DHARAMPAL PREMCHAND LTD,CHANDNI CHOWK vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-29, NEW DELHI, JHANDEWALAN

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ITA 7215/DEL/2025Status: DisposedITAT Delhi28 April 2026AY 2018-199 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the loans were raised in preceding years and their genuineness was accepted in those assessment years. The repayment was made out of business funds and bank overdrafts, supported by audited books and bank statements, and the AO failed to provide cogent evidence of unexplained cash or circular transactions.

What were the facts?

The assessee repaid unsecured loans along with interest during the financial year 2018-19. The Assessing Officer (AO) treated these repayments as unexplained cash received by the assessee and made an addition under Section 69A of the Income Tax Act, 1961.

What were the issues?

Whether the repayment of previously accepted unsecured loans can be treated as unexplained cash under Section 69A when the genuineness of the loans was accepted in prior assessment years and repayment is supported by books of account.

Which sections of the Income-tax Act were involved?

Section 69A,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI M. BALAGANESH, ACCOUNTANT MEMEBR & SHRI YOGESH KUMAR U.S.

For Appellant: CA and Sh. Rajat Garg, CA
Hearing: 09/03/2026Pronounced: 28/04/2026

1 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI [DELHI BENCH: “C” NEW DELHI] BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMEBR AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No.7215/Del/2025 (A.Y 2018-19)

Dharampal Premchand Ltd. Vs Deputy Commissioner of 4873, Chandni Chowk, Income-tax,Central Circle-29, DelhiPAN: AAACD1952B Room No. 318, ARA Centre, Jhandewalan, Delhi Appellant Respondent Assessee by Sh. R. S. Singhvi, CA, Sh. Satyajeet Goyal, CA and Sh. Rajat Garg, CA Revenue by Sh. Dayainder Singh Sidhu, Sr. DR Date of Hearing 09/03/2026 Date of Pronouncement 28/04/2026

ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld.

Commissioner of Income Tax (Appeals) (‘Ld. CIT(A)’ for short), 30, New

Delhi dated 25/09/2025 for the Assessment Year 2018-19.

2.

The grounds of Appeal are as under: -

1.

That on the facts and in the circumstances of the case, the Learned Commissioner of (Appeals)-30, New Delhi ( CIT-A for Short) erred in confirming the action of the Assessing Officer in making an addition of Rs 10,53,03,397/- under Section 69A Income Tax Act, 1961 (The Act for short) to the total income of the appellant without appreciating that the said addition wad made :- (a) Simply on conjectures and surmises without any tangible evidence (b) by wrongly holding and that too, without jurisdiction that the loans taken in earlier years were not genuine and, therefore their repayment supposedly generated an equal amount of cash taxable u/s 69A of

2 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

the Act, although, as on date, the loans do not stand included in earlier assessment years u/s 68 of the Act.

(c) By grossly flouting the principle of Natural Justice. That on the facts and in the circumstances of the case, the Learned and without prejudice to the grounds of appeal no. 1 above, CIT(A) erred in confirming the action of Assessing Officer in holding in the absence of any tangible evidence & contrary to Principles of Natural Justice that the following loans aggregating to Rs 10,53,05,397/- Sl Party Returned Back No. during the Year 1 M/s AA Finlease Pvt. Ltd. 2,51,97,260/- 2 M/s Stercon Energy Pvt. Ltd. 1,22,06,466 /- 3 M/s Annies Apparel Pvt. Ltd. 4,35,01,369 /- 4 M/s Jorehaut India Limited. 1,19,04,110 /- 5 M/s Hollow Securities Pvt. Ltd. 1,08,02,192 /- 6 M/s Innovist India Pvt Ltd. 16,94,000/- Total 10,53,05,397/- were not genuine, despite the fact that they were taken/paid through banking channels after deducting TDS from the interest payments. 3. That on the facts and in the circumstances of the case, the addition of Rs 10,53,05,397/- is wholly unjustified & deserves to be deleted.”

3.

Brief facts of the case are that, the Assessee filed return for the

year under consideration declaring income of Rs. 30,45,37,370/- which

has been processed under Section 143(1) of the Income Tax Act, 1961

('Act' for short). The case of the Assessee was picked up for scrutiny and

an assessment order came to be passed on 10/06/2021 under Section

143(3) of the Act by disallowing Rs. 17,93,000/- under Section 14A of the

Act, reduced the exemption under Section 10AA of the Act to the tune of

Rs. 49,74,000/- and also made addition of Rs. 10,53,05,397/- under

Section 69A of the Act. Aggrieved by the assessment order dated

3 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

10/06/2021, Assessee preferred an appeal before the Ld. CIT(A). The Ld.

CIT(A) vide order dated 25/09/2025, confirmed the addition of Rs.

10,53,05,397/- and partly allowed the Appeal. As against the order of

the Ld. CIT(A), the Assessee preferred the above appeal.

4.

The Ld. Counsel for the Assessee canvassing on Grounds of Appeal

submitted that the loans were raised in preceding years and all those

assessments were completed under Section 143(3) of the Act and

genuineness of the loans were duly scrutinized and verified. Further

submitted that the loans were duly repaid during preceding years and

the loans were repaid out of self-generated business funds and bank over

draft limits and all the transactions were recorded in books of account.

Therefore, there is no case of violation of Section 69A of the Act, thus,

sought for allowing the appeal.

5.

Per contra, the Ld. Departmental Representative vehemently

submitted that the lender companies are controlled by Sh. Himanshu

Verma/Vikas Kumar Agarwal and the transactions are not genuine. The

A.O. after recording the statement of the lenders, made the addition. The

creditors are established to be shell Companies controlled by the entry

operators. The Ld. Assessee's Representative relying on the findings and

the conclusion of the authorities below sought for dismissal of the Appeal

of the Assessee.

4 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

6.

We have heard both the parties and perused the material available

on record. The A.O. while making addition of Rs. 10,53,05,397/-

observed that the Assessee company had made repayment of unsecured

loan outstanding as on 31/03/2018 during Financial Year 2018-19

along with accrued interest to the lenders. Further observed that during

the Financial Year under consideration, the Assessee Company in actual

was not under any liability with respect to repayment of the loan and it

was only an eye wash colored those transaction by claiming that it had

repaid the unsecured loans, while in actual the genuine transaction was

that the Company had received back the unexplained cash from the

entry operator and reversed those bogus accommodation entry back to

those Companies. The A.O. further held that the Assessee Company had

failed to discharge its onus to prove the genuineness of the transactions.

The Ld. A.O. has relied on the statement of one Mr. Himanshu Verma

and Sh. Vikas Kumar Aggrawal while drawing adverse inference as in

respect of genuineness of the loans received and repaid by the Assessee.

The Ld. CIT(A) upheld the addition made under Section 69A of the Act

holding that loans are not genuine and the Assessee had failed to explain

the source of repayment.

5 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

7.

It is not in dispute that the loans availed by the Assessee have been

repaid. The Assessee's Representative has produced the Chart giving

details of loans taken and repaid which is reproduced as under:-

S. Lender Amount of A.Y in A.Y Amount No. loan which taken 1 AA Finlease 2,50,00,000/- 2015-16 2016-17 28,12,779 Pvt. Ltd. 2017-18 27,00,000 2018-19

2 Stercon 2,20,00,000/- 2014-15 2017-18 1,10,00,000 Energy Pvt. 2018-19 1,21,85,819 Ltd.

3 Annies 5,20,00,000/- 2016-17 2017-18 1,10,00,000 Apparel Pvt 2018-19 4,31,51,232 Ltd.

4 Jorehaut 1,10,00,000/- 2016-17 2016-17 8,00,087 India Ltd. 11,88,000 2017-18 1,18,13,699 2018-19

5 Hallow Ltd 1,00,00,000/- 2016-17 2016-17 7,16,054 Securities 10,80,000 2017-18 Pvt. 1,07,21,973 2018-19 6 Pvt Ltd. 80,00,000/- 2014-15 2014-15 99,273 Innovist India 2015-16 8,64,000 2016-17 6,64,000 2018-19 16,94,239 12,60,00,000

8.

As could be seen from the above the loans were raised by the

Assessee in preceding years. Further it is observed that all those

assessments were complete under Section 143(3) of the Act and the

genuineness of the loans were dulyscrutinized and verified. The Ld.

6 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

Assessee's Representative has produced the assessment orders

framedunder Section 143(3) of the Act for Assessment Year 2014-15 to

2017-18 in Paper Book at Pages 51 to 84. Admittedly the parts of loans

were repaid during the preceding years and there is nodispute in respect

of the same. It is the specific case of the Assessee that loans were repaid

out of self-generated business funds and bank over draft limits.

9.

Further, it is observed that during the Assessment Year 2018-19,

the total sale was Rs. 557 crore, net profit as per P & L Account is Rs.

21.61 crore and general reserve and retained earnings was Rs. 210 crore.

The subject transactions were duly recorded in the books of accounts.

Though the A.O. relied on the statements of Sh. Himanshu Verma and Sh.

Vikas Kumar Aggarwal, even after seeking for opportunity to cross-

examination, the same was not provided to the Assessee.

10.

In so far as source of repayment is concerned, the same has been

explained from audited books of account and corresponding bank

statements evidencing availability of sufficient funds. The allegation of

accommodation entries is merely based on generalizedstatements and

surmises without any direct or corroborative evidence linking the Assessee

to unaccounted cash or circular transaction in the year under

consideration. The A. O has not brought any positive evidence or direct or

7 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

in direct material to establish existence of any cash transaction and as

such the provisos of Section 69A of the Act cannot be applied. The

deeming provision of Section 69A of the Act can only be invoked on actual

discovery of money, bullion, jewellery or other valuable article and the

same cannot be applied based on presumption or supposition.

11.

Further, it is found that the loans in questions were received in

earlier Assessment Years and the Assessments have been completed

under scrutiny proceedings under Section 143(3) of the Act. In those

years, the A.O. has accepted the loans/transactions without drawing any

adverse inference with regard to identity, creditworthiness or genuineness

of the lenders. Further the part repayment of the very same loans had

been made in the Assessment Years, which has been duly accepted by the

A.O. without any dispute while framing the assessment under Section

143(3) of the Act. Having accepted the loan transactions as well as their

partial discharge in preceding years, the A.O. cannot selectively the

question the balance repayment in the year under consideration without

any distinguishable feature. The Assessee had demonstrated availability

of sufficient funds through its books of account which have neither been

rejected nor any specific defect has been pointed out by the A.O. In the

absence of any material to indicate that the repayment has been made out

8 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

of unexplained source, the addition under Section 69A of the Act is devoid

of any factual or legal basis. In view of the above, considering the fact

that genuineness of the loans were accepted in the year of receipt, there is

no dispute vis-à-vis source of repayment and the alleged accommodation

entries is not supported by any cogent evidence. Therefore, we find no

reason to upheld the addition which has been confirmed by Ld. CIT(A),

accordingly addition of Rs. 10,53,05,397/- made under Section 69A of the

Act is hereby deleted.

12.

In the result, appeal of the Assessee is allowed.

Order pronounced in the open court on 28th April, 2026

Sd/- Sd/-

(M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:-28 .04.2026 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTR ITAT, NEW DELHI

9 ITA No. 7215/Del/2025 Dharampal PremchandLtd.Vs. DCIT

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