BANSI FASHION PRIVATE LIMTIED,THANE vs. ITO - WARD 1(1), KALYAN, KALYAN

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ITA 9312/MUM/2025Status: DisposedITAT Mumbai25 May 2026AY 2023-246 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 assessee had provided sufficient documentary evidence, including bank statements and confirmation from the bank, to prove that the loan was advanced through banking channels and not in cash. Therefore, the addition made by the AO was unsustainable.

What were the facts?

The assessee advanced a loan of Rs. 50 lacs to Shri Narendra G. Somani, which the Assessing Officer (AO) treated as an unexplained cash loan and added it to the assessee's income under Section 69A. The assessee claimed the loan was advanced through banking channels and supported this with documentary evidence.

What were the issues?

Whether the loan advanced by the assessee was an unexplained cash loan or a transaction through banking channels, and if the latter, whether the addition under Section 69A was justified.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

For Appellant: Shri Rasesh Shah (Virtually appeared)
For Respondent: Shri Swapnil Choudhari (Sr. AR)
Hearing: 30.04.2026Pronounced: 25.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER

ITA No. 9312/Mum/2025 (Assessment Year: 2023-24) Bansi Fashion Private Limited ITO-Ward 1(1) Gala No. 6, 1st Floor, Building No. 17, Kalyan Shree Arihant, Dabhad B.O. Nanda, Vs. Thane-421 302 PAN/GIR No. AABCB 1584 C (Appellant) : (Respondent) Appellant by : Shri Rasesh Shah (Virtually appeared) Respondent by : Shri Swapnil Choudhari (Sr. AR) Date of Hearing : 30.04.2026 Date of Pronouncement : 25.05.2026 O R D E R Per Saktijit Dey, Vice President: Captioned appeal by the assessee arises out of order dated 08.10.2025 passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y. for short) 2023-24.

2.

In ground no. 1, the assessee has challenged the addition of an amount of Rs.50 lacs u/s. 69A of the Income Tax Act, 1961 (‘the Act’ for short). Briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed its return of income on 09.10.2026, declaring income of Rs.2,19,50,280/-. The return of income filed by the assessee was selected for scrutiny.

3.

In course of assessment proceeding, the Assessing Officer (A.O. for short) found that as per information available on record, during a search and seizure operation conducted

2 ITA No. 9312/Mum/2025 (A.Y. 2023-24) Bansi Fashion Private Limited vs. ITO in case of Surana Group, whereunder the residential premises of one Shri Payag H. Dugar was also covered, material found revealed that Shri Narendra G. Somani, proprietary of Bhagwati Marketing Co. received loans aggregating to Rs.8.03,25,000/-, one of the lenders being the assessee, who allegedly advanced cash loan of Rs.50 lacs. He, therefore, called upon the assessee to prove the source of cash loan advanced to Shri Narendra G. Somani. In response to the query raised, the assessee furnished its reply stating that in total the assessee had advanced loan of Rs.1 crore to Shri Narendra G. Somani through proper banking channel. It was submitted, one of the loan advanced to Shri Narendra G. Somani had repaid an amount of Rs.50 lacs in the same year in which loan was advanced and balance Rs.50 lacs is still outstanding. The assessee further stated that he is receiving interest on the outstanding loan amount which is reflected as income. In support of such contention, the assessee furnished various documentary evidences including ledger copy, bank statements, etc. The A.O., however, remained unconvinced. He observed that the bank statement did not clearly reflect to whom the amount of Rs.1 crore was paid. Ultimately, he concluded that the source of cash loan advanced by the assessee to the tune of Rs.50 lacs remains unexplained. Thus, invoking the provision of section 69A of the Act, he added back the amount at the hands of the assessee. Though, the assessee contested the addition before the first appellate authority, however, he was unsuccessful.

4.

Reiterating the stand taken before the departmental authorities, ld. Counsel appearing for the assessee submitted that the assessee had not advanced any loan in cash. He submitted, total loan of Rs.1 crores was advanced to Shri Narendra G. Somani, out of which an amount of Rs.50 lacs was repaid back in the year in which loan was advanced and balance Rs.50 lacs remains outstanding. He submitted, the assessee is receiving interest

3 ITA No. 9312/Mum/2025 (A.Y. 2023-24) Bansi Fashion Private Limited vs. ITO on the outstanding loan and offering it to tax. In this context, he drew our attention to the ledger of Bhagwati Marketing Co. in assessee’s books and assessee’s ledger in books of Bhagwati Marketing Co. Drawing our attention to copy of the bank statement kept in the paper book, he submitted, the loan was advanced through cheque/RTGS and the part loan repayment was also through cheque and reflected in the bank account. He submitted, on the outstanding loan of Rs.50 lacs, the assessee has been receiving interest at Rs.62,500/- per month and offering it to tax. He submitted, even the borrower has confirmed the loan transaction. He submitted, the reasoning of the departmental authorities that the bank statement does not clearly indicate advancement of loan to Bhagwati Marketing Co. is totally wrong, as in response to a letter of the assessee, the bank has confirmed that the debit entries of Rs.1 crore are loan advanced to Bhagwati Marketing Co. Thus, he submitted, the assessee having proved the source of the loan transaction, no addition can be made.

