Amar Partap Steels Pvt. Ltd. Vs ITO (ITAT Jaipur)
Income Tax Appellate Tribunal (ITAT), Jaipur, has deleted an addition of ₹1.5 crore made by the Assessing Officer (AO) against Amar Partap Steels Pvt. Ltd. on allegations of receiving bogus unsecured loans from entities linked to the Praveen Kumar Jain Group.
Background of the Case
The case originated from information received by the AO from the Investigation Wing of the Income Tax Department, Mumbai, through the Director General of Income Tax (Investigation), Rajasthan. The information alleged that the assessee had obtained accommodation entries, in the guise of unsecured loans, from two companies controlled by the Praveen Kumar Jain Group:
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M/s Falak Trading Co. Pvt. Ltd. – ₹1 crore (F.Y. 2012–13)
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M/s Pragati Gems Pvt. Ltd. – ₹50 lakh (F.Y. 2012–13)
The AO, relying solely on this intelligence and the statement of Shri Praveen Kumar Jain recorded during search and seizure operations, treated the loans as non-genuine and added ₹1.5 crore to the assessee’s taxable income.
Findings of the Assessing Officer & CIT(A)
The AO concluded that the loans were sham transactions meant to introduce unaccounted money into the assessee’s books. The basis for the addition was the statement of Shri Praveen Kumar Jain, wherein he admitted to running a network of companies to provide accommodation entries.
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s order, citing the Supreme Court ruling in Sumati Dayal v. CIT (214 ITR 801), which emphasises that human probabilities and surrounding circumstances should be considered when assessing the genuineness of transactions. The CIT(A) held that the documentary evidence produced by the assessee was insufficient to override the information from the Investigation Wing.
Assessee’s Submissions Before ITAT
The assessee contested the addition, highlighting:
