ACIT-24(1), MUMBAI vs. PRAKASH GOLCHA HUF, MUMBAI

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ITA 1745/MUM/2026Status: DisposedITAT Mumbai09 September 2026AY 2022-236 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that both the lower authorities failed to properly examine the documents and evidence submitted by the assessee. The CIT(A) deleted the additions without discussing how the documents proved the identity, creditworthiness, and genuineness of the creditors.

What were the facts?

The Assessing Officer added unsecured loans of Rs. 6,18,86,178/- and related interest of Rs. 37,87,543/- as unexplained cash credits. The CIT(A) deleted these additions, finding that the assessee had furnished requisite documents. The Revenue appealed this deletion.

What were the issues?

Whether the CIT(A) erred in deleting additions for unexplained cash credits and related interest without proper verification of the assessee's evidence regarding identity, creditworthiness, and genuineness of unsecured loans.

Which sections of the Income-tax Act were involved?

Section 68,Section 36(1)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI SANJAY GARG & SHRI JAGDISH

For Respondent: Shri Ruturaj Gujrar, Advocate

आदेश / ORDER

Per Sanjay Garg, Judicial Member:

This appeal is filed by the Department against the order of Ld. Commissioner of Income Tax (Appeals) / NFAC [in short “the CIT(A)”] vide DIN: ITBA/AST/S/143(3)/2023-24/1063403156(1) dated 08-Dec-2025 for the Assessment Year 2022-23. The Department has raised the following grounds of appeal:

1) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 6,18,86,178/-made under section 68 on account of unsecured loan credits, despite the assessee having failed to establish, in respect of each credit, the essential ingredients of identity, creditworthiness, and genuineness as required under section 68. 2) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee had discharged the onus under section 68 merely by filing confirmations, PAN and bank statements, without recording any sustainable finding, creditor-wise and transaction-wise, regarding the financial capacity of the creditors and the verifiable source of funds at the creditor end. 3) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 6,18,86,178/- without appreciating that the assessee did not furnish primary and contemporaneous material establishing genuineness, including a clear and reliable fund trail linking the book credits to actual creditor outflows supported by explained sources, and that mere receipt through banking channels does not, by itself, establish genuineness under section 68. 4) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 6,18,86,178/- without appreciating that the assessee failed to produce basic commercial documentation ordinarily attendant to genuine borrowings, including contemporaneous terms of lending and repayment, thereby rendering the explanation in respect of the impugned credits unsatisfactory within the meaning of section 68. 5) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 37,87,543/- being interest claimed on such unsecured loans, as the said disallowance was consequential to, and inseparably linked with, the addition of the principal credits under section 68, and once the credits remained unproved, the related interest could not be allowed as deduction. 6) Without prejudice to Ground No. 5, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 37,87,543/- without recording any independent finding establishing allowability under section 36(1)(iii), including proof of actual borrowing, nexus with business purposes, and creditor-wise verification of interest computation and payment. 7) The appellant craves leave to add to, amend, alter, vary, substitute, OR withdraw any of the above grounds at the time of hearing.

2.

The Revenue, in the present appeal, is aggrieved by the action of the learned CIT(A) in deleting the addition of Rs. 6,18,86,178/- made by the Assessing Officer u/s 68 of the Act in respect of unsecured loans claimed by the assessee, which were treated by the Assessing Officer as unexplained cash credits. The Revenue is further aggrieved by the action of the Ld. CIT(A) in deleting the disallowance of Rs. 37,87,543/- made by the Assessing Officer on account of interest claimed to have been paid on such unsecured loans.

3.

The brief facts of the case are that during the assessment proceedings, the Assessing Officer noted that the assessee had shown unsecured loans of Rs. 6,18,86,178/-, on which the assessee had also claimed interest expenditure of Rs. 37,87,543/-. On being asked to explain the identity and creditworthiness of the creditors and the genuineness of the transactions, the assessee did not file any reply. The Assessing Officer, therefore, treated the aforesaid unsecured loans claimed by the assessee, as unexplained cash credits and added the same to the income of the assessee. The Assessing Officer also disallowed the interest expenditure claimed to have been paid on such unsecured loans.

4.

On appeal before the Ld. CIT(A), the assessee submitted that it had furnished all the requisite documents to establish the identity and creditworthiness of the creditors and the genuineness of the transactions. The Ld.CIT(A), considering the submissions of the assessee, observed that the assessee had furnished the requisite documents before the Assessing Officer. However, the Assessing Officer, without considering the same and without verifying the same, completed the assessment by making the impugned additions. The Ld. CIT(A) observed that, since the assessee had furnished all the relevant documents and the Assessing Officer had not brought any evidence on record to refute the correctness thereof, hence, the additions made by the Assessing Officer were not justified. He accordingly deleted the additions in respect of the unsecured loans as well as of the interest expenditure claimed to have been paid on such loans. Being aggrieved by the said order of the Ld. CIT(A), the Revenue has come in appeal before us.

5.

The Ld. DR submitted that the Ld. CIT(A) had deleted the addition made by the Assessing Officer without giving any finding relating to the veracity of the documents, if any, furnished by the assessee to establish the identity and creditworthiness of the creditors and the genuineness of the transactions. He further submitted that the assessee had merely furnished the names, PANs and confirmations of the creditors, however, no evidence was furnished by the assessee to establish the creditworthiness of the creditors and the source of funds from which the amounts had been advanced to the assessee.

6.

On the other hand, the Ld. AR of the assessee submitted that the assessee had furnished all the relevant documents before the Assessing Officer, pertaining to the creditors to establish their identity and creditworthiness as well as the genuineness of the transactions.

7.

We have considered the rival submissions and gone through the impugned order of the Ld. CIT(A). We note that both the lower authorities have failed to examine the relevant documents and evidences stated to have been furnished by the assessee to establish the identity and creditworthiness of the creditors and the genuineness of the transactions.

7.1 The Assessing Officer, in this case by way of none speaking order held that assessee has not filed any reply to the show cause notice and failed to furnish the relevant details and evidences in respect of the unsecured loans taken by the assessee from various parties. On the other hand, the Ld. CIT(A), by way of none speaking order has held that the assessee had furnished all the requisite details. However, the Ld. CIT(A) without discussing as to what were those documents and how the assessee was able to prove from the said documents about the identity and creditworthiness of the creditors and the genuineness of the transactions, straightaway deleted the additions, so made by the assessee.

8.

In view of the above, we deem it appropriate to set aside the order of the Ld. CIT(A) and restore the matter to the file of the Ld. CIT(A) for deciding the issue under consideration afresh. We direct the Ld. CIT(A) to provide adequate opportunity to the assessee to present its case and thereafter verify and examine the documents furnished by the assessee and give his finding thereupon by way of speaking order. With the above observations the appeal of the revenue is treated as allowed for statistical purposes.

9.

In the result, the appeal of the Revenue is treated as allowed for statistical purposes.

Order pronounced in the open court on 08.09.2026.

Sd/- Sd/- Jagadish Sanjay Garg ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 08.09.2026 KRK, Sr. PS Copy to: ACIT-24(1), ROOM NO.601, 6TH FLOOR, PIRAMAL 1 CHAMBERS, PAREL, MUMBAI - 400012, MUMBAI-400012, MAHARASHTRA

PRAKASH GOLCHA HUF, JE-6060, J TOWER EAST CORE, BANDRA 2 KURLA COMPLEX, BANDRA EAST,, MUMBAI-400051, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE

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