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Judgment
PER SUDHIR KUMAR, JM :
This appeal is preferred by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)-27, New Delhi (hereinafter referred to ‘Ld. CIT (A)’) dated 22.4.2025for AY 2013-14 on the following grounds:-
Whether the CIT(A) has erred in facts and in law in not appreciating the fact that the additions were made by the AO on the bass of credible information received from the Investigation Wing that the assessee has availed accommodation entries from a well known entry operator, Sh. Praveen Agarwal,?
ii) Whether the Ld. CIT(A) has erred in facts and in law by ignoring statement of Sh. Praveen Agarwal recorded u/s. 132(4) of the Act in which he has accepted that he is an entry operator and the entity from whom the assessee has availed loan is operated by him to facilitate accommodation entries to beneficiaries?
iii) Whether the CIT(A) has erred in facts and in law by ignoring the fact that it is an established modus operandi of entry operators to do transactions through banking channels in order to veil it is a legitimate transaction?
iv) Whether the CIT(A) has erred in fact and in law in not appreciating the fact that once it is established that the entity from which the assessee has obtained accommodation entry in the form of unsecured loan is a shell entity operated by well known entry operator, Sh. Praveen Agarwal. Then, there is no iota of doubt that the loan taken from that entity is a sham transaction and there is no need to prove any other fact.
Whether the CIT(A) has erred in facts and in law in not appreciating the fact that the true nature of transaction has to be ascertained in the light of surrounding circumstances and standard of proof beyond reasonable doubt has no applicability in determination f matters under taxing statues as held by Hon’ble Supreme Court in the case of SumatiDayal vs. CIT?
The brief facts giving rise in this appeal are that the assessee has filed his return of income for AY 2013-14 on 30.9.2013 declaring loss of Rs. 2,28,826/-. The case of the assessee was re-opened u/s. 148 of the Act on the basis of information received from DDIT-Unit 3(1), Kolkata regarding receipt of accommodation entries amounting to Rs. 1,00,00,000/- from the shell company namely M/s Khushboo Complex Pvt. Ltd.. Inquiry in the case of M/s ShardaVanijya Ltd. revealed that in its ICICI Bank account bearing no. 694605125734 with GC Avenue branch, Kolkata high value RTGS/NEFT deposits were observed followed by immediate transfer to the related inter mediatory layering entities having no business / economic rationale. After analysis of bank accounts a list of beneficiaries was prepared and it was revealed that the assessee, M/s Narayani Dealers Pvt Ltd., had received accommodation entry amounting to Rs. 1,00,00,000/- from M/s Khushboo Complex Pvt. Ltd. a paper/shell entity during FY 2013-14, which is noting but unaccounted / unexplained income of the assessee itself, not brought to tax. Based on the above information, the AO had reason to believe that taxable income had escaped assessment in the case of the assessee for the AY 2013-14 and thereafter notice u/s. 148 was issued on 15.4.2021. Later on the anvil of the Hon’ble Supreme Court decision in the case of UOI &Ors. Vs. Ashish Agarwal and others and CBDT’s instruction, the notice issued u/s. 148 of the Act dated 15.4.2021 was treated as notice to show cause u/s. 148A(b) of the Act and material underlying was provided to the assessee requiring therein to furnish his response within two weeks time in the matter. Thereafter, considering all the material available before him, the jurisdictional AO found the case fit for issuance of notice u/s. 148 of the Act and passed order u/s. 148A(d) of the Act accordingly within the stipulated time frame. Accordingly, after obtaining approval from the competent authority, notice u/s. 148 of the Act was issued on 28.7.2022 requesting the assessee to file his ROI in response to the said notice. However, the assessee has not filed his return of income in response to the above notice. Thereafter, the case of the assessee transferred under Faceless Assessment Scheme, 2019. The issue of verification as per order u/s. 148A(d) of the Act is that the assessee originally filed its return on 30.9.2013, declaring loss of Rs. 8,49,278/-The said return was selected for scrutiny and assessment was completed u/s. 143(3) of the Act on 12.11.2015 at the returned loss. In this case, credible information was received from DDIT(Inv.), Unit 3(1), Kolkata, regarding receipt of accommodation entries amounting to Rs. 1,00,00,000/- from a shell company namely M/s Khusboo Complex Pvt Ltd. The AO added the said amount by stating that as per information received from the investigation wing in the case of M/s Sharda Vanijya Ltd. revealed that appellant is the beneficiary of the accommodation entry amounting to Rs, 1,00,00,000/-. Against the said action of the AO, assessee appealed before the Ld. CIT(A), who vide his order dated 22.4.2025 has deleted the addition of Rs. 1,00,00,000/- by allowing the appeal of the assessee.
