Sadbhavna Enterprise vs. ITO Ward 7, Vapi

Parties Involved

Facts Summary

The assessee, Sadbhavna Enterprise, filed an appeal against the order passed by the Commissioner of Income Tax, Appeal, National Faceless Appeal Centre (NFAC) for the Assessment Years 2019-20 and 2020-21. The assessee had filed a return of income on 29.12.2019 declaring a total income of Rs.8,33,700/-. A search and seizure action was undertaken on 15.02.2022 against Shri Ramesh Chaurasia, Shri Achal Chaurasia, and the ARC Group, who were involved in illegal online betting and gambling activities. The Assessing Officer observed that CA Sanjay Shah was one of the intermediaries who had sourced and provided accommodation entries. The assessee had entered into substantial financial transactions and had not disclosed the quantum and nature of transactions in the return of income. The case was reopened under section 147 of the Income Tax Act, 1961, and an order under section 148A(1)(d) of the Act was passed on 06.04.2023. The Assessing Officer added Rs.1,35,000/- as variation in business income.…

Legal Issues

• 1. Whether the addition of Rs.1,35,000/- made by the Assessing Officer on account of accommodation entries is justified.
• 2. Whether the disallowance of interest amounting to Rs.12,38,393/- is justified.

Judgment Outcome

Decided in favour of Assessee.

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