Gold Sale of ₹11.27 Lakh Treated as Accommodation Entry u/s 69A: ITAT Holds Transaction Genuine and Deletes Addition [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) held that a gold sale transaction of ₹11.27 lakh, earlier treated as an accommodation entry under Section 69A of Income Tax Act,1961, was genuine and deleted the addition.

Girish Vrajlal Soni,appellant-assessee, was engaged in trading gold bars and ornaments. During the year, he sold 350 grams of gold to Viko Enterprise on 15.11.2016 for Rs. 11,27,000 through RTGS, supported by invoice, bank statements, stock records, and ledger entries.

Despite these documents, the Investigation Wing, Ahmedabad, treated the transaction as an accommodation entry based on its enquiry with Viko Enterprise. No incriminating material was found against the appellant, yet the Assessing Unit held the transaction to be non-genuine.

The appellant challenged this before the Commissioner of Income Tax (Appeals)[CIT(A)], contending that the sale was genuine and fully supported by documentary evidence. The CIT(A), however, upheld the addition of Rs. 11,27,000 under section 69A, relying on the Bombay High Court’s decision in PCIT vs. Kanak Impex and other rulings, holding that the entire accommodation entry must be disallowed.

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Dissatisfied with the decision, the assessee filed an appeal before the tribunal.

The assessee counsel stated that the assessee had sold 350 grams of gold to M/s. Vico Enterprise, Ahmedabad, on 15.11.2016 vide Bill No. 1/4. The sale was made at Rs. 3,188.12 per gram, totaling Rs. 11,15,842, and after adding 1% service tax of Rs. 11,158, the total came to Rs. 11,27,000. The payment was received through RTGS.

The counsel added that all supporting documents, such as the sales invoice, bank statement, ledger of Vico Enterprise, and stock statement, were submitted to prove the genuineness of the transaction.

The two member bench Dr.BRR Kumar ( Vice President) and Suchitra Kamble (Judicial Member) reviewed the records and submissions made by the assessee counsel. It found that the assessee had satisfactorily proved the genuineness of the sale, as the transaction was conducted through banking channels. Since no contrary evidence was produced to challenge these facts, the tribunal held that the addition confirmed by the CIT(A) was unjustified.

Accordingly the appeal was allowed.

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