SARJAK CONTAINER LINES PRIVATE LIMITED,MUMBAI, MAHARASHTRA, INDIA vs. DEPUTY COMMISSIONER OF INCOME-TAX - 11(1)(2), MUMBAI

आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 14.10.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the assessment order passed u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 12.12.2018 for the Assessment Year [A.Y.] 2011-12.

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd. 2. The grounds of appeal are as under: “1. That on the facts and circumstances of the case and in law, the Ld. NFAC erred in treating a loan of Rs. 1,50,00,000/-, borrowed by the Appellant (which was repaid in the immediately succeeding year) as income of the Appellant u/s 68 of the Act. 2. That on the facts and in the circumstances of the case and in law, the Ld. NFAC erred in confirming the addition by relying on statements of third parties recorded during search proceedings, while arbitrarily denying the Appellant's specific request for cross-examination of such parties, thus violating the principles of natural justice. 3. That the Ld. NFAC failed to appreciate that the Appellant had discharged the primary onus of proving the identity and creditworthiness of the lender (M/s Avance Technologies Ltd.). and the genuineness of the transaction, which was undertaken through normal banking channels and was duly supported by confirmation letters, balance sheets, and bank statements. 4. That on the facts and in the circumstances of the case and in law, the Ld. NFAC erred in upholding the reopening of assessment u/s 147, which was initiated after the expiry of four years from the end of the relevant assessment year, despite the original assessment having been completed u's 143(3) of the Act. 5 That the Ld. NFAC failed to appreciate that in the absence of any failure on the part of the Appellant to disclose fully and truly all material facts necessary for assessment, the assumption of jurisdiction is in violation of the First Proviso to Section 147 and is thus void ab initio. 3. Ground nos. 1 to 3 pertain to the addition of Rs 1.50 cr.stated to be Unsecured Loan from one Avance Technologies P.Ltd(„AVL‟).The assessee, a private limited company engaged in the business of transport, filed original return declaring the total income at Rs. 3,26,39.455/- and the AO computed the total income at Rs. 3,57,98,210/- u/s 143(3) of the Act, after making disallowance of Rs. 31,58,757/-on account of loss on sale of fixed assets. Subsequently, the notice u/s 148 and notice u/s 143(2) dated 06.06.2018 were issued alongwith the reasons for reopening.The AO received certain information from the Investigation Wing wherein it was found that the assessee was one of beneficiaries of accommodation entry provided by one

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd. Shrish C. Shah group of companies and AVL. It was concluded by the AO that the assessee had taken accommodation entry of unsecured loan which was treated as unexplained cash credit u/s 68 of the Act although it was claimed by the assessee that the impugned loan was reflected in the Balance sheet as on 31.03.2011 as unsecured loans under the head Long term borrowings. The said loan was subsequently repaid by the assessee in FY 2012-13 and was also reflected in the financials of FY 2012-13 which was submitted during the scrutiny assessment proceedings of AY 2013-14. Both the transactions were duly reflected in Tax Audit report of the respective years.The assessee requested the AO to give opportunity for cross examination of the person relying on whose statement, which was however, not given by the AO.The assessee also objected to the reopening u/s 148 of the Act claiming it to be a change of opinion on the ground that the reopening was nothing but review of a closed assessment and was merely on the basis of information received from Investigation wing should be held invalid in the absence of "fresh tangible material.

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd. copy of Loan confirmation, copy of its Financials, Bank account statements etc. claiming that the unsecured loan was genuine having been received through banking channels.

4.1 The ld.CIT(A),however, observed that the mere routing of funds through banking channels did not automatically establish the genuineness of the transaction. The identity of the creditor may be established, but creditworthiness and genuineness must also be proved by the assessee. Investigations in the case of AVL and the Shirish C. Shah group had conclusively revealed that these concerns were engaged in providing bogus accommodation entries. During search and seizure action u/s 132 in these cases, large-scale evidences including bank statements were seized, showing that the assessee had received accommodation entries. It had not produced any document to prove the genuineness of the transaction. The repayment made in a subsequent year does not by itself prove the genuineness of the original transaction, particularly when the lender is engaged in accommodation entries. The AO, in this case, had independently and very clearly segregated the apparent from the real by examining materials on record and taking support from evidences gathered from reliable sources of information and report. The above addition made by the AO was, therefore, confirmed.

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd. loan of Rs 1.50 cr. only. The transaction was made through banking channels and in fact, the assessee repaid the entire amount in the subsequent assessment year itself. All the ingredients u/s 68 of the Act regarding identity,creditworthiness of the lender and the genuineness of the loan were ably proved by the assessee. The AO without making any independent enquiry into the matter or allowing any opportunity to the assessee to cross examine the lender and without taking due cognizance of the evidences adduced by the assessee, treated the loan as unexplained. A legal paper book was also submitted inter alia comprising of orders of coordinate benches of ITAT where similar transaction with the above named lender has been found to be genuine and additions made were deleted. The ld.DR on the other hand relied on the orders of the authorities below.

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd. this regard. Moreover, nothing adverse has been pointed out in the evidences produced before him by the assessee to prove the genuineness of the impugned loan. We also find that similar transactions made by some other assessees with the said lender i.e. AVL have been duly deliberated by the coordinate benches of ITAT, including Mumbai Tribunal in favour of respective assessees treating the transactions as genuine. Reference could be made to M/s. Amirashmi Finstock Private Limited AYs (2010-11 & 2011-12) in ITA Nos. 4558-4559/Mum/2017 and M/s N. Kumar Construction Co. Pvt. Ltd. in ITA no.252/Nag./2018

Order pronounced in the open court on 17/06/2026.

Sd Sd/- Sd/- /- SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

ITA No. 9475/Mum/2025; Sarjak Container Lines Pvt. Ltd.

Place: म ुंबई/Mumbai ददनाुंक /Date 17.06.2026 Soumili Das / PS

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.