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Judgment
PER VIKAS AWASTHY, JUDICIAL MEMBER:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-29, New Delhi [in short ‘the CIT(A)’] dated 08.10.2025, for Assessment Year 2019-20. The assessee has filed cross objections in the appeal of Revenue raising legal ground.
The appeal of Revenue is time barred by 3 days. The Revenue has filed an application for condonation of delay citing reasons causing delay in filing of appeal. After perusal of the same, I am satisfied that delay in filing of appeal is not intentional, the delay has been caused for the reasons stated in application which appears to be bonafide. Thus, delay of 3 days in filing of appeal is condoned and appeal is admitted for decision on merits
Shri Manoj Kumar, representing the department submits that the assessment in the case of assessee for AY 2020-21 was reopened based on information collected during search u/s.132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) in the case of Galaxy Group, Shri Pradeep Indira Prasad Agrawalla, Shri Deepak Agarwal and Shri Himanshu Verma on 17.11.2021. During the course of search, documents were seized which contained information that the assessee is one of the beneficiaries of accommodation entry of Rs.24,50,000/-. During the course of search, it was found that Shri Deepak Agarwal and Himanshu Verma were providing accommodation entries to large number of beneficiaries, though, sham entities managed and controlled by them. The ld. DR placed reliance on the recent decision of Tribunal in the case of ACIT vs. Bhawani Finvest P. Ltd. in ITA No. 6303/Del/2025 for AY 2020-21 decided on 25.03.2025 contend that, where the assessee who was beneficiary of the accommodation entries from the aforesaid two persons in appeal by the Department, the Tribunal reversed findings of the CIT(A) and upheld the addition made by the Assessing Officer (AO).
Per contra, Shri Abhishek Jain, appearing on behalf of the assessee vehemently defending the impugned order prayed for dismissing appeal of the Revenue.
The ld. Counsel submitted that the assessee has filed a cross objection raising a legal issue that the assessment in the case of assessee has been reopened after elapse of three years from the relevant assessment year and the addition made is less than Rs.50,00,000/-. He pointed that as per the provisions of section 149(1)(b) of the Act after the elapse of three years but not more than ten years from the end of relevant assessment year, the assessment can only be reopened if the escaped amount is Rs.50,00,000/- or more. Since, in the impugned assessment year the addition made is only Rs.24,50,000/-. The reassessment proceedings are bad in law.
Both sides heard, orders of the lower authorities examined. In the present appeal, the Revenue prayed for reversing findings of the CIT(A) in deleting the addition of Rs.24,50,000/-u/s.69C of the Act on account of alleged accommodation entry received by the assessee from M/s. KG Finvest P. Ltd. a company controlled by Shri Deepak Agarwal for routing accommodation entries. The case of assessee is that Rs.24,50,000/- was payment of interest by the assessee against loan of Rs.2 crores from M/s. KG Finvest P. Ltd. The assessee has deducted tax at source on payment of said interest and the said amount has not been claimed as expenditure, rather has been capitalized in books of the assessee company.
The CIT(A) examined the transaction and came to the conclusion that the principal loan amount, as well as, interest including interest paid during the year were repaid by the assessee through banking channels and are supported by confirmations, ITRs, financials and other documentary evidences. The ingredients of loan amount originally taken on which interest is charged is established, identity and creditworthiness of creditor is proved and genuineness of the transaction is established. The assessee has discharged its burden to prove identity and creditworthiness of the lender and genuineness of transaction by furnishing PAN details, Income Tax return, financial statements, confirmations letter, bank statements of lending company which is a NBFC registered with RBI. The entire loan amount and the outstanding interest has been repaid by the assessee during AY 2019-20.
The Revenue has not been able to controvert finding of fact given by the CIT(A). No material is placed on record by the Revenue to negate findings of the CIT(A). In absence of any controverting material, I see no reason to interfere with findings of the First Appellate Authority.
In the result, impugned order is upheld and appeal of the Revenue is dismissed.
CO 105/Del/206
Since, the appeal of Revenue has been dismissed the legal grounds raised by the assessee in CO have become academic and are left open at this stage. The CO is dismissed as infructuous.