ITAT Grants Fresh Opportunity in Rs. 20 Lakh Section 68 Addition Linked to Alleged Accommodation Entry

The assessee, Ms. Bhavika Ravi Sukhija, filed her return for AY 2016-17, declaring an income of Rs. 14.47 lakh. Following a search under Section 132 on the Ashish Begwani group on 22.10.2016, proceedings under Section 153C were initiated against her. Relying on seized Excel sheets and search statements, the Assessing Officer treated Rs. 20 lakh received from M/s Maa Vaishnavi Vanijya Pvt. Ltd. as an unexplained accommodation entry under Section 68, along with a consequential addition of Rs. 60,000 under Section 69C towards alleged commission.

The assessee said that the amount was not a loan but an advance received towards the proposed sale of an under-construction flat at “Ekta Tripolish”, Goregaon, and furnished a confirmation letter from the payer. The AO rejected the explanation due to the absence of documents such as an agreement for sale. The additions were affirmed by the CIT(A).

Main Issue: Whether the Rs. 20 lakh receipt was an unexplained accommodation entry under Section 68 or a genuine advance against the proposed sale of immovable property, and whether the later commission addition could survive.

Tribunal Decided: The ITAT Mumbai held that the fundamental nature of the receipt had not been properly examined. It noted that crucial evidence such as financials of the payer company, board resolutions, and sale-related documents, had not been verified.

The Tribunal restored the issue of the Rs. 20 lakh addition to the Assessing Officer for de novo adjudication, granting the assessee a final opportunity to substantiate her claim with cogent contemporaneous evidence. The consequential addition under Section 69C was also restored. The appeal was allowed for statistical purposes.

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