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Facts
The assessee, engaged in real estate, filed its return for AY 2011-12. The Assessing Officer (AO) made additions of Rs. 22,50,000 and Rs. 1,62,50,000 treating them as unexplained cash credit. The CIT(A) upheld these additions, leading to the present appeal.
Held
The Tribunal held that the addition of Rs. 22,50,000 was not justified as the loan received was Rs. 10,00,000, which was repaid, and the lender had sufficient capacity. For the addition of Rs. 1,62,50,000, the Tribunal found that it was payment for flats, not a loan, and part of it was also offered to tax in a subsequent AY.
Key Issues
Whether the additions made under Section 68 for alleged unexplained cash credits and loans were justified, considering the evidence and explanation provided by the assessee.
Sections Cited
147, 68, 143(3), 80IB, 148, 250
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Before: SHRI PAWAN SINGH & SMT.RENU JAUHRI
Date of Hearing 03.11.2025 Date of Pronouncement 14.11.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :-
This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 25.08.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2011-12.
The grounds of appeal are as follows:
“”1.On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in not adjudicating the ground of reopening the case u/s.147 of the Income Tax Act, 1961. 2.On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in making an addition of Rs.22,50,000/- u/s.68 of the Income Tax Act, 1961, by treating the genuine loan from M/s. Vanquish Inv and Leasing Pvt. Ltd as alleged Unexplained Cash credit, without considering the fact that during the year under consideration the appellant had taken loan of Rs. 10,00,000/- only and the same was repaid in the same year. 3.On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of the Learned Assessing Officer in making an addition of Rs. 1,62,50,000/- u/s.68 of the Income Tax Act, 1961 by treating the genuine Advance received against booking of flats as alleged Unexplained Cash credit, without considering the facts and circumstances of the case. 4.On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in not considering the fact that the Learned Assessing Officer has made the addition on the basis of a third-party statement without providing the opportunity to cross examine as requested by the appellant. Order passed without allowing cross examination is in violation of principles of natural justice and thus void in law and needs to be quashed. 5.On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in not adjudicating the ground that the Learned Assessing Officer has treated the Total Income as 1,60,63,530/-as per the order passed u/s.143(3) instead of return income of Rs.1,07,90,094/-, without considering the facts and circumstances of the case.
6. The appellant craves leave to add, amend, alter or delete the said ground of appeal.
3. The brief facts of the case are that the assessee filed its return for A.Y. 2011-12 on 28.09.2011 declaring income of Rs. 107,90,094/- as per normal provisions of the Act and Rs. 1,47,31,239/- as book profit. The assessee is engaged in the real estate business and redevelopment of SRA projects. The case was selected for scrutiny and assessment u/s. 143(3) was completed at an income of Rs. 1,60,63,530/- after disallowing the claim of deduction u/s. 80IB of the Act.
3.2 Subsequently, information was received from the Investigation Wing of the department that one Shri. Jitendra Salecha was providing accommodation entries through his five entities including M/s. Induja Traders Pvt. Ltd. And M/s. Vanquish Investment & leasing Pvt. Ltd. Information was received by the ld. AO regarding following transaction made by the assessee with these companies. i. M/s. Vanquish Investment & Rs. 22,50,000/- leasing Pvt. Ltd. ii. M/s. Induja Traders Pvt. Ltd. Rs. 1,62,50,000/- 3.3 Based on this information, a notice u/s. 148 was issued by the ld. AO on 27.03.2018. The assessee filed its objections on 30.10.2018 which were disposed off by the ld. AO vide order dated 14.11.2018. After considering the assessee’s submissions, ld. AO finalised the reassessment after making the additions of Rs. 1,85,00,000/- on account of above mentioned bogus accommodation entries vide order dated 27.12.2018. Aggrieved, the assessee preferred an appeal before ld. CIT(A). Vide order dated 25.08.2025, the appeal was dismissed by ld. CIT(A). Further aggrieved, the assessee has filed an appeal before the Tribunal.
Ground no. 1 is legal whereas additions on merits have been challenged in Grounds No. 2 & 3. Ground no. 6 is general in nature. The additions on merits are being discussed hereunder.