5.

Ld. Departmental Representative (ld. DR for short) strongly relied upon the observations of A.O. and ld. First appellate authority.

6.

We have considered rival submissions and perused the materials on record. The point of dispute between the parties is the alleged cash loan of Rs.50 lacs to Shri Narendra G. Somani stated to be the proprietor of Bhagwati Marketing Co. While the department, based on some search related information, has alleged that the assessee has advanced cash loan of Rs.50 lacs, it is the say of the assessee that no cash loan was advanced and the entire loan transaction was through proper banking channel. As could be seen from the facts on record, in course of assessment proceedings, the assessee did furnish ledger extract of the loan transaction with Bhagwati Marketing Co., copies of the bank statements to prove that

4 ITA No. 9312/Mum/2025 (A.Y. 2023-24) Bansi Fashion Private Limited vs. ITO the loan transactions was through banking channel. On perusal of the bank statement of the assessee, it appears that the assessee had advanced loan of Rs.1 crores in two installments of Rs.50 lacs each on 09.04.2014 and 10.04. 2014. The bank statement further reflects that out of the loan advanced, the assessee received back an amount of Rs.50 lacs in the year in which the loan was advanced. Whereas, loan of Rs.50 lacs remained outstanding. Though, supporting evidences in respect of loan transactions were available before the A.O. and the first appellate authority, apparently, they have disbelieved such evidences on the ground that the entries in the bank statement do not clearly indicate whether the loan was advanced to Bhagwati Marketing Co.

7.

It is relevant to observe, in course of assessment proceeding, in response to the query raised by the A.O., the assessee furnished his submissions stating the details of the loan transaction indicating the cheque number, date, the name of bank through which the loan was advanced. The bank statements were also furnished before the A.O. Merely because no response from Bhagwati Marketing Co. was received against the notice issued u/s. 133(6) of the Act, the evidences furnished by the assessee could not have been overlooked. If the A.O. wanted further clarification regarding the entries in the bank statement, the minimum he could have done was to seek necessary information from the concerned bank, which would have clarified all his doubts. Without conducing any enquiry with the bank, the AO has arbitrarily rejected the evidence furnished by the assessee. It is noteworthy, in response to a letter issued by the assessee, the Tamil Nadu Mercantile Bank, through which the loan transaction was done, has confirmed that the debit entries of Rs.50 lacs each in assessee’s bank statements were payments made to Bhagwati Marketing Co. The clarification issued by the Tamil Nadu Mercantile Bank fortifies assessee’s claim that the

5 ITA No. 9312/Mum/2025 (A.Y. 2023-24) Bansi Fashion Private Limited vs. ITO loan transactions were through banking channel and not in cash, as alleged by the department. Since, the assessee through proper documentary evidences has established the source of loan of Rs 50 lacs advanced to Shri Narendra G. Somani, proprietor of Bhagwati Marketing Co., in our considered opinion, the addition made of Rs.50 lacs u/s.69A of the Act is unsustainable. Accordingly, we direct the AO to delete the addition.

8.

In Ground No. 2, the assessee has challenged the addition of Rs.9,47,539/-, being the reversal of provision of interest income.

9.

Briefly the facts are, in course of assessment proceeding, the AO, while verifying the return of income and financial statements of the assessee, noticed that the assessee has not offered the interest income of Rs.9,47,539/-. In reply to a query of the A.O., the assessee submitted that he has duly offered interest received of Rs.22,69,816/-. However, he submitted that the provision for interest income made in financial years 2019-20 and 2021- 21, aggregating to Rs.9,49,582/- was never received by the assessee. Hence, the amount was reversed in the current year. The AO, however, did not accept assessee’s claim and added back the amount of Rs.9,47,531/-. The addition so made was confirmed by the ld. first appellate authority.

10.

We have considered rival submissions and perused the materials on record. As could be seen from the facts on record, it is the claim of the assessee that the provision for interest income amounting to Rs.9,47,539/- was made in the financial years 2019-20 and 2020-21. However, since the interest amount was not actually received, it was reversed in the current assessment year. In our view, the issue is purely factual. It needs to be examined whether the interest income of Rs.9,47,539/- was offered to tax in any earlier assessment year. In

6 ITA No. 9312/Mum/2025 (A.Y. 2023-24) Bansi Fashion Private Limited vs. ITO case, the amount was offered to tax as claimed by the assessee and it was actually not received either in those years or even in current assessment year, then assessee’s claim can be accepted. Therefore, the AO is directed to factually verify assessee’s claim and decide the issue accordingly. This ground is allowed for statistical purpose.

11.

In the result, the appeal is party allowed. Order pronounced in the open court on 25.05.2026

Sd/- Sd/- (Prabhash Shankar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 25.05.2026 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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