ITO Vs Nimit Agarwal (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has dismissed an appeal from the Income Tax Department, reinforcing a key legal principle that tax additions cannot be made without sufficient evidence. The ruling, pronounced on July 23, 2025, sided with assessee Nimit Agarwal, upholding the deletion of a substantial addition of ₹3,62,60,000/- that had been made to his income. The tribunal found that the department failed to provide the necessary proof to substantiate its claim of unexplained accommodation entries.
Reassessment Followed Third-Party Search
The case originated from a reassessment proceeding for the Assessment Year 2013-14. The Income Tax Department had reopened the assessment based on information received from its Investigation Wing. This information was a result of a search action conducted under Section 132 of the Income Tax Act on April 12, 2019, targeting a third-party individual, Sanjay Govindram Agrawal (also known as Sanjay Tibrewal). The department alleged that Tibrewal was a key player in a network of entities that provided accommodation entries—bogus financial transactions designed to create fake credits—to various beneficiaries. Based on this, the Assessing Officer concluded that Nimit Agarwal, an individual and proprietor of Nimit Fabrication, was a beneficiary who had received entries totaling ₹3,62,60,000/-.
