SHREE SARASWATI EDUCATION SANSTHAN,MEHSANA V. THE ITO, EXEMPTION, PALANPUR

ITA 2210/AHD/2024

AI Insights

The case involves Shree Saraswati Education Sansthan, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was against the addition of Rs.15,50,450 to the assessee's income, which was alleged to be an accommodation entry received from M/s. Mehta Group. The AO had re-opened the assessment based on information from a search at Mehta Group's premises, which revealed that they were involved in providing accommodation entries. The assessee contended that the transactions with Mehta Group were legitimate loans through banking channels, with TDS deducted on interest paid. The Tribunal criticized the AO for not examining the detailed transactions and relying solely on the initial information, leading to the decision to delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771922 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. P. RASTOGI
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: TDS; Accommodation entries; Bogus loan; Bogus

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “बी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD \u0015ी संजय गग\u001a, \u0011ाियक सद\u001b एवं \u0015ी मकरंद वसंत महादेवकर, लेखा सद\u001b क े सम!। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं /ITA No.2210/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : 2016-17 Shree Saraswati Education Sansthan At & Post Rajpur Taluka Kadi Mehsana – 382 740 (Gujarat) बनाम/ v/s. The ITO (Exemption) Palanpur – 385 001 \u0013थायी लेखा सं./PAN: AAITS 3179 G (अपीलाथ$/ Appellant) (%& यथ$/ Respondent) Assessee by : Shri Divyakant Parikh, AR Revenue by : Shri R.P. Rastogi, CIT-DR सुनवाई की तारीख/Date of Hearing : 20/08/2025 घोषणा की तारीख /Date of Pronouncement: 28/08/2025 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 02/12/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2016-2017. Printed from counselvise.com ITA No.2210/Ahd/2024 Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17 2 2. The assessee, in this appeal, has agitated against the action of the CIT(A) in confirming the addition of Rs.15,50,450/- made by the Assessing Officer on account of accommodation entry received from M/s.Mehta Group. 3. The brief facts of the case are that a search action was carried out at the premises of one Mehta Group on 30/07/2018. During the course of search, various incriminating materials were found and seized. It was revealed that the Mehta Group was indulged in giving accommodation entries to various parties in the shape of bogus loans and advances, etc. It was also noticed from the seized material that the said Mehta Group provided accommodation entries of Rs.15.50 lakhs to the assessee. The AO, upon information received, re-opened the assessment u/s.147 of the Act. During the assessment proceedings, the assessee pleaded that the assessee had not taken any accommodation entry from the Mehta Group. That in fact, the assessee had a running account with the Mehta Group and assessee used to take loan through banking channel from Mehta Group and paid interest thereupon. That the TDS was duly deducted on the interest paid for the amounts which were taken as loan and the same were fully refunded during relevant assessment year itself. The assessee produced the ledger account of Mehta Group in its books of accounts. It was pleaded that all the loan transactions were routed through banking channel. The AO, instead of examining ledger account and the details of transactions furnished by the assessee, stuck his stand that as per the information available, the assessee had taken an accommodation entry of Rs.15.50 lakhs from Mehta Group. He, therefore, made the addition of the said amount into the income of the assessee. The Ld.CIT(A) confirmed the additions made by the AO. Printed from counselvise.com ITA No.2210/Ahd/2024 Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17 3 4. We have heard the rival contentions of the Ld.Representatives of the parties and gone through the record. In this case, though there was information available to the AO that the assessee had taken an accommodation entry of Rs.15.50 lakhs from Mehta Group, however, on being asked to explain in this respect, the assessee furnished its ledger account showing various transactions entered into by the assessee with the Mehta Group. Under the circumstances, the AO was supposed to examine each of the transaction and come with the definite conclusion as to which of the transaction was bogus and what was the income of the assessee which had escaped assessment. The AO, despite of the records furnished before him, simply made the impugned addition solely based on the information received from the Investigation Wing. Though the initial information, in our view, may have triggered the AO to make necessary verifications and to examine the accounts of the assessee to verify as to whether the income of the assessee has escaped in assessment proceedings. However, the addition solely based on the said information was not warranted especially when the assessee had furnished all details of transaction/ledger account during the assessment proceedings. The AO, in this case, has miserably failed to come to a definite conclusion regarding as to which of the entry in the books of accounts of the assessee was suspicious or bogus and thereafter to call upon the assessee to explain such entry with evidence/confirmation, etc. The addition made merely on the basis of assumption that the assessee has received accommodation entries of Rs.15.50 lakhs, in our view, is not sustainable. The AO noted that the assessee has received accommodation entry of the amount of Rs.15.50 lakhs. However, he has not pointed as to which specific entry in the accounts of the assessee pertained to the alleged accommodation entry of Rs.15.50 lakhs and which specific entry out of the ledger containing so many entries, the assessee was required to explain. No Printed from counselvise.com ITA No.2210/Ahd/2024 Shre Saraswati Education Sansthan vs. ITO(E) Asst.Year : 2016-17 4 doubt, the AO could have examined all the entries from the Mehta Group but no such enquiry was made during the course of assessment proceedings. Under the circumstances, the impugned addition is not sustainable and the same is hereby ordered to be deleted. 5. Though the assessee has raised a legal ground contending that the AO ought to have initiated the proceedings u/s.153C of the Act, instead of 148 of the Act, we do not find it necessary to adjudicate this issue, at this stage, since the impugned addition has already been deleted by us on merits. Hence, the legal ground raised by the assessee is rendered academic in nature and the matter requires no further adjudication. 6. With the above observations, the appeal of the assessee is hereby allowed. Order pronounced in the Open Court on 28 /08/2025. Sd/- Sd/- (Makarand V. Mahadeokar) Accountant Member ( Sanjay Garg ) Judicial Member अहमदाबाद/Ahmedabad, िदनांक/Dated 28/08/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)- (NFAC), Delhi 5. िवभागीय #ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabade Printed from counselvise.com "