AMIT CHHAGANLAL JAIN,VADODARA V. THE INCOME TAX OFFICER, WARD-4(1)(7), VADODARA

ITA 1294/AHD/2024

AI Insights

The case revolves around an appeal by Amit Chhaganlal Jain against the order of the Commissioner of Income-Tax (Appeals), which upheld the addition of Rs.61,75,297 to the assessee's income on account of alleged fictitious loan transactions. The addition was based on information from a search operation on entry operators who provided bogus entries. The assessee contended that no such loans were taken, a fact acknowledged by the Assessing Officer but still led to the addition based on the investigation report. The Tribunal found that the onus was on the Revenue to prove the allegations, which they did not, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298696 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B. P. SRIVASTAV
• Assessee Lawyers: MANISH J. SHAH; ISSUING NOTICE UNDER SECTION OF; WAY OF UNSECURED LOAN
• Keywords: Accommodation entries; Bogus loan; Bogus
• Section: 148; 142(1); 143(2); 250

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘A’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.1294/Ahd/2024 Assessment Year : 2013-14 Amit Chhaganlal Jain B/4, Khanderao Colony R.V. Desai Road Opp: Gopal Der Ganotri Apartments Baroda 390 004. PAN : AGDPJ 6312 M Vs ITO, Ward-4(1)(7) Baroda. (Applicant) (Responent) Assessee by : Shri Manish J. Shah, Shri Rushin Patel and Shri Vishal Jagetia, ARs. Revenue by : Shri B. P. Srivastav, Sr.DR सुनवाई क\t तारीख/Date of Hearing : 06/02/2025 घोषणा क\t तारीख /Date of Pronouncement: 27/02/2025 आदेश आदेश आदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The above appeal has been filed by the assessee against order passed by the Ld.Commissioner of Income-Tax(Appeals), National Faceless Appeal Centre (NFAC) [hereinafter referred to as “ld.CIT(A)] dated 17.05.2024 under section 250 of the Income Tax Act, 1961 (\"the Act\" for short) pertaining to Assessment Year 2013-14. 2. The grounds raised by the assessee are as under: 1. The notice issued u/s.148 is bad in law. ITA No.1294/Ahd/2024 2 2. The Id. CIT(A) has erred in law and on facts of the case, in upholding the addition of Rs.61,75,297/- on account of alleged fictions loan transaction. 3. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise. 3. At the outset, it was submitted that the solitary issue in the present appeal related to addition made to the income of the assessee on account of alleged accommodation entry of unsecured loan taken during the year amounting to Rs.61,75,297/-. It was pointed out from the order of the authority below that the AO had information received from the System Directorate during the search operation carried out by the Investigation wing on the entry operators viz. Shri Jignesh Shah and Sanjay Shah who had provided bogus entries as per the requirement of the persons , that the assessee had benefited out of the fictitious loans to the tune of Rs.61,75,297/- during the year. The facts relating to the information in the possession of the AO are reproduced at para-4 of the assessment order as under: 4. It was found during investigation that both (Jignesh S Shah and Sanjay Shah) are managing and controlling multiple companies and concerns, which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Various concerns were found to be nonexistent at their addresses as per Inspector report. The directors of companies/persons in whose names the said concerns are registered admitted by way of filing affidavits that the companies/ concerns are not carrying out genuine business activities and are engaged into providing accommodation entries through Jignesh S Shah. Furthermore, other kind of Digital Data including incriminating MS Excel files, incriminating Word Files, Whatsapp Chats/Images and documents including Khata-Bahis were also found and duly analyzed. Stamps and bank accounts of .various persons/entities were also found in possession of accommodation entry provider duo. During recording of their statements and by filing affidavits, various dummy directors admitted that they were merely signing documents on directions of accommodation entry provider duo. They admitted of being involved in providing accommodation entries of LTCG, Loss, and Unsecured Loans etc. Data analysis coupled with circumstantial evidences led to discovery that 15 BSE listed scrips have been used for ITA No.1294/Ahd/2024 3 generating bogus LTCG and contrived losses. During investigation, sample trail of funds was also established. The duo also admitted being involved in providing accommodation entries including bogus LTCG and contrived losses. As per information, The assessee was benefitted out of fictitious loan to the tune of Rs.61,75,297/- during the year under consideration. Hence, the assessment of the year under consideration was re-opened U/s 147 of the IT Act 1961. Notice u/s 148 was issued on 31.03.2021. In response, the assessee has filed his return on 26.04.2021. Subsequently, notice u/s 143(2) was issued on 02.08.2021. There after notices u/s 142(1) of the LT. Act, 1961 was issued to the assessee on 16.02.2022 asking assessee to file necessary details on the points as asked for the notices issued. 