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Case Law Details

Case Name : Arjun Manoj Purohit Vs ITO (ITAT Mumbai)
Appeal Number : I.T.A. No.3654/Mum/2023
Date of Judgement/Order : 02/05/2024
Related Assessment Year : 2014-15
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Arjun Manoj Purohit Vs ITO (ITAT Mumbai)

In the case of Arjun Manoj Purohit vs. Income Tax Officer (ITAT Mumbai), the dispute revolves around the addition of Rs. 1.17 crore under Section 68 of the Income Tax Act, 1961, concerning alleged accommodation entries. This summary will delve into the facts, legal arguments, and the decision rendered by the Income Tax Appellate Tribunal (ITAT) Mumbai.

Arjun Manoj Purohit, engaged in construction activities, filed his income tax return for the assessment year 2014-15, declaring a total income of Rs. 1,12,28,840/-. Subsequently, based on information from the Directorate of Investigation, Mumbai, the Assessing Officer (AO) reopened Purohit’s assessment under Section 148 of the Income Tax Act. This action was prompted by a search conducted on Shri Vipul Vidur Bhatt and related entities, revealing that Bhatt was involved in providing accommodation entries through numerous paper companies.

The AO alleged that Purohit had received loans amounting to Rs. 77 lakhs from M/s. Shipra Fabrics Pvt. Ltd. and Rs. 40 lakhs from M/s. Lunkad Textile Pvt. Ltd., both of which were allegedly controlled by Bhatt. The AO treated these transactions as accommodation entries and issued a show cause notice to Purohit, seeking justification for these credits under Section 68 of the Act.

Purohit responded by submitting various documents, including audited financial statements, bank statements, and confirmations of the loans. Despite these submissions, the AO remained unconvinced and added Rs. 1.17 crore to Purohit’s income under Section 68, arguing that Purohit had failed to prove the genuineness of the transactions, the identity of the creditors, and their creditworthiness.

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July 2024