ITO Vs Bherulal Chunnilal Jain (ITAT Mumbai)
Accommodation Entry Case: Entire Bank Credits Taxable When Beneficiaries Not Identified, Holds Mumbai ITAT
The Mumbai Bench of the ITAT allowed the Revenue’s appeal in the case of Mr. Bherulal Chunnilal Jain (AY 2009-10) and restored the full addition of ₹25.87 crore under section 68, rejecting the CIT(A)’s approach of taxing only estimated commission income.
The Tribunal held that where huge credits appear in a bank account admittedly belonging to the assessee, and the assessee fails to establish the identity, creditworthiness and genuineness of the transactions or furnish details of the beneficiaries, the entire amount is liable to be taxed as unexplained cash credits. Mere pleading of ignorance or alleging that the account was operated by an entry operator does not discharge the primary onus under section 68.
Relying on the binding Bombay High Court decision in PCIT v. Buniyad Chemicals Ltd., the ITAT clarified that taxation can be restricted to commission income only when the assessee identifies beneficiaries of accommodation entries and provides their details to the Assessing Officer. In the absence of such disclosure, full addition of bank credits is justified.
Accordingly, the ITAT set aside the CIT(A)’s order and upheld the AO’s assessment, reinforcing a strict approach in accommodation entry cases where the assessee withholds beneficiary details.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
