EPITOME PETROPACK LTD.,,KOLKATA vs. DCIT, CIRCLE 12(1),, KOLKATA

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 18.12.2025 for the AY 2015-16.

“9. For that the Ld. CIT(A), NFAC acted arbitrarily and in a perverse manner in confirming the addition of Rs. 10,15,05,000/- without discussing and dwelling upon the evidences submitted in explaining the nature and source of credits amounting to Rs. 10,15,05,000/-.

3.1. The facts in brief are that the assessee filed the return of income on 30.09.2015, declaring total loss of ₹3,85,05,157/-. The case of the assessee was selected for scrutiny and notices

3.2. The Ld. CIT (A) in the appellate proceedings, affirmed the said addition that mere filing of ITRs, audited balance sheets, confirmation from the loan creditors would not prove and discharge the onus as cast upon the assessee u/s 68 of the Act and thus, upheld the order of the Ld. AO.

3.3. After hearing the rival contentions and perusing the materials available on record, we note that during the course of assessment proceedings, the assessee has raised loans aggregating to ₹20,09,05,352/- from 41 parties. The assessee filed before the Ld. AO the details and evidences qua these loan creditors namely PANs, addresses, audited accounts ,loan taken, rate of interest, interest paid, TDS, confirmations and repayments of the loans before both the authorities below. Even summons issued u/s 131 of the Act to all the loan creditors were complied with only by 14 loan creditors by recording their personal appearance before the Ld. AO. However, the 26 loan creditors did not respond to the summons u/s 131 of the Act. We note that the Ld. AO has relied upon the statements of the entry operators without doing any verification or pin pointing any defects in the documents furnished by the assessee. Moreover, the undisputed facts as available in the records corroborate that the assessee has repaid substantial part of the loans taken during the year itself. The details of the loans raised during the year, interest paid, rate of interest, TDS deducted, closing

3.3.1. We have also examined the documents available in the paper book furnished before us qua these loan creditors and find that the assessee has repaid the substantial part of the loans during the year and the remaining was repaid in the subsequent financial years. In our opinion, once the assessee filed all the evidences before the Ld. AO and he has not conducted any enquiry into those evidences, then provisions of Section 68 of the Act cannot be invoked if the loans are repaid either in the current year or so in the subsequent financial years. The case of 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

"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."

4.1. Since, we have already allowed the appeal of the assessee in ground nos.9, 10 and 11 (supra), wherein we have directed the Ld. AO to delete the addition made in respect of unsecured loans. Therefore, this being a consequential issue to the ground no.9 to 11, consequently, we set aside the order of Ld. CIT (A) and direct the Ld. AO to delete the addition. Grounds no. 12 and 13 are allowed.

5.1. The fact in brief is that during the year the AO found that there are some opening liabilities outstanding in respect of unsecured loans coming over from the earlier years. These loans were relating to the three parties namely Cliff Tremix Pvt Ltd ₹2,00,00,000/-, Bossam Marketting Pvt Ltd ₹ 80,00,000/-and Ambala Trefin Pvt Ltd ₹ 48,44,000/- aggregating to ₹ 2,28,44,000/-. The assessee furnished before the AO the evidences qua these loans and submitted that these are opening balances and not received during the year. Therefore, the provisions of section 68 of the Act are not applicable to the said loans as no money is credited in the books of accounts during the year The AO also issued summons u/s 131 of the Act to directors of these loan creditors but the same were not responded by them. The AO concluded that since the directors of these companies did not appear pursuant to summons and therefore the said transactions remained unverified. The AO finally added these unsecured loans u/s 68 of the Act as unexplained cash credit.

5.2. The ld. CIT(A) also affirmed the order of AO on this issue.

5.3. We have heard the rival contentions and perused the materials on records. Undisputedly , the above three loans represented the opening balances coming over from the earlier years and not received during the year. Though there is no money credited in the books of accounts during the year , the assessee furnished before the AO , the evidences qua

“According to Shri Bajoria, the whole matter boils down to the fact that though the entries were made in the cash book in the case, there was no passage of cash at any stage. The whole thing was arranged by the entries to show that GB and Co. notionally advanced cash to the assessee-firm though not having cash to pass on. The assessee-firm, in turn, paid as consideration for the shares to the said three companies the same nonexistent cash as the aggregate purchase value of the shares held by the said companies in the other companies of the group without, however, any passage of cash and the said companies in their turn passing on the said non-existent cash to GB and Co. Shri Bajoriaemphasised that, in the course of assessment proceedings, the Income-tax Officer examined the transactions and found that these are only entries not involving at any stage any cash. He pointed out that the entire transactions were effected between the assessee-firm and the concerns belonging to the Jatia group only for the requirement of complying with the directions of the Reserve Bank of India that cast on the companies a statutory obligation to reduce their borrowing to maintain parity with the loan and capital ratio as prescribed. The assessee-company merely substituted the said three companies as debtors to GB and Co. and received the shares for undertaking the liability. Confronted with the question why the reduction of loan could not be achieved by straightaway transfer of the shares in question by the said three companies

Order pronounced on 22.07.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 22.07.2026 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//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata