Repayment of unsecured loans through banking channels, along with interest, establishes the genuineness of the transaction, overriding suspicions based solely on investigation reports identifying the lender as a bogus entity.

ORDER

PER S.RIFAUR RAHMAN,AM:

1. Both appeals are filed against the order of the Learned Commissioner of Income Tax (Appeals)-30, New Delhi [“Ld. CIT(A)”, for short] dated 31.07.2025 for the Assessment Years 2016-17. ITA No. 5430/Del/2025 passed u/s 250 of the Income Tax Act, 1961 (In short ‘the Act’) (arising out of order u/s 143(3)/147 of the Act) and ITA No. 5431/Del/2025 passed u/s 250 of the Act (arising out of order u/s 154 of the Act).

2. Both the appeals are interconnected having common issues. Both the appeals are heard together and disposed off by this common order.

LEAD APPEAL ITA NO.5430/Del/ 2025 (AY 2016-17)

3. Brief facts of the case are that, based on information received from DCIT, Central Circle-29, New Delhi, a search operation u/s 132(4) of the Income Tax Act, 1961 (in short ‘the Act’) was conducted on 13.04.2017 on the Himanshu Verma Group. During the search proceedings, it was found that Sh. Himanshu Verma was indulged in providing bogus accommodation entries through various shell companies operated or controlled by him or through dummy directors. It was noticed that assessee was engaged in purchase and sale of penny stock and, during the year under consideration the assessee had entered into accommodation entry transaction amounting to Rs. 3.30 crore with regard to M/s. Syala Buildwell Pvt. Ltd. (SBPL) and Rs. 40 lacs from M/s. Stabilitas Estate Pvt. Ltd. (SEPL). The assessee filed its return of income on 16.10.2016 for assessment year 2016-17 declaring total income of Rs. 27,73,600/-, which was processed u/s 143(1) of the Act on 22.11.2016.

4. Based on the above information received from the DCIT, Investigation Wing, the Assessing Officer formed an opinion that income had escaped assessment. Accordingly, proceedings u/s 147 of the Act was initiated after recording reasons with prior approval of the PCIT. Accordingly, notice u/s 148 of the Act was issued and served on the assessee. Subsequently, notice u/s 142(1) of the Act was also issued to the assessee. Further, the assessee filed objections against the reopening of the assessment, the same is reproduced at page nos. 2 to 12 of the order of Ld. AO.

5. Considering the above submissions, the Assessing Officer rejected the same with the reason that the assessee could not be acceded to as it was not filed within the prescribed time i.e. within 60 days of receipt of reasons recorded. Since the assessee was provided with the reasons recorded along with the notice u/s 143(2) of the Act on 07.09.2021. On merit, the Assessing officer heavily relied on the information received from Investigation Wing and the relevant findings in search proceedings in the case of Sh. Himanshu Verma and since the assessee had transactions with SBPL and SEPL and failed to furnish the explanation with supporting documentary evidence. The assessing officer reproduced the detailed findings in the case of Himanshu Verma and further listed the companies operated by Himanshu Verma Group. In the above list, SEPL is one of the entities listed. Since the above company name was mentioned by Himanshu Verma group, he came to the conclusion that the assessee has taken accommodation entries from this two companies and assessee was asked by the above said transaction why it should not be treated as unexplained credit and added to the income of the assessee. The assessee has submitted confirmations of above said parties and also details of