ITO, WARD-3(2)(1), MUMBAI V. LOQ WAREHOUSING PRIVATE LIMITED, MUMBAI

ITA 142/MUM/2025

AI Insights

The case involves LOQ Warehousing Private Limited, which was accused by the Income Tax Department of engaging in a bogus transaction involving a repayment of an unsecured loan from M/s Jahanvi Gems Pvt. Ltd., allegedly controlled by Shri Pravin Kumar Jain, an accommodation entry provider. The Assessing Officer added Rs. 2 crores to the assessee's income under section 68 of the Income Tax Act, 1961, treating the transaction as bogus. However, the CIT(A) reversed this decision, leading to the revenue's appeal to the Income Tax Appellate Tribunal. The Tribunal upheld the CIT(A)'s decision, noting the lack of adverse findings against the loan transaction and the absence of a detailed inquiry by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633334 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: PCIT vs. Shiv Sahai & Sons (l) Ltd., [2020] 121 taxmann.com 28 (Madras)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITESH JOSHI; RAKHEE; RAM KRISHN KEDIA
• Keywords: Accommodation entries; Bogus
• Section: 143(3); 142(1); 68; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 142/Mum/2025 (Assessment Year: 2013-14) ITO, Ward-3(2)(1) Aayakar Bhavan, M. K. Road, Churchgate, Mumbai – 400020. Vs. LOQ Warehousing Private Limited 72-73, Nariman Bhavan, Nariman Point, Mumbai – 400021. PAN/GIR No. AABCL4791R (Appellant) : (Respondent) Assessee by : Shri Nitesh Joshi & Ms. Rakhee Bakhai Respondent by : Shri Ram Krishn Kedia (SR. DR.) Date of Hearing : 24.03.2025 Date of Pronouncement : 09.06.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s. 250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14. 2. The revenue has raised the following grounds of appeal: (1) “Whether on facts and circumstances of the case and in law, the Ld. CIT(Appeal) was justified in deleting the addition made by the AO u/s 68 of the Act given the fact that during Search operation in the case of Pravin Kumar Jain, evidence collected including the statement of Shri Pravin Kumar Jain established the fact that the assessee has taken bogus entry in the name of repayment of unsecured loan.” ITA No. 142/Mum/2025 (A.Y. 2013-14) LOQ Warehousing Private Limited 2 (2) “Whether on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) is justified in giving his finding in favour of assessee even though the fact that M/s Jahnvi Gems Pvt. Ltd. is a bogus entity operated by Shri Pravin Kumar Jain was shared with the assessee during assessment proceedings but the assessee has not submitted any facts which negates the finding of this Search/Survey teams.” 3. Brief facts of the case are that the assessee company is engaged in the business of warehousing and had filed its return of income for the year under consideration, dated 30.09.2013, declaring total income at Rs. 95,515/-. The assessee’s case was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) observed that the assessee has received Rs. 2 crores from M/s Jahanvi Gems Pvt. Ltd. which was alleged to be controlled and managed by Shri Pravin Kumar Jain, an accommodation entry provider. The ld. AO held the impugned transaction to be bogus transaction by availing accommodation entries in the books of the accounts of the assessee and thereby made an addition of Rs. 2 crores u/s. 68 of the Act and a disallowance of Rs. 18,775/- u/s. 14A of the Act, determining total income at Rs. 1,99,23,260/- and passed the assessment order u/s. 143(3) of the Act, dated 28.03.2016. 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 11.11.2024, deleted the impugned addition/disallowance on the ground that the ld. AO has not given any adverse finding as to the loan that was given by the assessee to M/s Jahanvi Gems Pvt. Ltd. during F.Y. 2011-12 and once the same is not disputed credit in the assessee’s account which was mere repayment of the said loan cannot be faulted with. 5. The revenue is in appeal before us, challenging the impugned order of the ld. CIT(A). ITA No. 142/Mum/2025 (A.Y. 2013-14) LOQ Warehousing Private Limited 3 6. We have heard the rival submissions and perused the materials available on record. The only issue that requires adjudication is whether Rs. 2 crores reflected in the books of the assessee under the head ‘loans and advance’ from M/s Jahanvi Gems Pvt. Ltd. was a bogus transaction, where the assessee is alleged to have availed accommodation entry from Shri Pravin Kumar Jain who is said to have controlled and managed M/s Jahanvi Gems Pvt. Ltd. It is observed that the ld. AO has made the impugned addition on the ground that the assessee has not substantiated its claim that the said amount was a repayment of the loan that was advanced to M/s Jahanvi Gems Pvt. Ltd. during F.Y. 2011-12 along with details of bank statement reflecting the transaction by assessee to M/s Jahanvi Gems Pvt. Ltd. The ld. CIT(A) deleted the impugned addition on the ground that the ld. AO has not given any adverse view pertaining to the advancement of the loan were the assessee is said to have furnished a copy of ledger and confirmation of the loan. Further, the ld. CIT(A) has held that even otherwise, because loan was advanced in F.Y. 2011-12, the revenue implication would arise in A.Y. 2012-13 and not during the year under consideration. 7. The learned Departmental Representative ('ld. DR' for short) for the revenue contended that though the assessee submits that the loan was given to M/s Jahanvi Gems Pvt. Ltd. through banking channels in F.Y. 2011-12, the assessee neither before the lower authorities nor before the Tribunal has furnished the copy of the bank statement. The ld. DR further contended that the assessee has failed to prove the genuineness of the transaction by way of documentary evidences. The ld. DR relied on the order of the ld. AO. ITA No. 142/Mum/2025 (A.Y. 2013-14) LOQ Warehousing Private Limited 4 8. The learned Authorised Representative ('ld. AR' for short) for the assessee on the other hand controverted the said fact and stated that the assessee had advanced loan to M/s Jahanvi Gems Pvt. Ltd. during F.Y. 2011-12 and the same was repaid during the year under consideration. The ld. AR further stated that the ledger account and the bank statement of the assessee was furnished for perusal. The ld. AR relied on the order of the Hon'ble High Court of Madras in the case of PCIT vs. Shiv Sahai & Sons (l) Ltd., [2020] 121 taxmann.com 28 (Madras), and also relied on the order of the ld. CIT(A). 9. On the above factual matrix of the case, it is observed that the assessee has advanced Rs. 2 crores to M/s Jahanvi Gems Pvt. Ltd. during F.Y. 2011-12 as per the books of accounts of the assessee for which the assessee is said to have furnished copy of the ledger and confirmation of the loan before the ld. AO. On the basis of the Investigation, Wing were it is found that Shri Pravin Kumar Jain has been providing accommodation entries to various entities by way of bogus transactions, the ld. AO held the assessee’s transaction with M/s Jahanvi Gems Pvt. Ltd. which is managed and controlled by Shri Pravin Kumar Jain to be also bogus transaction, in which the assessee is said to be one of the beneficiary of accommodation entry provided by Shri Pravin Kumar Jain. It has also observed that the ld. AO beyond the fact that Shri Pravin Kumar Jain is an accommodation entry operator has not brought anything on record to show that the said transaction is a bogus transaction and has also failed to discuss about the documentary evidence such as the ledger account, the confirmation from the parties which were produced by the assessee during the assessment proceeding as to how these are not genuine transactions. It is also evident that the ld. AO has not conducted any inquiry in ITA No. 142/Mum/2025 (A.Y. 2013-14) LOQ Warehousing Private Limited 5 the case of M/s Jahanvi Gems Pvt. Ltd. which ought to have been carried out by the ld. AO. It is further observed that the ld. AO has not discussed about the advancement of loan to M/s Jahanvi Gems Pvt. Ltd. during F.Y. 2011-12 and whether or not the same has been verified by the ld. AO is also not mentioned in the assessment order. In the absence of the same, it is presumed that the ld. AO has not disputed the advancement of loan by assessee to M/s Jahanvi Gems Pvt. Ltd. and when the same is not disputed, then the assessee’s contention that this amount has been repaid by M/s Jahanvi Gems Pvt. Ltd. to assessee during the year under consideration also cannot be faulted with. When the assessee has discharged the initial onus casted upon it, the onus now shifts to the ld. AO to conduct further inquiry and also the ld. AO ought to have discussed as to the discrepancy in the documentary evidences furnished by the assessee. In the present case in hand, the ld. AO has failed to do so. In the failure of cogent reasoning, in disregarding the assessee’s contentions, we find no justification in the action of the ld. AO. 10. From the above observation, we find no infirmity in the order of the ld. CIT(A) in deleting the impugned addition. We therefore deem it fit to dismiss the grounds of appeal raised by the revenue. 11. In the result, the appeal filed by the revenue is hereby dismissed. Order pronounced in the open court on 09.06.2025 Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 09.06.2025 Karishma J. Pawar (Stenographer) ITA No. 142/Mum/2025 (A.Y. 2013-14) LOQ Warehousing Private Limited 6 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "