JUDICIOUS FINVEST (P) LTD.,KOLKATA vs. I.T.O., WARD - 6(2), KOLKATA

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ITA 906/KOL/2026Status: DisposedITAT Kolkata16 July 2026AY 2019-202010 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee had provided sufficient evidence of the loan transaction, its assignment, and subsequent repayment through banking channels. The allegation that M/s Saffire Exports & Agency Pvt. Ltd. was a shell company was not substantiated.

What were the facts?

The assessee assigned a loan given to EDCL Power Project Ltd. to M/s Saffire Exports & Agency Pvt. Ltd. Subsequently, M/s Saffire Exports & Agency Pvt. Ltd. repaid the loan to the assessee. The Assessing Officer treated this repayment as an unexplained cash credit and made an addition.

What were the issues?

Whether the repayment of an assigned loan by a third party to the assessee constitutes an unexplained cash credit under Section 68 of the Income Tax Act, and whether the entity involved in the transaction is a shell company.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM Shri Manoj Kataruka, AR

For Appellant: Shri Manoj Kataruka, AR
For Respondent: Shri Madhumita Das, DR
Hearing: 29.06.2026Pronounced: 16.07.2026

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 18.02.2026 for the AY 2019-20.

2.

At the time of hearing, the ld. Counsel for the assessee pressed the ground no.4, which is extracted below:-

“4) That on the facts and in the circumstances of the case the action of the CIT(A) to uphold the action of the AO in making addition of Rs.3,00,00,000/- on account of unexplained cash credit u/s 68 of the Act is contrary to the material evidences on record and the addition made is erroneous, arbitrary, excessive and illegal.”

4.

In the appellate proceedings, the ld. CIT (A) also confirmed the order of the ld. AO by observing and holding that the assessee had transactions with shell companies M/s Saffire Exports & Agency Pvt. Ltd. during the year amounting to ₹3,00,00,000/- which is nothing but accommodation entry taken and thus, upheld the order of the ld. AO without recording any reasons.

5.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee gave loan to EDCL Power Project Ltd. of ₹1,,00,00,000/- from Kotak

6.

Further the main reason for disallowance is the allegation that Saffire Exports & Agency Pvt Ltd is a shell company. Credentials of Saffire Exports & Agency Pvt Ltd is noted at

7.

We further note that in case of Aviral Marketing Pvt Ltd for AY 2019-2020 order was passed u/s 147 dated 30.3.2025 wherein income was assessed as returned and the explanation of the assessee that Saffire Exports & Agency Pvt Ltd was not a shell company was duly accepted. The copy of Assessment Order of Aviral Marketing for AY 19-20 is at page 72 to 77.

8.

Furthermore, in the case of the Gandevi Commerce Pvt Ltd for AY 2016-2017, the case was reopened that it had received money from Saffire Exports & Agency Pvt Ltd allegedly a shell company and CIT(A)/(NFAC) vide order dated 27.02.2026 accepted the transaction with Saffire Exports & Agency Pvt Ltd held that there was no evidence that Saffire Exports and Agency Pvt Ltd was a shell Company. The CIT(A) at page 19 para 5.2.4 has observed as under:-

"5.2.4. The Assessing Officer has relied predominantly on the characterization of M/s. Saffire Exports & Agency Pvt. Ltd. as a shell entity based on investigation report. However, no independent enquiry has been conducted to demonstrate that the funds advanced by the assessee represented its own unaccounted income routed back. The Hon'ble Supreme Court in CIT vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC) held that once the assessee furnishes details establishing identity and basic transaction evidence, the burden shifts to the department. Mere suspicion cannot substitute evidence, as held in Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC)".

10.

Therefore, we are of the view that additions are wrongly made by the ld. AO by not appreciating the facts correctly and similarly, the ld. CIT (A) upheld the order in a very cryptic manner. We note that the assessee has received refund of loan during the year, which was given in the earlier financial year. Therefore, we are not in a position to concur with the conclusion drawn by the authorities below. We note that in this case the assessee has furnished all the details and evidences before the AO. The case of the assessee is squarely covered by the decision of Hon'ble Gujarat High Court in case of Deputy Commissioner of Income-tax vs. Rohini Builders [2003] 127 Taxman 523 (Gujarat)/[2002] 256 ITR 360 (Gujarat)/[2003] 182 CTR 373 (Gujarat)[19-03-2001], wherein the Hon'ble court Confirmed the order of the Tribunal Ahmedabad Bench in ITA No. 4913/Ahd/1995 reported in 76 TTJ 521 (Ahd) vide order dated 15.09.2000, wherein it has held as under:-

“7. We have considered the rival submissions and have also gone through the order passed by the assessing officer, the relevant portion of which we have also extracted in para 2 above. The Commissioner (Appeals) more or less confirmed the addition on the reasoning given by the assessing officer in the assessment order. A perusal of the chart given by us in para 3 above indicates that out of 21 creditors the assessing officer has recorded the statements of only six creditors viz., creditors at Serial Nos. 1,2,3,4,6 and 7. However, in respect of all the 21 creditors the assessee has furnished their complete addresses along with GIR Numbers/Permanent Account Numbers as well as confirmations along with the copies of assessment orders passed in the cases of creditors at Serial Nos. 1, 2, 4, 5, 6, 7, 9, 10, 11, 12 and 16. In the remaining cases where the assessment orders passed were not readily available, the assessee has furnished the copies of returns filed by the creditors with the department along with their statement of income. All the loans were received by the assessee by account payee cheques and the

“5. Heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue. The only contention on behalf of the revenue is that on the last day of passing the order, communication dated 22/12/2008 of the assessee along with the confirmation letter of Shri Ishwar Adwani confirming the loan/advance of Rs.1,45,00,000/- given to the assessee, was produced before the Assessing Officer i.e. on the day the Assessing Officer passed the order and thereafter the same was reproduced before the CIT(A) and the CIT(A) considered the same, the CIT(A) ought to have remanded the matter to enable the Assessing Officer to hold further inquiry and, therefore, it is requested to admit/allow the present Tax Appeal. 6. Having heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue and on perusal of the order passed by the CIT(A) confirmed by the ITAT, it appears that CIT(A) was satisfied with respect to the genuineness

13.

In the result, the appeal of the assessee is allowed.

Order pronounced on 16.07.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 16.07.2026 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

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