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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)-30, New Delhi [in short ‘the CIT(A)’] dated 03.12.2025, for Assessment Year 2020-21.
The appeal is time barred by 15 days. The Revenue has filed an application 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 petition which appears to be bonafide. Thus, delay of 18 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.1,29,67,650/-. 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 to show that the Tribunal in a similar case, where the assessee who was allegedly beneficiary of the accommodation entries from the aforesaid two persons, addition of Rs.2 crores u/s.68 of the Act was made by the AO. In addition, the AO made addition @3% u/s.69C of the Act for payment of alleged commission for providing accommodation entry. The CIT(A) deleted the addition. 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 Surender Kumar Garg, appearing on behalf of the assessee vehemently defending the impugned order and prayed for dismissing appeal of the Revenue. The ld. Counsel submits that the CIT(A) following the order of Tribunal in the case of Real Innerspring Technologies Pvt. Ltd. vs. ACIT in ITA No. 647/Del/2023 for AY 2016-17 decided on 27.03.2025 has deleted the addition. He pointed that in the said case similar allegations were made against the assessee therein, the Tribunal after examining facts of case allowed appeal of the assessee and deleting the addition.
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.31,00,000/- u/s.68 of the Act on account of accommodation entry received by the assessee from M/s. Shyamali Security and Consultant P. Ltd. a paper company controlled by Shri Deepak Agarwal for routing accommodation entries. The assessee claimed that Rs.31,00,000/- was taken as loan from Shyamali Security and Consultant P. Ltd. Since, the assessee failed to show genuineness of the transaction and creditworthiness of lender, AO made addition of the said amount u/s.68 of the Act. The CIT(A) has deleted the addition by placing reliance on the decision of Tribunal in the case of Real Innerspring Technologies Pvt. Ltd. vs. ACIT (supra). I find that the decision on which the CIT(A) placed reliance is distinguishable, whereas, facts in the case of ACIT vs. Bhawani Finvest P. Ltd. (supra) from which the ld. DR has drawn support is identical to the case of the assessee. The Division Bench in the case of ACIT vs. Bhawani Finvest P. Ltd. (supra) has confirmed the addition by holding as under:-
8.We have heard rival submission in the light of material available on records. We have noted that the ld. AO has vividly demonstrated in his assessment order extracted hereinabove that the assessee was having connections with accommodation entry providers. We have also noted that the ld. AO has extensively brought out in the assessment order while analyzing statements of entry providers Shri Himanshu Verma and Shri Deepak Agarwal and their employees Ms. Sonia, etc that a web of shell company was created to route accommodation entries and that the assessee was beneficiary of one such company. On the issue of justification of loan qua its repayment, we have noted that a co-ordinate Bench of the Mumbai Tribunal in the case of J.K. Global (supra) held as under:-
“..7. Considering the facts of the case in toto and in the light of the decisions of the coordinate bench (supra), we have no hesitation in confirming the addition made u/s 68 of the Act for the captioned Assessment years. The contention of the ld. counsel that the loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense….”
9.Thus, we have noted that the argument of the assessee regarding the justification of impugned loan of Rs.2 crores on account of repayment cannot be accepted. In respectful compliance to the decision of Hon’ble Mumbai Tribunal in the case of J.K Global(supra), we are of the considered view that the relief accorded by the ld CIT(A) is not based upon correct understanding of the facts of the case. We, therefore, set-aside the order of the ld. CIT(A) and confirm the addition of Rs.2 crores made by the ld. AO. Similarly, we also confirm the addition made by the AO of Rs.15,06,164/- on account of interest and of Rs.6 lakhs on account of commission. The appeal of the Revenue is therefore allowed.”
Thus, in light of facts of the case and respectfully following the decision of Division Bench, the impugned order is set aside and appeal of Revenue is allowed.