DCIT CC-1(4), KOL, KOLKATA vs. AMBICA INDUSTRIES , KOLKATA

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ITSSA 74/KOL/2024Status: DisposedITAT Kolkata15 May 2026AY 2015-1610 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the appeal filed by the Revenue. The Tribunal found no infirmity in the order of the CIT(A). The assessee company had taken loans from M/s LumpexVincomPvt. Ltd. and two other parties, totaling Rs. 1,40,00,000/- in the current year. The assessee had submitted loan confirmations and the parties had complied with summons under Section 131, confirming the lending of money. The loans were repaid in subsequent years. Crucially, the assessee had also received a loan from the same party in AY 2011-12, and the assessment order for that year under Section 153C read with Section 143(3) did not take an adverse view. The Tribunal noted that the lender was an existing Income Tax payee, and its identity and creditworthiness were proven by ITR copies, PAN numbers, and bank statements. The loan was taken through normal banking channels. The Tribunal found that the CIT(A) had considered the facts and judicial pronouncements, and therefore, the appeal of the Revenue was dismissed. The decision in ITA No. 74/2024 was applied mutatis mutandis to ITA No. 75/2024.

What were the facts?

The Revenue (DCIT, CC-1(4) Kolkata) appealed against the order of the CIT(A) for Assessment Years 2015-16 and 2016-17, concerning the assessee, Ambica Industries. The appeals were filed with a delay of 75 days, which was condoned. The original return of income for AY 2015-16 was filed on 30.10.2015, disclosing a total income of Rs. 1,34,74,620/-. A search and seizure action under Section 132(1) of the IT Act, 1981, was conducted on Ambica Group on 22.09.2015. Consequently, a notice under Section 153C was issued on 25.07.2017. The Assessing Officer (AO) alleged that the assessee received unsecured loans from 'Jamakharchi/Paper Companies' operated by entry operators, who provided accommodation entries. The AO added Rs. 40,00,000/- as bogus unsecured loan from LumpexVincomPvt. Ltd. and Rs. 3,74,301/- as bogus interest, totaling Rs. 43,74,301/-, to the assessee's total income under Section 68.

What were the issues?

1. Whether the addition of Rs. 43,74,301/- on account of bogus unsecured loans and interest, made under Section 68 of the Income-tax Act, 1961, is sustainable in the absence of supporting evidence, as held by the CIT(A)? - Assessee's Contention (supported by CIT(A)'s order): The CIT(A) erred in deleting the addition, as the additions made by the AO were not backed by supporting evidence. The genuineness of the transaction, identity, and creditworthiness of the loan creditors were not established. The CIT(A) noted a lack of correlation between seized documents and the assessment year, and that statements of entry operators were retracted. The CIT(A) also found it arbitrary that only one lender was treated as bogus when loans from other parties were accepted, and a loan from the same party in AY 2011-12 was treated as genuine. - Revenue's Contention: The CIT(A) erred in deleting the addition, as the genuineness of the transaction, identity, and creditworthiness of the loan creditors were not established. The CIT(A) failed to consider the statements on oath made under Section 131 by entry operators confessing to providing accommodation entries. The assessee failed to discharge its onus to prove the inaccuracy of the confession or the genuineness of the transaction. The CIT(A) erred in holding that the undisclosed income was not the assessee's own income and ignored that the identity of creditors was dubious or lacked creditworthiness, thus the primary onus under Section 68 was not discharged. The CIT(A) also erred in relying on the AO's order for an earlier year, as the principle of Res Judicata is inapplicable in tax matters.

Which sections of the Income-tax Act were involved?

Section 132,Section 153C,Section 143(3),Section 68,Section 131

AI-generated summary — verify with the full judgment below

Before: ShriRajesh Kumar & ShriPradip Kumar Choubey

IN THE INCOMETAXAPPELLATE TRIBUNAL“A” BENCH, KOLKATA Before ShriRajesh Kumar, Accountant Member and ShriPradip Kumar Choubey, Judicial Member IT(SS)A Nos.74 & 75/KOL/2024 Assessment Years: 2015-16 & 2016-17 DCIT, CC-1(4) Kolkata…………..…………………………………….Appellant Vs. Ambica Industries…………………………………….…………………...Respondent Plot No.162 IDA Mallapur Hyderabad, R.R Dist-500076 [PAN No.AAFFA5205Q] Appearances by: Shri Amit Agarwal,AR, appeared on behalf of the Appellant. Shri H. Robindra Singh, CITDR,appeared on behalf of the Respondent. Date of concluding the hearing :April27, 2026 Date of pronouncing the order: May 15 , 2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the Revenue is directed against the order dated 31.12.2017 & 05.02.2024 of the Office of the Commissioner of Income Tax passed under Section 153Cr.w.s143(3) & 153Ar.w.s143(3) of the Assessment Year 2015-16 & 2016-17 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). It appears from the report of the Registry that Revenue has filed the above captioned appeal after a delay of 75 days, for this revenue has filed a petition to condone the delay.The Ld. AR did not raise any objection in condoning the delay. Going over the contents of the petition filed by the Revenue, we find that the reason mentioned for delay is genuine and bona fide, accordingly we condoned the delay. Since in both the appeal issues are common, hence taken up together for disposal by taking the ITA No. 74/2024 as a lead case.

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries 2. The brief facts of the case of the assessee is that Assessee belongs to Ambica Group, filed original return of Income on 30.10.2015, disclosing total income of Rs. 1,34,74,620/-. A search and seizure action u/s 132(1) of the IT Act, 1981 was conducted on Ambica Group on 22.09.2015. Consequent upon the search, and seizure action, notice u/s 153C was issued on 25.07.2017. In response, appellant filed return of income declaring the same income as in the original return. AO has mentioned that several documents were found during the course of search on persons associated with 'Ambica Group and several seized documents related to the assessee. Hence, after recording satisfaction, notice u/s 153C was issued. It is mentioned that assessee firm had taken huge unsecured loans and incurred interest thereon. Investigation Wing had gathered information that assessee had taken loans from Jamakharchi/Paper Companies which do not have any real business activity. These Jamakharchi Companies were operated by entry operators and they indulged in giving accommodation entries for share capital, loans, bogus long term capital gains and bogus bills to inflate expenses. Referring to several seized documents, AO has mentioned that assessee had received bogus unsecured loans with the help of entry operators. Creditors were not found existing at their given addresses. Hence, summons could not be served on them. Thereafter, statements of entry operators and Dummy directors were recorded u/s 131 of the IT Act on various dates. Entry operators and dummy directors have accepted in their statements that they have provided accommodation entries in the form of bogus share capital/unsecured loans etc. to Ambica Group. Cash was taken from the beneficiaries and after routing through various bank accounts of Jamakharchi Companies, finally money came back to the desired beneficiary in the form of share capital/unsecured loan.It is further alleged that the entry operators have admitted that

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries cash was provided by shri Ramesh Kumar Bubna, shri Satyam Bubna and Shri Saurav Bubna, main persons of Ambica Group, for providing accommodation entries. Investigation Wing had alsocarried out its enquiries and found that the companies which had given share capital/loans to the Ambica Group were paper/jamakharchi Companies. It is further mentioned that in his disclosure petition, shri Satyam Bubna had disclosed the peak balance of Rs. 1,30,03,000/-, However, no specific or complete amount of unsecured loan has been disclosed. After collecting details from the balance sheet, assessee was show caused as to why additions should not be made in respect of the unsecured loans received from such paper/jamakharchi companies. In reply, assessee strongly defended its transactions with such creditors. However, AO is not convinced with assessee's reply. It is mentioned that during search and seizure action, Investigation Wing had found that all the companies are jamakharchi companies. They were existing only on paper. These do not have real business activity. These companies were created and operated by entry operators and directors of these companies are employees friends and near relatives of the entry operators. Further, these directors are not well educated. During search and seizure action, entry operators mentioned in the show cause letter had categorically stated that they had given unsecured loans through paper companies to Ambica Group. Further, the creditors were not found at their given addresses during pose search enquires. Hence, under the circumstances loan taken of Rs. 40,00,000/- from LumpexVincomPvt. Ltd. has been held to be bogus. Assessee had credited interest of Rs. 3,74,301/- for the loans. These has also been held to be bogus and entire amount of Rs. 43,74,301/- has been added back to the total income u/s 68 of the IT Act, 1961.

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been allowed by observing thus:-

3.3(a) I have carefully considered the facts of the case and the submissions of the appellant. It appears that proceedings u/s 153C have been initiated on the basis of material gathered from the premises of the persona, belonging to Ambica Group during search and seizure action. Although, it is mentioned that notice u/s 1530 has been issued after-recording satisfaction but nothing has been discussed about the evidences found during search. There is no reference to any incriminating evidences, which may have been found during search to support the additions made by the AO. There is no reference to any seized documents or other adverse evidences found during search. Discussion in the Assessment Order has been made regarding post search enquiries conducted by the Investigation Wing. There is also reference to statements of the entry operators but the statements were retracted immediately after search and further assessee was not provided any opportunity to cross examine the persons whose statements were adversely used against the assessee. In any case even auch person had retracted their statements. So no evidentiary value was left in these statements, in the case of CIT v. Sinhgad Technical Education society (2017) 387 ITR 344 (SC), the Hon'ble Supreme Court has held that there should be correlation between seized documents and the assessment year in question for initiating proceedings U/s 1530. However, in the present case there does not appear to be any incriminating evidences in respect of the unsecured loan which has been held to be bogus. Thus, additions are not sustainable of technical ground, in view of several court decisions.

3.3(b) Perusal of the assessment order shows that AO has made general allegations. These are not backed by supporting evidences. AO 4

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries has not commented on the loan confirmations and other submissions made by the lender. In the current year loans have been taken from three persons but only the loan from LumpexVincomPvt. Ltd. has been held to be bogus. In the assessment order nothing has been mentioned as to why the loans from the other two parties are genuine and how the facts of LumpexVincomPvt. Ltd. are different from the other two parties. Further, assessee has pointed out that in A.Y.-2011-12 assessee had taken a loan of Ra 15,00,000/- from the same party. Proceedings Us 1530 were also conducted simultaneously for A.Y. 2011-12. However, the loan amount from the same lender in AY.-2011-12, have been held to be genuine and no additions have been made. There could be no justification for this kind of double standard, Perusal of the assessment order shows that only generalised comments have been made. General allegations have been made for making the addition. There is no reference to any evidences found during search to support these additions. Decision of the AO appears to be arbitrary when he has treated only one lender, out of three, and even for that lender he has not made any addition in the preceding year when assessment proceedings were being conducted simultaneously for the earlier year as well. Under the circumstances, additions in respect of the loan amount and the interest paid on such loan are not justified. On the other hand, Assessee has furnished all necessary documents to establish the genuineness of the loans and the interest paid on such Joana. Interest has been paid after deducting TDS. Loan has been repaid in the subsequent year but AO is silent on this issue. AO has alleged that assessee has brought its own unaccounted income in the guise of unsecured loan. However, this premise fails on repayment of loan. Under the circumstances, additions are not justified and AO is directed to delete the addition of Rs. 43,74,301/-.

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries Being aggrieved by and dissatisfied the Revenue preferred appeal before us by taking following grounds;-

1.

That on the facts and circumstances of the case, the Ld. CIT(A), Kolkata erred in deleting the addition of Rs. 43,74,301/- holding that the additions made u/s 68 of the Income Tax Act, 1961, on account of bogus unsecured loan are not backed by supporting evidences, but the genuineness of the transaction, identity and creditworthiness of the loan creditors have not been established.

2.

That on the facts and circumstances of the case, the Ld.CIT(A) erred in not considering the statements on oath made u/s 131 of the Act, wherein the entry operators made confession that he had provided accommodation entries in the form of bogus unsecured loan to the beneficiary company. Hence, onus lies on the assessee to prove inaccuracy of confession of other party of such transaction and to prove genuineness of the transaction in which assessee has falled to discharge its onus.

3.

That on the facts and circumstances of the case, the principal which has been laid down by the Hori'ble Supreme Court in the case of Pr.CIT (Central)-1, Kolkata Vs NRA iron & Steel Pvt Ltd (412 ITR 161) suggests that the assessee is under a legal obligation to prove the receipt of credit to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. Thus, the decision of the Ld.CIT(A) is erroneous in holding that the undisclosed income was not the assessee's own income.

4.

That on the facts and circumstances of the case, the Principle which has been laid down by the Hon'ble Supreme Court in the case of Pr.CIT (Central)-1, Kolkata Vs NRA Iron & Steel Pvt Ltd (412 ITR 161) also holds that if the enquiries and investigations reveal that the identity of the creditors to be dubious or lack creditworthiness, then the 6

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by section 68 of the Act. In the facts of the case, the Ld. CIT(A) completely ignored this aspect, thus he has erred in giving relief to the assessee.

5.

That on the facts and circumstances of the case, the Ld.CIT(A) erred in deleting the addition made u/s 68 of the Act based on the order passed by the AO in earlier year in this case, whereas Principle of Res Judicata is inapplicable in tax matters. 3. Contrary to that Ld. AR supports the impugned order thereby submitting that there is no infirmity in the impugned order as the Ld. CIT(A) has discussed the facts of the case of the assessee and also considered the judicial pronouncement. The Ld. AR submits that assessee took loan from LumpexVincomPvt. Ltd. and other two parties in the current year and loan confirmation has been submitted before the AO and said parties have duly complied with summons U/s 131 of the IT Act. The Ld. AR submits that in the current year assessee has held loan of Rs. 40,00,000/- received from M/s LumpexVincomPvt. Ltd. and the said loan was repaid in the subsequent years. The Ld. AR further submits that assessee had also received loan from the same parties in the assessment year 2011-12 amounting to Rs. 15,00,000/- and in the assessment order passed U/s 153C read with Section 143(3) for the assessment year 2011-12, no adverse view had been taken by the AO for the loan received form the same party however in the assessment year 2015-16, Ld. AO held the loan to be bogus received from the same parties that is contrary to the law.The Ld. AR further submits that so far, the statement of entry operator Mr. Govind Prasad Agarwal is concerned the same had been retracted on 15.10.2015.

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries 4. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order we find that assessee company had taken loan from M/s LumpexVincomPvt. Ltd. and other two parties and total amount of loan taken in the current year was Rs. 1,40,00,000/-. Assessee in order to establish the identity and genuineness of the transaction loan confirmation was submitted before the AO and it is further pertinent to mention here that parties have duly complied with summons U/s 131 of the Act and they have confirmed lending money to assessee firm. It is further important to mention here that the said loan was repaid in the subsequent years.We further find that assessee had also received the loan from the same party in the assessment year 2011-12 and assessment order was passed U/s 153C read with Section 143(3) for the same year and there was no adverse view was taken by the Ld. AO for the loans received from the same party. It is further important to mention here that lender is existing Income Tax payee and their identity and creditworthiness stood proved from the copies of the of the ITR, pan Number, copies of the bank statement.Lender had duly confirmed the fact of lending money to the assessee and the loan was taken through normal banking channels. 5. Keeping in view the above discussion and going over the order passed by the CIT(A) we do not find any infirmity in the impugned order. Accordingly, the appeal filed by the Revenue is hereby dismissed. 6. ITA No. 75:-issuesare the common and same. CIT(A) has also allowed the appeal of the assessee by observing the order passed by the CIT(A) for the assessment year 2015-16 as discussed above. Hence the decision passed in ITA No. 74/2024 shall applied to this case also as Mutatis Mutandis.

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries As a result, both the appeal of the Revenue is here by dismissed.

Kolkata, the 15th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated:. 15.05.2026. DC, PS

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

IT(SS)A Nos.74 & 75/Kol/2024 Ambica Industries

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