Bombay High Court Orders Multi-Agency Investigation into Accommodation Entry Racket
Here is one of the major Tax Ruling on Section 68 wherein Bombay High Court Orders Investigation into Accommodation Entry Racket
It’s a big Tax Law Development in the case of Pr. CIT-14, Mumbai vs. Buniyad Chemicals Ltd. (2025). The Bombay High Court ruled that unexplained bank credits must be fully taxed under Section 68, while also directing a multi-agency probe into tax fraud, money laundering, and financial misconduct.
Key Takeaways from the Judgment:
Unexplained Bank Credits = Full Tax Addition – The assessee, involved in providing accommodation entries, failed to disclose details of ₹10.73 crore worth of transactions.
The Court ruled that without proper identification, the entire amount must be taxed under Section 68.
Books of Accounts & Digital Records Valid –
The Court dismissed the argument that credits in bank accounts do not qualify as books, clarifying that computerized records are valid under tax laws.
Accommodation Entry Racket Exposed
The assessee admitted to facilitating fake transactions, prompting the Court to order a full-scale investigation into financial crimes.
Rate of Commission Adjusted –
While the ITAT’s decision of 0.15% commission was upheld, the Court restored CIT(A)’s ruling that unexplained credits must be fully taxed under Section 68.
Court Directs Investigation by Multiple Agencies:
Institute of Chartered Accountants of India (ICAI):
To examine possible professional misconduct of the accused, a former CA.
National Financial Reporting Authority (NFRA):
To review financial irregularities.
Economic Offenses Wing (EOW), Mumbai Police:
To investigate potential fraud and tax evasion.
Enforcement Directorate (ED):
To probe money laundering under PMLA.
Ministry of Corporate Affairs (MCA):
To investigate violations of corporate laws.
Income Tax Department (Chief Commissioner, Mumbai):
To review tax prosecutions and compliance lapses.
Why This Judgment Matters:
If an assessee cannot explain deposits in bank accounts, expect full tax addition.
Accommodation entries and shell transactions will now face strict scrutiny.
Authorities will no longer ignore financial fraud disguised as tax planning.
It is a groundbreaking ruling that tightens the noose on financial misconduct!
The Copy Of the order is as under:
