DCIT Vs Varsha Prakash Shah (ITAT Mumbai)
Summary: The Mumbai ITAT dealt with two Revenue appeals and corresponding cross-objections concerning unsecured loans obtained by assessee Varsha Prakash Shah from M/s Meridian Gems, an entity alleged by the Investigation Wing to be connected with the Bhanvarlal Jain group. The first Revenue appeal appearing in source order is ITA No.3545/Mum/2026. While the cause-title mentions Assessment Years 2009-10 and 2011-12, the substantive portion of the order subsequently describes ITA No.3545/Mum/2026 as relating to Assessment Year 2008-09; this source inconsistency is retained without alteration. The disputed additions were Rs.10 lakh under Section 68 with interest disallowance of Rs.6,148 for the earlier year and Rs.50 lakh under Section 68 with interest disallowance of Rs.5,09,075 for AY 2011-12.
The original assessments had been completed under Section 143(3). They were subsequently reopened on the basis of Investigation Wing information alleging that concerns controlled by the Bhanvarlal Jain group were providing accommodation entries and that Meridian Gems was one such concern. The assessee disputed the allegation and produced loan confirmations, lender’s financial statements, bank statements showing transfer of funds and affidavits of Shri Manoj Jain affirming the transactions. The assessee also relied upon payment of interest after deduction of tax at source and subsequent repayment through banking channels. The Assessing Officer nevertheless treated the loans as unexplained cash credits, principally relying upon the statement of Shri Manoj Jain recorded during investigation.
