaliya राजस्व की ओर से /Revenue by: Shri Ram Krishn Kedia स िवाई की िारीख / Date of Hearing 17.06.2025 घोर्णा की िारीख/Date of Pronouncement 24.06.2025 P a g e | 2 ITA No. 690/Mum/2025 & Co. No. 40/Mum/2025 A.Y. 2008-09 S.V. Exports आदेश / O R D E R PER SANDEEP GOSAIN [J.M.]:- This appeal is filed by the revenue, against which the assessee has filed the cross-objections, challenging the order of the Learned Commissioner of Income-tax (Appeals), Mumbai-51[hereinafter referred to as “CIT(A)”] dated 18.11.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2008-09. 2. The revenue has raised the following grounds of appeal: 1. Whether on the facts and in the circumstances of the case and in law, the Lid. CIT(A) has erred in directing the AO to delete the addition of Rs. 30,52,095/- made u/s 68 of the income-Tax Act, on account of interest expenditure on unsecured loans received from entities operated by Shri. Bhawarlal Jain & its Groups in the previous assessment Year i.e, 2007-08 7\" 2. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CITIA) has erred in directing the AD to delete the addition of Rs. 30,52,095/-made on account of interest expenditure on unsecured loans received from five entities without considering the fact that the action of the AO μας based on the discreet report of DGT(inv), Mumbai post search operations conducted on Shn, Bhawarlal Jain & its syndicates, wherein it was established that all these paper companies with no real business activities, operating solely with purpose of facilitation of fraudulent financial transactions which includes providing accommodation entries in the form of unsecured loans, issuing of bogus sales bills etc and the assessee one of such entities, who has availed such accommodation entries of unsecured loans from five entities ?\" 3. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition of Rs. 30,52,095/- made u/s 68 of the Income-Tax Act, on account of interest expenditure on unsecured loan received from five entities operated and controlled by Shri Bhawarlal Jain & its syndicates, without considering the findings that the three tests of identity, capacity and genuineness are unreliable in view of the fact that these parties are found to be non-genuine involved in shame transaction, as a consequence of Search action conducted by the Income-Tax Department ?\" P a g e | 3 ITA No. 690/Mum/2025 & Co. No. 40/Mum/2025 A.Y. 2008-09 S.V. Exports 4. Whether on the facts and in the circumstances of the case and in law, the td. CIT(A) has erred in considering that as a consequence of Search findings, Shri Bhawarlal Jain & his syndicates/paper entities were established to be non- genuine parties and any subsequent ratification of transaction does not convert a non-genuine transaction into a genuine one ?\" 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CITTA) has erred in directing the AO to delete the addition of Rs. 30,52,095/- made u/s 68 of the Income-Tax Act, on account of interest expenditure on unsecured loan without appreciating the fact that the Assessing Officer has elaborated the modus operandi of Mr. Bhawarlal Jain & its syndicates and also established the assessee's direct involvement in fraudulent financial transactions with five bogus entities which were controlled, managed and operated by Mr. Bhanwarlal Jain & His groups for providing accommodation entries in the form of unsecured loan, issuing of bogus sales bills without delivering actual goods ?\" 6. The tax effect involved in this case is Rs. 9,43,100/-, which is below the prescribed limit as per CBDT's Circular No. 09/2024 Dated. 17.09 3024. However, this case falls under the exception within the ambit of the exceptional clause 3.1(k), of the CBDT's Circular No. 05/2024, dated. 15.03.2024, wherein it is stated that in the cases involving\" Organised Tax Evasion\", including of bogus LTCG/STCG/losses through accommodation entries, the decision to file appeal/SLP shall be taken on merit without regard to the tax effect and the monetary limit. Hence, the appeal u/s 253 of the Act is being filed before the Hon'ble ITAT.” 3. The assessee has raised the following ground in its cross-objections: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not adjudicating and considering that the assumption of jurisdiction by the Ld. Assessing Officer is bad in law as the conditions laid down under the Act for initiating reassessment proceeding u/s 147 of the Act have not been satisfied. 2. The Respondent craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another.” 4. At the outset, it has been brought to my notice that the order passed by the Ld. CIT(A) is covered by the decision of the coordinate bench of the ITAT. 5. As per the facts of the present case, the AO made additions of Rs. 30,52,095/- on account of interest payment made during the instant year for P a g e | 4 ITA No. 690/Mum/2025 & Co. No. 40/Mum/2025 A.Y. 2008-09 S.V. Exports loans taken in the earlier year from different entities belonging to Bhawarlal Jain Group. 6. However, the appeal order for AY 2007-08, Ld. CIT(A) deleted the additions of unsecured loans, and the said order was upheld by the coordinate bench of ITAT in ITA Nos. 689, 691, & 692/Mum/2025 dated 19.05.2025. Therefore, additions made towards the interest payment on these loans were also consequently deleted. 7. After hearing both parties, I notice that since the coordinate bench has deleted the additions on account of interest payment for AYs 2009-10 and 2010- 11, while following the decision of the coordinate bench, I also upheld the order of the Ld. CIT(A) and dismiss the appeal filed by the revenue. 8. In view of my decision in ITA No. 690/Mum/2025, the Co filed by the assessee is treated as academic. Accordingly, the same is treated as infructuous. 9. Consequently, the appeal filed by the revenue stands dismissed, and the CO filed by the assessee stands infructuous. Order pronounced in the open court on 24.06.2025. Sd/- Sd/- SANDEEP GOSAIN (न्यानयक सदस्य/JUDICIAL MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 24.06.2025 अननक ेत स ुंह र जपूत/ स्टेनो P a g e | 5 ITA No. 690/Mum/2025 & Co. No. 40/Mum/2025 A.Y. 2008-09 S.V. Exports आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "