SAHYOG CONSTRUCTION,VADODARA vs. THE ACIT, CIRCLE-1(1)(1) PREVIOUSLY CIRCLE-1(3), VADODARA

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD ‘C’ BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.104/AHD/2025 (Assessment Year: 2017-18) M/s. Sahyog Construction, The Asst. Commissioner of Income A-9, State Bank of Saurashtra Housing Tax, Society, Circle 1(1)(1), Nizampura, Vs. Aayakar Bhavan, Vadodara Race Course Circle, Gujarat – 390 002 Vadodara Gujarat -390007 PAN: ACKFS9276Q (Appellant) : (Respondent) Assessee by : Shri S.N. Soparkar, Sr. Advocate & Ms. Urvashi Shodhan, A.R. Respondent by : Shri Rignesh Das, CIT- DR Date of Hearing : 07.04.2026 Date of Pronouncement : 23.06.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “Ld. CIT(A)”] dated 23.11.2024 for the Assessment Year (in short “AY”) 2017-18.

ITA No.104/AHD/2025 M/s. Sahyog Construction submission of the appellant. The impugned addition of Rs. 6,58,43,000/- being bad in law and in facts is prayed to be deleted. 3. Without prejudice to the Ground No. 2 above, the Ld. CIT(A), NFAC ought to have directed the Ld. A.O. to consider the fact that the appellant has repaid the amounts during the year and thus, the addition made should be directed to be deleted once the payment made is accepted by the Ld. AO. 4. The Ld. CIT (Appeals), NFAC has erred in law and in facts in confirming the action of the Ld. A.O. in taxing the addition made u/s. 68 of Rs. 6,58,43,000/- u/s. 115BBE of the Act particularly when the amounts cannot be held as unexplained. 5. Your appellant craves liberty to add, alter, amend or delete any or all the grounds of appeal stated above.”

ITA No.104/AHD/2025 M/s. Sahyog Construction e) Veenaben S. Patel Rs. 42,00,000/- Total Rs.6,58,43,000/- The assessee filed part details and after taking into account the same, the Assessing Officer made addition of Rs. 6,58,43,000/- on account of unexplained cash credit under Section 68 of the Act.

ITA No.104/AHD/2025 M/s. Sahyog Construction 7. We have heard both the parties and perused all the relevant material available on record. From the perusal of the bank statement (page 107 of the paper book) of Rachna A. Patel it can be seen that Sahyog construction entry of Rs. 35,00,000/- is on 30.09.2016 on credit side of prior to that on 01.07.2016 balance was on 2,712.50 and very next debit entry on 01.10.2016 is in the name of Sahyog construction that of Rs. 35,00,000/-. This way of transaction of loan given and repayment is seen in all the other 4 parties as well. Thus, the money is only circulated by these parties without having any substantial funds. Thus, the creditworthiness as well as genuinety of these transaction was not at all established by the assessee before the Assessing Officer and before the CIT(A). The CIT(A) rightly held as under while quoting the Remand Report at para 5.3.3: “5.3.3 REMAND REPORT: As part of appellate proceedings, remand report was called for from the AO on the appellant's contentions as per paper book filed. The same is reproduced to the extent it relates to the present addition. (ii) Addition on account of unexplained loans u/s 68 of the Act: 1.1 During the course of assessment proceedings, it was noticed that the assessee had introduced fresh loans totaling to Rs.6,58,43,000/- from following persons/concerns during the year under consideration. 1. Rachna A Patel : Rs. 14,00,000/- 2. Rajvi Assets & Infra : Rs.81,35,000/- 3. Sahyog Enterprise: :Rs. 4,75,30,000/- 4. Sahyog Realty : Rs. 45,78,000/- 5. Veenaben S Patel : Rs. 42,00,000/- Therefore, the assessee was requested to furnish the details of loan providers with supporting evidence such as copy of ledger account, copy of IT returns, balance sheet, copy of relevant bank statements etc. to prove the genuineness of such transactions. But the assessee has failed to furnish the requisite details though the assessee has been given sufficient opportunities to furnish the said details. Therefore, the assessee was asked to explain as to why an addition of Rs. 6,58,43,000/-should not be made on account of unexplained unsecured loans u/s 68 of the Act by show cause notice dated 08.12.2019. In response to the show cause notice, the assessee had furnished copies of ITR and computation of Rachna A Patel, Veena Patel and Sahyog Enterprise and copy of P & L A/c and Balance Sheet of Sahyog Enterprise. The details submitted by the assessee were not sufficient to prove the identity. creditworthiness and genuineness of the above

ITA No.104/AHD/2025 M/s. Sahyog Construction transactions. Therefore, the AO had made an addition of Rs. 6,58,43,000/- u/s 68 of the Act. 1.2 During the appellate proceedings, the assessee has submitted the additional evidence which consists of copy of confirmation and bank statements from Sahyog Enterprise, Sahyog Realty, Veenaben S Patel and Rachna A Patel and copy of balance sheet, P & L account and Loan summary from Sahyog Enterprise, Sahyog Realty and Rajvi Assets & Infra. The same are verified and discussed here under:- a) Rs. 14,00,000/-loan from Rachna A Patel- During the appeal proceedings, the assessee had claimed that during the course of assessment proceedings, it had submitted copy of ITR and computation and on perusal of the same the AO held that the income of the lender for A.Y 2017-18 is of Rs.3,56,110/- which is not sufficient to establish the creditworthiness for the advancement of loan of Rs. 14,00,000/-. Further the assessee stated that now it had obtained confirmation and bank statement from the lender and on perusal of confirmation it can be seen that the amount received is repaid during year itself and that amounts are reflected in the bank statement. Further the assessee had submitted that the lender is assessed to tax and the transactions are duly reflected in the bank statement of the lender and thus, the onus was discharged. The above submission of the assessee is considered but not acceptable. The assessee has submitted the copy of bank statement bearing account number 000305016857 maintained with ICICI Bank, it is seen that initially the fund of Rs. 15,00,000/- was internally transferred from Yes Bank on 01.07.2016 and out of the same, an amount of Rs. 10,00,000/- & 4,00,000/- was transferred to M/s. Sahyog Construction on 15.07.2016 & 19.07.2016 respectively. It is worthwhile to mention here that the assessee has not produced the copy of Yes Bank Account in which an amount of Rs. 15,00,000/- lakh was transferred. In absence of the same, the genuineness of transaction is not ascertainable. It is important to mention here that as evident from the order u/s. 144 dated 23.12.2019 of M/s. Rajvi Assets & Infra, it is seen that Smt Rachna Ankur Patel is family members of assessee firm and during the demonetization period she has made cash deposits in current account of M/s. Rajvi Assets and Infra and the same has been added by the Ld. AO. Subsequently, the aforementioned firm opted VSVs and settled this issue which means the assessee accepted the addition made by the Ld. AO. Considering these facts, it is seen that the aforementioned person is involved in unaccounted transaction therefore, in absence of supporting evidences viz copy of other bank accounts from fund was initially transferred, the genuineness of the transactions is not ascertained. b) Rs.81,35,000/- loan from Rajvi Assets & Infra :- During the appeal proceedings, the assesseehad submitted copy of confirmation, Balance Sheet, P & L a/c, Loan summary, bank statements and assessment order of the lender. Further the assessee had submitted that the lender is assessed to tax and the transactions are duly reflected in the bank statement of the lender and thus, the onus was discharged.

ITA No.104/AHD/2025 M/s. Sahyog Construction On perusal of additional evidences submitted by the assessee it is noticed that the lender itself did not file the return of income during the year under consideration and the assessment was completed u/s 144 of the Act. Further, on perusal of order u/s. 144 of the Act in this case, the addition of unexplained money u/s. 69A was made on account of cash deposits in bank accounts during the demonetization period which was settled in VSVs. Therefore, the genuineness and creditworthiness of the above transactions is clearly not established. c) Rs. 4,75,30,000/- loan from Sahyog Enterprise During the appeal proceedings, the assessee had submitted copy of confirmation, Loan summary and bank statements of the lender. Further the assessee had submitted that the lender is assessed to tax and the transactions are duly reflected in the bank statement of the lender and thus, the onus was discharged. On perusal of bank statement of Mrs. Sahyog Enterprise, it is seen that various transactions have been entered in to between M/s. Sahyog Enterprise and M/s. Sahyog Construction (assessee). It is seen that M/s. Sahyog Enterprise is associate concern of assessee firm and substantial amount of transferred between these accounts however, nexus of amount transfer is not ascertainable. Further, the returned income of the M/s. Sahyog Enterprise is Rs. 5,51,970/- and the said firm has given substantial amount of unsecured loan to its associate concern. Considering the returned income of the lender, the creditworthiness of the lender is not established. Further, on verification of the bank statement of the lender, it was noticed that prior to fund transfer to assessee's bank account, amount was received through different individuals including Rajvi Assets & Infra. Subsequently, the said fund was transferred in the bank account of assessee firm. For instance, some of the entries are mentioned as under:- 1. 29.06.2016 amount transferred from Shri Haresh of Rs. 7,00,000 2. 29.08.2016 amount transferred from Shri Maheshwar Din of Rs. 35,00,000/- 3. 18.01.2017 & 19.01.2017 amount transferred from Rani of Rs. 10,00,000/- 4. 10.02.2017 amount transferred from PNB of Rs. 52,00,000/- In view of the above findings, it is clear that the sources of the funds from where loan was given to the assessee is not established. Considering the above facts, creditworthiness of the person as well as genuineness of the transaction is not ascertained. d) Rs. 45,78,000/- loan from Sahyog Realty:-- During the appeal proceedings, the assessee had submitted copy of confirmation, Balance Sheet, P & L a/c, Loan summary, bank statements and assessment order of the lender. Further the assessee had submitted that the lender is assessed to tax and the transactions are duly reflected in the bank statement of the lender and thus, the onus was discharged.

