JMD PALACE AND RESORTS PRIVATE LIMITED,RATLAM vs. DCIT/ACIT 1(1), UJN, UJJAIN

Per Paresh M Joshi, J.M.:

This is an Appeal filed by the Assessee under section 253 of

the income tax Act 1961,[ herein after referred to as the Act

for the sake of brevity] before this tribunal as & by way of a

second Appeal. The Assessee is aggrieved by the order

bearingNumber:-ITBA/NFAC/S/250/2024-25/1074631876(1)

dated 18.03.2025 passed by the Ld. CIT(A) u/s 250 of the

Act, which is herein after referred to as the “Impugned

order”. The Relevant Assessment year is 2018-19 and the corresponding previous year period is from 01.04.2017 to

31.03.2018.

2.1 That as & by way of an Assessment Order made u/s

143(3)RWS 143(3A) & 143(3B) of the Act, the total income of

the Assessee was computed and assessed at Rs.43,11,745/-

.The total income as per the original ITR was at Rs(-)18,98,255/-.

The addition of Rs.62,10,000/- was made by treating the said

amount as bogus loans. That the aforesaid Assessment order

bears Number :-ITBA/AST/S/143(3)/2020-21/1031748223(1)&

that the same is dated 25/03/2021 which is herein after

referred to as the “Impugned Assessment Order”.

2.2 That the case of the Assessee was selected for the Limited

Scrutiny on the following issues:-

Sr No Issues

1 Expenditure of Personal Nature

2 Unsecured Loans 2.3 That the Assessee had filed a Return of Income on

26.10.2018 for the AY 2018-2019. There was a mismatch in

Personal Expenditure reported in Audit Report & ITR & large

increase in the Unsecured loans. Therefore the scrutiny.

2.4 That Notice u/s 142(1) of the Act was issued calling upon the

Assessee to furnish a response. The assessee duly complied with

the same by furnishing an e-response which were verified &

considered. The mismatch of the personal expenditure was

explained which were clarified with the evidences. The same were

examined & verified.

2.5 That in order to verify the genuineness of the unsecured

loans Notice(s) u/s 133(6) of the Act were issued to the parties

from whom the loans were acquired/taken. Reply was not

received from any of the parties to whom the Notice u/s 133(6)

were issued.

2.6 A show cause notice was issued to the Assessee which read

as under:- 2.7 That No response to the above show cause notice was

received within the stipulated time.

2.8 That the Ld AO after taking into the Account the above facts

& the circumstances which had emerged during the course of the

Assessment Proceedings found that no proper Veriable evidences

with regard to the genuineness of the loans acquired have been

established. Therefore the Ld AO treated the sum of Rs.

62,10,000/-[in aggregate] as bogus loans & added the same to

the total Income in order to arrive at the total assessed income of

the Assessee Exigible to Tax.

2.9 That the Assessee being Aggrieved by the aforesaid

“Impugned Assessment Order” prefers the first Appeal u/s

246A of the Act before the Ld CIT(A) who by the “Impugned

Order” has dismissed the first Appeal of the grounds & Reasons

stated therein. The core ground & Reasons for the Dismissal of

the first Appeal was as under:-

“8. DECISION:-

8.1 I have gone thru all the documents available on records.

The appellant has filed an appeal against the assessment order passed by the Assessing Officer (AO) for the Assessment Year (AY) 2018-19, in which an addition of 62,10,000 was made to the total income under section 68 of the Income-tax Act, 1961, on account of unsecured loans. The addition was made on the grounds that the loans were treated as bogus, and the assessee failed to prove the genuineness of these loans and the creditworthiness of the lenders.

The appellant submitted its reply online on 08/07/2020, providing the following documents:

* A list of all unsecured lenders along with their PAN and addresses to substantiate the identity of the lenders.

Copies of the Income Tax Returns (ITRs) of the lenders for the last three years to substantiate their creditworthiness.

* Loan confirmation certificates provided by the lenders.

The Assessing Officer justified the addition of the unsecured loans by stating that the lenders' creditworthiness was not established, based on their income as per the ITRs, which did not support their capacity to lend the amounts in question.

ITRs of the lenders for the last three years show that they do not have sufficient income and accumulated money to lend the amounts, as reflected in the following summary:

It's to be noted that NO Asset-Liability statement or balance sheet of creditors have been filed by the appellant. Hence considering the income slab; 20% of savings from income of last 3 years are considered as financial capacity to lend for the creditors.

* Deepak Kumar (Soni BCOPS5514E): Loan of Rs.5,235,000. Income Rs. 999,430; AY 2016-17: Rs.1,029,800; AY 2017-18: Rs.1,489,580; AY 2018-19:

Approx financial capacity to lend: Rs 7,00,000

Rajesh Patni (AKGPP1548L): Loan of Rs.750,000. Income for AY 2015-16: Rs.1,165,200; AY 2016-17: Rs.1,041,610; AY 2017-18: Rs.905,500;

Approx financial capacity to lend Rs 6,00,000

Mohanlal Soni (ASQPS7786M): Loan of Rs.2,250,000[Rs.2,25000]. Income Rs 715,520; AY 2016- 17:Rs.498,060; AY 2017-18: Rs.496,010; AY 2018-19:

Approx financial capacity to lend Rs 3,50,000

Also it is seen that AO has issued a proper show cause notice as mentioned at page no 2 of his order. Further the fact remains that creditors did not respond to notice u/s 133(6) issued by AO. In view of above; its further noticed that from returned income shown by creditors for last 3 financial years; they do not have requisite financial capacity to lend amount of money they have lent to appellant. Hence genuiness of transaction and creditworthiness of lenders is not established. Hence addition made by AO is upheld and grounds of appeal are DISMISSED.”

2.10 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

Tribunal and has raised following grounds of appeal in the

Form No. 36 against the “Impugned Order” which are as

under:-

“(1) On the facts and in the circumstances of the case and in law, Ld. CIT (A) erred in confirming the addition of Rs. 62,10,000 made to the total income of assessee by Ld. AO on account of unsecured loan. Ld. CIT (A) ought to have appreciated that there was no justification to treat the unsecured loans as bogus since assessee had discharged his onus by submitting name, address, PAN, Loan Confirmations, ITRs and Bank Statements of all loan creditors during assessment. (2) The Appellant craves leave to amend, alter, add or delete all or any of the above grounds of appeal.” 3. Record of Hearing

3.1 That hearing in the matter took place before this Tribunal on

28/04/2026 when the Ld AR for & on the behalf of the Assessee

appeared before us and Interalia contended that the “Impungned

Order” is bad in law, illegal & not proper. It therefore deserves to

be set aside. It was then submitted that there is a delay of 135

days in filling the Instant Appeal. That the “Impugned Order”

was passed on 18/03/2025 & due date of filling the Appeal

expired on 31/05/2025. The Instant Appeal was filed on

15/10/2025. With Regard to the Condonation of the delay it was

submitted that the “Impugned Order” was received by the

Assessee Company’s Accountant Mr. Manoj Jain who had ceased

to be in the employment of the Assessee Company as on

01/05/2025, further that he had somehow or the other, kept the

relevant file in which the “Impugned Order” was also there. He

had not informed the Management of the Assessee Company

about the issuance of such an impugned order. When the “TAX AUDITORS” on 17th Sept 2025 logged in on the Tax portal for

the purpose of filling of the ITR & TAR it was then discovered by

them that the Impugned Order had been passed. Thereafter the

Instant Appeal was filed. The Delay is bonafide & was caused due

to the reasons beyond the Control of the Assessee Company. The

delay was not willful & the Assessee does not derive any benefit

out of it. An affidavit dated 07/10/2025 of the Assessee director

is placed on the record in support. The Ld DR for & on behalf of

the revenue submitted that on the issue of the Condonation of

delay the Dept leaves the issue to the wisdom of this Tribunal to take an appropriate call basis law in this regard. We after

perusing the Condonation of the Delay Application along with an

Affidavit in support are of the considered view that “sufficient

cause” is shown & that accordingly we condone the delay. The

appeal is thus admitted & taken up for hearing.

3.2 The Ld AR for & on the behalf of the Assessee has placed on

the record of this Tribunal a brief synopsis of five pages & a

paper book from pages 1 to 82. The Ld AR then contended that

the broad issue of Addition is of the unsecured loans. There are

in fact total three lenders who are Deepak Kumar Soni who had

advanced the loan of Rs.52,35,000/-, Rajesh Patni who had

given loan of Rs.7,50,000/- & Mohanlal Soni who had

advanced the loan of Rs.2,25,000/-. The amount in the

Aggregate comes to Rs.62,10,000/-. Deepak Soni & Rajesh Patni

are the Directors of the Assessee Company & Shri Mohanlal

Soni is father of Deepak Soni. Our attention was then invited to

PB Page 39 to 41 which was a bank statement of Mr. Deepak

Soni with the Central Bank of India for the Period 01/04/20217

to 23/03/2021 wherein there is a debit entry of Rs 3,50,000/- on 10/08/2017, Rs 2,25,000/- on 01/09/2017, Rs 1,50,000/-

on 13/12/2017, Rs 20,00,000/- on 03/01/2018, Rs 11,50,000/-

on 06/01/2018, Rs 9,80,000/- on 08/01/2018, & of Rs

2,00,000/- on 16/01/2018 in favour of Assessee Company,

aggregating to Rs 52,35,000/-. It was then submitted that the

ITR of last 3 years are placed on record along with the balance

confirmations which are at pages 46 to 57 of the paper book.Our

attention was invited to page 49 of the paper book showing

confirmation of Deepak Soni dt 01/04/2018 . It was submitted

that the Notice (s) u/s 133(3) were not complied with due to

Covid-19. Page 2 of the Ld AO’s Impugned Assessment

Order[ Page 77 of Paper book] was then readout; with regard to

notice(s) u/s 133(3) of the Act. Our attention was then invited to

page 2 & 3 of the synopsis basis which it was submitted that

amount of Rs 52,35,000/- advanced as loan is fully repaid. In so

far as Rajesh Patni are concerned Part Repayment of loans is only

made were as Mohanlal has not made any repayment[PB page 31].

It was emphasized that No cash deposit was made prior to the

loans. No interest was paid/payable because parties are all

connected page 2 of the synopsis containing material details of all the three landers with bank statements/ passbook & other

details like ITR, confirmations were highlighted in summary

manner. Our attention was then invited to paper book page 77

[Internal Page 2 of Impugned Assessment Order] & the relevant

extracts of para 8.1 therein were read out. It was submitted that

ITR’s are on record of ‘lenders’ including confirmations & that the

lenders are closely connected. Per contra the ld DR appearing for

& on behalf of the revenue placed reliance on the orders of the

lower authorities. The Hearing was over& closed.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case & after hearing & further upon

examining the rival contentions of the Ld AR & the Ld DR

canvasses before us, are of the considered opinion that the

“ Impugned Order” is not proper. The Ld DR for the Revenue has failed to demolish any arguments & contentions of the Ld AR

which were all made basis records of the case.The burden of

proof with regard to unsecured loan of Rs 62,10,000/- in the

aggregate given by the three persons [lenders] has been

successfully demonstrated basis the legal parameters of Name &

ideally, capacity/ credit worthiness & genuineness. The relevant

documents are all on the record which have not been questioned

& doubted in any manner by the revenue. Mere Reliance on

orders of the lower authorities perse is not sufficient exercise in

law to demolish the contentions of the Ld AR which are all factual

& basis records of the case which were all available before the

lower authority. The name and identity, the reasonableness of the

loans & the capacity [creditworthiness] & the genuineness of the

transactions can be doubted & challenged basis records,

evidences etc. Dept upon onus being shifted to them after

production relevant document (Supra) have miserably failed to

establish the contrary to what has been claimed & asserted by

the Ld AR. The majority of the loan amount of Rs.62,10,000/- in

aggregate [i.e. Rs 52,35,000/- + Rs 7,50,000/- + Rs 2,25,000/-]

stands repaid i.e. Rs.59,85,000/-. The genuineness of the loan transaction basis any adversial material on record is not

sufficient exercise in law. The analysis of the documents basis

ITR’s to determine capacity is mere a one of the way to do

analysis. The capacity of the lander too depends on several others

factors including the ITR’s but there are several other commercial

& financial considerations which too matters. There is thus no

substantive material. Parties herein are closely connected & have

commonality of Interest in a business venture. Giving loans on

unsecured basis majority of which is already repaid a fact not

rebutted in fact shows loans were all genuine & not bogus. The

Dept has also failed to bring on record any adversial material.

While it is true that lenders did not appear before the Ld AO u/s

133(3) Proceedings but the Dept ought to have re-summoned

them & should have resorted to other coercive measures to

ensure their presence in order to arrive at truth. None have been

done so therefore we set aside the Impugned Order & allow the

Appeal of the Assessee.

5 Order

5.1 In view of the above, we set aside the impugned order &

allow the appeal of the assessee.

5.2. Appeal of assessee is allowed.

Pronounced in open court on 08.05.2026.

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Indore Dated : 08/05/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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