Aggrieved, Revenue is in appeal before us.
At the time of hearing, ld. CIT(DR) relied upon the order of the Assessing Officer by submitting that assessee received accommodation etnrie from well know entry provider Sh. Praveen Agarwal and he also admitted u/s. 132(4) of the Act. AO issued proper SCN to the assessee and thoroughly examined the submission with the case record (Para 4.4 Para 14 of AO’s order). However, CIT(A) deleted the addition on the ground that no independent inquiry done by the AO. Therefore, CIT(A) order ignored this crucial findings of the AO. He placed reliance upon the decision in the case of Sumiti Dyal vs CIT 214 ITR 801 (SC) and CIT vs Durga Prasad 82 ITR 540 (SC).
Per contra, Ld. AR for the assessee relied upon the findings of the ld. CIT(A) and stated that he has passed a well reasoned order which does not need any interference.
Considered the rival submissions and material placed on record. It is noted that all the grounds are relating to addition of Rs. 1,00,00,000/- u/s. 68 of the Act which was made by the AO by relying upon the information received from DDIT(Inv.), Unit-3(1), Kolkata dated 11.3.2019. We noted that CIT(A) pointed out that as per information received from the Investigation Wing that assessee is the beneficiary of accommodation entry of Rs. 1.00 crore through M/s Sharda Vanijya Pvt Ltd. whereas the factual position is that Rs. 1 crore was received by the appellant assessee from M/s Khushboo Complex Pvt. Ltd. and the same was repaid alongwith interest in subsequent period, wherein no discrepancy was pointed out. It was the contention of the Revenue that CIT(A) ignored the statement of Sh. Praveen Agarwal recorded u/s. 132(4) of the Act. However, Ld. CIT(A) observed that AO has merely relied upon statement of Sh. Praveen Aggarwal and information received Investigation Wing and the AO has failed to brought any material evidence the fact that the appellant has taken accommodation entry of Rs. 1,00,00,000/- from the bogus entities. We draw support from the ITAT Delhi Bench decision in the case of Vineet Gupta vs. ACIT passed in ITA No. 1515/Del/2023 order dated 8.10.2024 wherein after referring to various case laws including CIT vs. Pavitra Realcom Pvt. Ltd. ITA No. 579/2018 of Delhi High Court, it was held in para 10 that it is an undisputed fact that the statement recorded u/s. 132(4) of the Act has better evidentiary value but it is also settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the context of the statements, which is absent in the instant case. It was the further contention of the Revenue that merely because the transaction has been made through banking channel deletion made by the CIT(A) is not proper. Ld. CIT(A) by relying upon the various case laws of the different High Courts has observed that assessee has fully repaid the said loan and same has been confirmed by the lender and all the transaction has been done through banking channel. Further, the AO has only relied upon the information received from investigation wing/statement of Praveen Aggarwal and assumed that the assessee has received bogus unsecured loan ignoring the fact that the said loan was repaid in subsequent years and no discrepancy was found on the same. Further, it was the contention of the Revenue that Sh. Praveen Aggaral is a well known entry operator, however, CIT(A) noted that no such evidence has been brought on record establishing that assessee has taken accommodation entry of Rs. 1,00,00,000/- from the bogus entities. The case laws relied by the Ld. DR are distinguishable.
Keeping in view of the aforesaid facts and circumstances, we are of the considered view that the Ld. CIT(A) has passed a well, reasoned order, which does not need any interference on our part, hence, we uphold the same and reject the grounds raised by the revenue.
In the result, the appeal filed by the Revenue is dismissed.