M/S. MAHENDRA ENTERPRISE FIRM ,MUMBAI vs. ACIT CIRCLE -17(2), MUMBAI

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ITA 4213/MUM/2025Status: DisposedITAT Mumbai11 May 2026AY 2017-183 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 discharged its onus under Section 68 by providing sufficient evidence and that repayment of the loan further strengthened its genuineness. Therefore, the addition made by the AO was unsustainable.

What were the facts?

The assessee took a loan of Rs. 50,00,000/- from an individual, providing documentary evidence for the lender's identity, creditworthiness, and the genuineness of the transaction. The loan was subsequently repaid with interest, and TDS was deducted.

What were the issues?

Whether the addition of the loan amount as unexplained credit under Section 68 was justified when the assessee provided evidence of identity, creditworthiness, and repayment.

Which sections of the Income-tax Act were involved?

Section 68,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI,

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR

For Respondent: Shri Umashankar Prasad (CIT
Pronounced: 11.05.2026

आदेश / ORDER

PER NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Assessee against the order dated 20.06.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.

ITA 4213/MUM/2025 M/S. MAHENDRA ENTERPRISE FIRM

2.

In the instant case, the Assessee during the assessment year under consideration had taken a loan of Rs. 50,00,000/- from Smt. Smita M. Shah, which has also been confirmed by the lender. The Assessee admittedly, before the authorities below, has also filed documentary evidence to prove the identity and creditworthiness of the lender and genuineness of loan transaction. Further, it is also a fact that the Assessee not only proved the source of loan but also the source of source of loan Further it is a fact that the Assessee subsequently repaid the loan amount along with the interest while deducting TDS and the interest expenses claimed has not been disputed by either of the authorities below and interest income has also been offered by the lender. Thus, considering the aforesaid factual aspects, specifically to the effect that the Assessee by producing the relevant documents prima facie discharged its onus cast u/s. 68 of the Act and by making repayment strengthen the genuineness of the transaction, as also held by Hon'ble Gujrat High Court in the case of PCIT vs. Ambe Trade (P) Ltd. (2022) 145 taxmann.com 27 (Guj.), by holding inter alia as under:

“Where assessee took loan from two parties and furnished the requisite material showing identity of loan givers and repaid the loan in subsequent year, then no addition could be made on account of such loan” 3. According to the Hon'ble High Court, where the Assessee was not a beneficiary of the loan received by it and the loan was repaid by the Assessee in the subsequent year, then it led to unacceptable conclusion that the impugned transaction was a business transaction between the Assessee and the loan parties and therefore the loan could not be doubted for its genuineness.

4.

We further observe that the Hon'ble Gujrat High Court in the case of Deputy Commissioner of Income-tax vs. Rohini Builders [2003] 127 Taxman 523 (Gujarat) [19-03-2001], has also held on the similar footing, as held in the case of Ambe Trade Corp (P) Ltd. (supra).

ITA 4213/MUM/2025 M/S. MAHENDRA ENTERPRISE FIRM

5.

Thus, on the aforesaid analyzations, the addition of Rs. 50,00,000/- being unexplained credit u/s. 68 of the Act made by the AO vide assessment order dated 30.12.2019 u/s. 143(3) of the Act and sustained by the learned Commissioner vide impugned order under consideration, is unsustainable and therefore the same is deleted.

6.

In the result, appeal filed by the Assessee is allowed.

Order pronounced in open Court on 11.05.2026

Sd/- Sd/- PRABHASH SHANKAR NARENDER KUMAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 11.05.2026 Karishma J. Pawar, SR. PS Copy to:

M/S. MAHENDRA ENTERPRISE FIRM , R.N 29, 2ND FLOOR, HANUMAN BUILDING 1 67, MUMBADEVI ROAD, PYDHONIE,, MUMBAI-400003, MAHARASHTRA ACIT CIRCLE -17(2), R.NO. 116 1ST FLOOR, KAUTILYA 2 BHAVAN, C-41 TO C-43 G BLOCK BANDRA KURLA COMPLEX BANDRA EAST, MUMBAI-400051, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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