The officer says I took accommodation entries from a party I have never dealt with. What do I actually have to do?
Show that the purchases are not in your books, and the burden goes back to the officer. A s.69C addition of Rs. 38,68,049 was deleted where the purchase register - covering both the firm and the company that succeeded it during the year - recorded no purchase at all from the concern named in the information from a search on a third-party group. Applying K.P. Varghese, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and an assessee cannot be called upon to prove a negative. The first appellate authority had himself recorded that the register showed no such purchase and had then sustained the addition on a theory of his own.
Decided by the ITAT (ITAT Mumbai Bench 'A' - Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member); order delivered by Girish Agrawal, AM; ITA No. 3097 (Mum.) of 2025; AY 2012-13) on 2025-08-28, reported as [2025] 178 taxmann.com 454 (Mum.)(Trib.); (2025) 127 ITR (Trib.) 265 (Mum.)(Trib.); ITA No. 3097 (Mum.) of 2025; AY 2012-13. It bears on section 69C, section 147, section 148 of the Income Tax Act 1961, in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Reassessment & Reopening matters.
A large share of s.69C notices are generated from a list of alleged accommodation-entry providers thrown up by a search on somebody else, without anyone checking the assessee's own ledgers first. This is the answer where the transaction is simply not yours: you do not have to explain a purchase you never made, and the officer cannot shift that to you. What makes this order useful is how far the concession went - the first appellate authority recorded in his own order that the purchase register showed no purchase from the alleged concern, and then sustained the addition on a theory of his own about off-book imports, which the Tribunal treated as unsupported by material. The decision turns on the purchases being absent from the books altogether, and it does not touch the case where the purchases are in the books and the supplier is a listed entry provider.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee was a partnership firm importing, manufacturing and trading in cut and polished diamonds, which converted into a private limited company on 27 April 2011, during AY 2012-13. The reopening rested entirely on a search and survey of the Bhanwarlal Jain group conducted on 3 October 2013, from which the Assessing Officer took it that the assessee had accommodation purchase entries of Rs. 38,68,049 from M/s Millennium Concern/Star. Notice under s.148 issued on 13 March 2019 and the assessment was made on 15 December 2019. From its first reply, on 2 November 2019, the assessee denied any purchase transaction with that concern and filed its purchase records for both the firm period and the company period. The Assessing Officer set out the group's modus operandi and concluded on circumstantial evidence and on statements of commission agents recorded in the group's own proceedings, making the addition under s.69C. The first appellate authority recorded in terms that the purchase register showed no purchase from that concern in the relevant period, and then sustained the addition on a theory of his own - that the assessee was a real importer on whose behalf the group imported diamonds and handed them over outside the books, so that the figure appears in the group's database with no matching entry in the assessee's books. The appeal to the Tribunal was 427 days late and the delay was condoned.
The addition under s.69C was deleted in full and the appeal allowed; nothing was restored to the Assessing Officer. On the purchase registers for the whole year, split between the firm period and the company period, there was no entry of any purchase from the alleged concern, and nothing cogent was placed on record by the authorities to demonstrate such a purchase beyond the findings of the 2013 search on the group. The assessee was thereby required to prove a negative, which is not permissible. Applying K.P. Varghese v. ITO, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and throwing on the assessee the burden of showing there was no understatement casts an almost impossible burden of establishing a negative.
The Tribunal decided on burden of proof and on nothing else. The registers for the whole year showed no purchase from the alleged concern; what the Assessing Officer relied on was circumstantial evidence and statements recorded in a search on a third-party group, and the first appellate authority sustained the addition on a theory he propounded himself, unsupported by material. From the first hearing the assessee had produced corroborative documentary evidence of its actual purchases as recorded in its books, and neither authority brought anything cogent to negate that or to show that a bogus purchase was in fact made. On that footing the assessee was being made to prove a negative, which the Tribunal held is not permissible, applying K.P. Varghese v. ITO [1981] 7 Taxman 13/131 ITR 597 (SC) for the proposition that the onus of establishing the conditions of taxability is always on the Revenue. The structural argument previously attributed to the Tribunal here - that s.69C fastens on expenditure actually incurred, so that with no such expenditure in the books the deeming provision has no foundation - appears nowhere in the order and has been removed.
Assessee has been made to prove negative that it has not made the purchases from the alleged concern Millennium Concern/Star. It is a trite law that one cannot be made to prove negative.
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Handle my notice → Ask a CA on WhatsAppShow that the purchases are not in your books, and the burden goes back to the officer. A s.69C addition of Rs. 38,68,049 was deleted where the purchase register - covering both the firm and the company that succeeded it during the year - recorded no purchase at all from the concern named in the information from a search on a third-party group. Applying K.P. Varghese, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and an assessee cannot be called upon to prove a negative. The first appellate authority had himself recorded that the register showed no such purchase and had then sustained the addition on a theory of his own. This was decided by the ITAT (ITAT Mumbai Bench 'A' - Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member); order delivered by Girish Agrawal, AM; ITA No. 3097 (Mum.) of 2025; AY 2012-13) and bears on section 69C, section 147, section 148 of the Income Tax Act 1961. It is reported as [2025] 178 taxmann.com 454 (Mum.)(Trib.); (2025) 127 ITR (Trib.) 265 (Mum.)(Trib.); ITA No. 3097 (Mum.) of 2025; AY 2012-13. A large share of s.69C notices are generated from a list of alleged accommodation-entry providers thrown up by a search on somebody else, without anyone checking the assessee's own ledgers first. This is the answer where the transaction is simply not yours: you do not have to explain a purchase you never made, and the officer cannot shift that to you. What makes this order useful is how far the concession went - the first appellate authority recorded in his own order that the purchase register showed no purchase from the alleged concern, and then sustained the addition on a theory of his own about off-book imports, which the Tribunal treated as unsupported by material. The decision turns on the purchases being absent from the books altogether, and it does not touch the case where the purchases are in the books and the supplier is a listed entry provider. If it applies to you, the first step is this: Before arguing genuineness, check whether the alleged supplier appears in your purchase register at all — for the whole year and for any predecessor entity.
The assessee was a partnership firm importing, manufacturing and trading in cut and polished diamonds, which converted into a private limited company on 27 April 2011, during AY 2012-13. The reopening rested entirely on a search and survey of the Bhanwarlal Jain group conducted on 3 October 2013, from which the Assessing Officer took it that the assessee had accommodation purchase entries of Rs. 38,68,049 from M/s Millennium Concern/Star. Notice under s.148 issued on 13 March 2019 and the assessment was made on 15 December 2019. From its first reply, on 2 November 2019, the assessee denied any purchase transaction with that concern and filed its purchase records for both the firm period and the company period. The Assessing Officer set out the group's modus operandi and concluded on circumstantial evidence and on statements of commission agents recorded in the group's own proceedings, making the addition under s.69C. The first appellate authority recorded in terms that the purchase register showed no purchase from that concern in the relevant period, and then sustained the addition on a theory of his own - that the assessee was a real importer on whose behalf the group imported diamonds and handed them over outside the books, so that the figure appears in the group's database with no matching entry in the assessee's books. The appeal to the Tribunal was 427 days late and the delay was condoned. The matter was decided on 2025-08-28 by the ITAT (ITAT Mumbai Bench 'A' - Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member); order delivered by Girish Agrawal, AM; ITA No. 3097 (Mum.) of 2025; AY 2012-13). On those facts the ITAT held as follows. The addition under s.69C was deleted in full and the appeal allowed; nothing was restored to the Assessing Officer. On the purchase registers for the whole year, split between the firm period and the company period, there was no entry of any purchase from the alleged concern, and nothing cogent was placed on record by the authorities to demonstrate such a purchase beyond the findings of the 2013 search on the group. The assessee was thereby required to prove a negative, which is not permissible. Applying K.P. Varghese v. ITO, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and throwing on the assessee the burden of showing there was no understatement casts an almost impossible burden of establishing a negative.
The Tribunal decided on burden of proof and on nothing else. The registers for the whole year showed no purchase from the alleged concern; what the Assessing Officer relied on was circumstantial evidence and statements recorded in a search on a third-party group, and the first appellate authority sustained the addition on a theory he propounded himself, unsupported by material. From the first hearing the assessee had produced corroborative documentary evidence of its actual purchases as recorded in its books, and neither authority brought anything cogent to negate that or to show that a bogus purchase was in fact made. On that footing the assessee was being made to prove a negative, which the Tribunal held is not permissible, applying K.P. Varghese v. ITO [1981] 7 Taxman 13/131 ITR 597 (SC) for the proposition that the onus of establishing the conditions of taxability is always on the Revenue. The structural argument previously attributed to the Tribunal here - that s.69C fastens on expenditure actually incurred, so that with no such expenditure in the books the deeming provision has no foundation - appears nowhere in the order and has been removed. In the words reproduced by the source cited on this page: "Assessee has been made to prove negative that it has not made the purchases from the alleged concern Millennium Concern/Star. It is a trite law that one cannot be made to prove negative." The decision followed or applied K.P. Varghese v. ITO [1981] 7 Taxman 13/131 ITR 597 (SC) - applied at para 6.1; the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue; Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) - applied at para 3.2, on condonation of the 427-day delay only.
It was decided by the ITAT on 2025-08-28 and is reported as [2025] 178 taxmann.com 454 (Mum.)(Trib.); (2025) 127 ITR (Trib.) 265 (Mum.)(Trib.); ITA No. 3097 (Mum.) of 2025; AY 2012-13. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 69C, section 147, section 148, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The addition under s.69C was deleted in full and the appeal allowed; nothing was restored to the Assessing Officer. On the purchase registers for the whole year, split between the firm period and the company period, there was no entry of any purchase from the alleged concern, and nothing cogent was placed on record by the authorities to demonstrate such a purchase beyond the findings of the 2013 search on the group. The assessee was thereby required to prove a negative, which is not permissible. Applying K.P. Varghese v. ITO, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and throwing on the assessee the burden of showing there was no understatement casts an almost impossible burden of establishing a negative. It arises in Cash Credits & Unexplained Money, Evidence & Burden of Proof and Reassessment & Reopening matters, on section 69C, section 147, section 148 of the Income Tax Act 1961, and was decided by ITAT Mumbai Bench 'A' - Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member); order delivered by Girish Agrawal, AM; ITA No. 3097 (Mum.) of 2025; AY 2012-13. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. File the purchase register extract and the tax audit report as the primary evidence, and say in terms that the assessee is being asked to prove a negative. Ask for the material behind the Investigation Wing's information and for cross-examination of anyone whose statement names you. Where a firm has been succeeded by a company during the year, produce the registers for both periods so there is no gap the officer can point to.
Validity check could not be completed. Unverified. The order has been read in full and nothing on its record shows any later treatment - no decision applying, following, affirming, doubting or reversing it, and no appeal to the High Court disclosed. Absence of contrary authority is not good law, so the status stays where it is. What is now settled first-hand is the record: the cause title names the Income-tax Officer as respondent, not a circle; the appeal is ITA No. 3097 (Mum.) of 2025 for AY 2012-13; the Bench is Mumbai Bench 'A', Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member), who delivered the order; the date is 28 August 2025, not the 8 September 2025 a secondary report gave, which is at best a publication date; and the citations are [2025] 178 taxmann.com 454 and (2025) 127 ITR (Trib.) 265. On the provision, no amendment to s.69C after the order was traced; a published concordance puts the successor at s.105 of the Income-tax Act, 2025, in force from 1 April 2026, and whether that text differs materially has not been established. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has been read in full. The respondent is the Income-tax Officer: the 'Circle 5(1)(1)' carried in the earlier record and in the slug appears to have been imported from an unrelated Mumbai case that surfaces on the same search, and the assessment here was made by the ACIT, Circle 19(1), Mumbai. The order is dated 28 August 2025 in ITA No. 3097 (Mum.) of 2025 for AY 2012-13, before Mumbai Bench 'A', Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member), who delivered it. The parallel citation is in the ITR (Tribunal) series. The sentence previously quoted here was a digest catchline and has been replaced with para 6. The reasoning attributed to the Tribunal in the earlier version of this entry - that s.69C fastens on expenditure incurred, so that with no such expenditure in the books the deeming provision has no foundation - does not appear in the order, which decides on burden of proof alone, applying K.P. Varghese v. ITO. Note the limit of the decision: it turns on the purchases being absent from the books altogether, not on the purchases being defended as genuine, and it says nothing about a profit-element percentage or about cross-examination, neither of which was raised or decided. Nobody has confirmed the order still stands. It does not tell you what happens where the purchases are in the books but the supplier is a listed entry provider - that is the Kanak Impex and Drisha Impex situation and this decision does not touch it. It decides no profit-element percentage: the addition was deleted in full and no percentage was sustained or discussed. And it decides nothing about cross-examination: the assessee never asked for it and the Tribunal does not mention it, so the entry cannot be cited for a right of cross-examination. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The addition under s.69C was deleted in full and the appeal allowed; nothing was restored to the Assessing Officer. On the purchase registers for the whole year, split between the firm period and the company period, there was no entry of any purchase from the alleged concern, and nothing cogent was placed on record by the authorities to demonstrate such a purchase beyond the findings of the 2013 search on the group. The assessee was thereby required to prove a negative, which is not permissible. Applying K.P. Varghese v. ITO, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and throwing on the assessee the burden of showing there was no understatement casts an almost impossible burden of establishing a negative.
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