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Facts
The Revenue appealed against an order deleting an addition made on account of an alleged unsecured loan of Rs. 1,95,00,000/-. The assessee, an NBFC, had received this amount. The Assessing Officer (AO) treated it as an accommodation entry. The Ld. Commissioner deleted the addition.
Held
The Tribunal upheld the Ld. Commissioner's order, finding that the reopening of assessment under Section 147 was bad in law as no independent verification was done by the AO. Furthermore, on merits, the loan was found to be from a different entity, M/s Suraksha Projects Ltd., which was explained and accepted in prior assessments.
Key Issues
Whether the reopening of assessment under Section 147 was valid without independent verification by the AO, and whether the addition under Section 68 was justified on merits when the loan was previously explained and accepted.
Sections Cited
250, 143(3), 147, 148, 68, 115JB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRYSHRI PRABHASH SHANKAR
O R D E R
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Revenue against the order dated 24.06.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Exemption) (in short ‘Ld. Commissioner’) u/s 250 of the Income Tax Act, 1961 (in short ‘Act’) for the Assessment Year 2014-15.
In the instant case, the assessee is registered as non-banking financial company (NBFC) with Reserve Bank of India and engaged in the financial requirement of emerging Small and Medium Enterprises (SME) segment, including rendering an advisory services relating to financial aspect.
The assessee for the year under consideration had declared its total income of Rs. 876440/- by filing its return of income on dated 27.11.2014, which was selected for scrutiny for regular assessment and resulted into the passing the assessment order u/s 143(3) of the Act dated 31.08.2015, raising the demand of Rs. 43,400/-.
Subsequently the Assessee has received information from DDIT (Inv.) Unit 2(2), Kolkata through insight system, to the effect that M/s. Panchkoti Promoters Pvt. Ltd is a strike off company maintains a bank account in ICICI Bank with other group companies, in which suspected transactions took place. M/s Panchkoti Promoters Pvt. Ltd and other companies from which interlinked transactions made namely M/s. Oversure Heights Pvt. Ltd, M/s Vijaypath Infrastructure Pvt. Ltd, M/s Suraksha Projects Ltd, M/s. Surakshit Real-Estate Pvt. Ltd, M/s Esquire Enclave Pvt. Ltd and M/s Bosslife Infratech Pvt. Ltd., are the shell companies, which are controlled and managed by the entry operator Praveen Agarwal through dummy Directors. It was also found that M/s Panchkoti Promoters Pvt. Ltd is strike off company having bank account in ICICI bank and transferred funds to the various beneficiaries. One of the beneficiary is M/s Sweekrutee Finance Pvt. Ltd having PAN AAOCS2723H has received Rs. 1,95,00,000/- during the FY 2013-14 relevant to AY 2014-15, from M/s Panchkoti Promoter Pvt. Ltd. {strike off company}, which has no real business and is used as a means of routing funds to the beneficiaries. In this process, M/s Sweekrutee Finance Pvt. Ltd. has brought its unaccounted money back in the books, without paying any tax.
The case of the assessee was reopened u/s 147 of the Act issuing notice dated 31.03.2021 u/s 148 of the Act. Thereafter in Swikrutee Finance Private Limited order to verify the said transaction of Rs. 1,95,00,000/- carried out by the Assessee with M/s. Panchkoti Promoters Pvt. Ltd (strike of company) the Assessee was showcaused, in response to which the assessee furnished its reply along with the bank statement vide response dated 28.03.2022 and requested for personal hearing through video conferencing, which was accepted and therefore the Ld. AO scheduled the video conferencing on 29.03.2022 at 5.00 pm and completed. The assessee during the video conferencing, has claimed that assessee has already assessed for the A.Ys. 2014-15 and 2018-19 by making addition of Rs. 2.15 crore and Rs. 36.03 crore respectively. The issues i.e. loan and interest credited in the account of assessee through strike of companies/shell companies was common for the aforesaid A.Ys., as involved in year under consideration. The assessee though has filed 1st appeal before the Ld. CIT(A) against the assessment orders passed for A.Ys. 2013-14 and 2018-19, however, till date, no appellate order has been passed. The assessee further claimed that it has not done any transaction with M/s. Panchkoti Promoters Pvt. Ltd.
The Assessing Officer though considered the aforesaid aspect as well as submissions made by assessee, however, not being satisfied, ultimately observed that the assessee has neither provided confirmation of the parties from whom unsecured loan has been received during the year nor any document with respect to creditworthiness of the parties and also not disclosed the loan received during the year. Further in the absence of plausible reply and simply denial of the transaction, it is crystal clear that the assessee has benefited from the accommodation entries from the bogus concern managed and controlled by the accommodation entries provider.
Swikrutee Finance Private Limited 6.1 The AO thus on the aforesaid facts and circumstances ultimately treated the amount of Rs. 1,95,00,000/- as accommodation entry and unexplained money u/s 68 of the Act and added the same in the income of the assessee taxable u/s 115JB of the Act.
The assessee being aggrieved challenged the said addition by filing first appeal before the ld. Commissioner, on legal grounds as well as merit.
We observe from the impugned order that Ld. Commissioner considered the legal issue raised by the assessee to the effect that the case of the assessee was reopened after period of 4 years and without establishing that there was failure on the part of the assessee to disclose fully and truly all material facts thereby violating the provisions of proviso to section 147. Further the assessment was reopened based on the borrowed satisfaction and without making any independent enquiry and recording any finding by the Assessing Officer. Further the unsecured loan of Rs. 1,95,00,000/- from M/s Suraksha Projects Ltd. has been examined twice in the earlier assessment and found to be explained and thus accepted and nothing new has been brought on record in current assessment proceedings, to prove that the said loans are not genuine. Even otherwise, entire loan has already been repaid along with the interest which has duly been accepted by the Revenue and therefore addition of the said amount u/s 68 of the Act, without any new facts of the record, cannot be upheld. The Ld. Commissioner thus, on the aforesaid analyzations ultimately deleted the aforesaid addition, which is under consideration before us in the appeal filed by the Revenue Department.
Swikrutee Finance Private Limited 9. The Ld. DR thus at the outset has claimed that the Assessing Officer has rightly reopened the proceedings u/s 147 of the Act on the basis on loan transaction and therefore it cannot be said that the reopening of the assessment is erroneous and bad in law. Further the information with regard to the assessee involvement in transaction with shell companies, was not available during the original assessment u/s 143(3) and the first re-assessment u/s 147 of the Act, as the same was received post assessment from the investigation, which can be considered as tangible material. The Ld. DR further submitted that the Ld. Commissioner has erred in ignoring the fact that M/s. Panchkoti Promoters Pvt. Ltd was strike of company and/or was part of the network of shell companies. Even otherwise, the Ld. Commissioner failed to consider the fact that there was lack of loan confirmation. Further Ld. Commissioner also erred in holding the loan from M/s Suraksha Projects Ltd. was accepted in earlier assessment, ignoring that no specific discussion on this loan is occurred in the prior years.
On the contrary ld. Counsel for the assessee refuted the claim of the assessee and vehemently supported the impugned order.
Heard the parties and perused the material available on record. Admittedly the Assessing Officer on receiving the information from the DDIT (Inv.) Unit 2(2), Kolkata, has not made any enquiry independently, as it clearly appears from the reasons recorded as reproduced in para No. 2 of the assessment order. Admittedly, the assessee has duly claimed before the Ld.AO that it has not done transaction with the said concern. Even name of M/s. Panchkoti Promoters Pvt. Ltd., does not figure in the list of parties from whom the assessee has taken unsecured loans. Thus, the finding of the assessment officer in the Assessment order that the assessee has received Rs. 1,95,00,000/- from M/s. Panchkoti Swikrutee Finance Private Limited Promoters Pvt. Ltd as recorded in the reasons for re-opening, is contrary to the fact. The Assessee has claimed that it has not received any fresh loan of Rs. 1,95,00,000/- from M/s. Panchkoti Promoters Pvt. Ltd during the AY under consideration but in fact the said loan was taken from another concern i.e. M/s Suraksha Projects Ltd. which was subjected to examination examined twice in earlier assessment years and found to be explain as claimed by the Assessee and accepted and endorsed by the Ld. Commissioner.
11.1 The Ld. Commissioner by independently examining the relevant provisions of law and applicability thereto to the case of the assessee specifically the proviso to section 147 of the Act and by holding that the Ld.AO has not done any independent verification before reopening of the case, held the assessment as bad in law and therefore we are of the considered view that there is no perversity or impropriety or illegality in the decision of the ld. Commissioner in holding the assessment order as bad in law.
11.2 We further observe that the ld. Commissioner also touched upon the merits of the case and by giving categorical findings that no loan has been taken by the assessee from M/s. Panchkoti Promoters Pvt. Ltd. during the AY under consideration. Further the loan of Rs. 1,95,00,000/- received from M/s Suraksha Projects Ltd. has duly been explained and accepted in the earlier assessment years and further the addition of such amount cannot be made u/s 68 of the Act, without any new facts on record. In our considered view the decision of the Ld. Commissioner on merit, is also based on factual aspect and the documents available on record and in the right perspective of the issue involved, thus we could not find any perversity or impropriety of illegality in the decision of ld. Commissioner on merit too.
In the result, Appeal filed by the Revenue Department stands dismissed.
Order pronounced in the open court on 31.10.2025.