MOHINI SALES & RETAIL PRIVATE LIMITED,KOLKATA vs. ITO WARD 9(1), KOLKATA

For that on the facts and in the circumstances of the case, the appellant craves leave to submit additional grounds and/or amend or alter the grounds already taken either at the time of hearing of the appeal or before.”

Brief facts of the case are that the assessee is a company engaged in the trading of readymade garments and fabrics, watches, clocks etc. and for AY 2016-17 the assessee had filed the return of income declaring total income of ₹31,990/- u/s 139(1) of the Act. A copy of the audited financial statement along with other details have been enclosed in the paper book filed. The assessment was reopened u/s 147 of the Act and it was mentioned that the assessee had received fictitious loan of ₹10 Lakh from M/s. Chaturang Commercial Pvt. Ltd. (in short ‘CCPL’) and accommodation entry of ₹60 Lakh from M/s. Innovative Commercial Pvt. Ltd (in short ‘ICPL’). It is stated that no other information or supporting document had been provided. The assessee responded to the notice issued. The notices issued in the course of the reassessment proceedings remained non-complied for the reason that the email ID in which the subsequent notices were issued was no longer accessible to the assessee’s management since the concerned person who used to manage the email ID suddenly left the organisation in the middle of the FY 2024-25 and deactivated the email ID without informing the management. The assessment was accordingly completed u/s 147/144 of the Act on 06.02.2025 making addition of ₹70 Lakh and the total income was assessed at ₹85,81,170/- as the credits received were treated as unexplained cash credits and were held to be received from paper/shell companies formed with the sole purpose of providing accommodation entries in the form of bogus loans from two different entities. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who confirmed the addition of ₹70 Lakh and dismissed the appeal of the assessee by giving his findings as under: “The appellant, in the ground of appeal, contended that the addition under section 68 was unjustified. It was submitted that the loans were genuine. interest-bearing, received and repaid through proper banking channels, and the appellant had the required documents to establish the identity creditworthiness, and genuineness of the lenders. The appellant further contended that the AO had relied solely on information from third parties and the Investigation Wing without any tangible evidence, and that the loan confirmations, bank statements, and financials provided were sufficient to discharge the onus under section 68 of the Act. Reliance was placed on several judicial precedents including CIT v. Apex Therm Packaging (P) Ltd., CIT v. Patel Ramanikal Hirji, and Pr.CIT v. Sree Leathers. The appellant also submitted that interest on the loans was duly paid, TDS was deducted, and all lenders had filed their returns and were assessed to tax. Further, the appellant contended that the statements of third parties relied upon by the AO were not made available for cross-examination, thereby violating principles of natural justice, and that the addition was made purely on conjecture and surmises. On perusal of the e records, it is observed that the AO's action is in conformity with the law. The appellant failed to produce the loan confirmations, ledger entries, and repayment records before the AO, and the AO was therefore justified in making the addition under section 68. While documents were subsequently filed before the appellate authority, the statutory scheme places the onus on the assessee to explain the nature and source of the credit during the assessment proceedings. The judicial precedents relied upon by the appellant are distinguishable, as in those cases either full particulars of lenders were already furnished to the AO or the facts involved regular course of business where the AO had conducted independent verification. In the present case, the AO received information indicating that the loans could be accommodation entries, which is sufficient under law to make an addition when the assessee fails to substantiate the source adequately. It is further noted that merely submitting documents before the appellate authority cannot cure the non-production before the AO. In the present case, the appellant has not claimed that these additional documents were submitted under Rule 46A of the Income-tax Rules, 1962, which is the statutory mechanism for admitting additional evidence before the appellate authority. Accordingly, the documents produced at this stage cannot be considered, as they appear to be afterthoughts aimed at substantiating claims not supported during the assessment proceedings. Furthermore, the detailed findings of the Investigation Wing, which include verification of transactions and corroborative data indicating that the loans could be accommodation entries, constitute strong evidence against the appellant. The AO was therefore justified in relying on these findings, along with third-party statements and CRIU data, to form a prima facie belief regarding unexplained credits under section 68. The appellant's arguments regarding the non-availability of cross-examination or reliance on judicial precedents are not relevant in this context, as the statutory onus to prove the identity, creditworthiness, and genuineness of the lenders rested squarely on the appellant during the assessment proceedings. In view of the above, the additional documents produced before the appellate authority cannot be accepted, and the AO's action in making the addition of Rs.70,00,000/- under section 68 is justified and upheld. Accordingly, assessee appeal on ground on ground no. 2 is dismissed.”

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that the order of the Ld. CIT(A) runs to 169 pages and the order from page no. 1 to 85 has again been copy/pasted from page 85 to 169 and 2 similar orders are included in the impugned order. In the paper book filed before us at page 32 to 38, it had been pleaded before the Ld. CIT(A) to admit the additional evidence filed by the assessee despite the same going to the root of the matter and despite the assessee submitting detailed submission before him. The assessee had furnished the chronology of the events before the Ld. CIT(A) in the application u/r 46A of the I.T. Rules, 1962 and reliance was placed upon the decision of the Hon'ble Bombay High Court in the case of CIT Vs Suretech Hospital and Research Centre Limited (293 Wahabbhai (232 ITR 900) and Anantnag & Anr. vs. Mst. Katiji & Ors. [1987 (2) SCR 387] for accepting the additional evidence which were not accepted.

The Ld. AR has stated that the loans were eventually repaid and the assessee had furnished complete details in support of the claim that the transactions were genuine yet the same were not accepted and the loan of ₹10 Lakh from CCPL and ₹60 Lakh from ICPL and the additions on account of loans were upheld. It was submitted before us that non- acceptance of the confirmation letters from the creditors before the Ld. CIT(A) has resulted in injustice to the assessee and therefore, the same may be allowed to be accepted by the Ld. CIT(A) and the matter may be remanded to the Ld. CIT(A) to decide the appeal afresh.

The Ld. DR relied upon the order of the Ld. CIT(A) and vehemently argued that the same may be confirmed.

We have considered the facts of the case, the submissions made and the documents filed. Since the confirmation and the additional evidences etc. filed were necessary for adjudicating the issue, the same ought to have been admitted by the Ld. CIT(A). Hence, the Bench was ITA No(s). 2349/KOL/2025 Assessment Year(s) 2016-17 of the view that the order of the Ld. CIT(A) may be set aside. Therefore, the order of the Ld. CIT(A) is set aside and the appeal is restored before him to be decided afresh and to consider the additional evidences filed for which acknowledgment of submission dated 27.08.2025 filed online has been filed before us. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 5th May, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.05.2026 Bidhan (Sr. P.S.)

CIT(A)-NFAC, Delhi.

CIT-

CIT(DR), Kolkata Benches, Kolkata.

Guard File. //// By order