ENRICH CONSULTING PVT. LTD.,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-2(1)(1), AHMEDABAD

ITA 1243/AHD/2024

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Enrich Consulting Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC), which had upheld the addition of Rs. 50,46,028 to the assessee's income for the Assessment Year 2011-12, treating it as a bogus unsecured loan. The case was reopened under Section 147 of the Income Tax Act, 1961 based on information that the assessee had taken an accommodation entry of Rs. 50 Lacs. The Tribunal found that the affidavit used to reopen the case did not mention the assessee and that the assessee had provided sufficient evidence to prove the genuineness of the loan transaction, including repayment and interest payments with TDS deductions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473951 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR VERMA
• Assessee Lawyers: S.N. DIVATIA; SAMIR VORA
• Keywords: Principle of natural justice; TDS; Accommodation entries; Bogus loan; Bogus
• Section: 147; 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1243/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2011-12) Enrich Consulting Pvt. Ltd. 404, Aniket Near Municipal Market, C. G. Road, Ahmedabad, Gujarat - 3800098 बनाम/ Vs. The Income Tax Officer Ward – 2(1)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACCE1889J (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri S. N. Divatia & Shri Samir Vora, A.Rs. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Sudhakar Verma, Sr. DR Date of Hearing 23/01/2025 Date of Pronouncement 29/01/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 09.05.2024 for the Assessment Year 2011-12. 2. The brief facts of the case are that the return of income for A.Y. 2011-12 was filed by the assessee on 25.09.2011 declaring total income of Rs.13,12,600/-. The case was reopened under Section 147 of the Income Tax Act, 1961 (in short ‘the Act’) on ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 2 – the basis of an information that the assessee has taken an accommodation entry of Rs.50 Lacs from one Shri Sandeep Vinodchandra Dave. The assessment was completed u/s.143(3) r.w.s. 147 of the Act on 21.12.2018 at total income of Rs.63,58,628/-, wherein addition of Rs.50,46,028/- was made u/s.68 of the Act on account of bogus unsecured loan. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided vide the impugned order and the appeal of the assessee was dismissed. 4. Now, the assessee is in second appeal before us. The grounds taken by the assessee in this appeal are as under: “[1] The order passed u/s 143(3) r.w.s 147 on 21.12.2018 for A.Y. 2011-12 by LT.O. Ward-2(1)(1), A'bad, making addition of Rs.50,46,028 as bogus is wholly illegal, unlawful and against the principles of natural justice. [2] The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant. [3] The Ld. CIT(A) has grievously erred in law and or on facts in making impugned addition of Rs.50,46,028 without providing opportunity to cross examine the concerned parties so that the assessment was liable to be quashed. [4] The Ld. CIT(A) has grievously erred in law and or on facts in initiating proceedings u/s 147 for AY 2011-12 because the conditions precedent were not fulfilled. [5] The Ld. CIT(A) has grievously erred in law and or on facts in not appreciating that the proceedings initiated u/s 147 were illegal and unlawful. [6] The Ld. CIT(A) has grievously erred in law and or on facts in holding that unsecured loan of Rs.50 lacs received by cheque & interest payment of ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 3 – Rs.46,028 as bogus and thereby making aggregate addition of Rs. 50,46,028 as bogus loans. [7] On facts and circumstances of the case, the Ld. CIT(A) ought not to have unsecured loan of Rs.50 lacs received by cheque & interest payment of Rs.46,028 as bogus and thereby upholding aggregate addition made by the Ld. A.O. of Rs.50,46,028 as bogus loans. [8] It is therefore prayed that the addition of Rs.50,46,028/- made by the AO by upholding the addition by Hon. CIT(A), should be deleted looking to the merits of the case. [9] The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.” 5. Shri S. N. Divatia, the Ld. AR appearing for the assessee submitted at the outset that he is not pressing the legal grounds taken by the assessee against the reopening. Therefore, all the grounds other than Ground Nos. 3, 6 & 7, which are in respect of the merits of the case, are dismissed. 6. On merits, the Ld. Counsel submitted that the case was reopened on the basis of an affidavit filed by one Shri Sandeep Vinodchandra Dave that he was providing accommodation entries to certain parties against receipt of commission. He submitted that the name of the assessee was nowhere appearing in the affidavit of the assessee. Further, the assessee had repeatedly requested the Revenue to allow an opportunity to cross examine Shri Sandeep Vinodchandra Dave, which was not allowed. The Ld. AR submitted that the loan of Rs.50 Lacs was taken through banking channel on which interest was paid and TDS was also deducted thereon. Further, the loan was also re-paid to Shri Sandeep Vinodchandra Dave in the next year. Under the circumstances, there was no question of obtaining any ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 4 – accommodation entry by the assessee. The Ld. AR further submitted that the Revenue has been unable to bring on record any evidence for accommodation entry taken by the assessee, which was out rightly denied by the assessee. 