ACIT, CNETRAL CIRCLE-1, UDAIPUR, UDIAPUR vs. MIRAJ DEVELOPERS LTD., UDAIPUR

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ITA 79/JODH/2026Status: DisposedITAT Jodhpur12 June 2026AY 2017-1818 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) was justified in deleting the additions. It found that the department did not unearth any incriminating material during the search and that the relied-upon judgments were distinguishable on facts.

What were the facts?

The Revenue appealed the deletion of additions made by the Assessing Officer (AO) on account of unexplained unsecured loans and disallowance of interest expenses. The AO had treated unsecured loans as unexplained credit and disallowed interest expenses, citing shell entities and retracted statements. The CIT(A) had deleted these additions.

What were the issues?

Whether unsecured loans from alleged shell entities constitute unexplained credit, and whether interest paid on such loans is disallowable, especially when no incriminating material was found during a search.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: DR. MITHA LAL MEENA, HON’BLE & SHRI SUDHIR PAREEK, HON’BLE

For Appellant: Shri M.S. Jhanwar, CA and Kamlesh, CA (Virtual), Shri O.P. Meena, CIT-DR (Virtual)

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE DR. MITHA LAL MEENA, HON’BLE ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, HON’BLE JUDICIAL MEMBER ITA Nos. 1207 & 1208/Jodh/2025 ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 (Assessment Years – 2013-14 to 2017-18 & 2019-20 to 2023-24) ACIT, Central Circle-1, Miraj Developers Ltd. Udaipur 103, Income Tax Office, Savina, Udaipur-313001 PAN No. AAACU 9093 J Assessee by Shri M.S. Jhanwar, CA and Kamlesh Mundra, CA (Virtual) Shri O.P. Meena, CIT-DR (Virtual) Revenue by Date of Hearing 01 / 06 / 2026. Date of Pronouncement 12 / 06 / 2026. ORDER PER BENCH: These appeals are filed by department against the separate order of Ld. Commissioner of Income Tax Appeal, Udaipur-2 [hereinafter referred to CIT(A)] with respect to assessment years 2013-14 to 2017-18 and 2019-20 to 2023-24.

2.

The department has raised common issues on identical facts in this bunch of 10 appeals and, therefore, all these appeals were heard together and adjudicated by this consolidated order for the sake of convenience and brevity. The appeal in ITA No. 1207/Jodh/2025 with respect to assessment year 2019-20 is

2 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 taken as a lead case for discussion of facts and accordingly, grounds of appeal are reproduced hereunder:

1.

Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in law and on facts of the case in deleting the addition of Rs 10,96,75.689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act without appreciating that the assessee has received unexplained credit of Rs. 10.96.75.689/- related to unsecured loan from bogus/shell entities with no genuine business/trading activity & creditworthiness and hence were liable to be treated as unexplained cash credits? 2. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act without appreciating that the assessee has failed to bring any evidence on record which could substantiate the genuineness and creditworthiness of the companies from which the assessee received unsecured loan? 3. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act without appreciating the fact that directors of these companies are persons of no financial means and Ld. CIT(A) has also erred in ignoring the facts that group CFO, Anoop Kabra, who is incharge of all financial affairs of group, failed to substantiate the nature of transaction of Miraj Group with these shell entities? 4. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act in ignoring the facts that a part of the total unsecured loan was stated to be received from M/s Tanish Equity Services Pvt Ltd whose registered address was a residential premises which had no trace of any kind of business activity and the person residing there was not aware of any such entity? 5. Whether on the facts and in circumstances of the case, the L.d. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act on account of unsecured loan received from various shell companies ignoring admissions of Sh. Pradeep Purushotamlal Garg. Accountant in Mirag Group in his statement u/s 132(4) through retracted later that these entities arc associated with Miraj Group and are shell entities, where share capital/advances/loans are received and subsequently transferred to Miraj Group of entities? 6. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10.96.75.689/- made to the total income of the assessee by the Assessing Officer u/s 68 of the IT Act on account of unsecured loan received from various shell companies ignoring admissions of Sh. Rajeev Sharma, Accountant in Mirag Group in his statement u/s 132(4) though retracted later that all the companies are unofficially controlled by Miraj Group and are used for giving accommodation entries/bogus LTCG to Miraj? 7. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made to the total income of the assessee by the

