HC Upholds Revenue Appeal in Accommodation Entry Case Despite Tax Effect Below Rs. 1 Crore

A company named M/s Agroha Fincap Limited has filed a review petition in the Delhi High Court, urging the court to review an earlier judgment passed on October 06, 2025, in an income-tax appeal filed by the Revenue.

The key argument of the assessee in the petition is that the impugned tax amount involved was then less than Rs. 1 crore; therefore, the appeal of the tax department should not have even been filed at all, according to the CBDT circular dated July 11, 2018. The court did not decide the said issue in the order dated October 06, 2025. Further argued that the new exemption has been introduced this year only, i.e., in 2025, hence should not be applied to an appeal filed in 2024.

However, the tax department argued that the present case falls under the category of exception, as mentioned in the New Circular No. 09/2024 dated September 17, 2025, specifically cases involving accommodation entries/organised tax evasion, where appeals can be filed irrespective of tax amount, as permitted under the CBDT Circular dated March 15, 2024.

When the court analysed the arguments of both sides, it ruled that older circulars were replaced by newer ones, and as per the latest New Circular No. 09/2024 dated September 17, 2025, appeals are allowed in serious cases like bogus entries or accommodation entries, and since the present case is based on accommodation entries, the appeal filed was valid even if the tax amount was below Rs. 1 crore.

The court ruled that, “In any case, having considered the record, it is clear that the case of the appellant/revenue before the assessing officer and also the CIT(Appeals) was of an accommodation entry. If that be so, the case surely falls within the exception (h).” Therefore, the plea on behalf of the assessee in this regard is liable to be rejected.

The assessee also claimed that some grounds were earlier raised before the ITAT, which were not decided there, and hence prayed the High Court to remand the same matter back to the tribunal.

The Court noted that before the ITAT, the assessee had only highlighted one legal ground, i.e., approval under Section 151 was defective. Other grounds were not argued at all, so the ITAT rightly did not decide them. As a result, the high court denied the request of the assessee to remand the case to the tribunal.

In the final decision, the court did not find any mistake in the earlier judgment and hence dismissed the review petition filed by the assessee. The tax department’s appeal remains valid.