SUMIT GUPTA,VASHI NAVI MUMBAI vs. WARD 23(1)(1) NATIONAL FACELESS ASSESSMENT CENTRE, PIRAMAL CHEMBERS LOWER PAREL

ITA 1328/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2019-2021 pages
AI SummaryAllowed

What were the facts?

The assessee, Sumit Kumar Gupta, an individual engaged in management consultancy, filed his return for assessment year 2019-20. The Assessing Officer (AO) received information from the Insight Portal regarding a loan of Rs. 47,56,942/- obtained by the assessee from M/s Aneri Fincap Limited during FY 2018-19. This information stemmed from a search in Oneworld Group cases, which involved alleged bogus purchase and sale transactions with entities controlled by Shri Rajesh G. Mehta, who identified Aneri Fincap Limited as one of his controlled entities. The AO initiated reassessment proceedings. The assessee provided loan confirmation, bank statements, and interest working, asserting the loan was genuine and repaid through banking channels. The AO, however, relied on Shri Mehta's statement that Aneri Fincap Limited conducted no business and treated the loan of Rs. 23,00,000/- as an unexplained cash credit under section 68, applying section 115BBE. Further additions were made for inferred commission (Rs. 12,420/-) under section 69C and disallowed interest (Rs. 1,69,003/-), totaling Rs. 24,81,423/-. The Commissioner of Income-tax (Appeals) [CIT(A)] sustained these additions.

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal, directing the deletion of all additions. Regarding the Rs. 23,00,000/- loan addition under section 68, the Tribunal found that the assessee had provided primary documents like loan confirmation, bank statements, and the lender's financial material, establishing the lender's identity and creditworthiness. The Tribunal noted that the AO's reliance on Shri Mehta's statement was not sufficiently substantiated by independent adverse findings concerning the loan transaction itself, especially when the assessee sought cross-examination. The Tribunal distinguished the present case from Bajaj International Realty by emphasizing the availability of primary documents and audited accounts, and the revenue's failure to point out defects in the assessee's material. The Tribunal held that an untested general statement could not overcome the assessee's transaction-specific explanation without an inquiry addressing that explanation. For the commission addition of Rs. 12,420/- under section 69C, the Tribunal found no evidence that the assessee incurred such expenditure. The rate was derived from Shri Mehta's statement concerning unrelated transactions, and the assessment order did not show a distinct proposed commission addition. The Tribunal directed deletion of this addition. For the interest disallowance of Rs. 1,69,003/-, the Tribunal noted that the AO's sole reason was the characterization of the principal loan as unexplained, which had been set aside. The Tribunal also observed that the assessee claimed income under section 44ADA, where interest is deemed to have been allowed. The Tribunal directed deletion of this disallowance. The AO was directed to recompute the income and tax liability accordingly.

What were the issues?

1. Whether the addition of Rs. 23,00,000/- as an unexplained cash credit under section 68 of the Income-tax Act, 1961, is justified, considering the assessee's submission of loan confirmation, bank statements, and lender's financial documents, and the denial of cross-examination of Shri Rajesh G. Mehta. 2. Whether the addition of Rs. 12,420/- as commission expenditure under section 69C of the Income-tax Act, 1961, is sustainable in the absence of any evidence of such expenditure incurred by the assessee. 3. Whether the disallowance of interest of Rs. 1,69,003/- is valid, especially when the assessee claims no separate interest deduction was claimed and the underlying loan addition has been disputed. Assessee's Arguments: The assessee contended that the loan was genuine, supported by documentary evidence including the lender's status as a registered NBFC, its financial capacity, and repayment through banking channels. The assessee argued that Shri Mehta's statement, which formed the basis of the AO's adverse findings, pertained to unrelated transactions and did not implicate the assessee's loan. The assessee also raised the issue of denial of cross-examination and argued that the commission and interest additions were not proposed in the show-cause notice. Revenue's Arguments: The revenue, through the CIT(A), relied on Shri Mehta's statement and the information from the Oneworld Group search, asserting that the AO had not based the assessment solely on Shri Mehta's statement and that the test of human probabilities supported the addition. The revenue also referred to the decision in Bajaj International Realty Pvt. Ltd. regarding the treatment of accommodation entries and consequential additions.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 144B,Section 148A,Section 148,Section 115BBE,Section 69C,Section 250,Section 44ADA,Section 30,Section 38

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

For Appellant: Shri Tejas Sodha, Ld. A.R
For Respondent: Shri Pravin Salunkhe, Ld. Sr. D.R
Hearing: 22.07.2026Pronounced: 29.09.2026

PER: MAKARAND VASANT MAHADEOKAR, AM This appeal by the assessee is directed against the order dated 08.12.2025 passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act”] by the Commissioner of Income- tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "the CIT(A)"]. The order under appeal sustained the additions and disallowance made in the assessment order dated 14.03.2024, passed under section 147 read with section 144B of the Act for assessment year 2019-20. 2. The facts of the case are such that the assessee is an individual engaged in manage

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 68

All 29,634 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →