DCIT-19(1), MUMBAI, LAL BAUGH, MUMBAI vs. DINESH BHABUTMAL SALECHA, MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

Commissioner of Income Tax (Appeals), Delhi, [for short “CIT(A)”] dated

10.09.2025, for the assessment year 2017-18.The revenue has raised

following grounds of appeal:-

“(i)Whether, on the facts and in the circumstances of the ease and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition of Rs.2,01,75,000/- made under section 68 on alleged unsecured loans based on credible information available with the department. (ii) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to DLEETE the addition made on account of unproved interest expenditure of Rs.4,46.700, without appreciating the fact that the unsecured loan transaction found to be bogus, thus claim of interest expenditure on it is not allowable. (iii) Whether, on the facts and in the circumstances of the case and in law, the L.d. CIT(A) has erred in deleting the addition of Rs. 15,64,300 as income from sale of futures and options, whereas the assessee failed to submit the documentary evidences to substantiate his claim (iv) Whether, on the facts and in the circumstances of the ease and in 4 law, the ld. CIT(A) has erred in deleting the addition of Rs.1,37,500 made u/s 69 for an alleged unrecorded investment (v) 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. 1,19,85.400 made on account of unproved income from sale of equity shares, without considering the fact that assessee has failed to substantiate his claim with all the supporting documentary evidences (vi) General. 2. The brief facts of the case are that the assessee is an individual, filed

return of income for the Assessment Year 2017-18 on 16.01.2018,

declaring income of Rs. 15,86,120/-. The Assessing Officer (’AO’) received

information through insight portal that the assessee was having savings

bank account in ICICI Bank and there were huge debit and credit

transactions. The assessee has shown the professional income of Rs.

15,24,566/-. The assessee also sold futures and options of Rs. 15,64,300/-

through National Stock Exchange (NSE). The assessee also purchased

equity shares through National Stock Exchange (NSE). There is interest

income from the overseas bank and from Marwar Oil Company,

aggregating income of Rs. 1,36,286/-. Further, there was some foreign

remittance through ICICI Bank of Rs. 35,61,711/- and the assessee

received the repayment of loan of Rs. 1.54 Crore from Meridian Finance &

Consultancy Co. Pvt. Ltd, and also paid salary to Udayraj T Jain of Rs.

4,90,000/-. On the basis of such information, the AO was of the view that

the income of the assessee has escaped assessment. The AO after

recording the reasons of reopening obtained the approval from Competent

Authority and issue Notice under Section 148 on 28.03.2024. In response to the Notice under Section 148, the assessee filed its return of income on

22.04.2024 declaring total income of Rs. 15,86,120/-. The AO after serving

the statutory notices proceeded for reassessment.

information, the assessee has total credit of Rs. 25.90 Crore and total debit

of Rs. 25.80 Crore in ICICI Bank and the assessee has shown ‘income from

business and profession’ of Rs. 15,24,566/- only, which is not

commensurate that the credit in the bank account. The AO issued show-

cause notice to furnish the explanation of business activities, details of

trading and import ofelectronic components and other electrical items,

profit and loss account along with details of the bank account, copy of

foreign remittance and salary paid to Shri. Udayraj T Jain during the

period. The AO recorded that the assessee furnished reply. The details of

reply are not recorded by the AO in the Assessment Order.

creditors. The AO issued Notice under Section 133(6) to various parties

and the parties have furnished their replies. The details of opening and

closing balance of eight of such lenders/creditors with opening balance

and closing balance of loan is recorded. As per such details, there is a loan

transaction of Rs. 3.81 Crore from seven lenders. The assessee was also

asked to prove the identity, genuineness and creditworthiness of the

parties. The AO recorded that the assessee failed to furnish complete

details of all the lenders to prove their identity, creditworthy and

genuineness of transaction. The AO disallowed Rs. 2.01 Crore of unsecured loan from four lenders and treated the same as unexplained

credit. The AO treated unsecured loan as unexplained credit in respect of

following four creditors.

1 Kishoremal M. Shan Rs.10,00,000/- 2 Meridian Financial Consultancy Rs.1,54,75,000/- 3 Geeta Dhoka Rs. 25,00,000/- 4 Bhanwar Lal Chopra Rs.12,00,000/-

Total Rs.2,01,75,000/-

15,64,300/- through National Stock Exchange (NSE). The assessee has not

shown such income on sale of futures thus, the sale consideration of

futures and options was also added to the income of the assessee. The

AOfurther noted that the assessee has purchased equity shares of Rs.