7. Per contra, Shri Sudhakar Verma, Ld. Sr. DR supported the orders of the lower authorities. 8. We have carefully considered the rival submissions. It is found that the AO had reopened the case on the basis of affidavit of one Shri Sandeep Vinodchandra Dave, a copy of which has been brought on record in the paper book filed by the assessee. The said affidavit is found to be as under: “I the undersigned SANDEEP VINODCHANDRA DAVE aged about 58 years by cast Brahmin, religion Hindu residing at C-9, Morpinchh Apartments, Nr. Sharda Mandir Road, Paldi, Ahmedabad do hereby state under oath that 1. I am assessed to Income Tax under PAN: AFCPD2790K by ITO Ward 5(3)(2). 2. I was doing business in the name of Venus Trade and in the name of Shri Namaste Tour Services but as such no genuine business was carried out by me during the year under consideration but provided accommodative entries only. 3. My real source of Income was to provide accommodative entries only. 4. I earn only 0.05 paisa to 0.35 paisa per Rs. 100/- for providing accommodative entries for different purposes. 5. Whatever income I have shown in the books of accounts under different sources is not my real income but on account of adjustment in the books of accounts. 6. In this affidavit I again reiterated that no business was carried out or services were rendered. 7. I may be assessed on the concept of real income which is 0.05 paisa to 0.35 paisa per 100/- and also accepted ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 5 – by the IT. Department in the cases of accommodative entry providers. What is stated above is true and to the best of my knowledge and belief. Place: Ahmedabad Dated: 08/02/2016 ________________ SANDEEP V DAVE 9. The above affidavit was filed by Shri Sandeep Vinodchandra Dave in the course of the assessment proceeding undergoing in his own case. Shri Sandeep Vinodchandra Dave did not explain the manner of providing accommodation entries neither the name of the assessee was anywhere mentioned in the said affidavit. No addition could have been made in the hands of the assessee on the strength of such bald affidavit. It, prima facie, appears that the said affidavit was filed by Shri Sandeep Vinodchandra Dave in support of his contention that only commission income earned on accommodation entries should be assessed in his case and that his book results should be rejected. Apart from this affidavit, the Revenue has not brought on record any other evidence to substantiate the allegation of the accommodation entry taken by the assessee. A request was repeatedly made by the assessee to allow an opportunity to cross examine Shri Sandeep Vinodchandra Dave. The AO had rejected the request of the assessee on the ground that the onus was on the assessee to produce the loan creditor. When the Revenue was relying on the affidavit of Shri Sandeep Vinodchandra Dave, the onus was squarely on the Revenue to allow an opportunity to cross examine him to the assessee. That apart, the AO as well as ld. CIT(A) did not deal with the assessee’s claim of genuineness ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 6 – of loan transaction considering the fact that the interest was paid by the assessee on the loan transaction on which TDS was made and ultimately the loan amount was returned to the creditor in the subsequent year. 10. The assessee has brought on record, in the paper book filed, a copy of the ledger account and the bank statement through which the loan transactions were made. It is found that the loan of Rs.50 Lacs obtained by the assessee on 03.03.2011 which is found to be reflected in his bank statement. The assessee had regularly paid the interest to the loan creditor on which TDS was also made. The loan amount along with the outstanding interest totalling Rs.50,41,425/- was returned to the loan creditor on 25.05.2011, which is also found reflected in the bank statement. The balance outstanding interest of Rs.82,044/- was paid on 17.03.2012 through the banking channel and the entire transaction was squared up. Thus the entire transaction of obtaining the loan as well as repayment thereof, including payment of interest after due deduction of TDS, was made through the banking channel. Considering the fact that the assessee had produced the evidences to establish the identity, creditworthiness and genuineness of loan transaction and that the entire loan transaction was squared up in the next year, there was no basis for the Revenue to treat the loan transaction as bogus. The Revenue has been unable to bring on record any credible evidence to substantiate that this loan transaction was an accommodation entry. Under the circumstances, we do not find any merit in the addition of Rs.50,46,028/- as made by the ITA No. 1243/Ahd/2024 [Enrich Consulting Pvt. Ltd. vs. ITO] A.Y. 2011-12 - 7 – Revenue in respect of the unsecured loan. The addition made by the AO is, therefore, deleted. 11. In the result, the appeal filed by the assessee is allowed. This Order pronounced on 29/01/2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 29/01/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "