Funali Rakesh Doshi Vs DCIT (ITAT Mumbai)
Mumbai ITAT Deletes ₹14 Lakh Accommodation Entry Addition; Search Report Alone Cannot Override Documentary Evidence and Loan Repayment
The Mumbai ITAT allowed the appeal of Funali Rakesh Doshi, deleting the ₹14 lakh addition under Section 69A read with Section 115BBE made on the allegation that an unsecured loan received from M/s Aarohi Creations LLP was merely an accommodation entry. The reassessment was reopened based on information unearthed during a search in the ARC Group and the case of Lokesh Kumar Khabya, who was alleged to be an entry operator. Although the Assessing Officer treated the loan as the assessee’s own unaccounted money routed back in the guise of a loan, the assessee produced the loan confirmation, ledger account, bank statements of both parties, lender’s income-tax return and details of unsecured loans, and demonstrated that the loan was repaid within the same financial year after remaining outstanding for only three to four months.
The Tribunal held that the addition was based solely on the general findings of the search against third parties, without any independent evidence linking the assessee to any accommodation entry arrangement. It observed that the Assessing Officer had not disproved the identity of the lender, the genuineness of the banking transaction or the creditworthiness of the lender, nor had he shown that the documentary evidence furnished by the assessee was false or fabricated. The Tribunal relied on its earlier decision in ACIT v. Venus Portfolio and Finances Pvt. Ltd., along with other judicial precedents, holding that where a loan is supported by documentary evidence, routed through banking channels and subsequently repaid, no addition can be sustained in the absence of material proving that it represented the assessee’s own unexplained money.
Finding that the Revenue had merely reiterated the search report without producing any fresh incriminating material to rebut the assessee’s evidence, the Tribunal held that the ₹14 lakh addition under Section 69A read with Section 115BBE was unsustainable in law. Accordingly, it set aside the order of the CIT(A), directed the Assessing Officer to delete the addition, and allowed the assessee’s appeal.
Cases Discussed
- ACIT v. Venus Portfolio and Finances Pvt. Ltd. (ITAT Mumbai), ITA No. 4024/M/2025, date of pronouncement 23/02/2026
- Rajuram Savaji Purohit v. ITO (ITAT Mumbai), (2025) 210 ITD 358 (Mum ITAT)
- DCIT v. Supreme Holdings and Hospitality (India) Ltd. (ITAT Mumbai), (2025) 171 taxmann.com 309 (Mum ITAT)
- PCIT v. Bairagra Builders (P.) Ltd. (Bombay High Court), (2024) 299 Taxman 460 (Bom. HC)
- PCIT v. Merrygold Gems (P.) Ltd. (Gujarat High Court), (2024) 164 taxmann.com 764 (Guj. HC)
- Rajuram Savaji Purohit v. ITO (ITAT Mumbai), [2024] 169 taxmann.com 18
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity “Ld. CIT(A)”], order passed under Section 250 of the Income Tax Act, 1961 (for brevity ‘the Act’), for Assessment Year 2019-20, date of order 06.02.2026. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity ‘Ld. AO’), order passed under Section 147 r.w.s. 144B of the Act, date of order 06.02.2025.
