DEPUTY COMMISSIONER OF INCOME TAX, KOLKATA vs. ANUP KUMAR LAKHOTIA , KOLKATA

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ITA 1720/KOL/2024Status: DisposedITAT Kolkata21 August 2026AY 2019-208 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding that the transactions were commercial/current account based and not covered by Section 2(22)(e). It also agreed that the addition under Section 68 was factually incorrect as no fresh loan was taken during the year.

What were the facts?

Following a search operation, the assessee received a notice under Section 153A. The Assessing Officer (AO) made additions for a loan under Section 2(22)(e) and unsecured loans under Section 68. The CIT(A) allowed the assessee's appeal, deleting both additions.

What were the issues?

Whether the transactions constituted 'loans or advances' under Section 2(22)(e) and whether the unsecured loans under Section 68 were genuine.

Which sections of the Income-tax Act were involved?

Section 153A,Section 2(22)(e),Section 68,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No 1720/KOL/2024 Assessment Year- 2019-20 Deputy Commissioner of Income Tax.....................................................................Appellant 110, Shantipally, Aayakar Bhawan Poorva, West Bengal- 700107 [PAN No. AAXPL1622L] Vs. Anup Kumar Lakhotia..................................................,..……………....……….Respondent 241/16, GT Road (N) Liluah West Bengal- 711204 Appearances by: Miraj D Shah, A.R., appeared on behalf of the Respondent. Satyajit Mandal, CIT, DR, appeared on behalf of the Appellant. Date of concluding the hearing: July 09, 2026 Date of pronouncing the order: August 21,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 27.12.2023 of the Office of the Commissioner of Income Tax passed under Section 153A of the Assessment Year 2019-20 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

At the very outset it appears from the report of the Registry that the appeal has been filed after a delay of 170 days. The Revenue has filed the petition to condone the delay. Going over the contents of the petition delay is hereby condoned.

ITA No.1720/Kol/2024 2. The brief facts of the case of the assessee is that a search & seizure operation was carried out at the residential and office premises of "Health Care Group" on 05.02.2021. The assessee Anup Kumar Lakhotia belongs to this group. Consequent upon search and seizure operation, notice u/s 153A of the Income Tax Act, 1961 was issued on 01 12.2021and duly served upon assessee seeking to file return for A.Y 2019-20. In response, return of income was filed by assessee on 02.12.2021 declaring a total income of Rs.2363470/-The return filed in response to notice u/s 153A was selected for scrutiny by issuing notice u/s 143(2) on 09.12.2021 and served upon assessee. Notice u/s 142(1) of IT Act along with questionnaire was issued on 09.12.2021 & 28.01.2022and served upon assessee. In response to the said notices, Authorized Representative of assessee appeared from time to time to represent the case and produced/submitted necessary details/documents as per requisition, which were examined. The case was heard and discussed. The Ld. AO added the loan of Rs. 3,50,108/- to the total income of the assessee, made an addition of Rs. 2,65,1,000/- u/s 2(22)(e) of the Act.

3.

Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been allowed by the CIT(A) by observing thus: -

This agitates against the action of the AO in making addition u/s 2(22)(e) to the tune of Rs. 26,51,000/- as commercial and / or current Account transaction is outside the 2

ITA No.1720/Kol/2024 scope and ambit of section 2(22)(e) of the Act.The AO has recorded that the following transactions attracted the provisions of 2(22)(e) of the Act. SL. No Company Name Share % Amount 1 B&B Marketing Pvt. 31.11% 5,59,000 Ltd. Loan 13,72,000 2 Bhawani Alumina 35.38% 7,20,000 Products Total 26,51,000

The appellant has submitted ledgers of both the concerns mentioned above. On perusal of both the ledgers it is observed that amounts have been taken and repaid on several occasions throughout the year. In the case of B & B Marketing Pvt Ltd it is observed that prior to the receipts of the amounts of Rs. 5.59,000/- and Rs. 13,72,000/- by the appellant, several amounts were advanced by the appellant to the said company, B & B Marketing Pvt. Ltd. Hence these payments of Rs. 5,59,000/- and Rs. 13,72,000/- by B & B Marketing Pvt. Ltd to the appellant, are rather repayment made by B & B Marketing Pvt. Ltd. It is also observed that specifically in the case of M/s Bhawani Alumina Products, the appellant had been making several statutory payments on behalf of M/s Bhawani Alumina Products. I therefore agree with the appellant's contention that in both these cases, the transactions are commercial or current Account transactions being carried out throughout the year and there is no evidence of excess drawing as claimed by the AO. I find that in a recent judgement, the Hon ble jurisdictional High Court in the case of Commissioner of Income-tax, Kolkata 1v. Gayatri Chakraborty [2018] 94 taxmann.com 244 (Calcutta) hasheld that when it was a case of mutual running or current account which created independent obligations on the other and not merely transactions which created obligations on other side, those on the other being merely complete or partial discharge of such obligations and there were reciprocal demands between the parties and the account was mutual, payment of the aforesaid sums to the assessee cannot be treated as dividend out of profit. Since, it is now well established that the deeming provision should be construed strictly and the meaning of the words "loans or advances" used in Sec.2(22)(e) cannot be extended to other transactions like mutual and current transactions. The addition of Rs.26.51,000/- made by the A.O. on this count is, therefore, deleted. This ground is allowed. Grounds 7-8 Both these grounds agitate against the action of the AO in making an addition of Rs. 3,50, 108/-u/s 68 towards bogus unsecured loans. On perusal of the assessment order, it is observed that the AO has recorded that the assessee has taken loan from the following entity: SL. No Name of the Lender Loan taken during he Interest on Loan year 1. Surana Trading Co 350108 Pvt Ltd

ITA No.1720/Kol/2024 The appellant has stated that during the year no fresh loan was taken but interest was paid to M/s Surana Trading Co Pvt Ltd after TDS deduction, on loans taken during previous years. In Support of the same the appellant has furnished the requisite documentary evidences. Since no loan has been taken from the said concern M/s Surana Trading Co Pvt Ltd during the year and the same is also apparent from the AO's notings in the assessment order, the AO is factually incorrect and therefore no addition could have been made u/s 68. The addition of Rs.350108/- made on this count also stands deleted. This ground is allowed. In the result, the appeal is partly allowed.

4.

Being aggrieved by and dissatisfied the Revenue preferred appeal by taking following grounds:-

1.

Whether the Ld. CIT(A) has erred in facts and in law by allowing the appeal of the assessee by deleting the addition of Rs 3,50,108/ made by the AO under section 68 of the Act despite the assessee failing to establish the genuineness of the transactions and the identity and creditworthiness of the creditors? 2. Whether the Ld. CIT(A) has erred in facts and in law by allowing the appeal of the assessee by deleting the addition of Rs. 26,51,000/- made by the AO under section 2(22)(e) of the Act, despite the assessee being in receipt of excess drawings being in the nature of advance for the purpose of selection 2(22)(e) of the Act? 3. The department craves the right to add, alter, amend or withdraw any ground of appeal before or at the time of hearing.

5.

Contrary to that Ld. AR supports the impugned order thereby submitting that commercial or current account transactions is outside the scope and ambit of Section 2(22)(e) of the Act and this view has been upheld by the Hon’ble High Court of Kolkata. The Ld. AR further submits that in course of assessment proceedings assessee has submitted ledgers of both the concerns and on perusal of both the ledgers it is clear that amounts have been taken and repaid

ITA No.1720/Kol/2024 on several occasions throughout the year. The ld. AR submits that there is no infirmity in the impugned order.

6.

Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that assessee being an individual deriving his income mainly from director’s salary and from other sources. As per the survey operation it appears that assessee took unsecured loan from the five parties. It is pertinent to mention here that assessee has submitted copy of ledger of all the parties concerned that goes to establish that amount of loan was interest bearing commercial loan. The ledger copy of M/s B & B Market clearly reflects that it was an interest bearing commercial loan. Copy of the ledger of M/s Bhawani Alumina Products Pvt. Ltd with regard to the loan of Rs. 1,99,37,000/- reveals that it was not in fact a loan transaction rather it was merely a current account maintained by assessee with the company to make a various payment like loan instalments of ICICI Bank, Bank of India, Fluetorn India, etc. The Ld. Cit(A) in its order has also discussed the documentary evidences filed by the assessee and hold that in the case of B & B Marketing Pvt Ltd it is observed that prior to the receipts of the amounts of Rs. 5,59,000/- and Rs. 13,72,000/- by the appellant, several amounts were advanced by the appellant to the said company, B & B Marketing Pvt. Ltd. Hence these payments of Rs. 5,59,000/- and Rs. 13,72,000/- by B & B Marketing Pvt. Ltd to

ITA No.1720/Kol/2024 the appellant, are rather repayment made by B & B Marketing Pvt. Ltd. It is also observed that specifically in the case of M/s Bhawani Alumina Products, the appellant had been making several statutory payments on behalf of M/s Bhawani Alumina Products.

6.1. Going over the order passed by the CIT(A) and considering the documents filed by the assessee, we do not find any infirmity in the impugned order.

Accordingly, the appeal of the Revenue is hereby dismissed.

Kolkata, the 21st August , 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 21.08.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Deputy Registrar, Kolkata Benches

ITA No.1720/Kol/2024

ITA No.1720/Kol/2024

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