ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-25, NEW DELHI, DELHI V. BHAWANI FINVEST PRIVATE LIMITED, DELHI

ITA 6303/DEL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the additions made by the AO under section 68, 69C, and related sections of the Income Tax Act, 1961. The additions were initially made following a search operation on entities linked to accommodation entries. The Tribunal found that the assessee, Bhawani Finvest Private Limited, was a beneficiary of such entries and had not sufficiently rebutted the presumption of these being unexplained credits. The Tribunal relied on precedents and the factual matrix provided by the AO, which included digital data and documents seized during the search.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847064 (ITAT-NEW DELHI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: 2020-2021
• Appeal Filed On: 06-10-2025
• Other Referred Cases: J.K. Global vs. Income Tax Department
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR
• Assessee Lawyers: ANUJ TIWARI
• Keywords: Unexplained cash credit; Document seized; Documents seized; TDS; Accommodation entries; Competent authority
• Section: 147; 148; 143(3); 142(1); 132; 68; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘A’: NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.6303/DEL/2025 [Assessment Year: 2020-21] Assistant Commissioner of Income Tax, Central Circle-25 Room No.317, 3rd Floor, ARA Centre, Jhandewalan Extension, New Delhi-110055 Vs Bhawani Finvest Private Limited, Office No.309, Plot No.H-6, Aggarwal Tower, Netaji Subhash Place, Shakur Pur I Block North West Delhi, New Delhi-110034 PAN-AAACB3919J Appellant Respondent CO No.264/Del/2025 (Arising out of ITA No.6303/DEL/2025) [Assessment Year: 2020-21] Bhawani Finvest Private Limited, Office No.309, Plot No.H-6, Aggarwal Tower, Netaji Subhash Place, Shakur Pur I Block North West Delhi, New Delhi-110034 Vs Assistant Commissioner of Income Tax, Central Circle-25 Room No.317, 3rd Floor, ARA Centre, Jhandewalan Extension, New Delhi-110055 PAN-AAACB3919J Appellant Respondent Appellant/Assessee by Shri Anuj Tiwari Respondent/Revenue by Shri Rajesh Kumar, CIT-DR Date of Hearing 10.03.2026 Date of Pronouncement 25.03.2026 Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 2 of 9 ORDER PER AMITABH SHUKLA, AM, This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax(Appeals)-39, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] dated 11.06.2025 arising out of assessment order dated 22.03.2025 passed under section 147 of the Income Tax Act, 1961, for the Assessment Year 2020-21. The word ‘Act’ herein this order would mean Income Tax Act, 1961. The assessee has also filed Cross Objection. 2. The Revenue has raised following grounds of appeal:- a. Whether on the facts and circumstances of the case, the Ld. CIN(A) is justified in holding that the assessee failed to rebut the presumption u/s 132(1A) and 292C of the L.T. Act, which states that where any document is found in the possession or control of any person in the course of search. it may be presumed that such document belongs to such person and the contents of such documents are true. The assessee has not rebutted the presumption b. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in relying upon the submission of the assessee whereas the entry provider Shri Himanshu Verma has duly admitted that he is providing accommodation entry in the books of account through banking layer to give the color of legality to these transaction. c. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law d. The grounds of appeal are without prejudice to each other. 3. The assessee has raised following grounds of appeal in its cross objection No.264/Del/2025:- Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 3 of 9 The respondent most respectfully submits this reply to the grounds of appeal filed by the Revenue against the order of the learned CIT(A)-29, Delhi, dated 11.06.2025 for A. Y. 2020-21, whereby the addition of Rs. 2,21,06,164 made in reassessment under section 143(3) section 147 has been deleted. The assessee supports the order of the learned CIT(A) both on facts and in law and submits that the appeal filed by the Department deserves to be dismissed. The memorandum of objections are enclosed hereunder with the individual ground raised by the appellant. The assessee will submit detailed reply and further documents/information before your Honour at the time of hearing of the case. ITA No.6303/Del/2025 4. The principal controversy raised by the Revenue is regarding the deletion of addition by ld CIT(A), of Rs.2 crores under section 68 made by the ld. AO. The Revenue authorities had conducted a search upon Galaxy Group of cases and entry providers Shri Deepak Agarwal and Shri Himanshu Verma on 17.11.2021. Upon examination of seized documents inter alia comprising digital data, it was noted that the assessee was beneficiary of accommodation entries. The factual matrix noted from the order of the ld. AO dated 22.03.2025 is as under:- “2. A search action u/s 132 of the Income tax Act 1961 was conducted on Galaxy Group, Sh. Deepak Agarwal, entry provider and Sh. Himanshu Verma, entry provider on 17.11.2021. During the search and post search, following has been emanating. 3. It has been gathered that Sh. Deepak Agarwal and Sh. Himanshu Verma are involved in providing various types of accommodation entries to large number of beneficiaries through various paper companies managed and controlled by them in lieu of commission. Both are engaged in providing accommodation entries in the form of unsecured loans, share capital, share premium, purchase and sales etc. on a huge level by utilizing web of bank accounts in different banks in the name of paper companies / entities. Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 4 of 9 4. On examination of digital data seized from the premises of Sh. Deepak Agarwal and Sh. Himanshu Verma, many incriminating documents related to non- descript entities and their directors, in the form of bank account details, income tax credentials, unsigned board resolutions, what's app chats giving instructions for fund transfer from various non-descript entities and list of beneficiaries were found. 5. Further summons were issued to directors of various non-descript companies. Most of the directors did not comply with the summonses issued to them. It was also observed that those summonses were returned un-served from their available address(s) on record. 6. Field enquiries were also conducted on the business premises of these paper companies / entities and it was found that either many addresses are non- existent or no such company existed on the given addresses. 7. It has been found that the assessee company is amongst the beneficiaries of the accommodation entries from the non-descript entities controlled and managed by Sh. Deepak Agarwal and Sh. Himanshu Verma. Documents seized during the search contains information which shows that the assessee has obtained accommodation entries. On perusal of information, it has been revealed that assessee has taken the accommodation entries amounting to Rs. 2,00,00,000/-from entity M/s Sarvottam Securities Private Limited and has paid Rs. 50,00,000/- to the same entity which is paper company, controlled and managed by Sh. Himanshu Verma. 8. Accordingly, after getting approval from the competent authority u/s 148 /149 /151 of the Income Tax Act, 1961 (including prior approval u/s 148 Explanation 2 of the Act), a notice u/s 148 was issued to the assessee on 31.03.2024 by the Circle 4(2), New Delhi and assessee was requested to file its return of income u/s 148 of the Act. 9. In response to notice u/s 148 of the Income Tax Act, 1961, the assessee has filed its return of income under section 148 on 16.04.2024 declaring total Income of Rs.9,39,750/-.Further, notice u/s 143(2) of the Act was also issued to the assessee through ITBA on 29.06.2024. Notices u/s 142(1) of the Act was also issued to the assessee through ITBA. The case of assessee was centralized with the Central Circle-25, Delhi, after getting necessary approval. The assessee vide letter dated 20.02.2025 has been provided incriminating material in the form of ledger copies and copy of note sheet initiating assessment proceedings u/s 147 of the IT Act, approved by the competent authority. 10. In compliance to the above statutory notices issued from time to time, the assessee has filed submission against various notices u/s 142(1) of Income Tax Act, 1961. 11. A Show Cause Notice dated 03.03.2025was issued to the assesee asking to file the details in respect of receipts of Rs.2,00,00,000/- during AY 2020-21 from the entity M/s Sarvottam Securities Private Limited. Assessee was also show caused as to why the amount of Rs.2,00,00,000/-should not be treated assessee’s unexplained credit in case of non-filing of submissions in this respect along with documentary evidence. Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 5 of 9 12. The assessee has filed its reply on 06.03.2025 and submitted that assessee had taken a loan of Rs. 2,00,00,000/- from M/s Sarvottam Securities Private Limited for the business needs of the company as the few existing lenders has recalled/demanded for repayment of their existing loans and respective EMIs due but the Company was not having sufficient fund in bank accounts for making the respective loan and EMIs due thereon. The assessee has further submitted that it has done transaction through banks and TDS was deducted on interest payment. The assessee further submitted that it has repaid loans of Rs. 50,00,000/- to M/s Sarvottam Securities Private Limited in the same AY. The assessee further submitted that it has repaid last installment on 04.11.2020. The assessee has submitted copy of loan agreement, copy of ITR of above entity, bank statement, ledger, copy of incorporation, copy of audited financials… Further mere bank account statement doesn’t establish the genuineness of the transaction and creditworthiness and identity of the above mentioned entity. The assessee has not submitted any registered loan agreement and also there was no collateral for the same.…” 5. The ld. AO accordingly proceeded to make the impugned addition of Rs.2 Crores under section 68 qua loan received from M/s Sarvottam Securities Pvt. Ltd. . Additionally, the ld. AO also made addition of Rs.15,06,164/- on account of interest paid on the unsecured loan of Rs.2 Crores and addition of Rs.6 lakhs under section 69C of the Act on the presumption of commission @3% of Rs.2 Crores. The ld. CIT(A) through his order dated 11.06.2025 deleted the impugned additions while inter alia concurring with the argument of the appellant that the assessee has repaid the part loan during the current Financial Year, loan was received through banking channels, etc. He also held that the addition was made on general observations and that the AO had not brought on record evidence to establish the factum of accommodation entry. The addition of interest and commission were also deleted on the premise that main addition of Rs.2 crores has been deleted. Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 6 of 9 6. Before us, the ld. Counsel for the assessee reiterated the arguments taken before the ld. CIT(A). It was vehemently argued that as the loan was repaid during the year through banking channel , it was impermissible to add the same u/s 68 of the Act. 7. The ld. CIT- DR, Shri Rajesh Kumar, vehemently argued in favour of the order of the AO. It was urged that the factum of indulgence of assessee with accommodation entry providers is clearly brought out by the ld. AO in his order. On the issue of repayment of loan during the year under consideration, the ld. DR placed reliance upon the decision of Hon’ble ITAT Mumbai in its order dated 05.09.2024 in ITA No.3258 to 3260/Mum/2023 in the case or J.K. Global. It was stated that it has been held in the impugned order that repayment of loan would not take away the blame of accommodation entry. 8. We have heard rival submission in the light of material available on records. We have noted that the ld. AO has vividly demonstrated in his assessment order extracted hereinabove that the assessee was having connections with accommodation entry providers. We have also noted that the ld. AO has extensively brought out in the assessment order while analyzing statements of entry providers Shri Himanshu Verma and Shri Deepak Agarwal and their employees Ms. Sonia, etc that a web of shell company was created to route accommodation entries and that the assessee was beneficiary of one such company. On the issue of justification of loan qua its repayment, we have noted Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 7 of 9 that a co-ordinate Bench of the Mumbai Tribunal in the case of J.K. Global (supra) held as under:- “..7. Considering the facts of the case in toto and in the light of the decisions of the coordinate bench (supra), we have no hesitation in confirming the addition made u/s 68 of the Act for the captioned Assessment years. The contention of the ld. counsel that the loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense….” 9. Thus, we have noted that the argument of the assessee regarding the justification of impugned loan of Rs.2 crores on account of repayment cannot be accepted. In respectful compliance to the decision of Hon’ble Mumbai Tribunal in the case of J.K Global(supra), we are of the considered view that the relief accorded by the ld CIT(A) is not based upon correct understanding of the facts of the case. We, therefore, set-aside the order of the ld. CIT(A) and confirm the addition of Rs.2 crores made by the ld. AO. Similarly, we also confirm the addition made by the AO of Rs.15,06,164/- on account of interest and of Rs.6 lakhs on account of commission. The appeal of the Revenue is therefore allowed. Printed from counselvise.com ITA No.6303/Del/2025 and CO No.264/Del/2025 Page 8 of 9 CO No.264/Del/2025 10. The assessee has contested the above appeal of the Revenue in ITA No.6303/Del/2025 to its impugned CO. In its Cross Objection, the assessee has supported the order of the ld. CIT(A) dated 11.06.2025. Apropos to the decision taken (supra), as we have set-aside the order of the ld. CIT(A) and sustained that of ld. AO, the CO of the assessee is dismissed as infructuous. 11. In the result, the appeal of the Revenue is allowed and the Cross Objection of the assessee is dismissed. Order pronounced in the open Court on 25th March, 20256 Sd/- Sd/- [MADHUMITA ROY] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.03.2026 Shekhar Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "