JCIT(OSD)-CIRCLE-27(3), NAVI MUMBAI vs. SURESH GURUBUXSING WADHWA, NAVI MUMBAI

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ITA 336/MUM/2026Status: DisposedITAT Mumbai05 June 2026AY 2014-155 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the additions on which the penalty was imposed were deleted and confirmed by higher authorities, the penalty could not survive. Similarly, since the unsecured loans were accepted as genuine, the interest paid on them could not be disallowed.

What were the facts?

The Revenue appealed against the deletion of penalty under Section 271AAB and the deletion of disallowance of interest expenditure. The penalty was imposed based on additions made during a search operation, which were later deleted by the CIT(A) and confirmed by the ITAT. The disallowance of interest was on unsecured loans which were also held to be genuine by appellate authorities.

What were the issues?

Whether penalty under Section 271AAB can be sustained when the underlying additions are deleted by appellate authorities? Whether interest on unsecured loans can be disallowed when the loans themselves are accepted as genuine by appellate authorities?

Which sections of the Income-tax Act were involved?

Section 271AAB,Section 132,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR

For Appellant: Ms. Rutuja Pawar, Adv
For Respondent: Shri Swapnil Choudhari (Sr. AR)
Hearing: 15.04.2026Pronounced: 05.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER

ITA Nos. 336 & 337/Mum/2026 (Assessment Years: 2014-15 & 2017-18) JCIT(OSD)-Circle-27(3) Suresh Gurubuxsing Wadhwa Room No. 423, Tower No.6, 429, Arenja Corner, Vashi Complex, Mumbai-400 703 Vs. Sector 17, Vashi, Mumbai-400 705 PAN/GIR No. AAAPW 0812 A (Appellant) : (Respondent) Appellant by : Ms. Rutuja Pawar, Adv. (Virtually appeared) Respondent by : Shri Swapnil Choudhari (Sr. AR) Date of Hearing : 15.04.2026 Date of Pronouncement : 05.06.2026 O R D E R Per Saktijit Dey, Vice President:

The present appeals have been filed by the Revenue against two separate orders of learned Commissioner of Income Tax (Appeal), Mumbai (‘ld. CIT(A)’ for short), pertaining to the Assessment Years (‘A.Y.’ for short) 2014-15 and 2017-18.

2.

While the appeal for the A.Y. 2014-15, being ITA No. 336/Mum/2026 is against deletion of penalty imposed u/s. 271AAB of the Income Tax Act, 1961 (‘the Act’ for short), the appeal for A.Y. 2017-18, being ITA No.336/Mum/2026, arises out of quantum proceedings.

2 ITA Nos. 336 & 337/Mum/2026 (A.Ys.2014-15 & 2017-18) JCIT(OSD) vs. Suresh Gurubuxsing Wadhwa ITA No. 336/Mum/2026 (A.Y. 2014-15) 3. As stated earlier, in the present appeal, the department has challenged the deletion of penalty-imposed u/s. 271AAB of the Act. The assessee is a resident individual. For the assessment year under dispute, the assessee had filed his return of income on 30.09.2014, declaring income of Rs.68,77,364/-. A search and seizure operation u/s. 132 of the Act was carried out on the assessee on 18.02.2014. Based on information gathered, in course of such search and seizure operation, assessee’s case was selected for scrutiny and in course of scrutiny assessment proceedings, the Assessing Officer (‘A.O.’ for short) made enquiries relating to various issues. Ultimately, while completing the assessment, the AO made various additions and disallowances as under: Sr. Particulars Amount No. 1) Disallowance of interest expenditure paid on bogus Rs.2,42,43,904/- unsecured loan 2) Unsecured loans treated as unexplained cash credit Rs.1,39,98,481/- 3) Commission paid in cash for computing accommodation Rs.59,14,000/- entries of bogus unsecured loans 4) Addition on account of unexplained jewellery Rs.43,31,240/- 4. Contesting the additions, the assessee filed an appeal before ld. First appellate authority. However, based on the additions made, the A.O. initiated proceeding for imposition of penalty u/s. 271AAB of the Act and, ultimately, passed an order on 30.06.2017, imposing minimum penalty of Rs.1,45,46,288/-, computed at 30% of the total additions made.

5.

Against the penalty order so passed, the assessee preferred an appeal before ld. First appellate authority.

3 ITA Nos. 336 & 337/Mum/2026 (A.Ys.2014-15 & 2017-18) JCIT(OSD) vs. Suresh Gurubuxsing Wadhwa 6. When the appeal came up for hearing before ld. First appellate authority, based on the facts and materials on record he found that the additions made by the AO were subjected to appeal proceedings before ld. first appellate authority and while deciding the appeal, ld. First appellate authority had deleted the additions. Further, the order so passed by ld. First appellate authority was also confirmed by the ITAT. Having found that the additions based on which the penalty was imposed have been deleted by the higher appellate authority, ld. First appellate authority deleted the penalty.

7.

We have considered rival submissions and perused the materials available on record. Before us, the parties have agreed that the additions based on which penalty was imposed were not only deleted by ld. First appellate authority, but such decision of ld. First appellate authority was upheld by ITAT while deciding Revenue’s appeal, being ITA Nos. 78 to 80/Mum/2020 vide order dated 24.06.2022. Thus, the uncontroverted facts on record demonstrate that the addition based on which penalty u/s. 271AAB of the Act was imposed have lost their existence. That being the case, no penalty u/s. 271AAB of the Act can survive. Thus, in our view, ld. First appellate authority was justified in deleting the penalty imposed.

8.

In the result, the appeal is dismissed.

ITA No. 337/Mum/2026 (A.Y. 2017-18) 9. In the present appeal, the Revenue has challenged the deletion of addition made on account of disallowance of interest expenditure on alleged bogus unsecured loans obtained from Shri Bhanwarlal Jain Group.

4 ITA Nos. 336 & 337/Mum/2026 (A.Ys.2014-15 & 2017-18) JCIT(OSD) vs. Suresh Gurubuxsing Wadhwa 10. Briefly the facts are, for the assessment year under dispute, the assessee filed his return of income on 31.10.2017, declaring income of Rs.1,00,82,280/-. The assessee’s case was selected for scrutiny. In course of scrutiny assessment proceedings, the A.O. while verifying the financial statements noticed that the assessee had debited interest expenditure of Rs.2,25,90,000/- in relation to the unsecured loans availed from various entities. He observed that while examining the genuineness of the loan transaction in the earlier assessment years, it was found that such unsecured loans were obtained from various entities controlled by Shri Bhanwarlal Jain Group. Hence, such unsecured loans were treated as bogus and in the nature of accommodation entries while completing the assessment in earlier assessment years. Thus, based on such fact, the A.O. disallowed the entire interest expenditure amounting to Rs.2,25,90,000/-.

11.

The assessee contested the aforesaid disallowance before ld. First appellate authority.

12.

While deciding the appeal, ld. first authority found that the unsecured loans on which the assessee had claimed to have paid interest were availed in A.Ys. 2012-13 to 2014-15. Whereas, while completing the assessment in those assessment years, the A.O. had treated such unsecured loans as bogus and added u/s.68 of the Act. However, while deciding the appeals of the assessee, the ITAT had deleted the additions made by the A.O. Thus, relying upon such fact, ld. First appellate authority deleted the disallowance made by the A.O.

13.

Before us, the parties have agreed that the additions made by the AO treating the unsecured loans as unexplained cash credit u/s. 68 of the Act in A.Ys. 2012-13 to 2014-15

5 ITA Nos. 336 & 337/Mum/2026 (A.Ys.2014-15 & 2017-18) JCIT(OSD) vs. Suresh Gurubuxsing Wadhwa have been deleted by ld. first appellate authority and the decision so taken by ld. first appellate authority was upheld by the Tribunal while deciding Revenue’s appeals vide order dated 24.06.2022. Thus, it was submitted, when the unsecured loans were found to be genuine, interest paid on such loans cannot be decided. The fact that the unsecured loans availed by the assessee in earlier assessment years have been accepted as genuine by ld. First appellate authority remains uncontroverted. That being the case, interest paid on such loan cannot be disallowed on the reasoning that unsecured loans are non-genuine. In view of the aforesaid, we do not find any infirmity in the decision of ld. First appellate authority.

14.

In the result, the appeal is dismissed.

15.

To sum up, both the appeals of the Revenue are dismissed. Order pronounced in the open court on 05.06.2026

Sd/- Sd/- (Prabhash Shankar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 05.06.2026 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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