ITAT Remands Rs 1.80 Crore Tax Dispute, Says Buyer’s Alleged Accommodation Entries Cannot Alone Trigger Section 68 Addition:

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has remanded the case of Shweta Manish Jain to the Assessing Officer (AO) for fresh examination of an addition of Rs 1.80 crore made under Section 68 of the Income Tax Act, 1961. The Tribunal held that merely suspecting a buyer of providing accommodation entries is not sufficient to treat the seller’s recorded sales receipts as unexplained income without establishing a direct link between the alleged activities and the assessee’s transactions.

The case relates to Assessment Year (AY) 2019-20. Jain, who operates a wholesale and retail betel nut business under the name Mohit Supari Depot, filed her income tax return (ITR) on September 30, 2019, declaring total income of Rs 35.50 lakh. Based on information received from the Investigation Wing that M/s Niyati Traders was allegedly providing accommodation entries through its Axis Bank account, the AO reopened the assessment and treated receipts of Rs 1,79,97,196 from the firm as unexplained credits under Section 68.

The assessee challenged the addition before the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that the transactions were genuine and supported by documentary evidence. However, the CIT(A) upheld the addition, observing that receiving payments through banking channels and reporting sales in GST filings did not independently establish the genuineness of the transactions.

The tribunal when analysed the facts of the case observed that "the assessment record does not indicate any independent inquiry or verification by the Assessing Officer with regard to the specific transactions undertaken by the assessee with M/s Niyati TradeRs In our considered view, the genuineness of the assessee’s transactions requires examination on the basis of the entire evidence and cannot be determined solely on the basis of general information regarding the counter-party."

The ITAT noted that the assessee had recorded the sales in her regular books of accounts, included the receipts in her disclosed turnover and offered the resulting profit to tax. The Tribunal held that the Revenue must produce relevant evidence showing that the transactions were not genuine sales or that the money received represented something other than sale consideration. It noted that the assessment record did not establish any independent verification of the specific transactions between the assessee and Niyati Traders.

Accordingly, the ITAT set aside the CIT(A)'s order and restored the matter to the AO for fresh adjudication after examining the relevant evidence and giving the assessee an adequate opportunity to be heard. The appeal was allowed for statistical purposes. The order was pronounced on October 1, 2026.