Ratul Tex Private Limited Vs DCIT (ITAT Mumbai)
The Mumbai ITAT deleted an addition of ₹1.09 crore made under section 69A where the entire case of the Revenue was based on the statement of an alleged accommodation entry operator, without granting the assessee an opportunity to cross-examine him. The Tribunal held that denial of cross-examination amounts to a serious violation of natural justice, relying on the Supreme Court ruling in Andaman Timber Industries v. Commissioner of Central Excise.
The assessee had received a loan from Surya Diamonds Pvt. Ltd., which the Department treated as a bogus accommodation entry based on information gathered during investigation into alleged entry provider Shri Deepak Jain. However, the assessee produced income-tax returns, audited financials, confirmations and bank statements proving receipt and repayment of the loan along with interest within the same financial year.
The Tribunal also noted an important factual flaw in the Department’s case – the alleged entry operator, Shri Deepak Jain, was not even a director of the lender company during the relevant assessment year.
Rejecting the Revenue’s reliance on minor address discrepancies and generalized suspicion, the ITAT held that once the assessee establishes the identity of the lender, source of funds and repayment through banking channels, the addition cannot survive merely on the basis of third-party allegations.
The Tribunal further observed that repayment of the entire loan with interest during the same year substantially strengthens the genuineness of the transaction and arbitrary doubts about creditworthiness cannot override documentary evidence on record.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 31.07.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi/ the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as “Ld. Commissioner”] under Section 250 of the Income Tax Act, 1961 (in short, “the Act”) for Assessment Year 2018–19.
