ASSTT. COMMISSIONER OF INCOME TAX -19(3), MUMBAI V. SANJAY PRAKASHMAL JAIN, MUMBAI

ITA 2992/MUM/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 Assessing Officer on account of alleged loans obtained by the assessee from M/s Basant Dia Jewels, identified as hawala entities. The Assessing Officer had initially made these additions based on a survey and subsequent investigation report which suggested that the entities were involved in providing accommodation entries. The CIT(A), however, found that the assessee had provided sufficient documentary evidence to substantiate the genuineness of the loan, which was not adequately rebutted by the Assessing Officer. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for concrete evidence to support allegations of tax evasion.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705673 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2008-2009
• Other Referred Cases: Sumati Doyal [1995] 80 Taxmann. 89(SC), Ranchhod Jivabhai Nakhava (2012) 21 taxmann.com 159 (Gujarat), CCIT(OSD)/PCIT vs Bhupendra Champaklal Delal (2024) 160 taxmann.com 560 (Bom)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH DATTATRAYA LONDHE
• Assessee Lawyers: R.K. SINGH VIRTUALLY
• Keywords: Set aside; Business income; Unexplained cash credit; Income from undisclosed sources; Tax effect; Retraction; TDS; Accommodation entries; Bogus
• Section: 147; 143(3); 68; 131; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 2992/MUM/2025 (AY : 2008-09)) (Physical hearing) ACIT-19(3), Mumbai Vs Sanjay Prakashmal Jain B, Mahavir Darshan, 26 Khambata Lane, 8th Khetwadi Back Road, Mumbai – 400004. PAN: ADYPJ4763A Appellant / Revenue Respondent / Assessee Assessee by Sh. R.K. Singh AR - (Virtually) Revenue by Sh. Mahesh Dattatraya Londhe, Sr. DR Date of hearing 01.07.2025 Date of pronouncement 02.07.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JM; 1. This appeal by revenue is directed against the order of ld. CIT(A) / National Faceless Appeal Centre (NFAC) dated 14.02.2025 for A.Y. 2008-09. The revenue has raised following grounds of appeal: 1. \"Whether on the facts and circumstances of the case and in law, Ed. CITIA hos erred in deleting the entire addition of Rs. 25,00,000/- made on by AO, u/s 68 of the Act on account of alleged loans obtained from M/s Basant Dia Jewels, identified as hawala entities of Shri Basant D. Jain 2 \"Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs. 1,03,279/ made by the AQ, on account of interest paid on alleged loan of Rs. 25,00,000/- obtained from M/s. Basant Dio Jewels, a hawala entities?\" 3. \"Whether on the facts and circumstances of the case and in low, Ld. CIT(A) has erred in deleting the entire addition, without appreciating the fact that the action of Al was based on the discreet report of the DGIT (Inv.) Mumbai prepared, post survey action conducted u/s 133A of the Act, an business premises of M/s. Moxidiam, M/s. Basant Dia lewels and M/s. Morewi impex Pvt. Ltd, all are hawala entities engaged in the business of creating fictitious transaction to adjust unaccounted income into business accounts through accommodation entries of loans and assessee was obtained alleged ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 2 loons of Rs. 25,00,000/ from one of the entity, M/s Bosant Dia Jewels and paid interest of Rs. 1,03,279/ on alleged loan?\" 4. Whether on the facts and circumstances of the case and in law, Ld.CIT(A) has erred in deleting the entire addition of Rs. 25,00,000/-, by ignoring the fact that in the recorded statement during the survey proceedings, Mr. Basat D Jain, of M/s. Basant Dia Jewels has admitted that all these concerns are providing only accommodation bills and hawala entries o various parties and generated commission income only through this activity?\" 5. \"Whether on the facts and circumstances of the case and in low, Ld. CIT(A) has erred in deleting the entire addition of Rs. 25,00,000/-, without oppreciating the decision in the case Sumati Doyal [1995] 80 Taxmann. 89(SC)[1995] 2014 IFR B01(SC)/[1995) 125 CTR 24(SC), wherein it was held that Hon'ble Court and Tribunal have to judge the evidences before it by applying the test of probabilities, the surrounding circumstances which exercise ad been done by the Assessing Officer ?\" 6. “The Tax Effect involved in the instant case is Rs. 7,88,790/-, which is below the escribed limit as per CBDT's Circular F .No.279/Mist. 142/200入(TI(Pt) amended vide No 1/7024 dated. 17.09.2024 However, the case fall under one of the exception clause 3.1(h) if down in CBDT Circular No. 05/2024 Dated. 15.03.2024, wherein it is stated that in cases involving \"Organized Tax Evasion\", the decision to file appeal/SLP shall be taken on merit, without regard to the tax effect and the monetary limit. The appellant craves, leave to amend or alter any grounds or add a new ground which ty be necessary.” 