IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER &

SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 3854/Mum/2025 (Assessment Year: 2011-12)

ITO - 19(1)(1), Mumbai Dilip Kanubhai

501, Piramal Chambers, Raval Lalbaug, Mumbai – Vs. 60/A/3, Jariwala 400 012. Bldg, Sane Guruji Road, Tardeo, Mumbai-400 034.

PAN/GIR No. ADRPR7652P (Applicant) (Respondent)

Assessee by None Revenue by Shri Vivek Singh, Ld. DR Date of Hearing 23.03.2026 Date of Pronouncement 07.04.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the Revenue is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "CIT(A)"]under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]dated 19.03.2025 for the Assessment Year 2011–12.

FACTS OF THE CASE

2. The assessee is an individual. The assessee filed his return of income on 14.02.2013 declaring total income at Rs.2,03,610/-. Subsequently, the case was reopened by issuance of notice under section 148 dated 20.03.2018. In response thereto, the assessee filed return of income on 05.10.2018.

3. Thereafter, statutory notices under section 142(1) dated 07.06.2018 and 18.10.2018 and notice under section 143(2) dated 22.11.2018 were issued. However, the assessee failed to comply with the said notices. Accordingly, the Assessing Officer completed the assessment ex-parte under section 144 read with section 147 of the Act vide order dated 04.12.2018 passed by the Income Tax Officer, Ward 19(1)(4), Mumbai determining total income at Rs. 19,47,540/- as against returned income of Rs.

2,03,610/-.

4. During the course of assessment proceedings, the Assessing Officer received information from the Investigation Wing that a search action was carried out in the case of Shri Vipul Vidur Bhatt and his group concerns, wherein it was revealed that the said person was engaged in providing accommodation entries. In his statement recorded under section 132(4), Shri Vipul Vidur Bhatt admitted that he was engaged in providing accommodation entries and had charged commission for the same.

5. Based on such information, the Assessing Officer observed that the assessee had entered into transactions with entities controlled by Shri Vipul Vidur Bhatt and was a beneficiary of accommodation entries. The Assessing Officer noted that the assessee had received credits aggregating to Rs. 13,80,300/- and, in absence of any explanation or supporting evidence from the assessee, treated the same as unexplained cash credit under section 68 of the Act and added the same to the total income.

6. Further, the Assessing Officer observed from the bank statements that the assessee had earned interest income amounting to Rs. 3,63,625/- which was not offered to tax. Accordingly, the same was brought to tax under the head “Income from Other Sources”.

7. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the material available on record and earlier submissions filed by the assessee, partly allowed the appeal vide order dated 19.03.2025. The Ld. CIT(A) held that the assessee was merely acting as an intermediary in providing accommodation entries and not the ultimate beneficiary. The Ld. CIT(A) took note of judicial precedents relied upon by the assessee, including decisions in the cases of Shri Vijen Jhaveri, Vardhman Overseas Ltd., and Alang Securities Pvt. Ltd., wherein it has been held that in cases of accommodation entries, only commission income is liable to be taxed and not the entire amount of credits. Particular reliance was placed on the decision of the Hon’ble jurisdictional High Court in the case of PCIT vs. Alang Securities Pvt. Ltd. (425 ITR 658), wherein it was held that where an assessee receives cash from beneficiaries and issues cheques after deducting commission, the provisions of section 68 cannot be invoked to tax the entire