4. It was based on this information that re-assessment proceedings were initiated on the assessee by issuing notice under section 148 of the Act and the addition made on account of the alleged accommodation entry taken by the assessee by way of unsecured loan amounting to Rs.61,75,297/- which was confirmed by the ld.CIT(A). The contention of the ld.counsel for the assessee before us was that the assessee had pleaded and demonstrated to the AO that no unsecured loan was taken by the assessee during the year, and this fact was confirmed by the AO also when he noted in his order at page no.2 that the submissions of the assessee have been scrutinized and found that the assessee has not taken this fictitious loans amounting to Rs.61,75,297/- in his books of accounts. He contended that despite noting so, the AO still went on to hold that the assessee had taken fictitious loans during the year which remained unexplained, and added the same to the income of the assessee. He contended that the ld.CIT(A) though did not controvert the finding of the AO that no such fictitious loan was found to be taken by the assessee, he went a step further and contended that onus was on the assessee to show that it had taken loan during the year, and the ITA No.1294/Ahd/2024 4 assessee having not discharged the onus, therefore, the addition needed to be confirmed. In this regard, he drew our attention to the finding of the ld.CIT(A) at page 6-7 of his order as under: The observation of the Assessing Officer is that based on the investigation report, appellant is one of the beneficiary who had taken fictitious loan through the accommodation entry provider and as a result of search in the premises of the following individuals, the Assessing Officer proceeded to make the addition and the gist of the investigation report is reproduced below: search u/s132 was launched on 11.09.2018 in the case of Jignesh Shah and Sanjay Shah of Ahmedabad (J$SS hereinafter). The search resulted into seizure of unaccounted cash of Rs.19.37 Crores (related to accommodation entries and commission earned thereon) along with incriminating digital as well as documentary evidences. 4. It was found during investigation that both (Jignesh S Shah and Sanjay Shah) are managing and controlling multiple companies and concerns, which are not carrying out any genuine business activity. These concerns are involved into activity of providing accommodation entries of various kinds such as unsecured loans, share premium, bogus gains, contrived losses etc. Various concerns were found to be non- existent at their addresses as per Inspector report. The directors of companies/persons in whose names the said concerns are registered admitted by way of filing affidavits that the companies/ concerns are not carrying out genuine business activities and are engaged into providing accommodation entries through Jignesh S Shah. Furthermore, other kind of Digital Data including incriminating MS Excel files, incriminating Word Files, Whatsapp Chats/Images and documents including Khata-Bahis were also found and duly analyzed. Stamps and bank accounts of various persons/entities were also found in possession of accommodation entry provider duo. During recording of their statements and by filing affidavits, various dummy directors admitted that they were merely signing documents on directions of accommodation entry provider duo. They admitted of being involved in providing accommodation entries of LTCG, Loss, and Unsecured Loans etc. Data analysis coupled with circumstantial evidences led to discovery that 15 BSE listed scrips have been used for generating bogus LTCG and contrived losses. During investigation, sample trail of funds was also established. The duo also admitted being involved in providing accommodation entries including bogus LTCG and contrived losses. As per information, the assessee was benefitted out of fictitious loan to the tune of Rs.61,75,297/- during the year under consideration. Thus, the Assessing Officer proceeded to treat the sum of Rs.61,75,297 as unexplained income in the hands of the appellant based on the above investigation report. Appellant submitted that the said parties who were acting as entry providers are not known to him and it was also submitted that no loan was paid or taken from the above parties ITA No.1294/Ahd/2024 5 as could be seen from the bank account. In this regard, it is pointed out that the appellant was a partner in a firm and the above sum was routed through the individual bank account or firm's account was not known at the time of scrutiny proceedings. Appellant has submitted copy of two bank accounts which is having not even 15 entries in his savings bank account and the deposit of money in this bank account were very meagre. Appellant has received interest and remuneration from the firm. Appellant has also received share of profit from the firm. But there are no entries in the bank account for receipt of the said money. Hence, the appellant did not furnish the source for the entire amount received by him the year under consideration which gives rise to the probability of not furnishing other bank accounts if any held by him. Thus, the onus is on the appellant to prove with bank accounts and map the entries with his own account and there are two entries in Indian Overseas bank, one of which is a debit entry and the amount was paid to Shri Nakoda Metals and the other entry is a credit entry from Shubh Metal. Further the appellant did not furnish the name of the firm in which the appellant is a partner and the mode of receipt of remuneration and interest and share income. Since even these details are not figuring in the bank account, details reflecting the loan transaction as mentioned in the Investigation Report was also not furnished by the appellant. Further, the investigation report prepared by the investigation team was done after making many enquiries and collecting the statistical data and other details about the entry providers and observed that the appellant is one of the beneficiaries who has taken fictitious loan from the group companies of Jignesh Shah. Since the documentary evidences were not fully furnished by the appellant even at the time of appellate proceedings other than the statement that there was no business transaction between the appellant and Jignesh Shah, it is held that the fictitious transaction with Jignesh Shah was not conclusively proved by the appellant and the Investigation Report was prepared based on the confirmation of Jignesh Shah for having entered into a fictitious transaction with the appellant and it was clearly stated that he is one of the beneficiaries and there are catena of judicial precedents to hold that findings given in the investigation report are concrete information based on so many enquiries and collection of data which cannot be stated to be incorrect at any point of time. 5. He, therefore, contended that when the facts on record are that the assessee had taken no loan during the year, there was no occasion at all for making any addition on account of the same. 6. The ld.DR was unable to controvert the factual contentions of the ld.counsel of the assessee that he had not taken any loan during the year, but he supported the order of the AO and the ld.CIT(A). ITA No.1294/Ahd/2024 6 7. We have heard contentions of the both the parties and gone through the orders of the authority below. We do not find any merit in the addition made by the AO and confirmed by the ld.CIT(A) of alleged accommodation entry of unsecured loan of Rs.61.75 lakhs taken by the assessee during the impugned year. As pointed out by the ld.counsel for the assessee, it is an admitted fact that no loan was taken by the assessee during the year. 8. In the light of the same, we completely agree with the ld.counsel for the assessee that there was no occasion, therefore, to hold that the assessee had taken fictitious or bogus loans during the year. The ld.CIT(A), we hold, is grossly unjustified in holding that onus was on the assessee to establish that it had taken loan during the year, and having failed to do so, therefore, the addition of bogus unsecured loan was rightly made by the AO. It is plain and simple law that when an allegation is levelled on any of the party, it is on the party levelling the allegations to prove its case with evidence, and only then the onus shifts on the other party to prove otherwise. The allegation in the present case of the department is that the assessee had taken unsecured loans during the year which was an accommodation entry. The assessee having showed that it had not taken any unsecured loans during the year, it was for the Revenue to prove to the contrary before proceeding to make any addition in the hands of the assessee. The ld.CIT(A) is grossly unjustified in holding that the assessee had not discharged its onus of showing that it had taken unsecured loans. It was for the Department to have unearthed this fact and more particularly when all the information was with the Department revealed during search on the entry providers. ITA No.1294/Ahd/2024 7 The order of the ld.CIT(A) therefore, we hold, is not sustainable, and the addition confirmed of alleged bogus unsecured loans of Rs.61,75,297/- is directed to be deleted. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 27th February, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 27/02/2025 "