TaxTMI 
TaxTMI 
2026 (6) TMI 1116
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....stances of the case and in law, the ld. CIT(A) has erred in ignoring the fact that the assessee has transacted with Madhudhan Barter Pvt. Ltd. which is a shell company managed and controlled by renowned entry operator of Kolkata- Shri Manohar Lal Nangalis? 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 4. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Office be restored." ITA No. 1505/Ahd/2024 (A.Y. 2022-23) "1. Whether on facts and circumstances and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 3,30,00,333/- u/s. 68 of the Act as unexplained cash credit and interest of Rs. 30,54,619/- thereto, without appreciating the facts of the case. 2. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in ignoring the fact that the assessee has transacted with M/s. Cosmos Tradelink Private Limited which is a shell company managed and controlled by renowned entry operator of Kolkata- Shri Mukesh Banka? 3. The appellant craves leave to amend or alter any ground or add a new groun....
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....subsequent year through RTGS and therefore the transaction could not be characterized as an accommodation entry. 6. However, the Assessing Officer was not satisfied with the explanation furnished by the assessee. The Assessing Officer relied primarily upon investigation wing information alleging that M/s. Madhudhan Barter Pvt. Ltd. was a shell entity controlled by alleged entry operators and concluded that the lender company lacked genuine financial credibility. According to the Assessing Officer, the assessee failed to satisfactorily establish the true source of funds available with the lender company and therefore the amount of Rs. 1,25,00,000/- received from the said entity represented unexplained cash credit under section 68 of the Act. The Assessing Officer accordingly completed reassessment under section 147 read with section 144B at a total income of Rs. 1,35,93,480/- after making addition of Rs. 1,25,00,000/-. 7. Aggrieved by the reassessment order, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). During appellate proceedings, the assessee contended that complete documentary evidences establishing the identity, genuineness and....
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....l employee expenditure. Another factor considered by the CIT(Appeals) was that the assessee had repaid the entire loan amount in the subsequent financial year through banking channels along with interest after deduction of TDS. According to the CIT(Appeals), such conduct strongly supported the genuineness of the transaction and negated the allegation that the loan represented mere accommodation entry. 11. While granting relief, the CIT(Appeals) placed reliance upon several judicial precedents including the decision of the Delhi Tribunal in Nimbus (India) Ltd. v. DCIT, wherein it was held that once PAN details, bank statements, audited financial statements and income-tax acknowledgements are furnished, the assessee discharges its initial burden under section 68 and the onus shifts upon the Assessing Officer to disprove the evidences. Reliance was also placed upon the decision of the Calcutta High Court in Shankar Industries v. CIT [1978] 114 ITR 689 for the proposition that the assessee is required to establish only the identity of the creditor, the capacity of the creditor and the genuineness of the transaction. Further CIT(Appeals) placed reliance on the decisions in CIT v. Met....
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....ield enquiries conducted through the Verification Unit also failed to establish genuine business existence of the entities concerned. The ld. DR further emphasized that the lender company had disclosed only meagre profit of Rs. 5,447/- during the relevant year and possessed no fixed assets whatsoever, thereby demonstrating absence of any real business infrastructure or financial strength to justify advancement of loans of Rs. 1.25 crores. According to the ld. DR, the directors of such entities were merely dummy directors and the entire arrangement represented structured accommodation entries routed through shell companies. It was therefore argued that the assessee failed to establish the real creditworthiness and genuine source of funds of the lender company and accordingly the Assessing Officer was justified in treating the amount of Rs. 1,25,00,000/- as unexplained cash credit under section 68 of the Act. 15. In response, the ld. counsel for the assessee placed reliance on the observations made by CIT(Appeals) in the appellate order. 16. We have heard the rival submissions and perused the material available on record. 17. The controversy involved in the present appeal re....
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....partment further relied upon investigation material alleging that connected entities were shell concerns operated by entry providers. 20. In our considered view, the issue requires deeper factual verification balancing both sets of circumstances emerging from the record. It is a settled position of law that addition under section 68 cannot be sustained merely on the basis of generalized investigation reports or suspicion once the assessee furnishes prima facie evidences establishing identity, genuineness and creditworthiness. At the same time, where surrounding circumstances raise legitimate doubts regarding the true source and financial capacity of the creditor, the matter requires proper verification by the Assessing Officer. 21. In this regard, reliance may be placed upon the judgment of the Hon'ble Gujarat High Court in the case of DCIT v. Rohini Builders reported in [2002] 256 ITR 360 (Guj.), wherein the Hon'ble High Court held that once the assessee furnishes confirmations, PAN/GIR particulars and establishes that the amounts were received through account payee cheques, the primary onus cast upon the assessee stands discharged. The Hon'ble High Court observed as under: ....