3 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 Assessing Officer u/s 68 of the IT Act on account of unsecured loan received from various shell companies ignoring admissions of Sh. Anoop Kabra, the CFO of Miraj Group in his statement u/s 132(4) though retracted later that unaccounted funds routed through shell entities were generated from tobacco business of Miraj Group? 8. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of interest expenditure of Rs 5,13,77,755/- ignoring the search findings, post search findings and detailed analysis of these entities on various parameters of shell entities as discussed in the assessment order? 9. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of interest expenses of Rs 5,13,77,755/- ignoring the facts detected from the search operation that the assessee was involved in accommodation entries to route unaccounted funds of its own through shell/bogus? 10. Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made on account of unexplained credit and deleting disallowance of interest expenses of Rs. 5,13,77,755/- ignoring the submissions made by various officials of the assessee company in their statements on oath due to retractions filed by them which were invalid thereby not following the binding decision of Apex Court in the case of Bannalal Jat Constructions (P.) Ltd. v. Assistant Commissioner of Income-tax, [2019] 106 taxmann.com 128 (SC) wherein Hon'ble SC has observed that retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. 11. Whether on the facts and in circumstances of the case, the Ld, CIT(A) has erred in deleting the addition of Rs 10,96,75,689/- made on account of unexplained credit and deleting disallowance of interest expenses of Rs. 5,13,77,755/- ignoring the judgement of Hon'ble Supreme Court judgement in the case of Sumati Dayal Vs. Commissioner of Income tax 1995 AIR 2109 in which Hon'ble Supreme Court has upon its own judgement in the case of Durga Prasad More (SC)? 12. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellant proceeding.

3.

In ground no. 1 to 9, the department has challenged deletion of the addition of Rs. 10,96,75,689/- made by the AO u/s 68 of the Income Tax Act, 1961 without appreciating the evidence on record, statement recorded u/s 132(4) during the course of search at Miraj Group.

4 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 4. Briefly the facts of the case are that the appellant Miraj Developers Ltd. Company engaged in the business of real estate and developing/construction of residential and commercial properties. A search and seizure action u/s 132 of the Income Tax Act, 1961 (in short “the Act”) was carried out on 21.02.2023 at the business/residential premises of Miraj Group including the appellant company. The appellant company E-filed its return of income u/s 139(1) of the I.T. Act on 27.09.2019 declaring total income of Rs. NIL/- and has shown current year loss of Rs. 11,24,72,554/-. In response to notice u/s 148 of the Act, the appellant company e-filed its return of income on 16.04.2024 declaring total income of Rs. NIL/- and the loss declared is same as filed u/s 139(1) of the Act on 27.09.2019. During the course of scrutiny, the AO has issue notice u/s 143(2) of the Act and fully complied with show cause notice. Accordingly, the AO has passed assessment order u/s 147 of the I.T. Act assessing total income of Rs. (-) 6,10,94,799/- on 28.03.2025 after making addition of Rs. 5,13,77,755/- on account of bogus interest expenditure and addition of Rs. 10,96,75,689/- as unexplained credit u/s 68 r.w.s. 115BBE of the Act.

5.

In appeal, the Ld. CIT(A) has granted relief to the assessee on both the issues of addition towards unexplained credits u/s 68 and claim of interest

5 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 expenditure. While deleting the addition of Rs. 10,96,75,689/- made by the AO on account of unexplained credits u/s 68. The Ld. CIT(A) has observed vide para 5.33 page 85 & 86 as under:

“Therefore, the addition made by the AO amounting to Rs. 10,96,75,689/- on account of unexplained credit u/s 68 of the Act, in relation to unsecured loan is deleted as the appellant has proved the creditworthiness of the lender companies. The AO has not been able to provide any incriminating material to substantiate his decision. The pattern of repayment of loans along with interest by the appellant company to all the lenders except one lender company (NBFC) reaffirms the argument of the appellant. The relevant case law is ACIT v. Jaideep Halwasiya (ITAT Kolkata, 2025) "Upholds deletion of addition under section 68 for unsecured loans repaid through banking channels with TDS on interest. Reinforces the appellant's argument on genuineness shown by repayments and bank trails, especially where no cash or hawala trail was detected." And ITAT Jaipur in ABCAUS Case Law Citation 4701 (2025) (08) "No addition under section 68 where unsecured loans are repaid with interest, following Gujarat High Court precedents.” The AO could not produce any evidence regarding the addition made, which were already verified by various AOs during last 7-8 years. And finally the settled jurisprudence which states that although statements u/s 132(4) of the Act has evidentiary value but it needs to be substantiated with evidences/documents unearthed, during the course of search proceedings. The AO has also disallowed payment of interest amounting to Rs. 5,13,77,755/- stating that the unsecured loans have been treated bogus in nature and are in form of accommodation entries to route unaccounted funds. In the above discussions,, the disallowance of unsecured loans amounting to Rs. 10,96,75,689/- has been deleted, therefore, the interest burden on these loans is also allowed and assessee is given relief on this ground. The appellant has submitted details regarding payment of interest, deduction of TDS on time to time, and hence it is allowed as business expenditure. Hence, the ground of appeal filed by the appellant is accepted.” 6. The Ld. DR for the department has submitted that the Ld. CIT(A) has erred on law and in facts of the case in deleting the addition of Rs. 10,96,75,689/- made by the AO to the total income of the assessee u/s 68 of the I.T. Act without

6 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 appreciating that the assessee has received unexplained credits related to unsecured loans from bogus/shell entities with no genuine business/trading activities and creditworthiness and hence these unsecured loans will liable to be treated as unexplained cash credits. He further submitted that the Ld. CIT(A) was not justified in deleting the aforesaid addition of Rs. 10,96,75,689/- made to the total income of the assessee by the AO u/s 68 of the Act without appreciating that the assessee has failed to bring any evidence on record which could substantiate the genuineness and credit worthiness of the company from which the assessee received unsecured loan that the directors of these companies are persons of no financial means and the Ld. CIT(A) has also ignored the fact that Group CFO Anoop Kabra, who is incharge of all the financial affairs of group failed to substantiate the nature of the transactions of Miraj Group with these shell entities and that the Ld. CIT(A) ignored the fact that part of the total unsecured loan was stated to be received from M/s Tanish Equity Services Pvt. Ltd. whose registered address was a residential premises which had no trace of any kind of business activity and the person residing there, was not aware of any such activity.

7 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 7. The Ld. DR further submitted that the CIT(A) ignored the admission of Shri Pradeep Purushotamlal Garg Accountant in Miraj Group who has in his statement u/s 132(4) through retracted later stated that these entities are associated with Miraj Group are shell entities, where share capital/advances/loans are received and subsequently transferred to Miraj Group of entities, that Ld. CIT(A) ignored the admission of Shri Rajeev Sharma accountant in Miraj Group where in his statement u/s 132(4) stated through retracted later that all the companies are unofficially controlled by Miraj Group and are used for giving accommodation entires/bogus LTCG to Miraj and that the unsecured loans received from various shell companies as per admission of Shri Anoop Kabra CFO of Miraj Group in his statement u/s 132(4) though retracted later, he stated that unaccounted fund route through shell entities were generated from tobacco business of Miraj Group. The Ld. DR has contended that the Ld. CIT(A) has erred in deleting the addition of Rs. 5,13,77,755/- ignoring the post search findings and detailed analysis of the shell entities of various parameters as per assessment order; that he ignored the facts deducted from the search operation that assesse was involved in accommodation entries through shell/bogus entities and that the Ld. CIT(A) has ignored the submissions made by various Officers of the company in

8 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 the statement by them. The DR argued that the Ld. CIT(A) has not followed the binding decision of Apex Court in the case of Bannalal Jat Construction Pvt. Ltd. Vs. ACIT (2019) 106 taxman.com 128 (SC) where the Hon’ble Supreme Court has observed that retraction, however should be supported by a strong evidence stating that the earlier statement was recorded under and correction and this has in have certain definite evidence to come to the conclusion that there was an element of compulsion for assessee to make such statement. Thus, the Ld. CIT-DR further submitted that the Ld. CIT(A) has erred in deleting the addition of Rs. 10,96,75,689/- made on account of unexplained credits and deleting disallowance of interest expenses of Rs. 5,13,77,755/- ignoring the judgment of Hon’ble Supreme Court in the case of Sumati Dayal Vs. CIT (1995) AIR 2109 (SC) where Hon’ble Supreme Court relied upon his own judgment of Durga Prasad More (1971) 82 ITR 540 (SC).

8.

On the other hand, the Ld. Counsel for the assessee heavily relied on the impugned order passed by Ld. CIT(A).

8.1. The Ld. AR has submitted that during the course of search and seizure action u/s 132 of the Income Tax Act, 1961 conducted on 21.02.2023 which continued until 26.02.2023 at the business/residential premises of Miraj Group

9 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 and the respondent, there was no incriminating document or undisclosed assets found or seized during the course of search relating to the respondent assessee. The AR argued that a search did not have any evidence of undisclosed cash pertaining to the respondent or any evidence including that the recorded transactions of unsecured loans were generated from unexplained sources. The counsel argued that during the course of search the statement of the individuals recorded namely: Shri Pradeep Purushotamlal Garg, Rajeev Sharma former accountant who left the group in 2013, Shri Anoop Sharma Group CFO and Shri Madanlal Paliwal which were subsequently retracted through sworn notarized affidavit within days/weeks of the search before the DDIT (Investigation). The Ld. AR contended that the transactions of unsecured loans entered with each lender company which are duly supported with the assessment order of the different assessment years passed by different Assessing Officers, ITR acknowledgment, confirmation, ROC master data, affidavit, audited balance sheet, bank statement and assessment orders of lenders as well as of the appellant as discussed on Assessment Order page no. 32 to 41.

8.2 The AR further submitted that Ld. CIT(A) has allowed substantive appeal on merits of the case by deleting the addition u/s 68 of the Act and that all the

10 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 interest expenses, the Ld. CIT(A) had inter alia found that the respondent had fully discharged its onus u/s 68 by establishing the identity, creditworthiness and genuineness of the donors; that the statements relied upon by the AO were retracted and uncorroborated by any independent evidence. The AR emphasized that the Ld. CIT(A) has further held that there was no cash trail including the material linking the respondent to any alleged accommodation entry was found and that the principle of consistency militiated against disturbing a settled position in the absence of fresh material. The AR has pleaded that the Ld. CIT(A) has passed a well-reasoned order based on documentary evidence and binding judicial precedents while deleting the addition made by the AO, as the AO failed to bring any cogent evidence to contradict the respondent’s explanation. The AR, thus contended that the department’s appeal deserves to be dismissed.

8.3 In support, he placed reliance on the following judgments:

 PCIT (Central) Vs. Naresh Nemchand Shah (2023) 156 taxman.com 346 (Gujarat HC)  Pavitra Realcon Pvt. Ltd. Vs. ITO (2024) (Delhi HC) ITA 579/2018  PCIT Vs. Wel Intertrade Pvt. Ltd. (2025) (Delhi HC)  Saroj Rani Vs. ITO (ITA No. 5471/Del/2024, ITAT Delhi, 08.05.2025)  ITAT Jaipur in ABCAUS Case Law Citation 4701 (2025) (08)  Andaman Timber Industries Vs. CCE (2015) 281 CTR 241 (SC)  Radhasoami Satsang Vs. CIT [1992] 193 ITR 321 SC

11 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 9. We have heard both the sides, perused the material on record, impugned order and case law cited before us. Admittedly, the Department has not challenged the identity and genuineness of the transactions related to the unsecured loans received by the assessee as the appellant has submitted PAN records, ROC documents as well as bank statement which are enough evidence to prove both the identity as well as unsecured loans received by the assessee. We find that the AO has treated unsecured loans as unexplained credits u/s 68 of the Act based upon the statement of Shri Pradeep Garg, Shri Rajeev Sharma, Shri Anoop Kabra, CFO of Miraj Group and Shri Madanlal Paliwal, CMD and Promoter of Miraj Group recorded u/s 132(4) of the Income Tax Act, during the course of search proceedings without any reference to any incriminating material found during the course of search conducted at the Miraj Group. It is noted that the AO has not conducted any independent enquiry to prove the possessions of unexplained credit u/s 68 of the Act, except the aforementioned statements which were retracted after the search. The various jurisprudence highlighted the importance of statements recorded u/s 132(4) of the Act, but it is finally settled law that these statements recorded u/s 132(4) should be based upon evidence/documents.

12 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 10. In the present case, AO has not mentioned even a single incriminating document found during the course of search which could prove that these unsecured loans were bogus or non-genuine. The Ld. CIT(A) has rightly observed that AO has conducted a table enquiry of all the lender companies as bogus companies while observing that the search and seizure action conducted by the Department is final action on any assessee which leads to unearthing of various incriminating material/documents on the basis of which the AO should pass a well-reasoned order.

11.

From the record, it is evident that during the course of search conducted on 21.02.2023, there was no cash, jewellery, undisclosed assets or any such material document could be termed as incriminating was found and that the whole assessment order passed by the AO was based on the statement recorded of the employees and CMD of the Group recorded u/s 132(4) of the Act, who had later retracted. Meaning thereby, that the AO has failed to provide any basis regarding the treatment of unsecured loans regarding good 12 entities as bogus loans. The appellant has submitted various evidences/documents to prove the identity, genuineness and creditworthiness of the lender companies. The Ld. CIT(A) has observed that perusal of the financials provided by the appellant, it was very clear

13 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 that these lender companies are duly registered in ROC, filing their ITR and even paying income tax since last seven to ten years where assessment orders in the case of the Group companies have been passed by different Assessing Officers for different assessment years by verifying the similar issues after examination and verification of aforementioned unsecured loans from the same lender companies and accepted all the loans as genuine in the present case. The AO has not been able to add anything further which led to the change of his opinion regarding the treatment of these loans in light of the principles of consistency. Thus, the Ld. CIT(A) was justified in deleting the addition of Rs. 10,96,75,689/- made on account of unexplained credit u/s 68 in relation to unsecured loans.

12.

The Ld. CIT(A) has rightly applied the settled principles of law that once the assessee is discharged the initial onus u/s 68 by furnishing the documentary evidence to establish identity, creditworthiness and genuineness of transactions, the burden shifts to the Revenue to disprove the same with cogent material. It is seen that the AO has not referred any incriminating documents being found during the course of search and solely relied on the statement retracted and uncorroborated without conducting independent enquiry and denying cross

14 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 examination in violation of the Apex Court judgment delivered in the case of Andaman Timber Industries Vs. CCE (2015) 281 CTR 241 (SC).

13.

In the present case, the interest disallowances was purely consequential to the loan addition u/s 68 and once the under lying principle addition has been deleted the interest allowance automatically gets deleted. It is noted that interest was genuinely incurred for the business premises paid through banking channels with TDS deduction and the corresponding income was assessed in the hands of the lenders. In the case of Udayan Grover Vs. NFAC ITA No. 2880/MUM/2023 dated 07.02.2024, the Mumbai ITAT has held that assessee has demonstrated that once the assessee has taken unsecured loan and repaid the same along with interest. Normally accommodation entires are taken and the unsecured loans remain unsettled for a long period of time. However, the assessee has taken unsecured loan and repaid the same along with interest, clearly indicate that loan transaction is genuine. Thus, the Ld. CIT(A) was justified in deleting the interest of Rs. 5,13,77,755/- by allowing as genuine business expenditure.

14.

The department has relied on the judgment of NRA Iron and Steel which is distinguishable on the facts of the present case as in that case, the company has negligible and mere paper existence whereas in the present case, lender

15 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 companies has substantial income, significant net worth and were assessed by the department by different AO’s for difference assessment years without adverse findings and had accepted genuine business activities with genuine unsecured loans.

15.

The Department further placed reliance on the judgment of Bannalal Jat Constructions Pvt. Ltd. Vs. ACIT [2019] 106 taxman.com 128 (SC) where the books were incomplete with admitted inflation of expenses whereas in the present case, there was no such infirmities found existed. Thus, in the case of Bannalal Jat Constructions Pvt. Ltd. Vs. ACIT (supra), there was independent corroboration to the cash found physically during the course of search whereas in the present case, there was no such cash and valuable article or document found from the respondent assessee during the course of search. Thus, the case of Bannalal Jat Constructions Pvt. Ltd. Vs. ACIT (supra) relied by the department is distinguishable on the facts of the present case and as such not applicable as rightly observed by the Ld. CIT(A).

16.

The department has further relied on the judgment of Sumati Dayal Vs. CIT (supra) and is distinguishable on the facts of the present case as in the case of Sumati Dayal Vs. CIT (supra), it was given in the light of human probabilities in

16 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 respect where the Chairman of the Settlement Commission has emphasised that the appellant did not possess the winning ticket which was surrendered to the Race Club and in return a crossed cheque was obtained. Thus, that case was delivered in the case of Race Club with respect to winning of lotteries where appellant had purchased winning ticket after the event she would be having the winning ticket with her which she could surrender to the Race Club and that the observation by the Chairman of the Settlement Commission that “fraudulent sale of winning ticket is not an usual practice but is very much of unusual practice.” Ignores the prevalent malpractice that was noticed by the District Taxes Enquiry Committee and the recommendations made by the said Committee which led to the amendment of the Act by the Finance Act, 1972 whereby the exemption from the tax that was available in respect of winnings lotteries, crossword puzzles, races, etc. was withdrawn. Thus, that judgment of Apex Court in the case of Sumati Dayal Vs. CIT (supra) was on the issue of the test of human probabilities that cuts both ways. In the present case, the overwhelming documentary evidence supports the respondent, and that the revenue failed to establish that apparent was real. Thus, the judgment relied by the Department is distinguishable on the facts of the case and not applicable to the present case.

17 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 17. In the present case, since the department did not unearth any incriminating material from the business or the residential premises of the assessee during the course of search, having direct or indirect nexus to the aforestated alleged unsecured loans and interest expenses and, therefore, the Ld. CIT(A) order is held to be in consistency with the ratio led down by Hon’ble Apex court in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC), Hon’ble Rajasthan High Court in the case of CIT Vs. Bhanwar Lal 225 ITR 870 (Rajasthan HC) and Hon’ble Supreme Court in the case of PCIT Vs. Hadoti Punj Vikas Ltd. (2023) 157 taxman.com 193 (SC).

18.

In view of the above discussion and judicial precedents, we hold that the Ld. CIT(A) has been justified in deleting the addition of Rs. 10,96,75,689/- made by the AO on account of unsecured loans u/s 68 and Rs. 5,30,77,755/- on account of interest expenses. Accordingly, the impugned order passed by the Ld. CIT(A) is upheld. Thus, the issues raised in the grounds of appeal by the Department are rejected.

19.

The issues raised in ITA No. 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 are similar on identical facts to that discussed in ITA No. 1207/Jodh/2025, therefore, our observation and finding given in ITA No.

18 ITA Nos. 1207 & 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 Asst. years : 2013-14 to 2017-18 & 2019-20 to 2023-24 1207/Jodh/2025 shall be applicable to the appeals in ITA No. 1208/Jodh/2025 & ITA Nos. 79, 80, 81, 172, 173, 174, 175 & 176/Jodh/2026 in mutatis mutandis, ordered accordingly. 20. In the result, all the captioned appeals by the Department are dismissed.

Order pronounced on 12/06/2026 under Rule 34(4), in accordance with the Income Tax (Appellate Tribunal) Rules, 1963.

Sd/- Sd/- (SUDHIR PAREEK) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 12/06/2026. Nimisha Sr. PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

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