SAMEEP FABRICS PRIVATE LIMITED,PIPLAJ AHMEDABAD V. DCIT CIRCLE 4 1 1 AHMEDABAD, VEJALPUR, AHMEDABAD

CO 1/AHD/2025

AI Insights

The case involves appeals by the Deputy Commissioner of Income Tax against Sameep Fabrics Pvt. Ltd. concerning the Assessment Years 2013-14 and 2019-20. The primary issue was the addition of amounts to the assessee's income, which the Department claimed were unexplained income from accommodation entries provided by entities controlled by Shri Sanjay Tibrewal. The Ld. CIT(A) had deleted some of these additions, leading to the Department's appeal. The Tribunal examined the evidence and found that the additions were not substantiated, leading to the dismissal of the Department's appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41020 (ITAT-AHMEDABAD)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TRUPTI PATEL
• Assessee Lawyers: GAURAV NAHTA; VIHAR SONI; A.RS; LD
• Keywords: Reassessment proceedings; Accommodation entries; Bogus
• Section: 271(1)(c); 132; 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. Nos.2017&2020/Ahd/2024 (Assessment Years: 2013-14 & 2019-20) Deputy Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad Vs. Sameep Fabrics Pvt. Ltd., 151, Devraj Industrial Park, Nr. Kankaria Textile, Pirana Puplaj Road, Piplaj, Ahmedabad-382405 [PAN No.AAFCA4848N] (Appellant) .. (Respondent) C.O. Nos.01&04/Ahd/2025 (Assessment Years: 2013-14 & 2019-20) Sameep Fabrics Pvt. Ltd., 151, Devraj Industrial Park, Nr. Kankaria Textile, Pirana Puplaj Road, Piplaj, Ahmedabad-382405 Vs. Deputy Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad [PAN No.AAFCA4848N] (Appellant) .. (Respondent) Appellant by : Shri Gaurav Nahta & Shri Vihar Soni, A.Rs. Respondent by: Smt. Trupti Patel, Sr. DR Date of Hearing 03.04.2025 Date of Pronouncement 04.04.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: These are appeals have been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Center (in short “NFAC”), Delhi vide orders dated 23.09.2024 passed for A.Ys. 2013 & 2019-20 and the Cross Objections filed by the assessee against the appeals filed by the Department. ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 2– We shall first take up the Department’s appeal for A.Y. 2013-14 2. The Department has taken the following Grounds of Appeal: “(a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 26,62,965/- out of Rs. 28,75,550/- made by AO on account of accommodation entries received from the entities M/s. Krishna Enterprise and M/s. Radhe Corporation despite the fact that the proprietor of these entities Shri Harshit M. Purohit has himself admitted in his statement recorded on oath u/s. 131 of IT Act that all the business concerns in his name are paper concerns and do not carry out any kind of sale/purchase of goods and the bank accounts of those concerns are operated by Shri Sanjay Tibrewal for proving accommodation entry only. (b) The appellant craves leave to add, alter and / or to amend all or any the ground before the final hearing of the appeal.” 3. The brief facts of the case are that the company filed return of income for A.Y. 2013-14 declaring total income of Rs. 20,83,680/-. Subsequently, a search under Section 132 of the Act was conducted on 12.04.2019 in the case of Shri Sanjay Tibrewal. Shri Sanjay Tibrewal is known to be engaged in providing accommodation entries to various persons such as issuing cheues in lieu of cash and vice-versa, providing cash loans etc. During the search action, various documents relating to financial transactions were found and seized, statements of various key employees of group were taken pursuant to the search. The Assessing Officer noted that Shri Sanjay Tibrewal was involved in tax evasion practices by providing accommodation entries to various persons to route their unaccounted money into the books of accounts, without payment of taxes. During the course of search, the Department noted that Shri Harishbhai Purohit was the employee of Shri Sanjay Tibrewal and bank accounts had been opened in his name to provide accommodation entries. The Assessing Officer noted that the employee of Shri Sanjay Tibrewal admitted in his statement recorded under Section 131 of the Act ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 3– dated 19.10.2016 that he worked at the advise and instructions of Shri Sanjay Tibrewal for ferrying cash. It was also admitted by Shri Harishbhai Purohit that Shri Sanjay Tibrewal is an accommodation entry provider. The Assessing Officer noted that as per information received, the assessee company entered into transaction with M/s. Krishna Enterprise (proprietor Shri Harish Mooljibhai Purohit) and M/s. Radhe Corporation (Proprietor Shri Harish Mooljibhai Purohit). Accordingly, the Assessing Officer made additions of sums of Rs. 7,50,000/- and Rs. 21,25,000/- on account of transactions between the assessee company and M/s. Krishna Enterprise (Rs. 7,50,000/-) and M/s. Radhe Corporation (Rs. 21,25,000/-) by holding that the same amounted to bogus transactions and hence constituted unexplained income of the assessee. Further, penalty proceedings under Section 271(1)(c) of the Act were also initiated against the assessee. 4. In appeal, Ld. CIT(A) partly allowed the appeal of the assessee with the following observations: “4(a) I have considered the assessee's submissions. I have also considered the facts and circumstances of the case. From the facts, it is seen that there was allegation that the assessee has taken accommodation entries from Sanjay Tibrewal concerns i.e., M/s. Krishna Enterprises and M/s. Radhe Corporation, the proprietor of which is Mr. Harish M. Purohit. The AO concluded that the assessee had taken accommodation entries from M/s. Krishna Enterprises for Rs. 7,50,000/-. In this regard, the assessee explained during the course of the reassessment proceedings that amount was given by the assesses company on 22.11.2012 to M/s. Krishna Enterprises and the same was received back from M/s. Krishna Enterprises on 30.01.2013 and 14.03.2013. The assessee filed necessary details during the course of appellate proceedings and after going through the details, it is seen that this is only a transaction of short term loans advanced through banking channels and the amount was received back by the assessee on 30.01.2013 of Rs. 5,50,000/- and on 14.03.2013 of Rs. 2,00,000/-. Thus^the entry was already squared off in the books of accounts during the current FY, therefore, this does not amount to any accommodation entries. Moreover, the AO did not bring any specific evidence such as cash voucher/cash receipts relatable to the assessee company in the search premises of Sanjay Tibrewal to authenticate that the above accommodation entry was taken in lieu of cash. Thus, on the basis of superficial ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 4– information, the AO proceeded to make addition which is not warranted. Accordingly, addition to the extent of Rs. 7,50,000/- is hereby deleted. 4(b) As regards to the entry pertaining to M/s. Radhe Corporation amounting to Rs. 21,25,550/-, the assessee categorically denied that the company has not entered into any such transactions with M/s. Radhe Corporation. However, the AO mentioned that\" the assessee received funds from M/s. Radhe Corporation from its Bank of Baroda account bearing account no. 1002050000051. The appellant submitted the bank statements during the course of appellate proceedings and I have perused the entire bank statements and there is no narration evidencing any entries received from M/s. Radhe Corporation. However, some of the credits are narrated as ‘clearing’ and ‘transfer' but name of the party was not mentioned. Therefore, it is not possible to categorically identify whether any funds received from M/s. Radhe Corporation or not. However, in subsequent years, the assessee entered similar transactions with Sanjay Tibrewal group entities which shows that the assessee received payments from the Sanjay Tibrewal controlled concerns on behalf of outstanding payments re from its regular customers. Therefore, if at all any money was received, that towards payment of outstanding liabilities from the regular customers/regular business. Thus, except some element of suspicion, there was no other material evidence to prove that funds were received from M/s. Radhe Corporation. In the given facts & circumstances and to meet the interests of revenue, I hereby treat 10 % GP of the above payments as additional income of the assessee which comes to Rs. 2,12,585/- and the addition to this extent is hereby confirmed and the balance amount is hereby deleted. Accordingly, the assessee's ground is partly allowed. In the result, the appeal is partly allowed.” 5. The Department is in appeal against the aforesaid relief granted by Ld. CIT(A). 6. Before us, Ld. D.R. submitted that it is an accepted fact that Shri Sanjay Tibrewal is an accommodation entry provider and assessee, during the year under consideration had entered into the bogus transactions with these entities run by Shri Sanjay Tibrewal, through his employee Mr. Harish Mooljibhai Purohit. Accordingly, the Ld. D.R. submitted that given the aforesaid facts, the relief should not have been granted to the assessee by Ld. CIT(A) since the transactions were entered only into, with a view to evade taxes. ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 5– 7. In response, the Counsel for the assessee placed reliance on the observations made by Ld. CIT(A) in his appellate order. 8. On going through the facts of the case, we observe that with respect to addition of Rs. 7,50,000/- in respect of the transaction between the assessee and M/s. Krishna Enterprises, it is seen that in a sum of Rs. 7,50,000/- was given by the assessee company on 22.11.2012 to M/s. Krishna Enterprises and the same was received back from M/s. Krishna Enterprises by the assessee through banking channels on 30.01.2013 and 14.03.2013. As per the assessee, this transaction represented a short term advance given by the assessee to M/s. Krishna Enterprises through banking channels and within a short period of time the amount was received back by the assessee on 30.03.2013 (Rs. 5,50,000/-) and 14.03.2013 (Rs. 2,00,000/-). Therefore, it is seen that the entry was also squared off in the books of accounts during the same Financial Year itself. Further, we are of the considered view that given the aforesaid facts, Ld. CIT(A) has correctly observed that the Assessing Officer did not bring on record any specific evidences to show as to how, in the instant facts, there was any evasion of any taxes by the assessee. On perusal of the ledger account of M/s. Krishna Enterprises and also bank statement of the assessee company during the impugned year under consideration, it is seen that the entire amount of Rs. 7,50,000/- advances by the assessee was received back by the assessee company, within the same Financial Year. Accordingly, in the set of facts, we are of the considered view that Ld. CIT(A) has correctly observed and held that the Department has not been able to establish any tax evasion by the assessee. Accordingly, ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 6– we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. 9. With regards to the entry pertaining to M/s. Radhe Corporation amounting to Rs. 21,25,550/- the assessee company categorically denied that the company had not entered into in transaction with M/s. Radhe Corporation. However, the Ld. AO was of the view that the assessee company had received funds from M/s. Radhe Corporation out of withdrawals made by the latter from it’s bank account held with Bank of Baroda. On going through the case records, Ld. CIT(A) observed that from the entire bank statements, there is no entry evidencing that the assessee had received the amount of Rs. 21,25,550/- from M/s. Radhe Corporation. Though there are some entries which are narrated as “clearing and transaction”, but the name of M/s. Radhe Corporation does not find mention in the bank statement of the assessee. Therefore, in the set of facts, CIT(A) observed that it is not possible to identify whether any funds were received by the assessee company by M/s. Radhe Corporation. In the light of these facts, we find no infirmity in the order of Ld. CIT(A) that the Department did not have any material evidence to substantiate that the assessee company had received funds from M/s. Radhe Corporation. However, in order to meet the interests of Revenue, Ld. CIT(A) treated 10% GP of the above payments as additional income of the assessee and confirmed the addition to this extent. Even before us, during the course of hearing, the Department has not brought forth any substantial evidence to prove that the assessee company had received funds from M/s. Radhe Corporation, as alleged by the Assessing Officer. On going through the case records, we find no such evidence that the assessee company had ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 7– received funds from M/s. Radhe Corporation. Accordingly, in light of the above facts, we are of the considered view that Ld. CIT(A) has taken a reasonable approach by restricting the disallowance to 10% of GP. Accordingly, in light of the above facts, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. 10. In the result, the appeal of the Department is dismissed for A.Y. 2013- 14. C.O. No. 01/Ahd/2025 (A.Y. 2013-14) 11. Before us, the Counsel for the assessee submitted that he shall not be pressing of his Cross Objection No. 01/Ahd/2025 for A.Y. 2013-14. Accordingly, the Cross Objection filed by the assessee for A.Y. 2013-14 is being dismissed as not pressed. 12. In the result, the appeal by the Department and the Cross Objection filed by the assessee are both dismissed for A.Y. 2013-14. Now we shall take up the Department’s appeal for A.Y. 2019-20 13. The Department has raised the following grounds of appeal: “(a) The Ld. CIT(A) has rrred in law and on facts in deleting the addition of Rs. 37,53,671/- out of RS. 41,43,671/- u/s 68 made by AO on account of accommodation entries received from the entities M/s. Narayana & Company, M/.s Radhika & Brothers and M/s. Hanuman Fabrics which are controlled by Shri Sanjay Tibrewal despite the fact that the assessee has failed to establish as to why these parties have taken recourse of M/s. Narayana & Company, M/s. Radhika & Brothers and M/s. Hanuman Fabrics as a supposed mediator party for payment and the assessee has also failed to furnish documentary evidences like agreement/order, godown space/rent, ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 8– transportation bills and transportation service for sale/purchase of goods etc. to establish the genuineness of transaction. (b) The appellant craves leave to add, alter and / or to amend all or any the ground before the final hearing of the appeal.” 14. The brief facts of the case are that during the course of assessment, the Assessing Officer made addition of Rs. 41,43,671/- under Section 68 of the Act on account of accommodation entry received by the assessee company from various entities like M/s. Narayana & Company, M/s. Radhika & Brothers and M/s. Hanuman Fabrics etc. which were controlled by Shri Sanjay Tibrewal, who is a well-known accommodation entry provider. 15. In appeal, Ld. CIT(A) observed that the assessee had made substantial sales to the various parties mentioned in the assessment order, which were duly supported by sales bills, e-way bills, proof of transportation of goods, shipping bills as well as confirmation of parties to whom the goods had been sold. Accordingly, Ld. CIT(A) partly allowed the appeal of the assessee and deleted the addition of Rs. 37,53,671/- out of total addition of Rs. 41,43,671/- made by the Assessing Officer under Section 68 of the Act. On going through the facts of the instant case we are of the considered view that Ld. CIT(A) has taken a reasonable approach in the matter and has correctly observed that the assessee has been able to establish that genuine sales were made by the assessee to the various parties under consideration. The sales made by the assessee were supported by various documents like copy of ledger confirmation of concerned parties, copy of invoices / bills, copy of transporter bills etc. and accordingly, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference. Before us, Ld. DR has not brought any evidence to controvert the findings made by Ld. CIT(A). ITA Nos. 2017&2020/Ahd/2024 & C.O. Nos. 01&04/Ahd/2025 DCIT vs. Sameep Fabrics Pvt. Ltd. Asst. Years –2013-14 & 2019-20 - 9– 16. In the result, the appeal filed by the Department is dismissed for A.Y. 2019-20. C.O. No. 04/Ahd/2025 (A.Y. 2019-20) 17. Before us, the Counsel for the assessee submitted that he shall not be pressing for the Cross Objections against the order passed by Ld. CIT(A) and accordingly, Cross Objection filed by the assessee is dismissed as not pressed for A.Y. 2019-20. 18. In the combined result, both the appeals filed by the Department as well as the C.O. filed by the assessee for A.Y. 2013-14 and 2019-20 are dismissed. This Order is pronounced in the Open Court on 04/04/2025 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 04/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "