DCIT,CC-2(2), KOLKATA, KOLKATA vs. RLJ POLYFAB PVT LTD, HOWRAH

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ITSSA 31/KOL/2025Status: DisposedITAT Kolkata16 June 2026AY 2020-217 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the Ld. CIT(A) and dismissed the revenue's appeals. The Tribunal found that the Ld. CIT(A)'s order was well-reasoned and discussed each aspect in detail. It noted that the assessee had provided all necessary documents and evidence regarding the loan creditors, and the AO had not pointed out any defects. The Tribunal emphasized that the loans had been repaid by the assessee, and the Ld. CIT(A) had categorically found that all details and evidences were furnished by both the assessee and the loan creditors. The Tribunal agreed with the Ld. CIT(A)'s finding that once repayment of the loan is established, credit entries cannot be viewed in isolation. The Tribunal also referred to the decision in PCIT vs. Abhisar Buildwell Pvt. Ltd. (SC) regarding jurisdiction in unabated assessments. The Tribunal concluded that no addition can be made when the assessee has furnished all evidence and the loans have been repaid, citing decisions of the Hon'ble Calcutta High Court and the Hon'ble Gujarat High Court in similar cases, particularly the decision in Ambe Tradecorp (P.) Ltd. The Tribunal found no infirmity in the appellate order and dismissed the revenue's appeals.

What were the facts?

The revenue (DCIT, CC-2(2), Kolkata) appealed against the order of the Ld. CIT(A)-22, Kolkata, dated 30.12.2024, for Assessment Year 2020-21. The assessee, RLJ Polyfab Pvt. Ltd., had declared Nil income and MAT profit of Rs. 96,83,335/-. A search action under Section 132 was conducted on the RLJ Group on 29.12.2020. The Assessing Officer (AO) made an addition of Rs. 4,65,00,000/- on account of bogus unsecured loans, treating them as unexplained cash credit under Section 68. Additionally, disallowances of Rs. 2,171,705/- for interest and Rs. 9,30,000/- for commission were made. The Ld. CIT(A) deleted these additions, holding that the assessee had furnished all necessary details and documents for the loan creditors, and the loans had been repaid. The Ld. CIT(A) also relied on the decision in PCIT vs. Abhisar Buildwell Pvt. Ltd. (SC).

What were the issues?

1. Whether the addition of Rs. 4,65,00,000/- on account of bogus unsecured loans, treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961, is justified? 2. Whether the disallowance of interest of Rs. 2,171,705/- and commission of Rs. 9,30,000/- related to the alleged bogus unsecured loans is justified? Assessee's Contentions (as inferred from Ld. CIT(A)'s order and Tribunal's findings): The assessee contended that all necessary details and documents, including loan confirmations, audited accounts of lending parties, and repayment details, were furnished to the AO. The loans were repaid through banking channels after deducting TDS. The Ld. CIT(A) also noted that the assessment was unabated at the time of search and no incriminating material was found, thus questioning the AO's jurisdiction to make additions under Section 153A. The assessee relied on decisions of the Hon'ble Apex Court and various High Courts, including PCIT vs. Abhisar Buildwell Pvt. Ltd. (SC), PCIT vs. M/s Shree Leather (Cal), and PCIT vs. Ambe Tradecorp Pvt. Ltd. (Guj). Revenue's Contentions: The revenue, through the AO, treated the unsecured loans as fictitious and bogus, representing the assessee's own undisclosed money. The revenue argued that the assessee had not discharged its onus regarding the identity, creditworthiness, and genuineness of the loan transactions.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 143(3),Section 142(1),Section 133(6),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH: KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey]

आयकर \ �Ȣ�ȣ��\ͬ ����, कोलकाता पीठ “डी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: KOLKATA Į Ȣ��ȡ�ȯ��Ǖ�ȡ����ȯ�ȡ�  �è��f �Ȳ�Į Ȣ�Ĥ�ȣ���Ǖ�ȡ���ȫ�ȯ�Û�ȡǓ���  �è��ȯ�  �¢ [Before Shri Rajesh Kumar, Accountant Member & Shri Pradip Kumar Choubey, Judicial Member] I.T.(S.S).A. Nos. 31 & 32/Kol/2025 Assessment Year: 2020-21 DCIT, CC-2(2), Kolkata Vs. RLJ Polyfab Pvt. Ltd. JCIT (In-Situ), CC-22, Kolkata

(PAN: AABCJ 8866 B) ( \ �Ȣ�ȡ�ȸ ) Respondent / Ĥ×��ȸ Appellant / Date of Hearing / सुनवाई 12.06.2026 �ȧ�Ǔ�ͬ � Date of Pronouncement/ 16.06.2026 ] �ȯ��` ɮ�Ȫ��ȡ��ȧ�Ǔ�ͬ � For the Appellant/ Shri Miraj D Shah, A.R Ǔ��ȡ[ǐ��Ȣ �ȧ�j ��  ȯ For the Respondent/ Smt. Pampa Roy, Sr. DR �ȡ�è���ȧ�j ��  ȯ��

ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-22, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 30.12.2024 for the AY 2020-21. First we shall adjudicate in IT(S.S)A No. 31/Kol/2025 for AY 2020-21. 2. The only issue raised by the assessee in the sole ground of appeal is against the deletion of addition of Rs. 4,65,00,000/- by the Ld. CIT(A) as made by the AO on account of bogus unsecured loans by treating the same as unexplained cash credit u/s

2 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. 68 and further deletion of disallowance on account of interest and commission of Rs. 2,171,705/- and 9,30,000/- respectively which were added by the AO.

3.

Facts in brief are that the assessee filed return of income on 31.12.2020 declaring total income at Nil and book profit under MAT at Rs. 96,83,335/-. A search action u/s 132 was conducted on RLJ Group of companies on 29.12.2020 and subsequent dates. During the course of search, several incriminating material/ documents were seized. The assessee was issued notice u/s 153A of the Act on 21.10.2021 which was complied with by the assessee by filing a return of income on 03.12.2021 declaring the same income was declared in the original return of income. Thereafter statutory notice u/s 143(2) and notice u/s 142(1) along with questionnaires were issued and served upon the assessee which were duly replied by the assessee by filing the necessary details such as names, addresses, PANs, loan confirmations, and audited accounts of lending parties etc. Thereafter the AO noted that during the course of search and post search enquiries it was found that the assessee was indulged in ploughing back its own undisclosed and unaccounted money in the form of unsecured loans. During the year the assessee had taken unsecured loans of Rs. 4,65,00,000/- from 6 parties as per details given in page no. 3 of assessment order . Thereafter the AO after discussing the modus operandi and financials of the loan creditors and after taking into account the submissions of the assessee treated the said loans as unexplained cash credit thereby making an addition of Rs. 4,65,00,000/- to the income of the assessee besides making additions in respect of commission of Rs. 9,31,000/- @s 2% of bogus unsecured loans and interest on bogus unsecured loans at Rs. 21,71,705/- thereby assessing the income at Rs. 4,96,01,710/- in the assessment framed u/s 153A/ 143(3) of the Act dated 31.03.2022.

4.

In the appellate proceedings, the Ld. CIT(A) noted that the assessee has furnished before the AO all the details and documents for the said loan creditors and even the notice issued u/s 133(6) to the loan creditors were issued and duly replied by by the loan creditors by filing necessary details/ information as desired by the AO. The Ld. CIT(A) therefore discussed each and every loan creditor in the appellate order

3 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. from page 10 to 32 and noted that all these loan creditors have filed confirmation of the loans, confirmations of loans repaid and audited financial account etc. The Ld. CIT(A) noted at page 12 of the appellate order that most of the loans were refunded . The Ld. CIT(A) also discussed the source of source in the appellate order. Finally the Ld. CIT(A) deleted the addition by holding that the assessee has furnished all the details and evidences qua the loan creditors and AO has not even appointed out any defect or deficiency in the documents/evidences furnished by the assessee as well as by the loan creditors. Moreover, the loans taken were repaid by the assessee. The Ld. CIT(A) also noted that this being an unabated assessment on the date of search and there being no incriminating materials found and seized during the course of search and therefore the AO has no jurisdiction to make addition by following the decision of Hon’ble Apex Court in the case of PCIT , Circle-1, Kolkata vs Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 (SC). The Ld. CIT(A) deleted the addition in respect of unsecured loans and also disallowances in respect of commission of Rs. 9,30,000/- and interest of Rs. 21,71,705/-.

5.

After hearing the rival contentions and perusing the material on record, we find that uncontroverted facts are that the assessee has borrowed money by way of unsecured loans from 6 parties during the year aggregating to Rs. 4,65,00,000/-. A search action was conducted on the assessee on 29.12.2020. During the search operation, certain documents were seized. The AO noted that during the course of search and post search enquiries, it was found that these loans taken by the assessee were fictitious and bogus and was nothing but the assessee’s own money brought into the books of accounts in the guise of unsecured loans. However on the other hand, we note that the AO has not carried out any enquiry on the evidences filed by the assessee in respect of loan creditors. Moreover letters issued u/s 133(6) to loan creditors were replied by the loan creditors by furnishing all the details submitting loan confirmations, copies of ledger accounts, confirmations of loan repayments, audited financial statements etc. We note that the Ld. CIT(A) has recorded a categorical finding to this effect by discussing each and every loan creditor in the appellate order.

4 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. . The Ld. CIT(A) while deleting the additions also relied on the series of decision namely:

i) PCIT vs. M/s Shree Leather [2022] 143 taxmann.com 435 (Cal)

ii) PCIT vs. Ambe Tradecorp Pvt. Ltd. [2022] 145 taxmann.com 27 (Guj)

6.

The Ld. CIT(A) also noted that the assessee has discharged its onus by proving identity of loan creditors by furnishing all the details and evidences and also creditworthiness and genuineness of the transactions by furnishing the evidences that same were done through banking channels. The Ld. CIT(A) noted that the interest was paid to these loan creditors through banking channels after deduction of TDS at source. The Ld. CIT(A) deleted the addition that once repayment of loan was established, the credit entries cannot be lived into isolation after ignoring the debit entries which may be done in the subsequent financial year . In our opinion, the order of Ld. CIT(A) is very reasoned and speaking order discussing each and every aspect of the matter in detail and accordingly does not call for our interference. Moreover, the AO has failed to point out any defect/deficiency in the documents and evidence field by the assessee as well as of the loan creditors. We are of the view that no addition can be made where the assessee has furnished all the evidences qua the loan creditors before the AO and loans were also repaid by the assessee. The case of the assessee squarely covered by the following decisions of Hon’ble Jurisdictional High Court: The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan

5 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act. Similarly, the case of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :-6.

"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information." 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the

6 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. " 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. Considering the facts of the assessee;s case in the light of above decisions , we do not find any infirmity in the appellate order which is very reasoned and speaking. Therefore we are inclined to uphold the order passed by the ld. CIT(A) by dismissing the appeal of the revenue.

IT(S.S)A No. 32/Kol/2025 for AY 2020-21 .

6.

The issue raised in the appeal is similar to one as decided by us in IT(S.S)A No. 31/Kol/2025 for AY 2020-21. Therefore, our decision in IT(S.S)A No. 31/Kol/2025 for AY 2020-21would ,mutatis mutandis, apply to this appeal as well. Accordingly, the appeal of the revenue is dismissed.

7 I.T.(S.S)A. Nso.31 & 32/Kol/2025 Assessment Years: 2020-21 RLJ Polyfab Pvt. Ltd. 7. In the result, both the appeals of the revenue are dismissed. Order is pronounced in the open court on 16th June, 2026

Sd/- Sd/- (Pradip Kumar Choubey /Ĥ�ȣ���Ǖ�ȡ���ȫ�ȯ) (Rajesh Kumar/राजेश कुमार) Judicial Member/Û�ȡǓ���  �è� Accountant Member/लेखा   �è� Dated: 16th June, 2026 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- DCIT, CC-2(2), Kolkata JCIT(In situ) CC-22, Kolkata 2. Respondent – RLJ Polyfab Pvt. Ltd., Sankrail Industrial Park, Dhulagarh, Howrah-721302 3. Ld. CIT(A)- 26, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

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