PRADEEP MEGHJI DODHIA,BHIWANDI V. DCIT-CC-3, THANE, THANE

ITSSA 1117/MUM/2025

AI Insights

This case involves an appeal by Mr. Pradeep Meghji Dodhia against the order of the Commissioner of Income Tax (Appeals), which upheld the addition of Rs.1,25,00,000 to his income for the Assessment Year 2016-17. The addition was made by the Assessing Officer (AO) under section 68 of the Income Tax Act, 1961, citing unexplained cash credit from loans taken from various parties, including a Kolkata-based company, Vinam Finance Pvt. Ltd. The Tribunal's decision to delete the addition was based on the absence of incriminating material found during the search and seizure operation conducted on Mr. Dodhia's premises, aligning with the legal principles established by the Supreme Court in similar cases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705771 (ITAT-MUMBAI)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Abhisar Buildwell Pvt. Ltd. vs. PCIT, Kabul Chawla vs. PCIT, Chndrika Mansukhla Dodhia vs. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA. DHYANI; LD.
• Assessee Lawyers: SIMRAN DHAWAN; LD. AW
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 142(1); 132; 153A; 68; 131

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SMT RENU JAUHRI, ACCOUNTANT MEMBER IT(SS)A No.1117/M/2025 Assessment Year: 2016-17 Mr. Pradeep Meghji Dodhia, House No.104, Dodhia House, New Mavji Compound, Narpoli, Maharashtra– 421 302 PAN: AASPD6745K Vs. DCIT-CC-3, Room No.12, A Wing, 6th Floor, Ashar IT Park, Thane West, Maharashtra – 400 604 (Appellant) (Respondent) Present for: Assessee by : Ms. Simran Dhawan, Ld. A.R. a/w Mr. Ravi Ganatra, Ld. A.R. Revenue by : Shri RA. Dhyani, Ld. CIT DR. Date of Hearing : 08.05.2025 Date of Pronouncement : 30.06.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 29.01.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2016-17. IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 2 2. The Assessee, being an individual had declared his income at Rs.41,84,650/- by filing his return of income for the AY under consideration on 01.08.2016. Subsequently, search and seizure operations were carried out on the business as well as residential premises of Dodhia group of cases including the Assessee herein along with other concerns/business associates on dated 27.11.2019. Since the search operations were carried out simultaneously and most of the concerns and individuals were inter connected and have business connections and therefore they have been clubbed under the overall name “Dodhia Group”. The Assessee being an individual was a director in M/s. Dodhia Synthetics Ltd. and M/s. Dodhia Chem-Tex Pvt. Ltd. and a partner in M/s Vasupujya Filaments and therefore on the aforesaid search and seizure operations dated 27.11.2019 a notice dated 04.01.2021 u/s 153A of the Act was issued to the Assessee who in response to the same filed his return of income on dated 30.01.2021 declaring total income at Rs.41,84,650/-. Thereafter, statutory notices were issued to the Assessee in response to which the Assessee filed partial details. On perusing the same, it was observed by the Assessing Officer (AO) that during the search operation it was seen that the Assessee has taken unsecured loans from various parties most of the loans of the Assessee have been taken from family members and some of the loans taken from Kolkata based companies detailed below: F.Y. Loan taken by Loan taken from amount of loan received 2015-16 Pradeep Dodhia Vinam Finance Pvt. Ltd. Rs.1,25,00,000/- 2.1 The AO also observed “that an enquiry was conducted by the Department on M/s. Vinam Finance Pvt. Ltd. which is Kolkata based company but the directors Shri Bhavik Jakharia and Shri Minesh Dodhia are based in Bhiwandi. Hence, it was suspected that this company is not engaged in any genuine activity. During the search action to ascertain that true nature of this company the residence of one of directors of company Shri Minesh Dodhia was IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 3 covered u/s 132 of the Act and statement of other director Shri Bhavik Jakhariaa u/s 131 of the Act was recorded. Further, a commission for enquiry u/s 131(1)(d) of the Act was issued to Kolkata investigation unit for making enquiry with respect to this company by the Department. Statement of Shri Susheel Goyal a Kolkata based entry provider was also provided by the investigation unit, Kolkata. From the response as given by Mr. Susheel Goyal it is clear that M/s. Vinam Finance Ltd. is managed and controlled by Shri Suchil Goyal who is an entry operator and Shri Deoki Nand Bejoria and Shri Dipak Bhejoria are nothing but dummy directors”. The AO further observed that similarly Shri Bhavik Jakhariaa and Shri Menesh Dodhia are only dummy directors and they have signed the papers related with M/s. Vinam Finance Pvt. Ltd. only on the advice of Dodhia group. Shri Minesh Dodhia working for Dodhia Synthetics Ltd. and Shri Bhavik Jakhariaa is known to Shri Mansuk Lal Dodhia as they belong to the same community. The AO also reproduced the relevant extract of the statement of Shri Minesh Dodhia recorded u/s 132(4) of the Act during search action at his residence, in the assessment order at para no.7.5, page no.5 to 14 of the assessment order. From the aforesaid analyzations, the AO ultimately held “that it is established that the company is incorporated /takeover only for the purpose of routing the unaccounted money in form of providing the unsecured loan or subscribing the share capital and in reality the company does not carry out any genuine business. Further, the transaction carried out by the Assessee is just a sham transaction and accordingly to give the colour to the said transaction, the books of accounts are prepared and maintained based on the commission report and facts available on record. A notice u/s 142(1) of the Act to the Assessee was issued and the Assessee was show caused to prove the identity, genuineness of transaction and the creditworthiness of the above said company. Though the Assessee in response to the aforesaid show cause notice filed partial details as alleged as called for by the AO. However, it is held that the identity, genuineness of transaction and creditworthiness of this company could not be established. It may be brought out here that the Assessee has taken almost all loans from local parties from Bhiwandi and Mumbai region. The large loans which are IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 4 taken by the Assessee are from Kolkata based companies, which on enquiry are found to be nonexistent or managed by accommodation entry provider. Hence, from the above facts and circumstances, it is concluded that the Assessee has failed to satisfactorily explained the loan taken from the said companies i.e. M/s. Vinam Finance Pvt. Ltd. and failed to substantiate the genuineness of the loan based on enquiries conducted by the Department. Accordingly, loan taken from M/s. VFPL of Rs.1,25,00,000/- is found to be unexplained cash credit within the meaning of section 68 of the Act. Hence, addition of Rs.1,25,00,000/- is made to the total income of the Assessee us/ 68 r.w.s. 115BBE of the Act”. 3. The Assessee, being aggrieved with the aforesaid addition preferred first appeal before the Ld. Commissioner and more or less challenged the said addition on merit as well as on legal point, such as in the absence of any incriminating material found during the course of search and seizure operation conducted on dated 27.11.2019 in the case of the Assessee wherein the assessment is unabated, the addition could not have been made in view of the judgment passed by the Hon’ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. 149 taxmann.com 399 (SC). The Ld. Commissioner though considered the said claim of the Assessee, however ultimately affirmed the aforesaid addition, not only on the merit but also on the legal point as well. Thus the Appeal being aggrieved with the impugned order, has preferred this appeal. 4. We have heard the parties and perused the material available on record. Though the Assessee has raised various issues on merits as well as on legal points, however, first we are inclined to decide the legal point /issue raised by the Assessee qua addition not based on the incriminating material found during the course of search carried out in the office and residential premises of the Assessee on dated 27.11.2019 and reopening of the unabated assessment proceedings. The Assessee has claimed that as on the date of search there was no scrutiny assessment or otherwise was pending which could abate therefore the reopening of the unabated /completed assessment by issuing notice u/s 153A of the Act and making the addition of Rs.1,25,00,000/- on the basis of books of account and or income of return already been shown, but not based on any incriminating material found during the course of search and seizure operation on dated IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 5 27.11.2019 which resulted into reopening of the unabated/completed assessment of the Assessee u/s 153A of the Act, would entail deletion of the such addition being unsustainable in the eyes of law and in view of the judgment passed by the Hon’ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. (supra). 5. On the contrary, the Ld. D.R. has submitted and claimed that the Ld. Commissioner has thoroughly examined this particular ground /issue raised by the Assessee and vide para no.27 to 30 in the impugned order has given categorical finding and affirmed the aforesaid addition by observing and holding as under: “27. For the year under consideration, the appellant had raised technical grounds (ground no. 1, 3 and 4) that no addition could have been made by the AO in the absence of any incriminating material found during the search operation. In this regard, the appellant has submitted that in the assessment order, the AO has not referred to any incriminating material suggesting that the appellant has received any accommodation entry during the year under consideration. The appellant has further argued that it is a well-settled legal position that while completing the assessment u/s. 153A of the Act, the AO cannot make any addition if no incriminating material was found during the search. Since the present case falls in the category of unabated assessment, the AO could not have made any addition while completing the assessment u/s. 153A of the Act. In this connection, the appellant has relied on the decision of Hon'ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (P) Ltd. 149 taxmann.com 399 (SC). Findings 28. I have considered the facts of the case and the submissions made by the appellant. It is seen that during the search operation, the residence of one of the directors of M/s. Vinam Finance Pvt. Ltd. namely Shri Minesh Dhodia was covered u/s. 132 of the Act and the statement of another director Shri Bhavik Jakharia was recorded and it was found that these persons were dummy directors. The statement of Shri Minesh Dhodia as well as Shri Bhavik Jhkharia have been reproduced in the assessment order. 29. The statement of Shri Minesh Dhodiaand Shri Bhavik Jhkharia clearly suggest that they were dummy directors and did not have any knowledge about the company. Furthermore, the said company was earlier managed by Shri Sushil Goel, a known accommodation entry operator and the shares of M/s. Vinam Finance were acquired by Dodhia Group from the accommodation entry operators. The statement of Shri Bhadresh Dhodia was also recorded u/s. 132(4) of the Act wherein in reply to question no. 70, Shri Bhadresh Dodhia accepted that Dodhia Group was having cash available from various sources which was routed to books of accounts of various entities, through M/s. Vinam Finance Pvt. Ltd. In reply to question no. 72, Shri Bhadresh Dodhia accepted that amount of Rs.43 crores approximately was routed through the said company. 30. The above discussion clearly suggests that incriminating material regarding the accommodation entries was found during the search and therefore the contention of the appellant that no incriminating material was found during the search is incorrect. Accordingly, the ground no. 1, 3 and 4 raised by the appellant are DISMISSED.” 6. We have given thoughtful considerations to the peculiar facts and circumstances of the case. The Hon’ble Apex Court while affirming the IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 6 decision of the Hon’ble Delhi High Court in the case of Kabul Chawla has laid down various dictums including that where there is no material is found/unearthed during the search and seizure operation then no addition u/s 153A or 153C of the Act is attracted specifically in the unabated assessment/completed assessment. In the instant case, admittedly, the addition of Rs.1,25,00,000/- made by the AO is based on the books of account or original return of income filed by the Assessee but not based on any incriminating material such as statements of various persons as relied on by the AO and the Ld. Commissioner in the assessment and the appellate proceedings respectively. Thus, by respectfully following the dictum of the Hon’ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. (supra) wherein it was held in para 14(iv) of the judgment that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessment/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132A of the Act, 1961. However, the completed/unabated assessments can be reopened by the AO in exercise of powers u/s 147/148 of the Act subject to fulfillment of the condition as envisaged/mentioned u/s 147/148 of the Act and those powers are saved. Here, admittedly, the assessment under consideration has been passed u/s 153A of the Act and the assessment of the Assessee is unabated/completed and the addition is also not based on any incriminating material found during the search and seizure operation and therefore in any case the same is unsustainable, thus the same is liable to be deleted. We further observe that even otherwise this identical addition has also been dealt with by the Hon’ble coordinate Bench in the case of Chndrika Mansukhla Dodhia, {IT{SS} A no. 199/Mum/2025 decided on 15-04-2025} and while relying on the judgment in Abhisar Buildwell case (supra) has deleted the identical addition and therefore on this count as well, the addition in hand is un-sustainable. Consequently, the addition is deleted by allowing the appeal of the Assessee. IT(SS)A No.1117/M/2025 Mr. Pradeep Meghji Dodhia 7 7. As we have deleted the addition on the aforesaid legal point/issue, thus, are inclined not to delve into other legal issue as well as merits of the case, as the adjudication of the same would prove to be futile exercise. Thus, the issues on other legal aspects as well as on merits, are left open. 8. In the result, the appeal filed by the Assessee, stands allowed in the aforesaid terms. Order pronounced in the open court on 30.06.2025. Sd/- Sd/- (RENU JAUHRI) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "