Shriganesh Kirana Pvt. Ltd. Vs ACIT (ITAT Delhi)
Entry Operator’s Shadow Cannot Erase a Genuine Loan: ₹1.40 Crore Addition Deleted
Background: Search Information Triggered Reopening
The dispute concerned Assessment Year 2020-21. The assessee company carried on wholesale trading in kirana items, dry fruits and chemicals.
Its assessment was reopened on the basis of information arising from a search conducted on the Galaxy Group and alleged accommodation entry providers Deepak Agarwal and Himanshu Verma.
The information identified the assessee as a beneficiary of an alleged accommodation entry of ₹1,40,00,000 from LVS Financial Services Private Limited, stated to be controlled by the entry operators.
A notice under Section 148 dated 23 March 2024 was issued. In response to subsequent notices, the assessee explained that the amount represented a genuine unsecured business loan, which had subsequently been repaid.
The Assessing Officer rejected the explanation and treated the amount as unexplained cash credit.
Three Adjustments Followed the Accommodation Entry Allegation
The Assessing Officer made an addition of ₹1.40 crore under Section 68 and disallowed interest expenditure of ₹1,44,956 relating to the loan.
A further addition of ₹4,20,000 under Section 69C was made towards alleged commission for arranging the accommodation entry. This was calculated at 3% of the loan amount.
