ACIT 26 1, MUMBAI, BKC vs. SHANTOSH BHOLANATH SHUKLA, MUMBAI

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ITA 5576/MUM/2025Status: DisposedITAT Mumbai02 April 20267 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

For AY 2012-13, the Tribunal restored the issue of loan addition to the AO for de novo adjudication, admitting additional evidence. For AY 2014-15, the Tribunal directed the AO to recompute the disallowance on expenses at 5%, aligning with a coordinate bench decision.

What were the facts?

The revenue appealed against the CIT(A)'s partial relief regarding an addition of Rs. 86,46,870/- for loans received. The assessee also appealed, seeking admission of additional evidence and restoration of the issue to the CIT(A). For another assessment year, the revenue appealed the CIT(A)'s restriction of disallowance on expenses.

What were the issues?

Whether the addition on account of loans received is justified, and whether additional evidence should be admitted. The second issue pertains to the extent of disallowance on various expenses.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.5576/Mum/2025 (Assessment year: 2014-15)

ACIT 26(1), Mumbai vs Santosh Bholanath Shukla 249, 2nd Floor, 200, 2nd Green Tower CHSL, KautilyaBhawan, Mumbai- Gillbert Lane Andheri Mumbai- 400051 400053 PAN: AUQPS2972P APPELLANT RESPONDENT ITA No.5451/Mum/2025 (Assessment year: 2012-13)

Santosh Bholanath Shukla vs ACIT 26(1), Mumbai 200, 2nd Green Tower CHSL, 249, 2nd Floor, Kautilya Bhawan, Gillbert Lane Andheri Mumbai-400051 Mumbai-400053 PAN: AUQPS2972P

Assessee by : Shri Bharat Kumar Revenue by : Smt. Priyanka Mashilkar(Sr.AR) Date of hearing : 26/03/2026 Date of pronouncement : 02/04/2026

2 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla O R D E R Per: Anikesh Banerjee (JM): Both the appeals filed by the revenue and the assessee for Assessment Year 2012- 13 and A.Y. 2014-15. The details of the respective impugned appellate & assessment orders, which vary across the appeals and assessments, are set out in the annexure below:

Sr. Appeal No. Asst. Appellate DO Assessing Asst DO No. Year Authority Authority Order 1 5451/M/2025 2102-13 NFAC 26.06.2025 DCIT- s. 143(3) 31.12.2016 25(1) 2 5576/M/2025 2014-15 CIT(A)-51/ 04.06.2025 ITO Ward s. 143(3) 24.03.2015 Mum 2(4)-Mum

2.

Since both the appeals arise from same assessee, identical facts and involved common issue for convenience all the appeals are heard together and are being disposed of by this common order ITA No.8397/M/2025 is taken as lead case and the decision rendered therein shall apply mutatis mutandis to all other appeals. ITA 5451/Mum/2025 A.Y. 2012-13 3. The Ld. AR, appearing on behalf of the assessee, contended that the Ld. AO had made an addition of Rs.86,46,870/- in respect of loans received from three different parties. The Ld. CIT(A) granted relief in respect of one party; however, the addition pertaining to M/s. Sushila Trading Corporation amounting to

3 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla Rs.86,46,870/- was sustained. During the appellate proceedings, the assessee furnished all relevant documentary evidences in support of the claim. However, without duly appreciating the same, the Ld. CIT(A) erred in confirming the addition relating to the repayment of loan from M/s. Sushila Trading Corporation, a proprietary concern of the assessee’s mother, Mrs. Sushila B. Shukla. To substantiate the claim, the assessee filed additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1962. The copies of ITR, ledger account, confirmations, and bank statements of M/s. Sushila Trading Corporation were duly placed on record before the Bench. The Ld. AR, therefore, prayed for admission of the additional evidence and for restoration of the matter to the file of the Ld. CIT(A) for de novo adjudication. 4. The Ld. DR supported the orders of the revenue authorities. However, with regard to the admission of additional evidence filed by the Ld. AR, the Ld. DR did not raise any serious objection. 5. We heard the rival submissions and perused the material available on record. Upon perusal of the impugned appellate order, we find that the assessee had indeed made submissions before the Ld. CIT(A), and the same have also been taken note of by the Ld. CIT(A). The relevant observations of the Ld. CIT(A) are reproduced hereunder: “9.2. Submission of the Appellant The assessee's vide letter dated 03.01.2015 has made the submission, which is reproduced as under :- In respect of the above mentioned loans, it is pertinent to note that these loans were received by Account Payee cheques in the year under appeal. The Impugned loans were also refunded in subsequent year/s through banking channel. The confirmation letter along with the balance

4 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla sheet and acknowledgement of return of income of the lender are enclosed herewith. In view of the above facts, the addition u/s 68 is not justified. We give details as below: Other Loans: 1. Loan against FDR with Syndicate Bank Rs. 11,80,247/- 2. Loan From Govind Panda Rs. 2,50,000/- 3. Repayment from Sushila Trading Corp. Rs. 72,16,623.11/- At the time was preparing accountant was made mistake for creating ledger. He was created two separate ledgers i.e. one is Sushila Trading Corporation which was shown in Asset side under Loan and advance head and other is M/s Sushila Trading Corporation (Loan) was shown in Liabilities side under Other Loans. Out of amount Rs. 72.16 lac M/s Sushila Trading Corporation was directly paid amount Rs. 66.24 lacs to the Airport Authority of India on behalf of M/s Santosh Enterprises and amount Rs. 5.92 lac was transfer through bank to us. Now we submitted confirmation received from Sushila trading corporation along with Bank statement of Sushila trading corporation. Where clearly show the amount transfer to AAl and Santosh enterprises. 9.3. Decision 9.3.1. The AO has made an addition of Rs.86,46,870/- on account of unsecured loans received from various parties. It is seen that the loans are from Syndicate Bank of Rs.11,80,247/-, from Govind Panda of Rs.2,50,000/- and of Rs. 72,16,623/-from Sushila Trading Corporation. The AO has treated the entire loan amount as unexplained cash credit. 9.3.2 At the outset, the loan of Rs.11,80,247/- from Syndicate Bank is outside the purview of Section 68 of the Act and is deleted. As regards the balance amount, no document has been furnished in respect of loan from Govind Panda to support the identity and credit worthiness of the said lender and accordingly the same is confirmed. As regards the loan from Sushila Trading Corporation the appellant has submitted the copy of PAN card and bank statement of the lender in support of the transaction. From the bank statement it is clear that the said account has multiple cash deposits just before the transfer of loan to the appellant. Further no document has been furnished in support of the credit worthiness of the lender. Accordingly, it is held that the appellant has not been able to substantiate the credit worthiness of the lender and even the genuinety of the transaction as the multitude of cash deposit in the bank account of the lender give credence to the belief that the appellant is round tripping its own money in the guise of loan. The loan from Sushila Trading Corporation of Rs. 72,16,623/- is therefore held to be hit by the provisions of Section 68. As a result, out of the total addition of Rs.86,46,870/- done by the AO U/s 68, the appellant gets a relief of Rs. 11.80,247/-on account of loan from Syndicate Bank

5 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla and the balance addition of Rs.74,66,623/- is confirmed. This ground of appeal is partly allowed.”

6.

In our considered view, we find that the assessee was unable to furnish the requisite documents before the Ld. AO. Only partial compliance was made before the Ld. CIT(A). Considering the submissions of the Ld. AR, we observe that the Ld. CIT(A) erred in treating the repayment of loan as a loan advanced to the assessee. The assessee has filed additional evidence before the Bench, which, in our opinion, goes to the root of the matter. Accordingly, we restore the issue to the file of the Ld. AO with a direction to consider the documents, including the additional evidence filed before us, after providing adequate opportunity of being heard to the assessee. We clarify that we have not expressed any opinion on the merits of the case, and the Ld. AO shall adjudicate the matter independently, without being influenced by any observations made herein. The assessee is also directed to be diligent and cooperative during the set-aside proceedings. Needless to say, the assessee shall be afforded a reasonable opportunity of being heard. Accordingly, the appeal of the assessee is allowed for statistical purposes. ITA No.5576/Mum/2025 A.Y. 2014-15 7. The Ld. DR submitted that during the assessment proceedings, the Ld. AO disallowed expenses claimed under the heads of conveyance, sundry expenses, telephone charges, printing and stationery, and staff welfare, treating the same as non-genuine. Accordingly, 45% of the total expenses amounting to Rs.42,94,492/- i.e., Rs. 19,32,521/-, was disallowed and added back to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), relying upon the decision of the Coordinate Bench of the ITAT, Mumbai

6 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla “A” Bench in the case of Sandeep Shukla vs. ACIT (ITA Nos. 2063 & 2064/Mum/2022, order dated 30.09.2022), wherein an identical issue in the case of the assessee’s sister concern was adjudicated, accepted the assessee’s plea and restricted the disallowance to 5% of the expenses.

8.

The Ld. DR, however, contended that in the appellate proceedings, the Ld. CIT(A) effectively restricted the disallowance to 4.8% of the expenses. It was submitted that, in view of the binding precedent of the Coordinate Bench, the disallowance ought to be restricted to 5% of the expenses.

9.

We have heard the rival submissions and perused the material available on record. We find that the Ld. AO had disallowed 45% of the expenses, amounting to Rs.19,32,521/-, which was added back to the total income of the assessee. The Ld. CIT(A), following the decision of the Coordinate Bench of the ITAT, Mumbai, restricted the disallowance to 4.8%. However, considering the order of the Coordinate Bench of the ITAT, Mumbai “A” Bench dated 30.09.2022, wherein the disallowance was restricted to 5% of such expenses, we deem it appropriate to align the present case with the said decision. The Ld. AR fairly accepted the contention of the Ld. DR and agreed to follow the order of the Coordinate Bench. Accordingly, we restore the matter to the file of the Ld. AO with a direction to recompute the disallowance by restricting the same to 5% of the relevant expenses. Both the parties have agreed to abide by the aforesaid direction. Accordingly, the appeal filed by the revenue is partly allowed.

7 ITA No.5451 & 5576/Mum/2025 Shantosh Bholanath Shukla 11. In the result, the appeal of the assessee bearing ITA No.5451/Mum/2025 is allowed for statistical purpose & appeal of the revenue ITA No.5576/Mum/2025 is partly allowed. Order pronounced in the open court on 2nd day of April 2026. Sd/- Sd/- (ARUN KHODPIA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 02/04/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI

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