February 13, 2026 : The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue’s appeals in the case of DCIT vs. Shri Irfan, affirming the deletion of a protective addition of ₹175.03 crore and an estimated commission addition of about ₹1.75 crore. The Tribunal held that once the transactions were established as genuine business dealings, they could not be treated as accommodation entries.

The appeals, being ITA Nos. 3519 & 3520/Del/2025 for Assessment Years 2018–19 and 2019–20, were heard by the Delhi Benches ‘E’ comprising Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman. The order was pronounced on 12 February 2026.

Shri Irfan, an individual engaged in the business of supplying she-buffaloes to slaughterhouses, supplied livestock to HMA Agro Industries Ltd. against indents raised by the company. Payments were received through banking channels as trade advances. The assessee maintained audited books of account and declared income including handling charges and commission.

The controversy arose during search and post-search proceedings in the HMA Agro group. The Assessing Officer alleged that Shri Irfan was not conducting genuine business but was instead providing accommodation entries in the garb of bogus purchase bills. On this basis, total bank credits of ₹175.03 crore were treated as unexplained under Section 68 on a protective basis in the hands of the assessee, while substantive addition was proposed in the hands of HMA Agro Industries Ltd. Additionally, commission income was estimated at 1 percent of total credits.

The Commissioner of Income Tax (Appeals), Kanpur-4, deleted the protective addition after examining books of account, bank statements, ledger accounts, and supporting documents. The appellate authority also relied on findings in the case of HMA Agro Industries Ltd., where substantive additions relating to alleged bogus purchases were deleted.

It was noted that in the assessment of HMA Agro Industries Ltd. for AY 2018–19, the Assessing Officer had recorded statements of Shri Irfan and verified documentary evidence, ultimately making no substantive addition on the same issue.

The CIT(A) held that protective assessment cannot stand independently without a substantive addition and that the transactions represented genuine supply of livestock.

The Tribunal examined the material on record and noted that:

• The transactions between Shri Irfan and HMA Agro Industries Ltd. were cross-verified with the books of account of the company.
• HMA Agro Industries Ltd. had acknowledged the purchases.
• The Assessing Officer had not brought any evidence on record to show that cash wiTribunal’s Observationsthdrawn by the assessee was returned to the company.

The Bench observed that the transactions could not be treated as accommodation entries merely on suspicion, especially when documentary evidence supported the genuineness of business activity.

On the issue of protective addition, the Tribunal agreed that such an addition cannot survive in the absence of a substantive addition in the hands of the alleged beneficiary. Since the substantive addition in the case of HMA Agro Industries Ltd. did not survive, the protective addition also failed.

Regarding the estimated commission income at 1 percent of total credits, the Tribunal held that the assessee had already declared commission income in his audited accounts and that the payments matched the books of HMA Agro Industries Ltd. The estimation was found to be without basis, particularly in the absence of comparative analysis or supporting material.

Finding no infirmity in the order of the CIT(A), the Tribunal dismissed the Revenue’s appeals for both assessment years and confirmed deletion of the additions.

The decision reinforces the principle that protective assessments cannot stand independently and that allegations of accommodation entries must be backed by cogent evidence, especially where transactions are supported by audited books and cross-verification with the counterparty’s records.

Case Details:
DCIT vs. Shri Irfan
ITA Nos. 3519 & 3520/Del/2025
Assessment Years: 2018–19 & 2019–20
Order dated: 12 February 2026.