PCIT Vs Oasis Jewels Private Limited (Gujarat High Court)
Case Summary: The Gujarat High Court, in Principal Commissioner of Income Tax-3, Ahmedabad v. Oasis Jewels Private Limited, upheld the ITAT’s deletion of additions of ₹12,50,000 under Section 68 and ₹12,500 towards alleged commission expenditure under Section 69C of the Income-tax Act, 1961. The Tribunal had found that the disputed receipt from Growth Capital represented sales duly recorded in the assessee’s audited books, supported by customer-wise sales details and other documentary evidence. Since the corresponding sales and profit element had been disclosed and accepted by the Assessing Officer, the same receipt could not again be taxed as an unexplained cash credit. The consequential commission addition also lacked a basis once the principal addition was deleted.
Citation: Principal Commissioner of Income Tax-3, Ahmedabad v. Oasis Jewels Private Limited, R/Tax Appeal No. 17 of 2025, Gujarat High Court, order dated 21 October 2026. The underlying ITAT order was dated 28 June 2024 in ITA No. 302/Ahd/2022 for AY 2012-13, reported at 2024 (6) TMI 1622 – ITAT Ahmedabad.
Core Issue: Whether ₹12,50,000 received from Growth Capital, which the assessee claimed represented accounted sales receipts, could be added again as unexplained cash credit under Section 68, and whether the consequential alleged commission expenditure of ₹12,500 was sustainable under Section 69C.
Fact: The assessee, engaged in bullion trading and the manufacture of ornaments, filed its return for AY 2012-13 declaring income of ₹13,42,000. The original assessment under Section 143(3) determined total income at ₹13,78,000 after disallowing ROC filing fees of ₹36,000. Subsequently, the assessment was reopened under Section 147 on the allegation that a receipt of ₹12,50,000 from Growth Capital represented an accommodation entry not disclosed in the books. The Assessing Officer added ₹12,50,000 under Section 68 and made a further addition towards alleged commission expenditure. The CIT(A) dismissed the assessee’s appeal.
AO / CIT(A) Finding: The Assessing Officer treated the receipt of ₹12,50,000 as an unexplained accommodation entry and made an addition under Section 68. A further commission addition of ₹12,500, representing 10% of the disputed amount, was made under Section 69C. The CIT(A) upheld the additions.
ITAT Finding: The Tribunal found that the disputed receipt formed part of sales duly recorded in the audited books of account and was reflected in the assessee’s bank account with Karur Vysya Bank. The assessee had furnished customer names and addresses, bill numbers, dates, product descriptions, weights, rates, amounts, VAT details and customer confirmations. The Assessing Officer had accepted the corresponding sales income and had not disputed the relevant sales or quantitative details. Since the profit element had already been offered to tax, adding the same sales receipts under Section 68 would result in double taxation. The Tribunal accordingly deleted the ₹12,50,000 addition. It also deleted the consequential commission addition of ₹12,500 under Section 69C because the underlying addition for alleged accommodation entries no longer survived.
High Court Finding: The Gujarat High Court observed that the Tribunal’s factual findings—that the disputed receipts represented sales duly recorded in the books and that the corresponding income had been accepted by the Assessing Officer—were not disputed. The sales receipts could not again be treated as unexplained cash credits under Section 68. Once the principal addition was deleted, the consequential commission addition also had no basis. The Court found no legal infirmity in the Tribunal’s order and held that no question of law, much less any substantial question of law, arose for consideration.
Outcome: The Revenue’s appeal under Section 260A was dismissed. The deletion of the addition of ₹12,50,000 under Section 68 and the consequential commission addition of ₹12,500 under Section 69C was upheld.
Cases Discussed
- ITA No. 302/AHD/2022, order dated 28 June 2024 — ITAT Ahmedabad “SMC” Bench, AY 2012–13 (Oasis Jewels Private Limited): The underlying Tribunal order deleted the ₹12,50,000 addition under Section 68 because the receipts represented duly accounted sales. The consequential commission addition under Section 69C was also deleted. The Gujarat High Court upheld these findings.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned Senior Standing Counsel Mr. Aaditya Bhatt for the appellant.
2. This appeal is filed under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) by the appellant-Revenue proposing the following substantial questions of law arising out of the order dated 28.06.2024 passed by the Income Tax Appellate Tribunal, Ahmedabad ‘SMC’ Bench, Ahmedabad (for short, “the Tribunal”) in ITA No. 302/AHD/2022 for A.Y. 2012-13;
“(i) Whether on the facts and circumstances of the case and in law, the ITAT erred in deleting the addition of Rs. 12,50,000/- made by the AO on account of accommodation entry received from M/s. Growth Capital controlled by Dilip Shah ?
(ii) Whether on the facts and circumstances of the case and in law, the ITAT erred in deleting the addition of Rs. 12,500/- made by the AO on account of unexplained commission expenses u/s 69C of the IT Act ?”
3. The brief facts of the case are that the assessee company is engaged in the business of bullion trading and ornaments manufacture. It filed return of income for A.Y. 2012-13 on 30.09.2012 declaring total income of Rs. 13,42,000/-. Thereafter, the case was selected for scrutiny and assessment was finalized under Section 143(3) of the Act determining total income at Rs. 13,78,000/- after disallowing ROC filing fees of Rs. 36,000/-.
4. It appears that the case was reopened under Section 147 of the Act after recording reasons and after obtaining approval of the competent authority. The assessee filed e-return of income on 05.08.2019 declaring total income at Rs. 13,42,000/-. Thereafter, notices under Section 143(2) and 142(1) were issued by the Assessing Officer. The Assessing Officer passed the assessment order under Section 143(3) read with Section 147 of the Act by making an addition of Rs. 12,50,000/- under Section 68 of the Act on the ground that the same represents accommodation entry being unexplained, and the Assessing Officer also made disallowance of unexplained expense of commission at 10% of the said amount.
5. The CIT(Appeals) dismissed the appeal of the assessee. The assessee preferred an appeal before the Tribunal contending, inter alia, that the assessee had carried out the transaction with Growth Capital receiving Rs. 12,50,000/- and the reopening was made on the ground that the same was not disclosed in the books of accounts. However, the receipt from Growth Capital was an amount towards the sales receipt which was recorded in the books of accounts and the same were reflected in the accounts held with Karur Vysya Bank. The Tribunal, therefore, after considering the fact that the receipt of Rs. 12,50,000/- was against the sales in the normal course of business and the same was duly accounted for in the audited books of accounts and considering the details provided by the assessee, allowed the appeal filed by the assessee by observing as under;
“7. Heard both the partiers and perused all the relevant material available on record. It is pertinent to note that the reasons recorded through the assessee’s contention is that it is vague, scanty and non-specific, yet from the perusal of the reasons, it can be seen that it has given details as relates to which third party was providing accommodation entries and which party was associated with the transaction with assessee especially that of Growth Capital which was not reflected in the disclosed bank accounts and, therefore, the Assessing Officer has rightly reopened the proceedings under Section 147 of the Act. Thus, ground no. 1 of the assessee’s appeal is dismissed.
8. As regard to ground no. 2 relating to sustaining additions of Rs.12,50,000/-on the ground of unexplained cash credit, the Id. AR submitted that once the underlying amount forms part of sale duly accounted for in the books of account and such income has been accepted by the Assessing Officer, the very same amount cannot be again added under Section 68 of the Act as it will tantamount to double taxation. The Ld. AR submitted that all the documentary evidences related to names and address of customers, bill numbers, dates, description of product, weight, rate & amount, VAT and total amount including that of confirmation of customers has been given by the assessee during the assessment proceedings and the same establishes that the assessee has in fact explained the sales and the Assessing Officer has accepted the same.
9. The Ld. DR submitted that there was cash deposits and thus the 97% amount received was without paying any tax. Therefore, the CIT(A) has rightly upheld the addition related to the source of credit entries aggregating to Rs. 12,50,000/-.
10. Heard both the partiers and perused all the relevant material available on record. It is pertinent to note that the amount on which the Assessing Officer has made addition under Section 68 of the Act has been duly explained by the assessee which forms part of sales accounted in the books of account of the assessee which was not disputed at any juncture by the Assessing Officer. In fact, the Assessing Officer has accepted such income and, therefore, the contention of the Id. AR that the same amount cannot be again added under Section 68 of the Act is justifiable as the assessee has given details related to sales, profit element in such receipts has already been offered to tax and income declared by the assessee was accepted by the Assessing Officer. Thus, the amount cannot be treated as unexplained cash credits. In fact, the Assessing Officer has not doubted the corresponding purchase/quantitative details and, therefore, the addition made by the Assessing Officer is not justifiable. Thus, ground no. 2 is allowed.”
6. The Tribunal has also allowed the appeal of the assessee so far as the 10% of the amount of Rs. 12,50,000/- added by the Assessing Officer under Section 69C of the Act by observing as under;
“11. As relates to ground no.3, the Ld. AR submitted that the commission paid for SO called accommodation entry will not be suffice as the addition under Section 68 allegedly made by the Assessing Officer has been very well explained by the assessee through documentary evidences and, therefore, the question of commission does not arise in the present case. In alternate, the Ld. AR submitted that the total turnover of the assessee is Rs. 520,64,77,230/- and the assessee would not take entry of Rs. 12,50,000/-, i.e. 0.02% of total turnover. Thus, even in view of material concept, the impugned addition is not justified and commission expense at 0.10% under Section 69C will not be justifiable.
12. The Ld. DR relied upon the Assessment Order and the order of the CIT(A).
13. Heard both the partiers and perused all the relevant material available on record. It is pertinent to note that the very addition of Rs. 12,50,000/- under Section 68 of the Act does not survive as per the findings given hereinabove and, therefore, the question of commission expenses will also be not arisen at this juncture. Hence, ground no. 3 is allowed.”
7. In view of the above finding of facts recorded by the Tribunal, and more particularly when the Tribunal has observed on the basis of facts that the Assessing Officer has made addition under Section 68 of the Act of Rs. 12,50,000/- which has been duly explained by the assessee forming part of the sales accounted in the books of account of the assessee, and the same was never disputed by the Assessing Officer. The Tribunal, therefore, has rightly concluded that the amount of sales which is already accepted as income by the Assessing Officer could not have been added under Section 68 of the Act, as the assessee has furnished details related to sales profit element in such receipts which have been offered to tax.
8. In view of the above findings of fact, we are of the opinion that there is no legal infirmity in the impugned order of the Tribunal, no question of law, much less any substantial question of law, arises from the order of the Tribunal.
Therefore, the appeal is accordingly dismissed.
