Narendrakumar Shankarbhai Patel Vs ITO (ITAT Ahmedabad)
Reopening u/s 147Sustained but Addition ₹30.50 Lakh Loan as Bogus Entry Deleted – ITAT Ahmedabad-Accommodation Entry Allegation Fails – Loan Transaction Proved by Bank Records
Assessee, proprietor of M/s. Parmi Traders, challenged the order of NFAC dated 19-03-2024 confirming reassessment & addition of ₹30.50 lakh as accommodation entry.
AO had reopened assessment u/s 147 on the basis of investigation report that transactions with Shri Chandrakant P. Patel, proprietor of M/s. Shiyon Enterprises, were accommodation entries. AO treated ₹30.50 lakh received by Assessee as unexplained income, holding that Shri Chandrakant P. Patel was a known entry operator. CIT(A) upheld both reopening & addition.
Assessee argued that when search material existed, notice u/s 153C only could have been issued, hence reopening u/s 148 was bad in law. It was further submitted that the impugned sum was genuine loan, duly reflected in books & bank account & subsequently repaid in the next year. No purchase/sale was ever made with Shiyon Enterprises, so allegation of bogus billing was unfounded.
Tribunal held that AO had obtained due approval for reopening & recorded valid reasons, so challenge to reopening failed. However, on merits, it found that Assessee had substantiated receipt of ₹30.50 lakh as loan by documentary evidence – books of account, bank statement & confirmation showing repayment in subsequent year. This crucial evidence was ignored by AO & CIT(A). Since the transaction was explained & co-related, the addition was unsustainable.