ITA No.104/AHD/2025 M/s. Sahyog Construction During the course of assessment proceedings, despite availing the sufficient opportunity as well as considerable time, the assessee could not submit the copy of ITR of M/s. Sahyog Realty. Subsequently, during the appellate proceedings, the assessee once again failed to produce the copy of ITR of M/s. Sahyog Realty. Further, the assessee has submitted the copy of Profit and Loss Account in which it is seen that the net profit of Rs. 3,49,169/- was shown. Further, the said firm has given unsecured loan of Rs. 45,78,000/- to assessee firm. Considering these facts, the creditworthiness of M/s. Sahyog Realty is not established. Further, on verification of the bank statement, prior to fund transferred to assessee bank account, amount was received through other bank accounts. Subsequently, the said fund was transferred in the bank account of assessee firm. For instance, some of the entries are mentioned as under: 1. 30.01.2017 amount transferred from HDFC of Rs. 36,00,000/- In view of the above findings, it is clear that the sources of the funds from where loan was given to the assessee is not established. Considering the above facts, creditworthiness of the person as well as genuineness of the transaction is not ascertained. e) Rs. 42,00,000/- loan from Veenaben S Patel: During the appeal proceedings, the assessee had claimed that during the course of assessment proceedings, it had submitted copy of ITR and computation and on perusal of the same the AO held that the income of the lender for A.Y. 2017-18 is of Rs. 1,51,900/- which is not sufficient to establish the creditworthiness for the advancement of loan of Rs. 42,00,000/-. Further the assessee stated that now it had obtained confirmation and bank statement from the lender and on perusal of confirmation it can be seen that the amount received is repaid during year itself and that amounts are reflected in the bank statement. Further the assessee had submitted that the lender is assessed to tax and the transactions are duly reflected in the bank statement of the lender and thus, the onus was discharged. However, the above submission of the assessee is considered but not acceptable. The assessee has not established the creditworthiness of lender by producing the capital accountand ITR of last three years. Further, on comparison of ITR, it is seen that the returned income was shown at Rs. 1,51,900/- and unsecured loan was given at Rs. 42,00,000/-. In these circumstances, the creditworthiness of the lender is not proved. Additionally, on perusal of bank statement of bearing account number 00305018186, maintained with ICICI Bank Account, it is seen that this bank account is opened on 01.07.2016 and majorly transaction is made with assessee firm as well as family members of partners of assessee. It is seen that the fund was received from either family members or assessee firm and subsequently, the same fund was transferred to M/s. Sahyog Construction. In this scenario, the genuineness of transaction are not ascertainable. In view of the above findings it is clear that the sources of the funds from where loan was given to the assessee is not established. Considering the above facts, creditworthiness of the person as well as genuineness of the transaction is not ascertained. 7

ITA No.104/AHD/2025 M/s. Sahyog Construction

ITA No.104/AHD/2025 M/s. Sahyog Construction loans/credits and such loan/credit has been given out of lender's own funds making a transaction genuine in real sense and it is not a sham transaction only using lenders bank account for rotation of funds. The nature and source of any sum, whether in form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. 4. Considering the above discussion and details submitted by the assessee during appeal proceedings, It is submitted that the additional evidences don't deserve to be accepted and addition made by the AO deserves to be upheld. 5.3.4. Decision: I have considered the submissions of the AO and the appellant both at the time of assessment and during remand proceedings. The AO had made out a clear a case as to how the evidence brought on record would not constitute satisfactory explanation for the source sought to be explained. The AO has brought on record the circumstantial evidence as to why the said assertions on the part of the appellant cannot be totally believed. Therefore, for the reasons stated in the remand report, no interference is called for to the impugned additions brought under section 68 of the Act. These grounds accordingly stand dismissed.” There is no need to interfere with the findings of the Assessing Officer as well as the CIT(A).

Order pronounced in the open court on 23.06.2026

Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated: 23.06.2026 * Kishore, Sr. P.S.

ITA No.104/AHD/2025 M/s. Sahyog Construction Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Ahmedabad 5. Guard File By order, TRUE COPY Assistant Registrar/Sr.PS/PS ITAT, Ahmedabad Bench