1,37,500/- source of such investment was not shown by the assessee.

Such investment was also added under Section 69 of the Act. The AO

noted that the assessee has received interest from Indian Overseas Bank

and Marwar Oil Company, which is not offered to the income. Hence, the

aggregate of interest of Rs. 1,36,286/- was added to the income of the

assessee under the head other sources. The AO further noted that there

was credit of Rs. 1.19 Crore in ICICI Bank on account of sale of long term

equity shares. The AO was of the view that such transactions has not been

offered for the taxation in the year under consideration. Therefore, Rs.

1.19 Crore was also treated as capital gain and added to the total income

of the assessee.

proposing such addition. The assessee was given the opportunity to make

his response. The AO recorded that in respect of the addition of loans

which were substantiated were accepted and remaining of four creditors

were added under section 68.

CIT(A). The CIT(A), the assessee filed detailed written submissions in

respect of all the additions. The submissions of the assessee are recorded

by CIT(A) on page no. 5 to 19 of his order. The assessee in its submissions

submitted that he is engaged in the business of Semi-Conductors. The

assessee borrowed loan from various parties namely Kishoremal M Shah of

Rs. 10.00 Lakhs, Meridian Financial Consultancy Rs. 1.54 Crore, Geeta

Dhoka of Rs. 25.00 Lakhs and Bhanwarlal Chopra HUF 12 Lakhs. To

substantiate such loans transaction, the assessee furnished the copy of

confirmation of letter, ITR, bank statement. The assessee also explained

that the identity, creditworthiness and genuineness of such loan were also

proved. For each of lender, the assessee furnished the explanation along

with the evidence. In respect of addition of sale of futures, the assessee

explained that the assessee has receivable income on account of sale of

future and options of the earlier years; recoverable during the year under

assessment the assessee has shown that it was recoverable income. It has

nothing to do with the current year income. The AO ignored all such facts

and made addition. Against the addition of equity shares of Rs. 1,37,500/-

added under Section 69. The assessee explained that there is no such investment. Since, there was no such investment, thus no details were

provided and addition under section 69 is arbitrary. Against the addition of

equity shares of Rs. 1.19 crore, the assessee stated that the details of loss

and sell of shares were filed. During the year, on the sale of shares, the

assessee suffered the loss. The loss was not carried forward by the

assessee but debited to depreciation account. The gross of sale of shares

was added to the income by ignoring the submissions and evidence in the

form of Demat account, brokers contact note and proof with sale as

resulted in the capital loss. The assessee stated that the addition is

arbitrary and needs to be deleted. Against the addition of the interest from

Indian Overseas Bank and Marwar Oil Company Limited. The assessee

submitted that during the assessment, the assessee furnished the detailed

submission and requested to add the same to the return income and due

to oversight the same was not offered in the income. The assessee in

response to the Notice under Section 250 of the Income Tax Act, also filed

certain written submissions which has been recorded in various parts of

the Order. The assessee also relied on the certain case laws.

the addition of entire unsecured loan by taking the view that during the

assessment, the assessee discharged his onus on three conditions of

Section 68, i.e. disclosing identity of the creditors, credit-worthiness and

genuineness of the transactions. On examination of the records furnished

by the assessee, the Ld. CIT(A) noted that, assessee paid interest, on the

interest TDS were made. The assessee once discharged his onus, in proving identity, credit worthiness and genuineness of the transactions.

The onus was shifted to the revenue. No adverse facts were brought on

record by AO. On the basis of such observations, it deleted the addition of

Rs. 2.01 Crore. Similarly, the Ld.CIT(A) also deleted the addition of

disallowance of interest of Rs. 4,46,700/- by holding that the loan was

treated as genuine, no disallowance of interest will survive.

that the case of the assessee is that, it was opening recoverable balance

carried from the earlier years, which is reflected in the balance sheet. To

substantiate such claim, copy of ledger account was furnished.Recoverable

income cannot be taxed otherwise it amounts to double taxation. On

verification of such facts, the Ld.CIT(A) found it in the Order.The Ld.CIT(A)

held that only income accrued during the year can be taxed. The recovery

of balances already accounted in earlier years cannot be brought to tax.

On the basis of such observation, Ld. CIT(A) deleted such additions.

Section 69, the Ld.CIT(A) recorded that the AO made such addition

alleging unexplained investment. The assessee categorically denied of such

investment and requested for furnishing details/ basis of such addition,

from the AO. Such details were never provided. The AO has not produced

any evidence to show that the assessee made an investment outside the

books. The addition was made in presumption. The onus was on the AO to

prove the existence of unrecorded investment. On the basis of such view,

the Ld.CIT(A) deleted the addition of Rs. 1,37,500/-.

recorded that the AO made such an addition on the basis of credit in the

bank account and treating as unexplained income under Section 68. The

assessee furnished Demat account statement, brokers contact note and

proof with sale as resulted in the capital loss. The loss was not claimed in

return and was adjusted in the capital account. The AO ignored evidence

and taxed the gross receipt without allowing cost of acquisition. The

Ld.CIT(A) recorded that the taxing gross sale proceed without considering

cost, is against the fundamental principle of capital gain taxation. The

Ld.CIT(A) relied upon the decision of the Hon’ble Supreme Court in the

case of CIT Vs. B.C. Srinivasan Shetty (1981) 128 ITR 294 (SC), wherein it

was held that the computation provision must be applied and only net gain

can be taxed. The Ld.CIT(A) also referred the decision of Mumbai Tribunal

in ITO Vs. Kamlesh S. Jain (2011) 45 SOT 17 (Mum), wherein, it was held

that the result in gain or loss from the sale of shares can be considered.

The assessee claimed the capital loss which was even not claimed as

deduction. Thus, the addition was not justified. In the basis of such

findings the Ld.CIT(A) also deleted the addition of sale of shares.

Marwar Oil Company, the Ld.CIT(A) recorded that during the assessment

the assessee admitted to offer such income and consequently such

addition was confirmed. Aggrieved by the Order of the Ld.CIT(A), the

Revenue has filed the present appeal before the Tribunal.

Representative (ld. Sr. DR) of the Revenue and the learned Authorised

Representative of the assessee (ld. AR) of the assessee. Ground No. 01

relates to deleting the addition of Rs. 2.01 Crore under Section 68 on

account of unsecured loan. The Ld. Sr. DR for the Revenue supported the

order of the AO. The Ld.Sr. DR submits that during the assessment the

assessee failed to discharge the onus to prove the identity,

creditworthiness and genuineness of the transactions. The unsecured loan

which was substantiated by the assessee was not added. However, the

loans which were not substantiated were added by the AO.

furnished complete details of the lender which includes name, confirmation

letter, ITR, bank statement. The assessee filed detailed written submission

before the Ld.CIT(A) in respect of four lenders. The assessee availed Rs.

10.00 Lakhs from Kishoremal M Shah, Rs. 1.54 Crore from Meridian

Consultancy and Rs. 25.00 Lakhs from Geeta Dhoka and Rs. 12.00 Lakhs

from Bhawarlal Shah HUF. In respect of these lenders, the assessee in

discharge of onus proved triple condition that the identity, creditworthiness

and genuineness of the transactions. The Ld.CIT(A) on appreciation of

facts and evidence, deleted the addition. The assessee availed loan for

genuine business need. The assessee paid interest, on which TDS was

made. There is no allegation in the assessment that the loan is received

from non-genuine parties. The AO has not disproved the documentary

evidences furnished by the assessee. No adverse evidence was brought on record by AO that the unsecured loans are not genuine. The ld AR for the

assessee prayed for dismissal of appeal.

gone through the orders of the authorities. We find that the AO made an

addition on account of unsecured loan as per his findings on Page No. 13

by taking view that the AO recorded that the assessee failed to furnish

complete details of all the lenders to prove their identity, creditworthy and

genuineness of transaction. The AO disallowed Rs. 2.01 Crore of

unsecured loan from four lenders and treated the same as unexplained

credit. The AO treated unsecured loan as unexplained credit in respect of

following four creditors. The Ld. CIT(A) deleted the addition by giving

categorically findings the view that during the assessment, the assessee

discharged his onus on three conditions of Section 68, i.e. disclosing

identity of the creditors, credit-worthiness and genuineness of the

transactions. On examination of the records furnished by the assessee, the

Ld. CIT(A) noted that, assessee paid interest, on the interest TDS were

made. The assessee once discharged his onus, in proving identity, credit

worthiness and genuineness of the transactions. The onus was shifted to

the revenue. No adverse facts were brought on record by AO.

during the assessment, the assessee has discharged his onus, the onus

shifts on the AO to disprove that the evidence filed by the assessee is not

genuine. We No investigation of fact was carried out by the AO except

doubting the explanation of the assessee. We find that the Ld.CIT(A) had deleted the addition on appreciation of facts and evidence. We find that

there is no allegation in the assessment order that the assessee is

beneficiary of non-genuine unsecured loan. The AO issued notice under

section 133(6), which was responded by lenders. We find that the Hon’ble

jurisdictional High Court in The Hon'ble Jurisdictional High Court in CIT Vs.

Amber Tradecorp (P) ltd. (2022) 145 taxmann.com 27 (Guj) held that

where the assessee took loan from two parties and assessee has furnished

requisite material showing identity of loan givers and that assessee was not

beneficiary as loan was repaid in subsequent year, no addition under

Section 68 could be made on account of such loan. We find that the

Hon'ble Gujarat High Court in the case of DCIT Vs Rohini Builders CIT Vs

Ranchod Jivabhai Nakahava in Tax Appeal No. 50 of 2011 dated

20.03.2012, held that when the assessee has discharged initial onus by

providing identity of all creditors by giving their complete addresses, GIR

numbers, PAN and copy of assessment orders wherever readily available

and proved the capacity of creditors that amounts were paid through

cheques, no addition is to be made. The Hon’ble jurisdictional High Court in

the case of CIT vs. Ranchod Jivabhai Nakhava, (2012) 21 taxmann.com

159 (Guj.) also held that once the assessee has discharged their onus the

burden shift on the assessing officer to prove otherwise or to bring adverse

evidence on record or to make further investigation. In absence of adverse

addition, the additions of loan under section 68 are not sustainable. Thus,

we do not find any merit in the ground of the appeal raised by the revenue.

In the result, ground no. 01 raised by the revenue is dismissed.

fact that we have confirmed/upheld the order of the Ld.CIT(A) in deleting

the addition of loan, the disallowance of the interest is consequential of

addition of loan. Hence, the deletion of disallowance of loan is also upheld.

Hence, the Ground No. 02 of the appeal is also dismissed.

account of sale of futures and options. The Ld. Sr. DR for the revenue

supported the order of the AO and prayed for restoring his order.

Ld.CIT(A). The Ld. AR of the assessee submits that the assessee has

already shown the said amount as recoverable balance carried from earlier

years. The Ld. CIT(A) deleted the addition on appreciation of the facts.

merit in the submissions of the Ld. AR of the assessee that opening

recoverable balance carried forward from earlier years which is duly

reflected in the balance sheet would amount to double taxation. Hence, we

affirmed the order of Ld. AR. In the result, Ground No. 03 of the appeal is

dismissed.

of unrecorded investment. The Ld. Sr. DR for revenue supported the order

of the AO.

investment was made by the assessee, addition was made without any

process and no evidence was provided about the alleged investment. The Ld. CIT(A) deleted the addition on appreciation of facts that there is no

evidence of such investment.

the AO made an addition without any basis. No evidence is brought on

recorded to substantiate when the assessee made in unexplained or

unrecorded investment in shares. Thus, we do not find any merit in this

ground of appeal. In the result, Ground No. 04 of the appeal is also

dismissed.

sale of equity shares. The Ld. Sr. DR for the revenue submitted the order

of the AO. The Ld. Sr. DR submits that the AO made an addition by taking

view that despite credit in the bank account on account of sale of such

share the assessee has not shown such income in the computation of total

income. On the other hand, the Ld. AR of the assessee supported the

order of the Ld.CIT(A). The Ld. AR of the assessee submitted that on sale

of shares the assessee suffered capital loss. Hence, the capital loss not

claimed but adjusted in the capital account. The AO ignored all such facts

and taxed the gross receipt without considering the cost of acquisition.

merit in the submission of the assessee that gross receipt can never be

considered as income unless cost of purchase and other expenses are

debited. The assessee furnished details of demat account from brokers

contact note and details of sale. The Ld. CIT(A) ignored such vital

evidence. We find that the Ld. CIT(A) allowed relief on appreciation of relevant evidence. No contrary or law is brought to our notice to take their

view. In the result, Ground No. 05 of this appeal is dismissed. Ground No.

06 of the appeal is general and need no specific adjudication.

Order pronounced in open court on 15.06.2026

S Sd/- d/- Sd/- Sd/- MAKARAND VASANT MAHADEOKAR PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 15/06/2026 Aditi Pandare, PS Aditi Pandare, PS Aditi Pandare, PS Aditi Pandare, PS

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT (5) Guard file. By Order

Assistant Registrar/Sr Private Secretary ITAT, Mumbai