ITAT Ahmedabad Rejects Eightfold Duplication of Alleged ₹98,200 Bank Entry

Late Hetalkumar Gunvantlal Soni Vs ITO (ITAT Ahmedabad)

When the Addition That Triggered Reopening Fails, Other Reassessment Additions Cannot Survive

The Legal Principle

The Ahmedabad Tribunal held that information from the Investigation Wing could not, without supporting evidence and independent verification, sustain an addition for an alleged accommodation entry.

Having deleted the addition forming the specific basis of reopening, the Tribunal also deleted the remaining reassessment additions by following the jurisdictional Gujarat High Court decision in CIT v. Mohmed Juned Dadani.

The decision thus addresses two connected issues: the evidentiary foundation required to sustain an accommodation-entry addition, and the consequence when the very addition that triggered reassessment does not survive.

Background of the Case

The assessee filed his return for Assessment Year 2012–13 on 11 October 2012, declaring total income of ₹3,26,000.

The Assessing Officer subsequently received information alleging that the assessee had obtained an accommodation entry of ₹7,85,600 from Vinit Enterprise, a concern controlled by Jignesh Shah. The information arose in connection with a search conducted in the latter’s case.

A notice under section 148 was issued on 30 September 2019. Since the assessee did not comply during the reassessment proceedings, the Assessing Officer completed a best-judgment assessment under section 144 read with section 147 on 29 November 2019, determining total income at ₹75,07,759.

The CIT(A) partly allowed the first appeal. The assessee, represented through his legal heir, then approached the Tribunal against the surviving additions and also raised several jurisdictional objections.

One Disputed Entry Multiplied Eight Times

The assessee challenged the factual basis of the alleged accommodation entry.

His specific contention was that there was only one transaction of ₹98,200 relating to Vinit Enterprise, and that this entry had been repeated eight times to arrive at ₹7,85,600. Counsel further submitted that the actual transaction was a debit entry, rather than a receipt.

This objection went to the root of the allegation. Before examining whether a receipt was an accommodation entry, the Department had to establish that the alleged receipts had actually occurred.

The Tribunal found that the recorded reasons did not specify the dates on which the alleged amount was received. The assessment order also lacked transaction particulars such as receipt dates, cheque numbers and corresponding bank entries.

Remand Proceedings Did Not Cure the Evidentiary Gap

Since additional evidence had been submitted before the CIT(A), a remand report was obtained from the Assessing Officer.

However, the report merely reproduced details of the alleged receipts. Despite the assessee’s express objection concerning repetition of the same entry, the Assessing Officer did not independently verify whether there were eight separate transactions.

The reproduced details contained no cheque numbers or other identifying particulars establishing distinct receipts. Nor did the Assessing Officer verify the assessee’s bank statement or obtain the relevant bank records to resolve the dispute.

Consequently, the objection concerning both the number and quantum of transactions remained unverified. Reproduction of the allegation in a remand report did not supply the missing evidence.

Investigation Information Was Not Enough to Sustain the Addition

The Tribunal also found no material establishing that the disputed transaction was an accommodation entry.

There was no evidence that the assessee had paid cash or otherwise provided consideration to obtain such an entry. No transaction trail or corroborative material demonstrated that the transaction was merely a paper arrangement.

The Assessing Officer had proceeded on the Investigation Wing’s information without undertaking the necessary verification, particularly after the assessee specifically disputed the underlying transactions.

The Tribunal therefore deleted the alleged accommodation-entry addition, referred to in its operative discussion as ₹7,85,000. The order contains variations in the stated amount, while the reopening allegation was ₹7,85,600.

Failure of the Foundational Addition Defeated the Remaining Additions

The reassessment had been initiated specifically because of the alleged Vinit Enterprise accommodation entry.

Once that addition was deleted, the Tribunal examined whether the other additions could independently survive within the same reassessment proceedings.

Following CIT v. Mohmed Juned Dadani, it held that where the addition relating to the issue for which the assessment was reopened does not survive, the Assessing Officer cannot sustain additions on other issues in those proceedings.

Accordingly, the remaining reassessment additions were also deleted, and the appeal was allowed.

Other Legal Objections Were Left Undecided

The assessee had raised objections concerning borrowed satisfaction, supply of reasons and sanction, and whether proceedings arising from third-party search material should have been initiated under section 153C rather than section 148.

The Tribunal expressly declined to adjudicate those grounds because relief had already been granted. The order therefore does not establish a ruling on those separate jurisdictional questions.

Author’s Comments

An investigation report identifies an issue for enquiry; it does not replace the enquiry needed to sustain an addition. Once duplication of a bank entry is specifically alleged, verification of dates, cheque numbers and bank records becomes central.

The Department had a further opportunity during remand proceedings but failed to resolve that factual objection. An unverified allegation cannot acquire evidentiary strength merely by being reproduced repeatedly.

The second aspect is equally significant: the issue that opens the reassessment cannot simply disappear while unrelated additions remain standing, under the jurisdictional principle applied here.

The relief arose from failure of proof and the consequent application of Mohmed Juned Dadani. It was not based on any finding that filing a presumptive return under section 44AD automatically protects all bank transactions from examination.

Cases Discussed

• CIT Vs Mohmed Juned Dadani (Gujarat High Court) – 355 ITR 172 (Guj.), as referred to in the Tribunal’s order. Followed for the principle that additions on other issues cannot survive when the addition forming the basis of reopening is deleted.
• Paras Chandreshbhai Koticha and Others Vs ITO (Gujarat High Court) – 182 taxmann.com 204; judgment dated 07/01/2026. Cited by the assessee concerning Section 153C and third-party search material; the Tribunal did not decide this ground.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal has been filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 10.02.2026 for the Assessment Year (A.Y.) 2012-13 in the proceeding u/s 144 r.w.s. 147 of the Income Tax Act [hereinafter referred as “the Act”].

2. The brief facts of the case are that the assessee had filed his return of income for A.Y. 2012-13 on 11.10.2012 declaring total income of Rs.3,26,000/-. The case of the assessee was reopened on the basis of the information received by the AO that the assessee has taken accommodation entry of Rs. 7,85,600/- from M/s. Vinit Enterprise, a concern controlled by Shri Jignesh Shah. Accordingly, a notice u/s. 148 of the Act was issued on 30.09.2019. The assessee did not make any compliance in the course of reopened assessment proceeding. The AO had, therefore, made various additions and the assessment was completed u/s. 144 r.w.s 147 of the Act on 29.11.2019 at total income of Rs. 75,07,759/-.

3. Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was partly allowed.

4. Now, the assessee in second appeal before us. The following grounds have been taken in this appeal:

1. The Ld. CIT(A) has grievously erred in law and on facts in upholding the reassessment proceedings submitted to be bad in law and on facts in as much as that-

a. The conditions for reopening are not fulfilled in the case of assessee

b. The reassessment proceedings are based upon borrowed satisfaction with no independent recording of reasons

c. The copy of reasons and copy of sanction u/s 151 of the Act were not provided

d. The alleged bogus entries mentioned are of Rs. 7,85,600/- whereas addition has been made Rs 71,81.759/- rendering the proceedings legally and factually erroneous

e. Not providing relevant documents on which reassessment proceedings have been initiated despite specifically requested for inspection of file and these documents by paying copying charge

f. Assessment order has been passed in the name of assessee who has expired on 18/11/2020 duly informed to the CIT(A) with copy of death certificate.

2. The reassessment proceedings are also submitted to be bad in law and on facts in as much as that proceedings having been initiated on account of information from DDIT based on search conducted on 11.09.2018 in the case of Jignesh Shah and assessee being 3rd party notice u/s 153C ought to have been issued without directly issuing notice u/s 148. Thereby the proceedings are invalid as per the decision of the honorable Gujarat High Court pronounced on 07.01.2026 in the case of Paras Chandreshbhai Koticha and others” reported in 182 Taxmann.Com 204

3. The Reassessment proceedings are submitted to be bad in law as the CIT(A) has reproduced the submission of the assessee relying upon various legal decisions duly mentioned on page 14 to 16 against the reassessment proceedings but not considered in the appeal order

4. Without prejudice to the above legal grounds the Ld. CIT(A) has grievously erred in law and on fact in upholding the additions made by the A.O. as unexplained money /unexplained receipts without properly appreciating and considering the detailed submissions with cogent evidences made before him though reproduced in the appeal order but not properly appreciated

A. Unexplained money credited in Dhanlaxmi Bank Ale. Rs. 7,85,500/-

B. Unexplained cash credit in Development Credit Bank Ltd. Rs. 15,42,500/-

C. Unexplained cash credit in Ratnakar Credit Bank Ltd. Rs. 9,00,000/-

5. The return of the assessee having been filed u/s. 44AD no addition as made by the AO ought to have been upheld.

6. On the facts of the assessee no interest ought to have been levied u/s. 234A, 234B, 234C and 234D without specifying and without furnishing the computation sheet.

7. On the facts of the assessee the return income of Rs. 3,26,000/- computed u/s. 44AD ought to have been accepted without any addition.

8. The appellant craves, leave, to add, to alter and or modify any ground of appeal.

5. Shri P. F. Jain, the Ld. AR of the assessee submitted that the case was reopened on the basis of a search conducted in the case of Shri Jignesh Shah. According to the Ld. AR, the reason recorded by the AO for reopening the case was on borrowed satisfaction, on the basis of report of the Investigation Wing. No material was brought on record to establish as to how the assessee had obtained accommodation entry of Rs. 7,85,600/- from M/s. Vinit Enterprise. He submitted that in the course of remand proceeding the assessee had contended that there was only one entry of Rs. 98,200/- in respect of Vinit Enterprise which was also a debit entry. He explained that the AO had made the addition on the basis of repetition of a single entry of Rs. 98,200/- on eight occasions. The Ld. AR further submitted that no evidence for any accommodation entry was brought on record by the AO either in the assessment order or in his remand report. Therefore, the addition of Rs. 7,85,000/- in respect of accommodation entry was not correct. The Ld. AR further contended that in the absence of any evidence for accommodation entry, the other additions made by the AO also cannot survive.

6. Per contra, Shri Arvind Kumar Namdeo, the Ld. SR-DR supported the order of the lower authorities.

7. We have considered the rival submissions and perused the material available on record. The assessment was reopened on the basis of information received from the Investigation Wing in connection with the search conducted in the case of Shri Jignesh Shah, alleging that the assessee had obtained an accommodation entry of Rs.7,85,600/- from M/s. Vinit Enterprise. On the basis of this information, the AO had recorded reason for reopening the assessment and issued notice u/s 148 of the Act. The Assessee had brought on record a copy of the reason recorded by the AO, which is found to be as under:

Reasons for reopening the assessment in the case of Hetalkumar Gunvantlal Soni for A.Y. 2012-13 u/s 147 of the I.T. Act

i. The assessee is an Individual. The assessee filed its return of income for A.Y.2012-13 on 11.10.2012 declaring total income at Rs. 3,26,000/-. The return of income was processed u/s.143(1) of the Act on 09.02.2013.

2. In this case, information and documentary evidences were received from the office of the DDIT (Inv), Unit 1(3), Ahmedabad vide letter No. DDIT(Inv)-1(3)/ahd/S&S/SSS/Jignesh Shah/Dissemination/2019-19 dated 22.03.2019. As per the information, a search u/s 132 was conducted on 11.09.2018 in the case of Jignesh Shah, an accommodation entry provider of Ahmedabad. The search resulted into seizure of unaccounted cash Rs. 19.3 Crores from residential premises of Jignesh Shah along with incriminating digital as well as documentary evidences. It was found during investigation that Jignesh S Shah is managing and controlling multiple companies and concerns, which were not involved in any genuine business activity, but in the business of providing accommodation entries to beneficiaries. Moreover, the said entities does not even exist at their given addresses. Further, directors of the companies/persons in whose names concerns were registered, admitted by way of filing affidavits that the companies/concerns are not carrying out any genuine business activity and said concerns are only engaged into providing accommodation entries through Jignesh S Shah and the same was also confirmed by Sh. Jignesh Shah, during the statement recorded u/s 131 of the I.T. Act. Further, Sh. Jignesh Shah explained his mode of operation of providing accommodation entries to beneficiaries through various concerns operated by him and he provided list of proprietorship concerns of various individuals including their personal bank accounts through which accommodation entries were arranged/facilitated/provided under his advice and consultation.

3. On analysis of above list of concerns operated by Jignesh Shah, it is found that M/s. Vinit Enterprise, a proprietorship of Sh. Aneelkumar A Patel, provided accommodation of Rs. 7,85,600/- to the assessee Sh. Hetalkumar Gunvantlal Soni.

4. I have gone through the information received from Ahmedabad Investigation Wing and I have also analyzed materials and return of income for A.Y. 2012-13 filed by the assessee. On the basis of materials, it is gathered that it has been well established that Jignesh Shah is a accommodation entry provider and he managed and controlled various concerns to provide bogus/accommodation entries to the beneficiaries. Further, Jignesh Shah also provided list of the concerns operated by him and on perusal of said list and material received, it is found that the assessee i.e. Hetalkumar Gunvantlal Soni, received bogus entry of Rs. 7,85,600/- from M/s. Vinit Enterprise, one of the concern managed by Sh. Jignesh Shah for providing accommodation entries, during financial year 2011-12. In view of the above, it is safe to conclude that the assessee has received bogus entries of Rs. 7,85,600/-.

5. From discussion made herein above, it is summarized that assessee has received bogus/accommodation entries of Rs. 7,85,600/- received from M/s. Vinit Enterprise, one of the concern managed by Sh. Jignesh Shah for providing accommodation entries, during financial year 2011-12.

