ASST. CIT- 5(1)(1), MUMBAI, MUMBAI V. SHRI DINESH HARICHAND SHAH, MUMBAI

ITA 3928/MUM/2024

AI Insights

The case involves an appeal by the Assistant Commissioner of Income Tax (ACIT) against the order of the CIT(A)-51, Mumbai, which pertained to the assessment year 2011-12. The revenue challenged the deletion of additions amounting to Rs. 1 Crore, which were initially added as unexplained cash credits under section 68 of the Income Tax Act. These additions were related to loans received from M/s. Josh Trading Company Pvt. Ltd. and M/s. Nakshatra Business Pvt. Ltd., which were alleged to be non-genuine. The CIT(A) had found that the assessee had adequately substantiated the genuineness of these transactions, a finding that the Tribunal upheld.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315867 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVINDRAO J. NINAWE; DR
• Assessee Lawyers: MAHAVEER JAIN; SHOBIT
• Keywords: Unexplained cash credit; Accommodation entries; Bogus
• Section: 68

Judgement Text

"| आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 3928/Mum/2024 Assessment Year: 2011-12 ACIT, Circle - 5(1)(1), Mumbai Vs Shri Dinesh Harichand Shah 175, Kika Street Mumbai - 400004 [PAN: AAFPS0930E] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Mahaveer Jain, C.A. & Shri Shobit Mishra, A/Rs Revenue by : Shri Govindrao J. Ninawe, Sr. D/R सुनवाई की तारीख/Date of Hearing : 07/05/2025 घोषणा की तारीख /Date of Pronouncement: 14/05/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the revenue is preferred against the order of the ld. CIT(A)-51, Mumbai dated 10/06/2024 [hereinafter “the ld. CIT(A)”] pertaining to AY 2011-12. 1.1. At the outset, the application made under Rule 27, is not accepted. 2. The sum and substance of the grievance of the revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 75,00,000/- and Rs. 25,00,000/- u/s 68 of the Act towards non-genuine loans shown to have been received from M/s. Josh Trading Company Pvt. Ltd. and M/s. Nakshatra Business Pvt. Ltd.. 3. Briefly stated, the facts of the case are that the assessee electronically filed its return of income on 27/03/2012 declaring total income of Rs. I.T.A. No. 3928/Mum/2024 2 3,86,012/-. The return was processed u/s 143(1) of the Act and subsequently reopened on the basis of information received from the investigation wing of the Department by which the AO came to know that the assessee has taken loan from persons who are involved in the providing bogus accommodation entries. It was found by the Income-tax authorities that certain parties were involved in issuing bogus unsecured loan which was routed to beneficiaries through hawala transactions by these bogus unsecured loan and assessee is one of the beneficiaries who has taken bogus unsecured loans of Rs. 75,00,000/- and Rs. 25,00,000/- from M/s. Josh Trading Company Pvt. Ltd. and M/s. Nakshatra Business Pvt. Ltd. (Hema Trading Company Pvt. Ltd.) respectively. 4. On the basis of search and survey action carried out in the case of Shri Pravin Kumar Jain and his group, the AO formed a belief that the group was providing accommodation entries through various companies formed by Pravin Kumar Jain and his associates and the assessee is a beneficiary. Basis this information, the AO treated the borrowings from M/s. Josh Trading Company Pvt. Ltd. and M/s. Nakshatra Business Pvt. Ltd. as unexplained cash credit and made the addition of Rs. 1 Crore. 4.1. The assessee agitated the matter before the ld. CIT(A) and strongly contended that the loan transactions have been properly explained and the assessee has discharged the onus cast upon it by the provisions of Section 68 of the Act. 5. After considering the facts and submissions, the ld. CIT(A) has observed as under:- I.T.A. No. 3928/Mum/2024 3 “7.13 Now coming to the facts of the case, it is observed that the appellant has submitted the confirmations, ITRs, audited financial statements of the lenders and relevant bank statements to support the loan transactions. It is observed that the identity of the lenders is proved by the ITRs. Further, the genuineness of the transaction can also be safely concluded from the confirmations filed and since the entire transaction has been done through the banking channels, duly recorded in the books of accounts of the assessee and duly reflected in the financial statements of the assessee. Further, the creditworthiness or financial strength of the lenders is proved from the audited financial statements of the lenders wherein it is observed that they had sufficient balance in their accounts to enable them to advance the unsecured loans. The AO on the other hand has not made any independent inquiry to negate the explanation provided by the assessee, except relying on the statement of Sh. Pravin Jain, which had in any case been retracted. The AO has also not been able to bring on record any specific reference made to the assessee in any such statement recorded. It is noted that the AO has not been able to bring on record any evidence to show that the loan entries are coupled with similar contra-transactions in cash. The conduct of the two parties also does not lead us to an inference that each loan entry was coupled with a contra cash transaction.” 6. Before us, the ld. D/R could not point out any factual error in the aforementioned factual findings of the ld. CIT(A). Considering the facts of the case in totality, we do not find any reason to interfere with the factual findings of the ld. CIT(A) (supra). Accordingly, the effective ground/s raised by the revenue are dismissed. 7. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 14th May, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 14/05/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 3928/Mum/2024 4 आदेश की \u0017ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीला थ\u0016 / The Appellant 2. \u0017 थ\u0016 / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभा गीय \u0017ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड' फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "