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2025 Supreme(Online)(ITAT) 7855
INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
OM PRAKASH KANT, ACM, RAJ KUMAR CHAUHAN, JM
Manish Kantilal Kapadia – Appellant
Versus
ACIT-CC-8(2) – Respondent
ITA Nos. 264, 318 to 322/MUM/2025 | ITA Nos. 263, 280 to 284/MUM/2025
For the Appellants/Petitioners: None
For the Respondents: Mr. Uma Shankar Prasad, CIT-DR
The burden of proof lies with the assessee to prove the genuineness of transactions, particularly in cases involving accommodation entries.
Headnote:(A) Income Tax Act, 1961 - Sections 68, 132, 145(3) - Search and seizure operations led to the reassessment and rejection of books of account of the appellants, alleging their transactions represented accommodation entries without genuine movement of goods. (Paras 3.3, 5.5)
(B) Legal principles - The court reaffirmed that the burden of proof lies with the assessee to establish the genuineness of transactions, especially in cases involving cash credits. (Paras 4.4, 5.3)
(C)
Facts of the case:
The appellants operated businesses (M/s RM Textiles and others) that were subjected to searches revealing no evidence of actual transactions, leading to revenue assumptions of income. (Paras 4.1, 4.5)
(D)
Findings of Court:
The court upheld the rejection of the books based on the preponderance of evidence suggesting paper transactions, establishing the absence of substantive business activities. (Paras 5.4, 5.5) (E)
Issues: The main issues included the estimation of income and the legality of treating loans as unexplained cash credits under section 68. (Paras 6, 8) (F)
Ratio Decidendi: The court held that mere acceptance of loans does not exempt them from scrutiny under tax law; documentation is crucial to substantiate claims. (Paras 6.1, 8.3) (G)
Result: Appeals partly allowed for statistical purposes, while other assessments were dismissed based on identical reasoning. (Paras 9)
| Table of Content |
|---|
| 1. court establishes the basis of appeal processes. (Para 1 , 2) |
| 2. rejection of books leads to income estimation. (Para 3 , 4) |
| 3. commission estimation contested and adjusted. (Para 5 , 6 , 7) |
ORDER
PER BENCH
These appeals by the captioned assessee(s) arise from separate but contemporaneous orders passed by the Learned Commissioner of Income-tax (Appeals)–50, Mumbai [hereinafter referred to as “the Ld. CIT(A)”], pertaining to assessment years 2014-15 to 2019-20, respectively. Inasmuch as the issues involved in all these appeals are common, they were heard together, and are being disposed of by this consolidated order for the sake of convenience and in the interest of procedural uniformity.
2. We shall first advert to the appeal of Smt. Rekha Manish Kapadia for assessment year 2014-15, which was taken up as the lead matter. It was fairly agreed by both the parties that the adjudication in the said appeal would, mutatis mutandis, govern the disposal of the remaining appeals as well, as the underlying facts and circumstances being substantially identical, barring variations in the quantum of additions.
2.1 The grounds raised by the assessee in Rekha Manish Kapadia in appeal for assessment year 2014-15 are reproduced as under:
1. Against Addition of Rs. 2.63 Crores including Interest of1,65,49,942 Rs.4.10 Lakhs
Whether on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal) has wrongly estimated the income of the appellant @ 3% for total turnover of Purchase and Sales as reported in profit and loss account, prepared from Audited Book of Accounts amounting to Rs.51,78,40,543/ though the alleged turnover of Sales and Purchase with 'One World Group Companies' was Rs.12,81,11,995/-, during the captioned year, which is against the natural justice.
Further Ld CIT(A) has wrongly confirmed the Interest Income of 4,10,010/- added by DCIT as operational income.
2. Whether on the facts and circumstances of the case and in la the Learned Commissioner of Income Tax (Appeal) has erre in allowing the appeal partly on assumption bases and not or facts.
3. Whether on the facts and circumstances of the case and in la the learned Commissioner of Income Tax (Appeal) has erred upholding the action of learned assessing officer of treating the business activities as accommodation entry without appreciating the submission / documentary evidence provide to prove the genuineness of all the Audited purchase and sale submitted by appellant.
4. Whether on the facts and circumstances of the case and in la the learned Commissioner of income Tax (Appeal) has erred not allowing the assessee's appeal for disapproving the learn Assessing officer's view of rejecting the Books of Accounts and Income of appellant by invoking the provision of sectior 145 (3) of the income tax Act, 1961.
5. The Learned Commissioner of Income Tax (Appeal) has again erred in allowing the respondent made an addition u/s. 68 of Rs. 2,75,000/-/- in respect of unsecured loan appearing in audited Balance Sheet of the appellant prepared from the books of accounts which were rejected u/s 145(3) of the Act. The said loan was availed from my husband Manish Kapadia [(PAN: AAPPK5676H)] which was received and credited in Books of Accounts prior 01.04.2013 and is also appearing in the books of accounts in my husband Manish Kapadia as Loans & Advances.
3. Briefly stated, facts of the case are that during relevant assessment year, the assessee was proprietor of M/s RM Textiles. The assessee claimed to have been engaged in the trading of textile products. A search u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) was carried out on 06.11.2019 at the premises of a “One World Group” entities along with residential and office premises of the assessee.
3.1 Pursuant to the said search action, a notice under section 153A of the Act was issued on 24.03.2021. In response thereto, the assessee filed her return of income on 23.03.2021 declaring a total income
