TaxTMI 
TaxTMI 
2026 (10) TMI 1110
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....g deductions of Rs. 1,78,414/- under Chapter VI-A. The Assessing Officer received information through the Department's Insight Portal that the assessee had obtained a loan of Rs. 47,56,942/- from M/s Aneri Fincap Limited during financial year 2018-19. The information referred to a search conducted on 06.11.2019 in the Oneworld Group cases. According to the Assessing Officer, certain entities of that group had recorded purchase and sale transactions with entities controlled by Shri Rajesh G. Mehta. The Assessing Officer referred to statements given by Shri Mehta and Shri Urvil A. Jani concerning alleged bogus purchase and sale transactions. He also recorded that Shri Mehta had identified Aneri Fincap Limited as one of the entities under his control. 3. Acting on that information, the Assessing Officer passed an order under section 148A(d) on 24.03.2023 and issued notice under section 148 on the same date. The income declared by the assessee in the return filed in response to notice under section 148 was Rs. 13,79,504/-. 4. During the reassessment proceedings, the assessee submitted a ledger confirmation concerning the loan, bank statements relating to its receipt and repayment....
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....ncap Limited, previously known as Farry Industries Limited. He described the lender as a registered nonbanking financial company and referred to its registration certificate, loan confirmation, bank statements, returns and audited financial statements. He submitted that the lender's disclosed income and assets demonstrated its capacity to advance the loan. He also stated that the loan had subsequently been repaid through banking channels. The assessee contended that the statements relied upon in the assessment concerned alleged purchase and sale entries and did not identify either the assessee or his loan as an accommodation entry. He maintained that he had entered into no purchase or sale transaction with the lender. According to him, the documentary evidence established the lender's identity and creditworthiness and the genuineness of the loan, whereas no independent inquiry had connected his transaction with the alleged activities described in the statements. He again raised the denial of cross-examination of Shri Mehta and relied on judicial decisions concerning the use of third-party statements and the evidentiary burden under section 68. In relation to the two connected adjus....
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....e nature of transaction taken place with the aforesaid company. Further during the course of re-assessment the appellant proved that the loan was taken and repaid through prescribed banking channels and submitted bank statement of both the appellant and M/S Aneri Fincap Ltd highlighting the transactions. c. The appellant during the course of re-assessment proceedings submitted that M/S Anneri Fincap Limited is an NBFC (Certificate of Registration from RBI was submitted) and hence since the core business of the aforesaid company is of advancing loans itself substantiates that the company is setup for providing loans to customers. The appellant through prescribed banking channels had taken loan amounting to Rs. 23,00,000. Also from the financial statements from period AY-2017-18 to AY-2020-21 the Total Assets of the company stood at approximately Rs. 932 Crores and Rs. 1032 Crores respectively in AY-2018-19 and AY-2019-20 respectively. Therefore it is evident that the company was well within the capacity to provide a loan of Rs. 23,00,000/- to the appellant for the year under review. d. The appellant states that by making submissions and proving genuineness of the t....
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....essment proceedings or at the time of issuance of show cause notice/ draft order, the learned A.O. nowhere mentioned about the addition of commission expenses u/s 69C of the Income Tax Act,1961. The appellant was not made aware of any such additions being made by the learned A.O. The appellant states that section 144B (6)(vii) of the Income Tax Act,1961 states that "in a case where a variation is proposed in the income or loss determination proposal or the draft order, and an opportunity is provided to the assessee by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such income or loss determination proposal, the assessee or his authorised representative, as the case may be, may request for personal hearing so as to make his oral submissions or present his case before the income-tax authority of the relevant unit;" The appellant states that the draft order/show cause notice did not propose variation in respect to the aforesaid additions of commission paid of Rs. 12420/- and hence no proper opportunity of being heard was given to the appellant which is a blatant violation of Principal of natural justice. c. Further, whi....
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....eof in FY-2022-23. Hence as the interest has not been paid or claimed during the year under review the same cannot be disallowed by the learned A.O. at the time of filing of impugned order. d. The appellant has paid interest on such aforesaid genuine loans during the year under review. Further such interest has been paid through proper banking channels. Bank statements highlighting the interest paid along with interest working has been submitted during the course of assessment. e. Further, while passing the impugned order under section 250 of the Income Tax Act, 1961, the learned Commissioner of Income Tax (Appeals) did not consider the submissions made by the appellant and the learned A.O. erred in law and fact by not passing a speaking order in respect of the impugned addition. The Appellant craves leave to add to and/or amend and/or delete and/or modify and/or alter the aforesaid grounds of appeal as and when the occasion demands. 9. During the hearing, the learned Authorised Representative (AR) relied on his written submissions and addressed the three disputed adjustments separately. He submitted that the assessee had established the identity and c....
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....ring the year relevant to the assessee's loan. 11. The learned AR submitted that Shri Rajesh G. Mehta's statement concerned alleged bogus purchase and sale transactions. He contended that the statement neither named the assessee nor identified the particular loan as an accommodation entry. He further submitted that the assessee had requested cross-examination during the assessment proceedings and the virtual hearing, but no effective opportunity was provided. In this connection, he referred to page 97, point 21, of the paper book. He argued that a general allegation about the lender could not, without material connecting it to the assessee's transaction, displace the loan documents and banking records. 12. The learned AR relied on the decisions listed in his written submissions as concerning alleged accommodation loans from the same lender. He cited ACIT v. Ramesh Kumar Jain, ITA No. 192/Mum/2025; DCIT v. Jayantilal Rajmal Seth, ITA No. 5773/Mum/2024; ACIT v. G.M. Cables & Switches Pvt. Ltd., ITA No. 32/Viz/2025; ITO v. Mukesh Kumar Jain, ITA No. 4664/Mum/2025; JCIT (OSD) v. Rajesh Virendrakumar Singh, ITA Nos. 689, 690, 691, 790 and 1000/Mum/2026; and Shanti Gold Internation....
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....al question is whether the assessee satisfactorily explained the loan of Rs. 23,00,000/- received from M/s Aneri Fincap Limited on 07.05.2018. The additions for alleged commission of Rs. 12,420/- and the disallowance of interest of Rs. 1,69,003/- arose from the Assessing Officer's conclusion that the loan was an accommodation entry. We shall examine each adjustment separately. 18. At the outset, we recognise the force of the Revenue's objection. The portion of Shri Rajesh G. Mehta's statement reproduced in the assessment order identifies Aneri Fincap Limited among the entities which, according to him, he controlled. In answer to the question concerning the activities of those entities, he stated that they carried on no business, existed on paper and were used to generate bogus sales and purchases for commission. The statement was material warranting scrutiny of a loan from that company. It could not be disregarded merely because it did not name the assessee. Equally, an allegation concerning the lender's general activities did not dispense with examination of the evidence concerning this particular loan. 19. The Assessing Officer initially acted on information describing the ....
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....s or tax records which demonstrates that the stated funds were unavailable to it or that the particular advance was fictitious. The CIT(A) referred to the documents and the lender's reported financial position but did not identify a defect in them. Both authorities preferred the general statement of Shri Mehta without explaining why it displaced the transaction-specific material tendered by the assessee. 23. Banking channels and subsequent repayment are relevant but are not conclusive. The assessee must still explain the nature and source of the credit to the satisfaction required by section 68. In the present case, however, the explanation rests on the identified lender, its confirmation, the identified transfer, financial records bearing on capacity and the material concerning repayment. The Assessing Officer accepted the documents as having been furnished but brought no transaction-specific material to rebut them. We therefore find that the assessee discharged the initial burden concerning the lender's identity, prima facie capacity and the genuineness of the identified loan. The Assessing Officer's stated reasons do not justify treating the credit as the assessee's unexplain....
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....rial and the failure of Shri Mehta to attend the video conference arranged for cross-examination. We draw from that decision no rule that a lender's registration alone proves a loan. Its conclusion followed an assessment of the available documents and the absence of material identifying the borrower's transaction as an entry. 30. The Visakhapatnam Bench in ACIT v. G.N. Cables & Switches Pvt. Ltd., ITA No. 32/Viz/2025, order dated 20.05.2025, likewise considered a loan from Aneri Fincap Limited. The order records that the assessee had furnished the lender's annual accounts and bank statements and material concerning the interest. In paragraph 7, the Bench held: "No adverse material has been brought before us by the Revenue to state that the transaction is a bogus entry." 31. That decision involved its own evidence and earlier transactions with the lender. We rely on its examination of transaction-specific material, and not on its earlier-year facts as if they were facts of this appeal. 32. In JCIT (OSD) v. Rakesh Virendra Singh, including ITA No. 1000/Mum/2026, common order dated 11.06.2026, the coordinate Bench considered additions concerning loans from Aneri Finc....
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....cifically pressed before us. Neither lower authority identified an entry, inconsistency or inquiry result which rendered those documents unreliable in relation to this advance. We distinguish Bajaj International Realty on that evidentiary footing. We neither disregard Shri Mehta's statement nor hold that a registered NBFC's accounts are immune from investigation. 38. The subsequent coordinate Bench decision in Shanti Gold International Ltd. v. ACIT, ITA No. 7192/Mum/2025, order dated 18.06.2026, considered Bajaj International Realty and expressly distinguished it where the assessee and lender had furnished primary documents and audited accounts. Paragraph 14 identifies the production of the lender's audited annual accounts as a feature: "which was a missing aspect in the case of Bajaj International Realty Pvt. Ltd." 39. The Bench held that the Revenue's failure to point out a defect in the available primary material was significant. We reach our conclusion independently on the documents and reasoning in this assessment. The distinction drawn in Shanti Gold International also explains why the learned DR's reliance on paragraph 5.1 of Bajaj International Realty does no....