2. Brief facts of the case is that assessee is a proprietor of Nexus Impex engaged, in trading ferrous and non-ferrous metals filed its return of income for A.Y. 2008-09 declaring income on 28.09.2008 of Rs. 14,95,788/-. Initially, return was processed under section 143(1). However, subsequently case was reopened under section 147 on the basis of information that assessee is a beneficiary of accommodation entry of unsecured loan received from Basant Dia Jewels managed by Basant Jain. The loan was received in the financial year relevant to the assessment year under consideration and was repaid in next assessment year. Such information was based on a survey action carried ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 3 out on the business premises of Basant Jain. During the assessment proceeding, the assessing officer noted that in the survey action statement of Basant Jain was recorded wherein he admitted that his concerns were providing accommodation bills to various parties. The assessing officer on the basis of report of Investigation Wing made addition of Rs. 25,00,000/- of loan received from Basant Dia Jewels and the interest payment of Rs. 1,03,279/-, thus, aggregating to Rs. 26,03,279/-. 3. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed details written submission. The assessee in its submission submitted that he is a proprietor of Nexus Impex, engaged in trading of ferrous and non-ferrous metals. The assessee has total sales of Rs. 19.97 crore during the relevant financial year and has shown gross profit of Rs. 74.75 lacs. The assessee obtained a loan of Rs. 25,00,000/- from Basant Dia Jewels which was repaid in A.Y. 2009-10. The loan was genuine and supported with relevant documentary evidence. The assessee furnished bank statement and confirmation of lender. The assessing officer made additions only on the basis of report of investigation and the submission of Basant Jain that he was provided accommodation entries. In A.Y. 2009-10, as well loan amount and interest payment of loan to Basant Jain was again disallowed. The loan amount was also added by treating the same as unexplained credit. On the submission of assessee, the remand report was called from assessing officer. The assessing officer in his letter dated 17.09.2024 submitted that assessee has not provided complete details of retraction statement of Basant Jain. The assessee again filed in his ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 4 submission on 18.04.2024. Such submission is recorded on page no. 3 to 5 of order by ld. CIT(A). The assessee in his further submission submitted that addition under section 68 was made on the basis of statement of Basant Jain recorded on 09.07.2008 during survey action under section 133A. As per investigation report, Basant Jain admitted that he was issuing accommodation bills. His case was solely reopened on the basis of report of Investigation Wing. The assessee stated that he availed loan through banking transaction and repaid through normal banking transaction. All the transactions are recorded on his books of account. During the assessment proceeding, he furnished all requisite evidence in support of transaction of loan which includes confirmation bank statement and ITR filed by lender. The assessing officer has not brought any evidence on record except relying on the statement of Basant Jain. The loan has been repaid in subsequent year. Interest was paid after making TDS. Basant Jain personally appeared before the assessing officer in response to summons issued under section 131 and has confirmed the loan transaction as genuine. The action of assessing officer is based on surmises and conjectures. The assessee also filed copy of decision of Tribunal in assessee’s own case for A.Y. 2009-10 dated 16.09.2016 in ITA No. 3262/M/2013, wherein the addition of loan amount and disallowance of interest was delated. 4. The ld. CIT(A) on considering the submission of assessee and the various evidences furnished by him in para 1 of his order recorded that assessee has explained the nature and source of credit. The assessee has furnished documentary evidence in support of his claim. The assessing officer has not ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 5 rebutted such evidence nor was contrary material against the documentary evidence brought on record. The assessing officer grossly erred in disregarding documentary evidence by making such addition. Interests paid by assessee were subjected to TDS. The assessee provided all such evidences. The statement recorded by Investigation Wing has been retracted. Further, in assessee’s own case wherein similar additions were made has been deleted by Tribunal in A.Y. 2009-10. It was held that the assessing officer relied upon the decision of Sumati Dayal Vs CIT 214 ITR 801-SC, on the principle of human probability but documentary evidence was not examined by assessing officer. On the basis of aforesaid observation, the ld. CIT(A) deleted the addition of Rs. 25,00,000/- as well as interest thereon of Rs. 1,03,279/-. Aggrieved by the order of ld. CIT(A), the revenue has filed present appeal before Tribunal. 5. I have heard the submission of learned Senior Departmental Representative (ld. Sr. DR) for the revenue and the learned Authorised Representative (ld. AR) of the assessee. The ld. Sr. DR for the revenue supported the order of assessing officer. The ld. Sr. DR submits that a survey under section 133A was conducted on the business premises of Basant Jain who was engaged in providing accommodation entry. In the statement recorded by Investigation Wing, Basant Jain admitted about providing accommodation entry. The ld. CIT(A) deleted the addition by disregarding the finding of Investigation Wing. Therefore, the order of ld. CIT(A) may be set aside and the order of assessing officer may be restored. ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 6 6. On the other hand, learned Authorised Representative (ld. AR) of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that a survey under section 133A was carried out in case of Basant D Jain on 09.07.2008. The assessment of Basant Jain was completed under section 143(3) on 29.10.2010. No addition in case of Basant Jain on account of alleged entry providing activity was made. In the books of assessee, Basant Jain, he has shown loan of Rs. 25,00,000/- to the assessee. Copy of balance sheet of Basant Jain (Basant Dia Jewels) as on 31.03.2008 is placed on record. The amount of Rs. 25,00,000/- is shown as a loan and advances to Nexus Impex who is proprietorship concern of assessee. The ld. AR of the assessee further submits that similar addition was made in assessee’s own case for A.Y. 2009-10 on account of unexplained cash credit of Rs. 25,00,000/- and disallowance of interest expenditure. However, on appeal before Tribunal in ITA No. 3262/M/2023, both the additions were deleted. In A.Y. 2009-10, the assessee repaid the said loan. Once repayment has been accepted by Tribunal, no addition can be made for receipt of loan as non- genuine. Even otherwise during the assessment, the assessee has provided complete details i.e. details of identity of lender, confirmation, bank statement, ITR with balance sheet of lender and the details of interest payment. Interest was paid after deducting TDS. Thus, the assessee discharged his primary onus. Once the assessee discharged his primary onus, the burden shifts of assessing officer to bring adverse material against the evidence furnished by assessee. The assessing officer has not made any independent investigation except relying upon the report of Investigation ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 7 Wing. The assessing officer solely relied upon the statement of Basant D Jain which has been retracted. Basant Jain appeared before assessing officer and confirmed the transaction of loan. The assessing officer disregarding all such facts and evidences. The ld. CIT(A) appreciated the fact and after giving opportunity to the assessing officer on various evidences allow relief to the assessee. The ld. CIT(A) clearly held that assessing officer disregarded the documentary evidence furnished by assessee. 7. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. I find that assessing officer while passing the assessment order solely relied upon the statement of Basant D Jain recorded during survey action for treating the loan as non- genuine loan. Surprisingly, the assessment of Basant Jain was completed after survey action; however, no addition of alleged incriminating material or on account of accommodation entry activities was made against him. However, in case of assessee, the assessing officer not only made addition of loan in A.Y. 2008-09 but also made similar addition of loan in A.Y. 2009-10. I find that addition under section 68 and interest on such loan amount has already been deleted by co-ordinate bench of Tribunal in ITA No. 3262/M/2023 dated 16.09.2026. Thus, in my considered view, once repayment of loan has been accepted by co-ordinate bench and no addition on loan will survive. 8. I find that assessee furnished the Income Tax Return of lender along with his audited report and balance sheet. The assessee also furnished bank statement and the statement of payment of interest after making TDS. No ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 8 finding on such documentary evidences was given by assessing officer. The assessing officer solely relied upon the report of Investigation Wing. In my view, once the assessee has discharged primary onus, the onus shifts on assessing officer to prove otherwise. In case, the assessee failed to rebut evidence submitted by assessee, the addition under section 68 is not sustainable. Similar view was taken by Hon’ble Gujarat High Court in CIT vs Ranchhod Jivabhai Nakhava (2012) 21 taxmann.com 159 (Gujarat). I find that Hon’ble Bombay High Court in CCIT(OSD)/PCIT vs Bhupendra Champaklal Delal (2024) 160 taxmann.com 560 (Bom) also held that where the assessee has received loan from its creditor and repaid same, since all transactions were routed through bank account, mere creditor has not charged interest and loan would not justify the loan were bogus. Moreover, similar addition was made in subsequent assessment year which has already been accepted by coordinate bench. Thus, I do not find any justification of making such addition without bringing independent and corroborative evidence to sustain the allegation of assessing officer. In the result, grounds of appeal raised by revenue are dismissed. 9. In the result, the appeal of the revenue is dismissed. Order was pronounced in the open Court on 02/07/2025. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated: 02/07/2025 Biswajit ITA No. 2992/Mum/2025 Sanjay Prakashmal Jain 9 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "