SUPRA FINANCIAL SERVICES LIMITED,NEW DELHI V. INCOME TAX OFFICER WARD 24(1), NEW DELHI, NEW DELHI

ITA 5431/DEL/2025

AI Insights

The case involves Supra Financial Services Limited, which faced scrutiny from the Income Tax Department following a search operation related to the Himanshu Verma Group, known for providing bogus accommodation entries. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, based on information that the assessee had engaged in transactions with entities linked to Verma, leading to additions in income as unexplained credits and commission for accommodation entries. The Tribunal examined the merits of the case, considering the evidence and submissions provided by the assessee, and found that the additions made were not justified.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841906 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Appeal Filed On: 01-09-2025
• Other Referred Cases: Real Innerspring Technologies (P.) Ltd. vs. ACIT, Income Tax Officer, Ward-1(1), Faridabad v. Bhikshu Portfolio Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: GOURAV JAIN
• Keywords: Additional evidence; Reassessment proceedings; Unexplained cash credit; Principle of natural justice; TDS; Accommodation entries; Bogus
• Section: 147; 148; 142(1); 154; 271(1)(c); 68; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No.5430/DEL/2025 (Assessment Year: 2016-17) Supra Financial Services Limited, vs. Income Tax Officer, F-314C, Lado Sarai Ward 24(1), Near White House, New Delhi New Delhi (PAN : AAACS8970N) ITA No.5431/DEL/2025 (Assessment Year: 2016-17) Supra Financial Services Limited, vs. Income Tax Officer, F-314C, Lado Sarai Ward 24(1), Near White House, New Delhi New Delhi (PAN : AAACS8970N) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Gourav Jain, Advocate Shri Tarun Chanana, Advocte REVENUE BY : Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing: 07.01.2026 Date of Order : 27.02.2026 ORDER PER S.RIFAUR RAHMAN,AM: Both appeals are filed against the order of the Learned Commissioner of Income Tax (Appeals)-30, New Delhi [“Ld. CIT(A)”, for short] dated 31.07.2025 for the Assessment Years 2016-17. ITA No. 5430/Del/2025 passed u/s 250 of the Income Tax Act, 1961 (In short ‘the Act’) (arising out Printed from counselvise.com 2 ITA Nos.5430 & 5431/DEL/2025 of order u/s 143(3)/147 of the Act) and ITA No. 5431/Del/2025 passed u/s 250 of the Act (arising out of order u/s 154 of the Act). 2. Both the appeals are interconnected having common issues. Both the appeals are heard together and disposed off by this common order. LEAD APPEAL ITA NO.5430/Del/ 2025 (AY 2016-17) 3. Brief facts of the case are that, based on information received from DCIT, Central Circle-29, New Delhi, a search operation u/s 132(4) of the Income Tax Act, 1961 (in short ‘the Act’) was conducted on 13.04.2017 on the Himanshu Verma Group. During the search proceedings, it was found that Sh. Himanshu Verma was indulged in providing bogus accommodation entries through various shell companies operated or controlled by him or through dummy directors. It was noticed that assessee was engaged in purchase and sale of penny stock and, during the year under consideration the assessee had entered into accommodation entry transaction amounting to Rs. 3.30 crore with regard to M/s. Syala Buildwell Pvt. Ltd. (SBPL) and Rs. 40 lacs from M/s. Stabilitas Estate Pvt. Ltd. (SEPL). The assessee filed its return of income on 16.10.2016 for assessment year 2016-17 declaring total income of Rs. 27,73,600/-, which was processed u/s 143(1) of the Act on 22.11.2016. Printed from counselvise.com 3 ITA Nos.5430 & 5431/DEL/2025 4. Based on the above information received from the DCIT, Investigation Wing, the Assessing Officer formed an opinion that income had escaped assessment. Accordingly, proceedings u/s 147 of the Act was initiated after recording reasons with prior approval of the PCIT. Accordingly, notice u/s 148 of the Act was issued and served on the assessee. Subsequently, notice u/s 142(1) of the Act was also issued to the assessee. Further, the assessee filed objections against the reopening of the assessment, the same is reproduced at page nos. 2 to 12 of the order of Ld. AO. 5. Considering the above submissions, the Assessing Officer rejected the same with the reason that the assessee could not be acceded to as it was not filed within the prescribed time i.e. within 60 days of receipt of reasons recorded. Since the assessee was provided with the reasons recorded along with the notice u/s 143(2) of the Act on 07.09.2021. On merit, the Assessing officer heavily relied on the information received from Investigation Wing and the relevant findings in search proceedings in the case of Sh. Himanshu Verma and since the assessee had transactions with SBPL and SEPL and failed to furnish the explanation with supporting documentary evidence. The assessing officer reproduced the detailed findings in the case of Himanshu Verma and further listed the companies operated by Himanshu Verma Group. In the above list, SEPL is one of the entities listed. Since the above company name was mentioned by Himanshu Verma group, he came to the conclusion that the Printed from counselvise.com 4 ITA Nos.5430 & 5431/DEL/2025 assessee has taken accommodation entries from this two companies and assessee was asked by the above said transaction why it should not be treated as unexplained credit and added to the income of the assessee. The assessee has submitted confirmations of above said parties and also details of repayment of the same and document relating to payment of interest after deducting TDS. After considering the same, the Ld. A.O. heavily relied on the information received from Investigation Wing and statement recorded from Himanshu Verma Group, he treated the transactions made by the assessee with the entity connected with Himanshu Verma as unexplained credits to the extent of Rs. 3.70 crores and he added commission for taking accommodation entries to the extent of Rs. 11.10 lacs u/s 69C of the Act. 6. Aggrieved with the above order, the assessee preferred an appeal before the Ld. CIT(A)-30, New Delhi and filed a detailed submission including confirmations, details of repayment in the subsequent years and details of TDS deducted which is reproduced in the First Appellate order. After considering the same, Ld. CIT(A) sustained the additions made by the Ld. A.O. and dismissed the appeal filed by the assessee. 7. Aggrieved with the above order, the assessee in appeal before us raising following grounds of appeal: “1. That the notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961 ('the Act') is illegal, bad in law, without jurisdiction, barred by time limitation and not in accordance with the provisions of the Act. Printed from counselvise.com 5 ITA Nos.5430 & 5431/DEL/2025 2. That the assessment order dated 27.03.2022 passed under Section 147 r.w.s. 144 r.w.s. 144B of the Act and the additions/disallowances made therein are illegal, bad in law, without jurisdiction, barred by time limitation and not in accordance with the provisions of the Act. 3. That the Commissioner of Income Tax (Appeals) 30, Delhi ['CIT(A)'] vide order dated 31.07.2025 has erred in in upholding the assessment order passed by the AO on the legal issues as well as on the merits of the case. 4. That the issuance of notice under Section 148 of the Act by the Income Tax Officer Ward 24(1), Delhi ('AO') is in direct contravention of Instruction No. 1 of 2011 dated 31.01.2011 Issued by the Central Board of Direct Taxes (CBDT). 5. That the notice issued under Section 148 is without Jurisdiction, as in the present facts proceedings, If any, were required to be initiated only under Section 153C, the special provision prescribed by the Act. 6. That the prior approval taken under Section 151 of the Act by the AO for issuing the notice under Section 148 of the Act is mechanical in nature and without any application of mind. 7. That the reassessment proceedings are vitiated in law as the AO failed to dispose of the objections filed by the Appellant against the reopening, as mandated by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC). The impugned reassessment order is therefore violative of principles of natural justice and liable to be quashed. 8. That the assessment order passed by the AO Is gross violation of principles of natural justice since the same has been passed without providing the opportunity of cross-examination. 9. On the facts and circumstances of the case and in law, the AO has erred in assessing the total income of the Appellant at Rs. 4,08,83,600/- as against the returned income of Rs. 27,73,600/-. 10. On the facts and circumstances of the case and in law, the AO has erred in making the addition of Rs. 3,70,00,000/- under Section 68 of the Act by allegedly treating the unsecured loans received from M/s. Syala Buildwell Pvt. Ltd. and M/s. Stabilities Estate Pvt. Ltd. as unexplained credit and the CIT(A) has erred in upholding the same. 11. On the facts and circumstances of the case and in law, the AO has erred in making the addition of Rs. 11,10,000/- under Section 69C at the Printed from counselvise.com 6 ITA Nos.5430 & 5431/DEL/2025 rate of 3% on the above addition of Rs. 3,70,00,000/- holding the same to be the commission paid by the Appellant and the CIT(A) has erred in upholding the same. 12. That the documents and the material available on record have not been properly considered and judicially interpreted and have been wrongly ignored. 13. On the facts and circumstances of the case and in law, the AO has erred in charging the interest under Section 234A/234B/234C/234D of the Act. 14. On the facts and circumstances of the case and in law, the AO has erred in initiating the penalty proceedings against the Appellant under Section 271(1)(c) of the Act.” 8. At the time of hearing, Ld. AR submitted that the case of the assessee was reopened on the basis of the information received from Investigation Wing that the assessee was taken accommodation entry from Himanshu Verma Group. He further submitted that the assessee had submitted information along with documentary evidences before the Ld. AO. There were proof of discharge of onus on the assessee to substantiate the genuineness, identity and creditworthiness of the lenders. There is no evidence with the Ld. AO to allege the said transaction to be accommodation entries. He submitted that the ld. AO proceeded to make the addition u/s 68 of the Act, disregarding the submissions of the assessee during the assessment proceedings only on the basis of surmises and conjectures. He also objected to the addition of commission paid on the above said accommodation entries @3%. Further, he relied on the following decisions: - Printed from counselvise.com 7 ITA Nos.5430 & 5431/DEL/2025 1. Real Innerspring Technologies (P.) Ltd. vs. ACIT- [2025] 174 taxmann.com 1130 (Delhi Trib.) [27.03.2025] 2. Income Tax Officer, Ward-1(1), Faridabad v. Bhikshu Portfolio Pvt. Ltd. ITA No. 4205/Del/2025 [ITAT Delhi] [17.11.2025] 9. Further, he brought to notice page nos. 173 to 177 of the paper book, wherein the assessee has repaid the above-said loan. In the subsequent assessment years, confirmations from SBPL and SEPL were also furnished, and the loan was settled on the same assessment year. The relevant confirmation of accounts is at page no. 178 of the paper book. The relevant bank statement were brought to our notice wherein the relevant payments were made. 10. On the other hand, the Ld. DR submitted that there was a search and the department had specific information that Himanshu Verma was providing bogus entries in this regard. He brought to our notice page no. 16 of the assessment order and submitted that it clearly establishes that Himanshu Verma was only providing accommodation entries for earning commission. Since, the assessee has dealt with the companies controlled by Himanshu Verma, therefore, assessee has taken accommodation entries without any doubt and he relied on the findings of the lower authorities. Printed from counselvise.com 8 ITA Nos.5430 & 5431/DEL/2025 11. In the rejoinder, Ld. AR submitted that the Ld. AO only relied on the Investigation report and completely overlooked the various details which prove that the assessee has discharged the onus cast on it. 12. Considered the rival submissions and material placed on record, we observed that the Ld. AO received information from Investigation Wing on the detailed findings and information acquired during search proceedings in the case of Himanshu Verma wherein Shri Himanshu Verma has accepted that he has provided accommodation entries to various beneficiaries through various entities controlled by him. As per the list provided by him, the company SBPL and SEPL were found to be entities controlled by Himanshu Verma. Since, the assessee had made certain transactions with above said companies, the Ld. AO after considering the details of transactions made by the assessee, he came to the conclusion mainly on the basis of such proceedings initiated in the case of Himanshu Verma and he completely overlooked the various confirmations and transactions were made only through banking channel. Further, the Ld. AO and Ld. CIT(A) completely overlooked the fact that the assessee has repaid the amount in the same assessment year or in the subsequent assessment years. The assessee has also submitted confirmations not only outstanding pending at the end of the year but also all the transactions with regard to repayment were submitted before the Ld. AO in the confirmation letter. The lower authorities completely Printed from counselvise.com 9 ITA Nos.5430 & 5431/DEL/2025 overlooked the repayment made by the assessee and proceeded to make addition merely because the names of the entities were listed as bogus entities. 13. After considering the various details available on record, we observed that the assessee has taken unsecured loan from SEPL on 12th January, 2016, and have confirmed the same with regard to SBPL. We further observed that opening balance as 01.04.2016 of Rs. 3,19,90,984/-, and the assessee has confirmed the above said opening balance from SBPL. During the same year, the assessee has made the repayment from 15th June, 2016 to 6th July, 2016 to the extent of Rs. 1.90 crore, and in subsequent year, the assessee has repaid 14 lacs in the month of April, 2017 and in F.Y. 2018-19. The assessee has paid the balance amount from 3rd October, 2018 to 5th December, 2018 only through banking channel. All the repayments were made even before the notice issued u/s 148 of the Act. We noticed that the lower authorities proceeded to make the addition mainly on the basis of investigation report, that the entities through whom the assessee has taken unsecured loan are bogus entities and the lower authorities have completely overlooked the fact that the assessee has taken unsecured loan through banking channel and repaid the same during the year and also in subsequent assessment years. This proves that the transactions are genuine. On exact similar facts on record, the co- ordinate bench in the case of Real Innerspring Technologies (P.) Ltd. has dealt with the similar issue for the sake of convenience reproduced as under: Printed from counselvise.com 10 ITA Nos.5430 & 5431/DEL/2025 “10. Considered the rival submissions and material placed on record. We observed that the AO has initiated reassessment proceedings on the basis of information received from the Investigation Wing and search proceedings in the case of Shri Verma. It is brought on record that these two companies were found to be controlled by the accommodation entry providers, Shri Verma and Shri Anil Agarwal. Merely because the assessee has taken the unsecured loan from the companies controlled by them, the addition was m rejecting the various supporting documents provided by the assessee relating to transactions. 11. In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee's own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid thru the banking channel as under: - Name of the Lender Amount of the Loan Date on which loan taken Date of interest payment Date of repayment of loan M/s. Citzy Infraheights Pvt. Ltd. 50,00,000 09.07.2015 (Pg. 38 of the PB) 30.12.2017 (Pg 40 of the PB) 06.12.2017 30.12.2017 (Pg 39 & 40 of the PB) M/s. CEA Consultants Pvt. Ltd. 50,00,000 18.03.2016 (Pg 81 of the PB) 27.04.2016 28.03.2017 (Pg 81 of the PB) 17.03.2017 18.03.2017 21.03.2017 (Pg 83 & 84 of the PB 12. From the above, it is clear that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the Printed from counselvise.com 11 ITA Nos.5430 & 5431/DEL/2025 loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Therefore, we are inclined to allow the grounds raised by the assessee. 13. In the result, appeal filed by the assessee is allowed.” 14. Similarly, in the case of Bhikshu Portfolio Pvt. Ltd. (supra) held as under: “The outcome is hardly found to be any different on merits of the issue of section 68 addition as well as the assessee has duly explained identity, genuineness and creditworthiness of M/s. S.P. Solutions Pvt. Ltd. by filing the above additional evidence wherein no adverse comments came from the Assessing Officer's side. We thus deem it as a fit case to uphold the learned CIT(A)'s above extracted findings holding the assessee to have proved the identity, genuineness and creditworthiness of the impugned sum of Rs.35 lakhs received from M/s. S.P. Solutions Pvt. Ltd. (supra). The Revenue fails in its instant main latter argument as well.” 15. Respectfully following the above decisions, we are inclined to allow the grounds raised by the assessee having similar facts on record. 16. In the result, the appeal filed by the assessees allowed. 17. With regard to ITA No. 5431/Del/2025, we observed that the issue involved is exactly similar to the facts in ITA No. 5430/Del/2025 except the fact that the Assessing Officer has passed u/s 154 of the Act, in the order observing that one of the entity i.e. Life Long Still and Silent Pvt. Ltd. with whom the assessee has taken unsecured loan of Rs. 4.10 crores hence, he Printed from counselvise.com 12 ITA Nos.5430 & 5431/DEL/2025 treated the same also bogus/ accommodation entry. Since, the facts are exactly similar to the facts in ITA No. 5430/Del/2025 and the findings are applicable mutatis mutandis to ITA No. 5431/Del/2025, accordingly, the appeal filed by the assessee is allowed. 18. In the Result, both appeals filed by the Assessee are allowed. Order pronounced in the open court on this 27th February, 2026. Sd/- Sd/- (SUDHIR KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27.02.2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals)-XXVI, New Delhi. 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "