Income Tax Dept Could not Place alleged accommodation entries which led to Addition u/s 69A: ITAT dismisses Appeal [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench, dismissed the Revenue’s appeal challenging the deletion of an addition of ₹3.62 crore made under Section 69A of the Income Tax Act, 1961.

The bench held that the Income Tax Department had failed to substantiate its allegations of unexplained accommodation entries, which formed the basis of the reassessment proceedings.

The reassessment was triggered following information from a search conducted in the case of one Sanjay Tibrewal, who was allegedly involved in providing accommodation entries through various dummy entities.

The Assessing Officer, relying on inputs from the Investigation Wing, alleged that Agarwal had received ₹3.62 crore through such accommodation entries and made the addition under Section 69A, invoking penal tax under Section 115BBE.

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However, after appeal, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), found no trace of such large sums in Agarwal's bank statements. The CIT(A) noted that the total credits and debits in the assessee’s bank accounts were significantly lower than the alleged ₹3.62 crore and concluded that the addition was devoid of factual basis.

The bench of Annapurna Gupta (Accountant member)and T R Senthilkumar (Judicial member), concurring with the findings of the CIT(A), held that the Revenue had failed to produce any concrete evidence linking the alleged accommodation entries to Agarwal.

The ITAT observed that since the alleged transactions were not reflected in the bank records and no corroborative evidence was presented, the very foundation of the reassessment under Section 147 stood invalid. Consequently, the Tribunal upheld the deletion of the ₹3.62 crore addition and dismissed the Revenue’s appeal as devoid of merit.

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