6. As per above discussion, I have reason to believe that undisclosed income on account of above bogus entries of Rs. 7,85,600/-, has escaped assessment for A.Y. 2012-13 and intend to reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of the proceedings under this section.

7. In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s. 143(3) of the I.T. Act, 1961 was made. Accordingly, in this case only requirement to initiate proceedings u/s. 147 is reason to believe which has been recorded above. It is pertinent to mention here that in this case the assessee has filed its return of income for the year under consideration but no assessment as stipulated u/s. 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, the provision of (b) of explanation 2 section 147 are applicable to facts of the case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. Further, in this case more than four years have lapsed from end of the assessment year under consideration. Hence necessary sanction to issue notice u/s.148 requested from Pr. Commissioner of Income-tax-1, Ahmedabad, as per the provisions of section 151 of the Act.

Date: 29.03.2019

(K.P. Parmar)
Income-tax Officer
Ward-1(2)(2), Ahmedabad.

8. On perusal of the reasons recorded, it is noticed that no specific date or dates on which the alleged amount of Rs.7,85,600/- was received by the assessee from M/s. Vinit Enterprise have been stated. Further, the assessment order also does not contain any particulars of the alleged transactions, such as the dates of receipt, cheque numbers, corresponding bank entries or any other material demonstrating that the assessee had actually received the said amount. The assessee had specifically contended before the CIT(A) that there was only one transaction of Rs.98,200/- relating to M/s. Vinit Enterprise and that the same entry had been repeated eight times, resulting in the alleged aggregate amount of Rs.7,85,600/-. Since additional evidence was furnished before the CIT(A), a remand report was called for from the AO. In the remand report dated 26.06.2024, the AO reproduced the details of the alleged receipts aggregating to Rs.7,85,000/- from M/s. Vinit Enterprise. However, despite the specific contention of the assessee regarding repetition of the same entry, the AO did not undertake any independent verification to ascertain the correctness of the entries. In the remand report dated 26.06.2024 the AO had reproduced the details of Rs.7,85,000/- received by the assessee from M/s. Vinit Enterprise as under:

In this regard, it is to be stated that the assessee had never complied during the course of assessment proceedings. Now, for the sake of clarity, the detailed information received by this office is reproduced hereunder.

9. The details reproduced in the remand report do not contain any cheque numbers or other particulars which could establish the existence of eight independent transactions. The AO also did not verify the assessee’s bank statement or obtain the relevant bank records to establish that eight separate amounts aggregating to Rs.7,85,000/- had actually been received by the assessee from M/s. Vinit Enterprise. Thus, the specific factual objection raised by the assessee remained unverified. Further, there is no material brought on record either in the assessment order or in the remand report to establish that the transaction with M/s. Vinit Enterprise represented an accommodation entry. No evidence has been brought on record indicating that the assessee had paid cash or otherwise provided consideration for obtaining such entry. There is also no transaction trail or other corroborative material demonstrating that the impugned transaction was merely a paper transaction or an accommodation entry.

10. It is thus found that the AO had proceeded merely on the basis of the information received from the Investigation Wing without carrying out the necessary independent verification of the underlying financial transactions, particularly after the assessee had specifically disputed the very number and quantum of transactions. The material on record does not establish either that the assessee received Rs.7,85,000/- from M/s. Vinit Enterprise or that the said amount represented an accommodation entry. In these circumstances, the addition cannot be sustained merely on the basis of the information received from the Investigation Wing, in the absence of any supporting material establishing the actual receipt and the nature of the transaction. Accordingly, the addition of Rs.7,85,000/- made on account of alleged accommodation entry from M/s. Vinit Enterprise is deleted.

11. The assessee’s case was reopened on the specific basis that income had escaped assessment on account of the alleged accommodation entry of Rs.7,85,000/- from M/s. Vinit Enterprise. We have, in the preceding paragraph, held that the said addition is not sustainable and have deleted the same. The legal consequence of deletion of the addition forming the basis of the reassessment has been considered by the Hon’ble Gujarat High Court in CIT v. Mohmed Juned Dadani, 335 ITR 172 (Guj.), wherein it was held, in the facts of that case, that where the addition on the issue for which the assessment was reopened does not survive, the Assessing Officer cannot make additions on other issues in the reassessment proceedings. Respectfully following the aforesaid decision, and since the addition on the issue for which the assessment was reopened does not survive, the other additions made by the AO in the reassessment proceedings are also not sustainable. Accordingly, the remaining additions made by the AO are deleted. The grounds of the assessee are accordingly allowed.

12. Since the grounds taken by the assessee on merits are allowed, we do not deem it necessary to adjudicate the legal grounds taken by the assessee.

13. In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 09/10/2026 at Ahmedabad.