JCIT(OSD), DELHI V. AURIONPRO TOSHI AUTOMATIC SYSTEMS PRIVATE LIMITED, DELHI

ITA 674/DEL/2025

AI Insights

The case involves Aurionpro Toshi Automatic Systems, a company engaged in manufacturing and trading of automation products, which appealed against the order of the CIT (A) regarding the reassessment of its income for the Assessment Year 2019-20. The reassessment was initiated based on information from the CBDT's ITBA software, which linked the company to a network of dummy companies controlled by Shri Aditya Jain, known for providing accommodation entries. The Assessing Officer (AO) added the amount of Rs. 72,83,830 as unexplained cash credit under section 68 and Rs. 7,28,383 as unexplained expenditure under section 69C of the Act. The CIT (A) later dismissed these additions, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 824797 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2019-2020
• Appeal Filed On: 03-02-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: SATYA PRAKASH
• Keywords: Reassessment proceedings; Unexplained cash credit; Unexplained expenditure; TDS; Accommodation entries; Source of fund; Borrowed satisfaction; Bogus
• Section: 147; 148; 133(6); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.674/DEL/2025 (Assessment Year: 2019-20) JCIT (OSD), vs. Aurionpro Toshi Automatic Systems, Delhi. Private Limited, M-2, Samrat Bhawan, Ranjit Nagar Commercial Complex, Ex-Patel Nagar, New Delhi – 110 008. (PAN : AADCT8510E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Satyaprakash, CA REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 06.11.2025 Date of Order : 30.12.2025 ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi[“Ld. CIT(A)”, for short] dated 10.12.2024 for the Assessment Year 2019-20. 2. Brief facts of the case are, the assessee is a company engaged in the business of manufacturing and trading of Automation products. The Printed from counselvise.com 2 ITA No.674/DEL/2025 assessee has filed its return of income on 25.10.2019 for AY 2019-20 declaring total income at Rs.56,91,830/-. In the present case, the AO has gathered the information form the Risk Management Strategy formulated by the CBDT through ITBA software under the High Risk CRI/VRU cases that “the search proceedings were conducted in the case of M/s K K Spun India Limited. It had been observed that Shri Aditya Jain being an accommodation entry operator has provided accommodation entries to M/s K K Spun Group. Shareholding pattern of various dummy companies controlled by Shir Aditya Jain was examined through MCA Database. It was observed that there was cross holding of Shares with various other dummy concerns controlled by Shri Aditya Jain which were also admitted to be bogus by Shri Aditya Jain. The crossholding was created only for the purpose of creating artificial creditworthiness (Premium or Reserves) of various companies. These companies further created assets in the form of loans to various beneficiary companies. The appellant “M/s Aurionpro Toshi Automatic Systems Private Limited”, which is also known as “Toshi Automatic Systems Private Limited” is one of the beneficiaries who were involved in terms of unsecured loan from bogus entries accommodation providers.” In this case, the order u/s 148A(d) of the Income-tax Act, 1961 (for short ‘the Act’) was passed on 31.03.2022. Accordingly, the case was re-opened u/s 147 of the Act with the issuance Printed from counselvise.com 3 ITA No.674/DEL/2025 of notice u/s 148 of the Act. In response to said notice, the assessee has filed its ITR on 04.04.2023 for AY 2019-20. Consequently, several statutory notices u/s 143(2)/142(1) of the Act/show cause notice were issued from time to time. In compliance to said notices, the assessee has submitted its reply during the reassessment proceedings. As per assessee’s request, the VC conducted on 13.02.2024. The AO noticed from the submission/details/documents furnished by the assessee that it had taken loan of Rs.72,83,830/- from M/s Odisha Finelease Private Limited during the 2018-19 and paid interest of Rs.7,28,383/-. The AO observed that M/s Odisha Finelease Pvt. Ltd. received share premium of Rs.(33,60,00,000 - 3,00,00,000) 102/- per share in addition to share value of Rs.10/- per share. The AO further observed that as on 31.03.2015, the reserves of the company were in negative and also get loss from revenue. The value of the company share was not in the value of Rs.102/- at that time. The introduction of the share capital was made in M/s Odisha Finelease Pvt. Ltd. was for providing accommodation entries by Mr. Aditya Jain only. Therefore, the AO completed the reassessment proceedings u/s 147 r.w.s 144B of the Act on 29.02.2024 with the addition of Rs.72,83,830/- u/s 68 of the Act on account of variation in respect of issued unexplained cash credit, at Rs. 7,28,383/- u/s 69C of the Printed from counselvise.com 4 ITA No.674/DEL/2025 Act on account of unexplained expenditure and determined total assessed income of Rs.1,37,04,040/-. 3. Aggrieved assessee preferred an appeal before ld. CIT (A) and filed detailed submissions and raised grounds on the issue of reopening the assessment with borrowed satisfaction and also on merits. 4. Ld. CIT (A) dismissed the ground on borrowed satisfaction and allowed the grounds on merits and observed as under :- “4.2 Ground no. 2 to 5 relates to addition at Rs. 72,83,830/- u/s 68 of the Act on account of unexplained cash credit & at Rs. 7,28,383/- u/s 69C of the Act on account of unexplained expenditure: In these grounds of appeal, the appellant contended that the AO has mentioned that the appellant’s company has taken unsecured loan of Rs.72,83,830/- from M/s OFPL but in fact the amount of loan taken from the said entity during the captioned year at Rs. 90,00,000/-. The appellant stated that it has also credited an amount of Rs. 7,28,384/- in the ledger of the said party towards the interest. The appellant submitted that against the said interest of Rs. 7,28,384/-, it has duly deducted the tax at source of Rs. 72,838/-. The appellant further submitted that the AO has not considered that the it is a bonafide borrower and not aware about the facts that M/s OFPL as mentioned in the investigation report. In support of its contention, the appellant has submitted the copy of ledger of M/s OFPL for the F.Y. 2017-18, bank statement showing transactions with M/s OFPL on its Loan, copy of PAN & ledger confirmation of M/s OFPL, Form 16A etc. The appellant also reliance the several judicial precedents in relation to the incorrect facts stated by the AO. The matter has been examined. It is a matter of fact that search proceedings was conducted in the case of M/s K K Spun India Limited in which observed that Shri Aditya Jain being an accommodating entry operator has provided accommodation entries to M/s K K Spun Group. On verification of the MCA database, the investigation wing found that shareholding pattern of various dummy companies controlled by Shri Aditya Jain and there was cross holding of shares with various other dummy concerns controlled by Shri Aditya Jain which were also admitted to be bogus by Shri Aditya Jain. During the investigation, it was observed that the said companies had huge Securities Premium which was later converted into fictitious reserves and surplus to create artificial creditworthiness of the companies so as to avoid any kind of suspicion during any inquiry. During the search proceedings, Shri Aditya Jain has admitted that several companies were controlled by his associates and used for the purpose of accommodation entries in which the appellant “M/s Aurionpro Toshi Automatic Systems private Limited” which is known as Printed from counselvise.com 5 ITA No.674/DEL/2025 “Toshi Automatic Systems Private Limited” is one of the beneficiaries who were involved in terms of unsecured loan from bogus entries accommodation providers. In this case, the AO noticed that the appellant has taken loan of Rs. 72,83,830/- during the F.Y. 2018-19 and paid interest of Rs. 7,28,383/- on loan to M/s Odisha Finlease Private Limited whereas the reserves of the company (M/s Odisha Finelease Pvt. Ltd) were in negative and also get loss from revenue. The AO further observed that M/s Odisha Finlease Pvt. Ltd. was engaged in the business of accommodation entries provider through Aditya Jain and others it is also a dummy company. Therefore, the AO made the addition on the basis of statement of key persons including Shri Aditya Jain , which were extracted in the re-assessment order. On verification of the bank statement A/c No. 628605013350 maintained with ICICI Bank, Uttar Pradesh, it reveals that the appellant has taken loan at Rs. 50,00,000/- on 24.04.2018, at Rs. 25,00,000/- on 04.05.2018 & at Rs. 15,00,000/- on 29.06.2018 from Odisha Finlease Private Limited through RTGS. Further, it is also noticed from the confirmation of Accounts (Ledger Confirmation of M/s OFPL) from 01.04.2018 to 31.03.2018, I find that the appellant has taken loan of Rs. 90,00,000/- on said dates and paid the interest on loan at Rs. 7,28,384/- & TDS deducted at Rs. 72,838/- which is also confirmed by the Form No. 16A. All these facts clearly established that the AO simply generalized the statements in the re-assessment order that loans were received from the paper company and discussed the modus operand! of said company in the re-assessment order. The AO had also conducted the VC during the re-assessment proceedings but could not understand the facts of the case. It is also observed from the re-assessment order that the appellant has provided the relevant details/documents vide its reply dated 06.10.2023 & 30.01.2024 but the AO failed to reach the genuineness of the case. After considering above facts, it reveals that the appellant has filed all the evidences concerning transactions to establish the identity and creditworthiness of the lenders and to prove the genuineness of the transactions and the AO has not carried out any further verification. Hence, the addition cannot be made in the hands of the appellant. In light of the foregoing facts and findings, the appeal on these grounds are allowed.” 5. Aggrieved, Revenue is in appeal before us and raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs.72,83,830/- u/s 68 of the Act on account of variation in respect of issue – unexplained cash credit without appreciating the facts that the assessee has failed to provide the evidences to establish the genuineness of the transaction and the creditworthiness of the lender. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of & Rs.7,28,383/- u/s 69C of the Act of account Printed from counselvise.com of unexplained expenditure without appreciating the facts that th failed to provide the sources of income.” 6. At the time of hearing, ld. DR relied on the factual report from the Assessing Officer dated 21.07.2025, for the sake of brevity, the same is reproduced below : 6 ITA No of unexplained expenditure without appreciating the facts that th failed to provide the sources of income.” At the time of hearing, ld. DR relied on the factual report from the Assessing Officer dated 21.07.2025, for the sake of brevity, the same is reproduced below :- ITA No.674/DEL/2025 of unexplained expenditure without appreciating the facts that the assessee has At the time of hearing, ld. DR relied on the factual report from the Assessing Officer dated 21.07.2025, for the sake of brevity, the same is Printed from counselvise.com 7 ITA No ITA No.674/DEL/2025 Printed from counselvise.com 8 ITA No ITA No.674/DEL/2025 Printed from counselvise.com 9 ITA No.674/DEL/2025 7. On the other hand, ld. AR of the assessee submitted that the actual loan amount taken was Rs.90 lakhs. Assessee has submitted all the details relating to this transaction before Assessing Officer including cheque details. The assessee has taken loan from one party and not aware of the investigation in the case of Mr. Aditya Jain. Assessee had returned the above said loan in the subsequent year, all the details are filed and relevant TDS was also deducted. He relied on the findings of the ld. CIT (A). 8. Considered the rival submissions and material placed on record. We observed that the Investigation Wing report available with the Assessing Officer indicates that Mr. Aditya Jain involved in providing accommodation entry to various companies through the entities controlled by him. It was observed that the company, M/s. Odisha Finlease Pvt. Ltd. is also controlled by Mr. Jain through whom the assessee had taken disputed loan of Rs.72,83,830/-. Further, factual report submitted by the Assessing Officer indicates that he had issued notice u/s 133(6) to M/s. Odisha Finlease Pvt. Ltd. but there was no response. Ld. DR further indicated that ld. CIT (A) has given relief only Printed from counselvise.com 10 ITA No.674/DEL/2025 on the basis that the same was repaid through bank and the onus is on the assessee to prove the source of the credit. 9. We observed that ld. CIT (A) has clearly brought on record that the assessee has taken loan on various dates through RTGS received from M/s. Odisha Finlease Pvt. Ltd. to the extent of Rs.90 lakhs and also assessee has paid interest of Rs.72,624/- after deducting relevant tax at source. The assessee also repaid the above said loan in subsequent year through banking channel. Ld. CIT (A) also observed that the company, M/s. Odisha Finlease Pvt. Ltd. does not have enough resources and negative reserves as the Investigation Wing has alleged the modus operandi of the accommodation entry provider. Since the factual matrix indicates that the assessee had taken loan through banking channel and also repaid the same through banking channel along with the interest, therefore, the assessee has already proved the genuineness and creditworthiness in this case. Accordingly, we do not see any reason to disturb the findings of ld. CIT (A). 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on this 30TH day of December, 2025. SD/- sd/- (VIMAL KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30.12.2025 TS Printed from counselvise.com 11 ITA No.674/DEL/2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "