SHI vs. HAKTI DEVELOPERS ,MUMBAIVS.ITO WARD 27(3)(1), MUMBAI

आदेश / ORDER

PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the order dt. 10.12.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income-tax (Appeals)/ NFAC, Delhi for the assessment years 2020-21. The assessee has raised the following grounds of appeal: “1. That on the facts and in the circumstances of the case and in law, the learned CIT(A)/NFAC erred in confirming the

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addition of 7,17,533/-under Section 69C of the Income Tax Act, 1961, by treating the interest paid on loans as unexplained expenditure. 2. That the learned CIT(A) erred in upholding the addition without appreciating that the Appellant had discharged its onus by providing sufficient evidence, including ledger confirmations, bank statements, and ITRs of the lenders, to prove the genuineness of the interest expenditure. 3. That the learned CIT(A) erred in disregarding the fact that the underlying loans were received in a prior assessment year (AY 2018-19) and were accepted by the department, and therefore, the interest paid on such loans in the current assessment year cannot be disallowed. 4. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of interest paid on loan ignoring the fact that loans has already been fully repaid and the same has also not been doubted the department, enhancing the credibility of loan and the interest paid thereafter cannot be doubted. 5. That the learned CIT(A) erred in holding that the unsigned approval under Section 151 of the Act was a valid sanction for the issuance of the notice under Section 148, thereby vitiating the entire reassessment proceedings. 6. That, without prejudice to the above, the learned CIT(A) erred in confirming the application of the maximum marginal rate of tax under Section 115BBE of the Act, as the addition under Section 69C is itself not sustainable. 7. That the learned CIT(A) erred in confirming the levy of interest under Sections 234A, 234B, and 234C of the Act, as such interest is not leviable in an assessment made under Section 147 of the Act. 8. The appellant craves leaves to add, alter, delete from or substantiate the above grounds of appeal." Ground no. 1 to 6 raised by the assessee are 2. interrelated and interconnected and relates to challenging the order of Commissioner of Income-tax (Appeals) in confirming the additions made by A.O. u/s 69C of the

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Income-tax Act. Therefore, I have decided to adjudicate these grounds through the present consolidated order. 3. I have heard, the counsels for both the parties, perused the material placed on record, judgment cited before me and also the order passed by the revenue authorities. 4. From the records, I noticed that the additions in this case was made by the A.O. u/s 69C of the Income-tax on account of interest paid by the assessee on loan taken from M/s Aarohi Creations LLP and M/s R.K. Exports, whereas on the contrary the assessee submitted that the additions are wholly unsustainable. In view of the fact that the loan was taken in AY 2018-19 and not in the year under consideration. Moreover, the loan has already been accepted by the department in the same year. Subsequently, the loan has already been fully repaid though banking channels. Thus, in these circumstances the provision of Section 69C are not attractable. After having considered arguments at length and also considering the facts of the present case it is undisputed fact that assessee did not receive any loan during year under consideration as said loan was taken in financial year 2017-18 which is relevant to A.Y. 2018-19 and no fresh loan was received from either parties in the year under consideration but only interest was paid and as well as principle was repaid. These payments are fully reflected in audited accounts, supported by bank statements and TDS records. Even the loan taken by the assessee was accepted by the department as the intimation dated 30.10.2018 accepted the return of income filed by the assessee,

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with no adverse adjustments. Similarly, in AY 2019-20, partial repayment of loan was made which was also accepted by the Department without any addition and it is a settled law that transactions accepted as genuine in the year of origin cannot be re-characterised as bogus in a subsequent year without fresh specific material against the assessee. In this regard, reliance is being placed on the decision in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC). In this case the entire loan has already been stand repaid and in this regard relevant documents have already been placed on record by the assessee which have also been gone through by me as well. Since, the facts of complete repayment through banking channel is also legally significant. As has been held by the Co-ordinate Bench of ITAT in the case of Orange City Recreation Resort Pvt. Ltd. v. ITO, in ITA No. 5698/MUM/2025 wherein it was held that “it is not in dispute that the assessee in fact has also repaid the loan amounts in the subsequent years. And therefore, the said aspect strengthens the case of the assessee as genuine." Even otherwise both the lenders have already declared the interest received from the assessee as income in their respective ideas for the year under consideration. Therefore, taxing the same receipts twice i.e. once in the hands of the recipient at normal rates and again in the hands of the payer at 60% is contrary to the fundamental principles of Income-tax law. The premise of Section 69C is that the source is unknown and unaccounted. Whereas

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the recipient has declared and paid tax on the same amount, the transaction is manifestly accounted for and 69C is not applicable. 5. Therefore, considering the totality of the facts and circumstances as discussed by me above, I direct the A.O. to delete the additions made under Section 69C of the Income-tax Act. Consequently, grounds raised by the assessee stands allowed. 6. Ground No. 7 and 8, these grounds are consequential in nature and in view of my finding on Ground No. 1 to 6 these grounds became infructuous and thus stands dismissed. 7. In the net result, appeal filed by the assessee stands partly allowed.

Order pronounced in the open court on 30.06.2026.

Sd/- (SANDEEP GOSAIN) JUDICIAL MEMBER Mumbai, Dated 30/06/2026 KK, PS आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / The CIT(A) 3. 4. आयकर आयु�(अपील) / Concerned CIT िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण,मु�बई/ DR, ITAT, Mumbai 5. गाड� फाईल / Guard file. 6. आदेशानुसार/BY ORDER, स�ािपत �ित //True Copy//

उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�बई / ITAT, Mumbai