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Facts
The Revenue appealed against an order of the CIT(A) who deleted an addition of Rs. 3,55,00,000 made by the AO as unexplained cash credit under Section 68 of the Income Tax Act. The assessee had received this amount as an unsecured loan from LAN Finance Private Limited.
Held
The Tribunal held that the assessee had provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the loan transaction. The onus on the assessee was discharged, and the AO failed to establish any deficiency in the provided evidence.
Key Issues
Whether the addition of Rs. 3,55,00,000 as unexplained cash credit under Section 68 is sustainable when the assessee has provided evidence of identity, creditworthiness, and genuineness of the loan?
Sections Cited
147, 143(3), 68, 148, 142(1), 133(6)
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Before: SHRI AMIT SHUKLA & SHRI PRABHASH SHANKAR
Date of Hearing 08.10.2025 Date of Pronouncement 11.12.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 12.04.2025 is preferred by the Revenue against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A)-48, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to assessmentorder passed u/s. 147 r.w.s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 27.01.2019 for the Assessment Year [A.Y.] 2012-13. P a g e | 2 A.Y. 2012-13 NMC Industries Pvt. Ltd.
The grounds of appeal
are as under:
1. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition of Rs.3,55,00,000/-u/s 68 of the ITAct, irrespective of the fact that there are no circumstances of normal course of business done by NMC and LAN.
2. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition of Rs. 3,55,00,000/- u/s 68 of the I.T. Act, merely by verifying the transactions between LAN and NMC without going deeper into the fact that the Investigation wing Kolkata has established money trail which proves that M/s. Kalyani Vincom was involved in providing accommodation entries along with intermediate companies and the ultimate beneficiary of the transaction was NMC.
3. Further, the tax effect involved in this case is of Rs.1,06,50,000/- which is more than the prescribed monetary limits circular no. 9/2024 dated 17.09.2024.
3. Facts of the case are that the assessee a private limited company filed its return of income for the year under consideration declaring total income of Rs. 2,83,19,740/-and the assessment was completed under section 143(3) of the Act, determining total income of Rs 2,89,53,890/-.Subsequently, assessment was re-opened u/s 148 of the Act. During assessment proceedings, the AO issued notice u/s 142(1) of the Act seeking explanation as to why the amount received as loan from one LAN Finance Private Limited (‘LAN’) of Rs. 3,55,00,000/- should not be added to the total income? In response, the assessee provided various details, documents and explanations with regard to the above cash credit. However, the AO not being impressed added amount of Rs. 3,55,00,000/- as unexplained cash credits u/s. 68 of the Act.
P a g e | 3 A.Y. 2012-13 NMC Industries Pvt. Ltd.
During appellate proceedings, the assessee claimed that it provided all details, documents and explanations with regards to the amount received from LAN .It was submitted that the AO re-opened assessment proceedings on basis of information received from Investigation Directorate, Kolkata stating that on the basis of some reliable information and bank statement of M/s Kalyani Vincom Pvt. Ltd. (KVPL) and interlinked companies, it was found that significant transactions of accommodation entries were established from the fund trail analysis of bank statements of KVPL group. It was also found that the said company was under the process of striking off and not doing any actual business justifying these transactions recorded in its bank account. As per investigation carried out, it was found KVPL was one of the many shell companies which controlled and managed by the entry operator Shri Praveen Agarwal and someother dummy directors. These companies had no business activity and showed meagre income and also had no fixed assets in the balance sheet. They were existing only on paper. After verification of money trail, it was found that the assessee company had taken accommodation entries amounting to Rs. 4,53,00,000/- from LAN during the year. The assessee categorically denied to know the person named as Praveen Agrawal or any of his shell companies. Further, reason recorded had not brought out any kind of P a g e | 4 A.Y. 2012-13 NMC Industries Pvt. Ltd. relationship between KVPL or its interlinked companies and LAN. Further amount received by assessee company from LAN during the year under consideration had no link with KVPL or its interlinked companies. It had duly provided AO with detailed of source of money which had been advanced by LAN. Further, the assessee had specifically requested the AO to provide them with the statement of Kolkata Investigation Wing refereed by him and also to provide with opportunity to cross examine Pravin Agarwal. In response to questionnaire by the AO, the assessee had provided with copy of Income Tax return acknowledgment, confirmation of accounts & bank statements of LAN and the same had been duly verified and accepted by the erstwhile AO as genuine and the same was allowed by him. During assessment proceedings, assessee company had submitted several details and documents to discharge its onus as laid down under section 68 of the Act in support of unsecured loans taken from LAN: a) Confirmation of accounts from LAN showing address and PAN b) Copy of Bank Statements of LAN highlighting payment made to the assessee company c) Copy of Income Tax Acknowledgment as proof that the LAN was assessed to Tax for A.Y. 2012-13 d) Copy of Audited Balance Sheet & Profit & Loss A/c along with Audit Report of ,Copy of Bank statement of the assessee in which the amount had been credited f) Copy of P a g e | 5 A.Y. 2012-13 NMC Industries Pvt. Ltd. "Certificate of Incorporation" issued by