DCIT Vs Jankhit Chandulal Prajapati (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, dealt with two Revenue appeals arising from a common order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Years (AYs) 2013-14 and 2014-15 in proceedings under Section 153A of the Income Tax Act, 1961. The Revenue challenged the deletion of additions made by the Assessing Officer (AO), contending that the CIT(A) had allowed the appeals solely on technical grounds without examining the merits of the case.
Background of the Case
A search under Section 132 was conducted in the Popular Group cases on 08.10.2020, covering the assessee’s premises. During the search, loose papers and digital data were seized, including accounting records maintained in Tally software. The AO found that the digital records reflected substantial credits received from eleven Kolkata-based companies in the form of unsecured loans and advances against Banakhat during the financial years 2012-13 to 2019-20, aggregating Rs. 35.56 crore.
Assessing Officer’s Findings
The AO noted that the eleven companies were registered with the Registrar of Companies (RoC), Kolkata, and that the Kolkata Investigation Wing had conducted search and survey operations against entry operators allegedly controlling these companies. According to the AO, statements recorded from entry operators indicated that the companies were used to provide accommodation entries for laundering unaccounted money. The AO also relied on information from the shell company database, enquiries conducted through commissions issued under Section 131, and statements of certain company directors who reportedly expressed ignorance about the transactions. Based on these materials, the AO treated the entire amount received as unexplained cash credits under Section 68, making additions of Rs. 24.49 crore for AY 2013-14, Rs. 10 crore for AY 2014-15, and Rs. 1.06 crore for AY 2018-19. The AO further made additions towards alleged commission at 2% for obtaining accommodation entries and disallowed interest claimed on these loans.