Ground no. 2: Addition of Rs. 22,50,000/- u/s. 68 5. With regard to the loan of Rs. 22,50,000/- shown from M/s. Vanquish Investment & leasing Pvt. Ltd., ld. AO primarily relied upon the information received from the DDIT(Inv.). It was further noted by ld. AO from the records that entry of Rs. 22,50,000/- is unexplained cash credit and added the same u/s. 68 of the Act. This addition was also confirmed by ld. CIT(A). 5.2 Before us, ld. AR has submitted the following documents in the form of paperbook to establish the genuineness of the loan: i. Acknowledgement of return filed by M/s. Vanquish
Investment & leasing Pvt. Ltd. for A.Y. 2011-12 declaring income of Rs. 13,42,157/-. ii. Confirmation of ledger account. iii. Extract of Bank account of M/s. Vanquish Investment & leasing Pvt. Ltd. evidencing relevant entries. iv. Copy of ledger account of M/s. Vanquish Investment & leasing Pvt. Ltd. in assessee’s books of account. He has argued that the onus on the assessee to prove the identity and creditworthiness of the lender and genuineness of transaction has been duly discharged in the light of above stated documents. Ld. AR has further submitted that the statement recorded during search on which ld. AO has heavily relied has since been retracted by Mr. Jitendra Salecha.
5.3 Ld. DR, on the other hand, strongly relied on the orders of lower authorities. He pointed out that the lender company having returned income of Rs.13,41,157/- did not have the capacity to advance the impugned loan and therefore, neither the credit worthiness of the lender nor genuineness of the transaction has not been established. 5.4 We have heard the rival submissions and carefully considered the document placed before us. It is seen that loan received during the year from M/s. Vanquish Investment & leasing Pvt. Ltd. is only Rs. 10,00,000/- and not Rs. 22,50,000/-.
From the ledger account of the lender company, it is seen that Rs. 30,00,000/- was the opening balance as on 01.04.2010. Thereafter Rs. 10,00,000 has been received on 17.04.2010 and subsequently the entire amount has been repaid vide cheques of Rs. 20,00,000/- each on 13.07.2010 and 21.07.2010.
After considering the entirety of the facts and circumstances, we hold that the addition u/s. 68 of Rs. 22,00,000/- in the hands of the assessee was not justified and is hereby deleted.
Ground no. 3: Addition of Rs. 1,62,50,000/- from M/s. Induja Traders Pvt. Ltd. Before us, Ld. AR has submitted that the assessee has repeatedly explained that it had booked two flats in the name of M/s. Induja Traders Pvt. Ltd. in its project named, ‘Kingston Tower’ in Parel, Mumbai and the impugned amount was payment received towards cost of flats and not an unsecured loan.
6.2 Following documents have been submitted in this regard: i. Copy of letter of allotment dated 15.07.2010 in the name of M/s. Induja Traders Pvt. Ltd. of flat No. 3301 & 3202 in Kingston Tower. ii. Copy of ledger account of M/s. Induja Traders Pvt. Ltd. in assessee’s books of account. iii. Copy of relevant bank account of M/s. Induja Traders Pvt. Ltd. in the Greater Bombay Co-operative Bank Ltd. showing payments made through cheques to the assessee. iv. Affidavit of Mr. Jitendra Salecha confirming the booking of flats and payment of Rs. 1,62,50,000/- during the year which was subsequently cancelled due to non-payment of remaining amount. v. Copy of audited Profit and Loss account and balance sheet of M/s. Induja Traders Pvt. Ltd. 6.3 It has been submitted by ld. AR that after cancellation of the allotment of flats vide letter dated 26.10.2013, refund of Rs. 75,00,000/- was given by the assessee and balance amount was forfeited. Further, this transaction has been duly reflected in the return for A.Y. 2014-15 of the assessee company wherein income of Rs.92,50,000/- on account of balance written off has been offered for tax under the heading ‘other income’. The assessment for A.Y. 2014-15 has also been completed after scrutiny and income of Rs. 1,37,24,070/- was assessed u/s. 143(3) of the Act.
6.3 Ld. DR, on the other hand, has vehemently argued that the submissions made by ld. AR are not supported by reliable evidence. The explanation regarding cancellation of flat and forfeiture of substantial portion of the payment allegedly made for purchase of flats, lacks credibility as it is not backed by any specific terms in the agreement/ allotment letter regarding forfeiture on cancellation. He has, therefore, strongly relied on the orders of the lower authorities. 6.4 We have heard the rival submissions and perused the material placed on record. We are of the considered view that the initial onus to prove the genuineness of the transaction has been discharged by the assessee.
Further, a part of the impugned amount of Rs. 1,62,50,000/- has also been offered for tax in the A.Y. 2014-15 where 92,50,000/- has been shown as income on account of balance written off. Under these circumstances, we hold that the addition made by the ld. AO u/s. 68 in respect of the impugned amount is not justified and is hereby deleted.
Since the appeal of the assessee has been allowed on the merits, the legal ground relating to reopening of the assessment in rendered academic and hence is not being adjudicated upon.
In the result, appeal of the assessee is allowed.
Order Pronounced in Open Court on 14.11.2025