TaxTMI 
TaxTMI 
2026 (3) TMI 1476
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....mount of Rs. 20,52,866/- under section 69A of the Act. 1.2 On the facts and circumstances of the case and in law, the Id. CIT(A) erred in upholding the addition under section 69A when the assessee was not found to be the owner of any unexplained money which has not been recorded in the books of account. 1.3 On the facts and circumstances of the case and in law, the Id. CIT(A) erred in overlooking that in the statement on oath given by Mr. Rajesh Mehta, he has stated that the accommodation entries were provided by him on persuasion of Mr. Urvil Jani to OneWorld group entities and to the Pittie Group, and nowhere has he quoted the name of the appellant, nor is the appellant related to any of the entities quoted by him. 1.4 On the facts and circumstances of the case and in law, the Id. CIT(A) erred in not appreciating that the Ld. Assessing Officer ['Ld. AO'] has disregarded all the relevant evidence including the details of all bank accounts, ledger copy of Aneri Fincorp Limited, bank statements highlighting the receipt and repayment of loan and interest and financial statements of Aneri Fincorp Ltd filed with Registrar, without bringing on record a....
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.... the right to add to, alter or amplify the above grounds of appeal, at any time before or at the time of appeal, to enable the Hon'ble Tribunal to decide the appeal in accordance with law. 2. Briefly stated, facts of the case are that the assessee filed its return of income on 31.10.2018 declaring Nil income under the normal provisions of the Income-tax Act, 1961 ("the Act") and book profit of Rs. 2,31,37,524/- under section 115JB of the Act. The assessment under section 143(3) was completed on 20.02.2021 assessing total income at Rs. 2,60,29,692/-. 2.1 Subsequently, based on information flagged on the Insight Portal indicating that the assessee had received a loan of Rs. 20,52,866/- from M/s Aneri Fincap Ltd., an entity allegedly controlled by Shri Rajesh G. Mehta and engaged in providing accommodation entries, proceedings under the amended provisions of section 148 were initiated. The Assessing Officer issued notice u/s 148A(b) of the Act on 19.03.2022 and after considering the submission of the assessee issued order u/s 148A(d) of the Act followed by a notice u/s 148 of the Act on 07.04.2022. The reassessment was completed by the Assessing Officer on 18.03.2024 by way ....
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....per and are used by several persons to generate bogus value and bogus purchases. I get a commission in the range of 54 paise per 100 Rs. transaction ... ". The Appellant's argument that Shri Mehta did not specifically name them is not entirely accurate in spirit. Shri Mehta identified M/s Aneri Fincap Ltd. as one of his paper companies providing accommodation entries. The information available with the department (flagged on Insight Portal) specifically links the Appellant to a transaction of 20,52,866/- with this very entity, M/ s Aneri Fincap Limited, terming it as a "Bogus Loan". The AO noted that while the assessee claimed a loan of 20,00,000/-, the information suggested a transaction of 20,52,866/-. This discrepancy itself raises questions. Regarding the non-provision of cross-examination of Shri Rajesh G. Mehta, while the principles of natural justice are paramount, their application depends on the facts of each case. The Hon'ble Supreme Court in Andaman Timber Industries vs. CCE did hold that not allowing cross-examination is a serious flaw. However, it is also settled law that statements recorded during survey/search operations have significant evi....
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.... involved in providing accommodation entries, based on the sworn testimony of its own controller. The repayment of the loan, even if true, does not automatically make a sham transaction genuine, as such routing of funds is often part of the accommodation entry mechanism. Given the specific admission by Shri Rajesh G. Mehta regarding M/s Aneri Fincap Ltd.'s involvement in providing accommodation entries and its lack of genuine business, the AO was justified in concluding that the explanation offered by the assessee regarding the source of the funds was not satisfactory. The amount of 20,52,866/- received from such an entity, which is specifically identified as providing bogus entries, is rightly treated as unexplained money under Section 69A of the Act. The findings of the AO are based on cogent material and a reasoned analysis of the facts and the statement of Shri Rajesh G. Mehta. Therefore, the addition of 20,52,866/- under Section 69A is upheld. Re: Ground No. 2 - Addition of 11,085/- under Section 69C This addition represents the commission allegedly paid by the Appellant for availing the accommodation entry. Shri Rajesh G. Mehta, in his ....
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....enuineness of the loan transaction. The AO has provided a reasoned basis for the additions made. The case laws cited by the appellant are distinguishable on the facts and circumstances as discussed above. The AO's reliance on the statement of Shri Rajesh Mehta, who controlled M/s Aneri Fincap Ltd., is a critical piece of evidence directly implicating the lender company. In view of the above discussion, the additions made by the Assessing Officer are found to be justified. The assessment order dated March 18, 2024, is hereby confirmed, and the appeal is DISMISSED." 3. Before us, the Ld. counsel for the assessee filed a Paper Book containing pages 1 to 9 and relied on the submissions made before the lower authorities. 4. In ground No. 1.1 and 1.2, the assessee is aggrieved with invoking of section 69A of the Act instead of section 68 of the Act. The primary contention of the assessee is that section 69A has been wrongly invoked since the loan was duly recorded in the books of account. The ld Counsel for assessee submitted that in the case loan of Rs. 20,52,866/- from M/s Aneri Fincap Ltd. was appearing in the books of accounts of the assessee and therefore, provisi....
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....eved that Shri Rajesh G Mehta during his statement u/s 132(4) of the Act only stated of providing accommodation entry to the entities of the 'One World Group' and 'Pittie Group' and not to the assessee, so according to the assessee, addition in the hands of assessee is not justified. 5.1 We have heard rival submissions of the parties and perused the relevant materials on record. The record reveals that Shri Rajesh G. Mehta categorically admitted controlling various paper entities, including M/s Aneri Fincap Ltd., and stated on oath that these entities existed only for providing accommodation entries without carrying out genuine business. Once it is admitted by the controlling person that the company in question was merely an accommodation entry provider with no real business activity, the character of the entity stands seriously impaired. The absence of a specific reference to the assessee does not exonerate the transaction and cannot bring M/s Aneri Fincap Ltd. out of entry providers. As the said company was not having any real business, the entry of the loan provided to the assessee also becomes in the nature of accommodation entry. The critical fact is that th....
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....said party for verification of the Assessing Officer nor brought substantive material demonstrating its financial capacity independent of entry operations, in order to discharge its burden of proof. Mere routing of funds through banking channels does not ipso facto establish genuineness. 6.2 The assessee has failed to demonstrate creditworthiness of said party. Before us also no details documentary evidence in support of creditworthiness have been filed. In the circumstances, we do not find any infirmity in the order of the Ld. CIT(A) in sustaining the addition treating the unsecured loan as explained cash credit. 7. In ground No. 1.6, the assessee has raised the issue that no opportunity was given to the assessee to cross-examine Mr. Rajesh G Mehta. 7.1 Having considered the facts and circumstances of the case, we are of the opinion that principles of natural justice require opportunity of cross-examination where adverse material is relied upon. However, the present case stands on a slightly different footing. The addition is not made solely on the basis of the third- party statement but on the assessee's failure to establish creditworthiness and genuineness under sec....