Assessee Must Clearly Establish 'Movement Of Goods' To Defend Allegations Of Accommodation Entries: Delhi HC

The Delhi High Court has made it clear that merely producing transaction documents to establish that payments were made to an entity is not sufficient to defend the allegations of accommodation entries. A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed, “The documents provided by the petitioner would establish that the payments had been made to Shri Ajay Gupta through banking channels. However, the same does not address the allegation of purchases reflected were accommodation entries…In the present case, the petitioner was required to clearly show the movement of goods to establish that the goods had in fact moved from Shri Ajay Gupta to the petitioner. However, it does not appear that any such information was provided by the petitioner to the AO.” In the case at hand, Petitioner was issued reassessment notice since as per the Tax authorities, Ajay Gupta was not a genuine entity and the payments made to it by the Assessee against certain purchases were suspected to be accommodation entries. The Petitioner challenged the proceedings on the ground that he was not provided a minimum seven days time to respond to the notice issued under Section 148A(b) of the Income Tax Act, 1961. The provision stipulates that an Assessee must be provided notice, not being less than seven days but not exceeding thirty days for furnishing his reply. The notice was issued to Petitioner on 21.03.2024 and he was provided seven days to respond to the same. However, three days out of seven days were holidays and, therefore, the petitioner claimed that he did not get seven working days to respond to the said notice. The High Court noted that the argument was merely an after-thought since the Petitioner had in any case filed a response to the notice within time. The Petitioner's response however, the Court said was inadequate, since it merely claimed that purchases made from Ajay Gupta were genuine purchases but, the Petitioner did not not address the allegation of accommodation entries. “It is well settled that the accommodation entries are those entries where payments are made through banking channels but the same are not against any genuine commercial transaction and are compensated by reverse payments in cash.” In this case too, payments received in the bank account of Ajay Gupta were withdrawn in cash, further strengthening the case of the authorities. Accordingly, the Court dismissed the petition. Appearance: Mr. Shahrukh Ejaz, Mr. Abhishek Kukkar, Ms. Palak Singh Parihar and Ms. Jahnavi Singh, Advocates for Petitioner; Mr. Gaurav Gupta, Senior Standing Counsel with Mr. Shivendra Singh and Mr. Yojit Pareek, Advocates for Respondent Case title: Abhishek Bansal v. Income Tax Officer, Ward 58(3), DelhiCitation: 2025 LiveLaw (Del) 21 Case no.: W.P.(C) 17300/2024 Click Here To Read/Download The order

Assessee Must Clearly Establish 'Movement Of Goods' To Defend Allegations Of Accommodation Entries: Delhi HC

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Assessee Must Clearly Establish 'Movement Of Goods' To Defend Allegations Of Accommodation Entries: Delhi HC

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