IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM &

MS PADMAVATHY S, AM I.T.A. No. 2963/Mum/2024 (Assessment Year: 2015-16)

Revenue/Appellant by : None Assessee/Respondent by : Shri Sridhar G. Menon, Sr. DR Date of Hearing : 05.08.2024 Date of Pronouncement : 06.08.2024 O R D E R Per Padmavathy S, AM:

This appeal by the Revenue is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi [for short 'the CIT(A)'] dated 31.03.2024 for Assessment Year (AY) 2015-16. The Revenue raised the following grounds of appeals:

“1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition u/s 68 of the I.T. Act of Rs. 32,00,000/- (on protective basis) when the Director of assessee company, Shri Lavekush Gadiya had accepted that assessee company have provided bogus accommodation entries to various entities, thereby the nature of transaction are non-genuine transactions?".

2. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition u/s 68 of the I.T. Act of Rs. 32,00,000/- (on protective basis), ignoring the facts and findings made by the investigation Wing and the fact that the assessee company failed to explain the source of the credit entries of Rs. 32,00,000/-?"

3. The appellant prays that the order of the CIT(A) on the grounds be set aside and confirm the order of the AO.

4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal.”

2. The assessee is a Private Limited Company and did not file the return of income for AY 2015-16. The Assessing Officer (AO) received information from DDIT (Investigation), Indore as a result of survey carried out at Indore Branch of the above Co-operative Credit Society that the assessee has huge cash deposited in Dnyanradha Multistate Co-operative Credit Society Ltd. and thereafter transferred the said money to Suraj Enterprises. On the basis of said information, the AO had the reason to believe that the income chargeable to tax has escaped assessment and accordingly served notice under section 148 of the Income Tax Act, 1961 (the Act) on the assessee and the assessee filed the return of income in response to notice under section 148 of the Act. Subsequently, the AO issued notice under section 143(2) and called for details pertaining to the impugned transactions. The assessee submitted before the AO that Shree Lavkush Gadiya, Director of the assessee has already admitted before the Investigation Wing, Indore that he was involved in providing accommodation entries and assessee is one of the conduit through which these fictitious entries were routed. The assessee also submitted the copies of bank statements and also the details of the beneficiaries i.e. M/s. Cyano Finance and Sales Limited & M/s Kwantum Devcon and Allied Limited, to whom the money is ultimately transferred to support the claim that the assessee is only a conduit. The assessee also submitted that since the Director has already admitted that he is providing accommodation entries, the re-opening cannot be done in assessee’s case for the same reason. The assessee also submitted that in similar cases, the commission at the rate of 0.25% to 1% on the amount of accommodation entries have been added and submitted the details of various parties in whose case such additions are made. After considering the submissions of the assessee, the AO made the addition of the entire amount on protective basis in the hands of the assessee by following the orders passed for AY 2011-12 and 2012-13. The AO also held that in case the assessee's case if the