Balaji & Maruti Transactions Genuine: ITAT Rejects ₹5.49 Cr Accommodation Entry Allegation [Read Order]

In a recent rulling the Income Tax Appellate Tribunal (ITAT) Delhi bench dismissed the revenue's appeal, holding that amounts received from Balaji Enterprises and Maruti Enterprises could not be treated as accommodation entries when the transactions were duly recorded as sales and supported by documentary evidence.

The appeal was filed by the Income Tax Department, challenging the order of the Commissioner of Income Tax (Appeals), who had deleted additions aggregating to ₹5.49 crore made by the Assessing Officer (AO) on account of alleged accommodation entries, along with an additional ₹37 lakh added towards unexplained cash deposits during the demonetisation period.

Revenue argued that AO had relied on information received from the Investigation Wing, which suggested that Balaji Enterprises and Maruti Enterprises were sham entities engaged in providing accommodation entries. It was argued that the assessee had failed to discharge its responsibility under Section 68 to establish the identity, creditworthiness, and genuineness of the transactions.

The assessee, Triveni Impex Private Limited, on the other hand, submitted that the amounts received from the said parties were sale proceeds, routed through banking channels, and duly recorded in the books of account.

Also argued that the AO had not rejected the books of account, nor pointed out any defects in the sales invoices, stock register, VAT returns, transport documents, or bank statements produced during assessment proceedings.

The tribunal noted that the AO had merely relied on the investigation report without bringing any material on record to rebut the documentary evidence furnished by the assessee. It was observed that the sales to Balaji Enterprises and Maruti Enterprises formed part of the declared turnover, purchases were supported by import documents and payment of customs duty, and the books of account had not been rejected.

The Tribunal upheld the deletion of the ₹37 lakh addition, holding that the AO’s comparison of cash deposits for selected months was arbitrary and unsupported by law. It noted that cash deposits during the year were lower than the preceding year and were properly explained by the opening cash balance arising from recorded cash sales, with no defects found in the books of account.

The bench, Anubhav Sharma (Judicial member ), Manish Agarawal (Account member), held that the AO had failed to establish any infirmity in the assessee’s books or documentary evidence and that additions under Section 68 could not be sustained merely on suspicion or third-party reports.

Accordingly, the Tribunal found that The grounsd raised by the revenue on meritsalso have no substance; the appeal of the revenue is dismissed.

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