DINESH AGARWALA,SILIGURI vs. A.C.I.T., CIRCLE - 1, SILIGURI

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 10.03.2026 for the AY 2017-18.

ITA No. 1501/KOL/2026 Dinesh Agarwal, Siliguri; A.Y. 2017-18 3. The facts in brief are that the assessee filed the return of income on 05.08.2017, declaring total income at ₹1,61,94,080/-. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 28.03.2024, after the ld. AO noted from the insight portal of the department that assessee has received bogus unsecured loan in the form of accommodation entries of ₹2,50,00,000/- from M/s Narayan Mercantile Pvt. Ltd. The assessee did not comply with the said notice. Thereafter, the ld. AO issued notice u/s 142(1) of the Act on three occasions which were partly complied. The assessee furnished before the ld. AO all the details and information qua the said unsecured loan. It was also submitted that the unsecured loan was raised for the purpose of business. The ld. AO also issued notice u/s 133(6) of the Act to the loan creditor to verify the genuineness of the loan transactions and the said loan has complied with the said notice by furnishing all the details qua the loan transaction and also confirmed the same. It was also brought to the notice of the ld. AO that the unsecured loan has been repaid within a period of 2 months’ time during the financial year itself.

ITA No. 1501/KOL/2026 Dinesh Agarwal, Siliguri; A.Y. 2017-18 of ₹2,50,00,000/- from M/s Narayan Mercantile Pvt. ltd. during the year and the loan was also repaid during the period of 2 months during the financial year itself. We note that during the course of assessment proceedings, the assessee furnished all the details and evidences qua the said loan creditors namely, PAN, address, audited financial statements, bank statement, confirmation, etc. We note that the ld. AO also issued notice u/s 133(6) of the Act to the said creditor which was complied by the said creditors on 11.01.2025. We note that the ld. AO as well as the ld. CIT (A) has not pointed out any defect or deficiency in the documents filed except the modus operandi of the shell entities and doubted the transactions. We note that once the assessee has furnished all the evidences qua the loan transactions before the authorities below and the loan was also repaid, then the provisions of Section 68 of the Act are not applicable. The case of the assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed Page | 3

ITA No. 1501/KOL/2026 Dinesh Agarwal, Siliguri; A.Y. 2017-18 all the evidences qua the loan creditors before the ld. AO and loans are also repaid ,then the same cannot be added us/ 68 of the Act. Similarly, the of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :-

"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information." 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that Page | 4

ITA No. 1501/KOL/2026 Dinesh Agarwal, Siliguri; A.Y. 2017-18 notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. " 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 6. We therefore respectfully following the ratio laid down by the Hon’ble Gujarat High Court and the Hon'ble Calcutta High Court set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. The appeal of the assessee is allowed.

ITA No. 1501/KOL/2026 Dinesh Agarwal, Siliguri; A.Y. 2017-18 7. In the result, the appeal of the assessee is allowed.

Order pronounced on 03.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 03.09.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

(Manish Bhoi) Dy. Registrar Income Tax Appellate Tribunal, Kolkata