DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), KOLKATA, KOLKATA vs. M/S R S FUEL PRIVATE LIMITED, KOLKATA

IN THE INCOMETAXAPPELLATE TRIBUNAL “D” BENCH, KOLKATA Before ShriRajesh Kumar, Accountant Member and ShriPradip Kumar Choubey, Judicial Member ITA No.2537 & 2538 & 2539 & 2540/Kol/2025 Assessment Year: 2016-17/18/19/20/21/22 DCIT, Central………………………………………….………………………….Appellant Circle- 1 (2), Kolkata [PAN No. AACCR2562H] Vs. M/s R S Fuel Private Limited………………..…………….………... Respondent, Suite No. 307 3rd Floor Clive, Square, 34 Indra Kumar Karnai, Street Jackson, Kolkata- 700001,

Appearances by: Shri Devesh Poddar, Advocate, appeared on behalf of the Appellant. Shri, S.B. Chakraborthy, Addl. CIT, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : May 20, 2026 Date of pronouncing the order : May 29 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: These all appeal filed by the revenue is directed against the order dated 29.07.2025 of the Office of the Commissioner of Income Tax under Section 147 of the Assessment Year 2016-17/18/19 & 21/22of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). At the very outset it appears from the report of the Registry the Revenue has filed this appeal (Four in number) after a delay of 35 days and for this Revenue has filed a petition to condone the delay. Going over the contents of the petition, we find that reason being genuine one, Accordingly, we condone the delay. 2. In all the aforesaid four appeal filed by the Revenue the following issues are common: -

ITA No.2537/38/39/40/Kol/2025 (i) Issue with respect to the disallowance of interest expenses is common in all the four appeals. (ii) Issue with respect to the addition of amount as unsecured loan is common in the ITA No. 2538(Assessment Year 2017-18) and ITA No. 2539(2019-20). Since the first issue that is disallowance of interest are common in all the aforesaid appeals hence to decide this issue, we took up the ITA No. 2537/25 for the Assessment Year 2016-17 as a lead case. ITA 2537/2025 3. The brief facts of the case of the assessee are that the case of the assessee for the Assessment Year 2016-17 was re-opened following the procedures laid down under the amended provisions of the section 148A of the Act by issue of notice u/s. 148 of the Act dated 27-04- 2023. Return of Income u/s 148 was filed on 27.04.2023. Notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 were issued and replies were submitted. The assessment order U/s 147 of the Income Tax Act dated 26.07.2024 was passed with addition of Rs. 1,10,82,026/- u/s 37(1) of the Income Tax Act, 1961 for interest paid on unsecured loan which were considered bogus. The income of the assessee company assessed at 2,47,70,866/- and demand amounted to Rs. 91,76,434/. 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:- 5.1 I have duly considered the fact of the case, assessment order and the submissions of the appellant. In the assessment order, addition of Rs. 1,10,82,026/- was made by disallowing interest on unsecured loan u/s 3991) of the Income Tax Act, 1961 from the following parties.

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6.2 In appeal stage, the appellant has stated that the unsecured loans from these parties were taken during the financial years 2013-14 and 2014-15, in the related assessment years 2014-15 and 2015-16. Loans were accepted by the department in the assessment orders for the impugned assessment years were passed u/s 153A/143(3) and 143(3) respectively. There was no adverse inference was drawn for loan taken. Similarly, in the assessment order passed u/s 143(3) of the Income Tax Act, 1961 for the assessment years 2017-18, 2018-19 and 2020-21 in scrutiny assessment no adverse inference was drawn in regard with payment of interest to these four parties. Further, interest paid during assessment years 2014-15 and 2015-16 was also accepted and as such no adverse inference about interest paid to these four parties were drawn.

ITA No.2537/38/39/40/Kol/2025 5.3 Decision: Since the loan taken from the above mentioned parties have been accepted by the department as the genuine loan in the earlier assessments. Further, the interest payment to the aforementioned parties against those loans have been regularly accepted by the department in the earlier year and the subsequent years as well. Therefore, I do not find merit in the in the decision of the AO in not allowing the payment of interest on the said loans to the aforementioned parties in the year under consideration. The AO has brought nothing on record to distinguish the facts of the case in the present assessment year from the cases of earlier assessment years in which the said loans and the interest paid thereon were allowed. Hence, in view of the above facts of the case, I am of the opinion that the addition made by the AO of Rs. 1,10,82,026/- is not sustainable in the eyes of law. Accordingly, the impugned addition of Rs.1,10,82,026/- is deleted. Being aggrieved by and dissatisfied the Revenue preferred appeal before us by taking following grounds:-

ITA No.2537/38/39/40/Kol/2025 which was further corroborated with the statement of the director of the company and post survey findings. 3. For that the monetary limit for filing appeal before Hon'ble ITAT as prescribed by the Cвот Cucular No. 09/2024 is not applicable in the present case as the case pertains to huge financial scam and falls under the exceptional clause in para 3.1(h) of the CBDT circular No 05/2024. 4. That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds hereinabove before or at the time of hearing of this appeal. 4. Contrary to that Ld. AR supports the impugned order thereby submitting that Ld. CIT(A) in its impugned order has accepted the contention of the assessee that the loans which were received in the previous year stood accepted during the scrutiny assessment proceeding the loan with the proportionate interest paid in those years and when the loans have been accepted and the identical expenses has also been accepted in the earlier years, no disallowance could be made for the current year. The Ld. AR draw the attention of the Tribunal on the page no. 7 of the assessment order wherein AO has drawn a chart by giving the name of four companies from whom loan was taken up. The Ld. AR has filed the assessment order for the assessment order 2014-15, 15-16 in order to prove his contention that issue of unsecured loan and interest paid thereon was duly looked into and accepted by the AO at the time of original assessment. He has brought following decision to the note of the Tribunal:- CIT v. Ashish Rajpal (2209) 23 DTR 266/320 ITR 674 / 180 Taxman 623 and M/s Sandhu Builders Vs ITO in ITA No. 1328 Mumbai Bench.

ITA No.2537/38/39/40/Kol/2025 The Ld. AR further submits that out of the four companies from whom loan was taken, three companies namely /s Khushi Commotrade Pvt Ltd, M/s Gravity Computech Pvt Ltd & M/s Crazy Carriers Pvt Ltdwere the group companies of the assessee and the same were merged into M/s R.S Coalmines Pvt Ltdby the order passed by the NCLT. He has also placed the copy of the order passed by NCLT. 5. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that the sole issue involve is with respect to the disallowance of interest expenses in all the above four appeals with difference of amount only. It is pertinent to mention here that in the assessment order itself AO has given a chart wherein name of four companies have been mentioned from whom total loan about Rs. 35.86 crore was taken for the assessment year 2014-15, 2015-16 against which the assessee paid interest of Rs. 1,10,82,026 in the current year which has been disallowed by the AO. It is pertinent to mention here that before the lower authority for the Assessment Year 2014-15 and 2015-16, assessment was completed u/s 153A/143(3) wherein the issue of unsecured loan received an interest paid was duly looked into and accepted by the AO at the time of assessment. This fact is established from the order passed by the AO dated 31.03.2016. We find substance in the arguments of the AR is that once when the loan is accepted as genuine in the year of receipt and the interest paid thereon has been allowed then there is no basis for disallowance of interest expenses in the year under Consideration. The Ld. CIT(A) has discussed everything in the order and thereafter allowed the appeal of the assessee on this issue. We do not find any infirmity in the impugned order.

ITA No.2537/38/39/40/Kol/2025 Accordingly this issue is hereby upheld in all these four appeals and appeal of the Revenue is hereby dismissed on this issue. 6. Now the second issue that is with respect to the addition of unsecured loan we find that for the Assessment Year 2017-18 there was an addition of Rs. 30,00,000/- which was received as unsecured loan from M/s Evernew Vinimay Pvt Ltd. during the year and further interest paid of Rs. 21,730/- against the same, and for the Assessment Year 2019-20 there was an addition of Rs. 20,00,000/- which was alleged to be received asunsecured loan from M/s Sunkissed Merchandise Pvt Ltd during the year and further interest paid of Rs. 1,67,123/- against the same. These issues are common for the Assessment Year 2017 -18 (ITA No. 2538/25)andAssessment Year 2019-20 (ITA No. 2539/25) so we discuss this issue by taking lead case of ITA No. 2538/25. 7. The brief facts of the case of the assessee is that the assessee company had filed its original return of income on 31.10.2017, at a total income of Rs.1,43,95,300/- for the AY 2017-18. The Assessee is engaged in the business of coal trading. Subsequently, the case of the assessee wasselected for scrutiny through CASS. Scrutiny assessment u/s 143(3) of the Income Tax survey operation u/s. 133A of the Income Tax Act. 1961 was conducted upon R S Group on 27-10-2022. The assessee company being a flagship company of the group was also covered under the said survey operation u/s 133A of the Act. The case of the assessee for the Assessment Year 2017-18 was re-opened following the procedures laid down under the amended u/s. 148 of the Act dated 27-04-2023. Notices u/s 143(2) and 142(1) of the Income Tax Act. 1961 were issued and replies were submitted. The assessment order U/s 147 of the Income Tax Act dated 26.07.2024 was passed with addition of Rs. 1,44,31,142/- for bogus interest paid on

ITA No.2537/38/39/40/Kol/2025 unsecured loan of Rs. 1,14,02,970/- u/s 37(1): Rs.30,00,000/- u/s 68 for bogus unsecured loan; and disallowance u/s 14A of Rs. 28,172/The income of the assessee company assessed at Rs. 2.88.43,542/- and demand amounted to Rs. 1.19.92,690/. 8. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee on this issue has been allowed by the CIT(A) by observing thus:-

Ground No. 7 & 8 relate to addition of Rs.30,00,000/- u/s 68 of the Act. In assessment stage, the Assessing Officer observed that the assessee taken loan of Rs.30,00,000/- from M/s Evernew Vinimay Pvt. Ltd. The assessee could not furnish supporting documents of the creditor. Hence, Rs.30,00,000/- was added to the total income of the assessee. In appeal stage, the appellant has stated that it has taken short term loan of Rs.30,00,000/- from Mis Evernew Vinimay Private Limited. Documents in regard with receipt and repayment of loan were submitted during the course of assessment proceeding. The loan was accepted in the assessment order passed for impugned assessment year 2017-18 u/s 143(3) of the Income Tax Act, 1961 which was completed before initiation of proceeding u/s 147/148 of the Income Tax Act, 1961. Due compliances were also made by the appellant assessee as such payment of interest and deduction of tax at sources. The A. O. added the amount u/s 68 of the Income Tax Act, 1961 and disallowed interest paid thereon u/s 37(1) of Rs. 21,730/-. Whereas in plethora of cases, the amount taken for a short period of time and duly reflected in bank of the appellant, accepted by the appellate authority. 6.1 Decision: As the appellant has stipulated that the the short term loan taken of Rs.30,00,000/- from M/s Evernew Vinimay Private Limited was refunded to the party within a short period of time in the same financial year through the proper banking channel. Further, the

ITA No.2537/38/39/40/Kol/2025 appellant assessee has paid interest to the said party on the amount of loan taken by it in. that period. It is also a fact on record that assessment in the case of the appellant for the instant assessment year was completed u/s 143(3) earlier also and the impugned loan was thoroughly examined and accepted by the then AO. Further, the AO has not brought out any cogent material to suggest that the said loans are bogus in nature. Furthermore, the Hon'ble Gujarat High Court in case of CIT Vs Ayacha Chandrashekhar Narsangji [2014] 42 Taxmann.com 251 has held that when the taxpayer has refunded the amount of loan to the party, therefore no addition of such loan can be made u/s 68 of the Act. Hence, considering the fact of the case and the decision of Hon'ble Gujarat High Court in the case of Hon'ble Gujarat High Court in case of CIT Vs Ayacha Chandrashekhar Narsangji [2014] 42 Taxmann.com 251 [Supra], I find the addition made by the AO of Rs.30,00,000/- u/s 68 of the Act is devoid of merit and untenable in the eyes of law. Hence, the addition of Rs.30.00,000/-and interest amount of Rs.21,730/- are deleted. 9. Being aggrieved by and dissatisfied the Revenue preferred appeal before us by taking the following grounds: -

That on the facts and circumstances of the case and in law whether Ld. CIT(A) as correct in deleting the addition amounting to unsecured loans of Rs. 30,00,000/- and interest amounting of Rs. 2,17,30 by ignoring the fact that the loan creditor was found to be not traceable and the assessee could not be prove the creditworthiness of the loan creditor and genuineness of the loan transactions. 10. Contrary to that Ld. AR supports the impugned order of the CIT(A) on this issue by submitting that unsecured loan had been taken for a short period of time and that in the immediate subsequent year the same was repaid along with proportionate interest. The Ld. AR

ITA No.2537/38/39/40/Kol/2025 submits that all the transaction were made through banking channel and once the loan has been repaid back the same cannot be said to be unexplained or bogus. 11. Upon hearing a submission of the counsel of the respective parties and on perusal of the ledger of M/s Evernew Vinimay Private Limited from whom loan was taken, we find that immediate subsequent year the loan has been duly repaid along with interest. It is pertinent to mention here that all the transactions were made there through banking channels. CIT(A) has discussed this issue and rightly held that when the tax payer has refunded the amount of loan to the party, new addition of such loan cannot be made u/s 68 of the Act. CIT(A) has relied on the decision of the Gujarat High Court as discussed in the impugned order. We donot find any infirmity in the impugned order on this issue; accordingly, we upheld the order of the CIT(A) on this issue for both the Assessment Year as they are identical one, and the appeal of the Revenue are hereby dismissed. As a result,all the appeal filed by the revenue are herebydismissed.

Kolkata, the 29th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated:. .29. 05.2026. DC, PS

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

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

ITA No.2537/38/39/40/Kol/2025