Sachin K Mehta (HUF) vs. ITO WARD 19(3)(1)

Parties Involved

Facts Summary

The assessee filed its return of income declaring a loss of ₹24,17,627/-. The assessment was subsequently reopened pursuant to information received through the Insight Portal concerning alleged accommodation-entry transactions unearthed during search proceedings conducted in the case of certain persons, including Shri Sanjay Shah. During the search, statements under section 132(4) were recorded and various documents and digital evidence were stated to have been found. On the basis thereof, the assessee was alleged to have obtained an accommodation entry from M/s Consultshah Financial Services Pvt. Ltd. During the reassessment proceedings, the assessee explained that the loan of ₹10,00,000/- had been received through banking channels and was subsequently repaid; interest of ₹14,301/- was also paid through banking channels after deduction of tax at source. The assessee furnished, inter alia, the relevant ledger, Form 16A and bank statement. The Assessing Officer, however, was not satisfied with the explanation and, relying principally upon the statement of Shri Sanjay Shah and the material gathered during the search, treated the loan of ₹10,00,000/- as unexplained money under section 69A and the interest of ₹14,301/- as unexplained expenditure under section 69C, aggregating to ₹10,14,301/-. In appeal, the assessee reiterated that the transaction was genuine and supported by documentary evidence. The learned CIT(A), however, confirmed the additions, observing that Shri Sanjay Sh…

Legal Issues

• 1. Whether the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 10,14,301/- made by the Assessing Officer under the provisions of Section 69A of the Income-tax Act, 1961 read with Section 69C of the Income-tax Act, 1961 without properly appreciating the facts and evidences placed on record by the Appellant.
• 2. Whether the Learned CIT(A) erred in confirming the addition of Rs. 10,00,000/- by treating the unsecured loan received from M/s Consultshah Financial Services Pvt. Ltd. as unexplained money under Section 69A of the Income-tax Act, 1961 despite the Appellant having furnished documentary evidence establishing the identity, creditworthiness and genuineness of the transaction.
• 3. Whether the entire assessment and penalty proceedings are vitiated as the AO failed to grant cross-examination of untested statement of Shri Sanjay Shah, the only person whose alleged statement was used to draw adverse conclusions.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

Similar Judgements

• Shree Saraswati Education Sansthan vs. ITO(E)

  Ahmedabad bench

• Gargi Overseas Pvt. Ltd Vs. Income Tax Officer, Ward-10(1), Delhi

  Delhi Bench 'A', New Delhi benchAY 2017-18Partly Allowed

• Vidur Chharia Vs. DCIT/ACIT, Central Circle, Ghaziabad

  Delhi Bench benchAY 2017-18Partly Allowed

• NITIN KAHER, VS. AO, WARD 44(6)

  Delhi Bench ‘A’ : New Delhi benchAY 2020-21Partly Allowed

• Karnimata Cold Storage Ltd. vs. ACIT, Circle-38, Midnapur

  Kolkata Bench benchAY 2014-15Allowed

• DR Engineers Private Limited v. AO

  Delhi bench