Alleged accommodation entry in sales transactions denied after documentary evidence and absence of cash trail, addition deleted.

Addition for alleged accommodation entries was rejected where the assessing officer neither disallowed the books of account nor established any cash trail; the taxpayer had recorded and offered the sales as revenue and received payments through banking channels. The assessee produced sales tax/excise certificates, VAT returns, invoices, bank statements, delivery evidence, C-Forms and tax audit records, thereby discharging the evidentiary onus and negating the accommodation-entry allegation. Reliance solely on investigation inputs without independent verification was insufficient. Re-adding accepted sales would amount to impermissible double addition; the impugned addition was deleted and decision upheld against revenue.

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Issues: Whether the addition of Rs. 2,68,00,000 made by the Assessing Officer treating receipts from M/s IINFC Ltd. as accommodation entry was rightly deleted by the Commissioner of Income Tax (Appeals).

Analysis: The Revenue reopened assessment under Section 148 based on third-party information from search proceedings of a group which indicated use of accommodation entries; AO added the amount for absence of confirmation from the purchaser. The Tribunal examined the material on record: books accepted and not rejected by AO, payments received through banking channels, tax-audit records, ledger extracts, complete invoices, VAT/C-form evidence and certificates from Sales Tax authorities, and no cash trail or other irregularity was established by AO. The CIT(A) found AO relied solely on third-party information without independent verification. The Tribunal analysed whether the assessee discharged the onus to prove genuineness of sales and whether AO conducted requisite inquiries before making the addition; it concluded that the assessee produced sufficient contemporaneous documents and that re-adding the accepted sales would amount to double addition absent positive evidence of accommodation entries.

Conclusion: The deletion of the addition of Rs. 2,68,00,000 by the CIT(A) is upheld and the Revenue's appeal is dismissed; decision is in favour of the assessee.

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