Amigo Finstock Private Limited Vs ITO (ITAT Ahmedabad)
Loan Repaid Through Banking Channel Cannot Be Branded as Accommodation Entry Merely on Third-Party Statement: Ahmedabad ITAT
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal has held that where an assessee establishes that unsecured loans were received and repaid through banking channels during the same year, the transactions cannot be treated as accommodation entries merely on the basis of a general statement recorded from an alleged entry operator, particularly when there is no evidence of cash changing hands.
At the same time, the Tribunal upheld the validity of reopening under Section 147. It held that where the Assessing Officer relied upon information and a statement recorded under Section 131, but not upon any material seized during a third-party search, the Revenue was not necessarily required to invoke Section 153C.
The decision was rendered in Amigo Finstock Private Limited v. ITO, ITA Nos. 1540, 1541 and 1542/Ahd/2026, Assessment Years 2013-14 to 2015-16, order dated 11 September 2026.
Facts relating to Assessment Year 2013-14
The assessee-company filed its return declaring a total income of ₹42,52,820. Its assessment was reopened on the basis of information that it had allegedly obtained accommodation entries in the form of bogus loans aggregating to ₹25,68,794 from:
- Drake Commercial Private Limited; and
- Pushkar Trading & Holding Private Limited.
The information originated from a search conducted in the case of Shri Subhas Chandra Bhartiya, who allegedly admitted that he was engaged in providing accommodation entries.
