INCOME TAX OFFICER, NON CORPORATE WARD-3(3), CHENNAI vs. MITESH SURANA, CHENNAI

ITA 3683/CHNY/2025Status: DisposedITAT Chennai29 September 2026AY 2017-1816 pages
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What did the Tribunal hold?

The Tribunal held that the assessee had discharged the initial onus under Section 68 of the Act in respect of the loan from Shri J. Mohan by providing PAN, confirmation of balance, ledger extracts, bank statements, and the creditor's response to summons under Section 131, confirming the transactions. The transactions were routed through banking channels, and the immediate source in the creditor's hands was explained and uncontroverted. The Tribunal noted that the CIT(A) had deleted a larger addition on identical material for Shri J. Mohan, and the non-filing of returns by creditors is a circumstance for further inquiry, not conclusive proof of unexplained credit. The Tribunal found no material to demonstrate that the monies advanced emanated from the assessee. Therefore, the addition of Rs.5,64,77,072/- made by the AO was rightly deleted by the CIT(A), and the Revenue's grounds of appeal on this issue were dismissed. The judgment also discusses the addition of Rs.1,17,80,000/- in respect of Smt. Vimala Devi and Shri Pradeep Kumar Chordia, but the specific finding on this issue is not fully detailed in the provided excerpt, though it was confirmed by the CIT(A) and the assessee appealed against it. The appeal by the assessee was allowed, and the appeal by the Revenue was dismissed.

What were the facts?

The assessee, Mitesh Surana, an individual engaged in bullion trading and money lending, filed a return for AY 2017-18 showing NIL taxable income. The Assessing Officer (AO) completed the assessment under Section 143(3) on 30.12.2019, determining total income at Rs.7,93,88,116/-. This involved rejecting a business loss claim of Rs.81,08,895/-, estimating business income at 1% of sales turnover, and adding Rs.6,82,57,072/- under Section 68 for unsecured loans from Shri J. Mohan, Smt. Vimala Devi, and Shri Pradeep Kumar Chordia. The addition was charged to tax under Section 115BBE. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition relating to Shri J. Mohan, directed deletion of the disallowed loss, confirmed additions of Rs.1,17,80,000/- for Smt. Vimala Devi and Shri Pradeep Kumar Chordia, and confirmed the estimated business income. Both the assessee and the revenue filed appeals against the CIT(A)'s order.

What were the issues?

1. Whether the addition of Rs.1,17,80,000/- under Section 68 of the Income-tax Act, 1961, in respect of unsecured loans from Smt. Vimala Devi and Shri Pradeep Kumar Chordia, was justified, considering the assessee had furnished PAN, addresses, ledger extracts, confirmations, and bank statements, and the creditors responded to summons, despite not filing their returns of income for the assessment year? (Mixed law and fact) Assessee's contention: The assessee discharged the initial onus under Section 68 by establishing identity, genuineness, and creditworthiness. The non-filing of returns by creditors is an act of a third party beyond the assessee's control and cannot render the credit unexplained. The CIT(A) deleted a larger addition on identical material, creating differential treatment. Revenue's contention: The non-filing of returns by the creditors, coupled with the magnitude of advances, casts doubt on their lending capacity, and the assessee failed to establish creditworthiness under Section 68. 2. Whether the estimated addition of Rs.1,09,04,450/- as business income was justified? (Mixed law and fact) Assessee's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation. Revenue's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation. 3. Whether the invocation of Section 115BBE of the Act was justified? (Mixed law and fact) Assessee's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation. Revenue's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation. 4. Whether there was a violation of the principles of natural justice and non-adherence to the faceless appellate regime? (Procedural) Assessee's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation. Revenue's contention: Not explicitly recorded in the provided text, but implied by the appeal against the CIT(A)'s confirmation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 131,Section 133(6),Section 68,Section 115BBE

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Heard together (2 matters)

ITA No.3587/Chny/2025
ITA No.3683/Chny/2025

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अधिकरण, ‘ए ’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री एबी टी वर्की, न्याययर्क सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3587/Chny/2025 निर्धारण वर्ा / Assessment Year: 2017-18 Mitesh Surana, The Income Tax Officer, Flat 10, 4th Floor, Golden Homestead vs. Non-Corporate Ward 3(4), Apartments 6, Harrington Road, Chennai. 7th Avenue, Chetpet, Chennai – 600 031. (प्रत्यर्थी/Respondent) [PAN: DMCPS-3835-J] (अपीलधर्थी/Appellant) अपीलधर्थी की ओर से/Appellant by : Shri. N.Arjun Raj, Advocate प्रत्यर्थी की ओर से/Respondent by : Ms. Anshu Sharawat, Addl.CIT

आयकर अपील सं./ITA No.3683/Chny/2025 निर्धारण वर्ा / Assessment Year: 2017-18 The Income Tax Officer, Mitesh Surana, Flat 10, 4th Floor, Golden Non-Corporate Ward-3(3), vs. Chennai. Homestead Apartments 6, Harrington Road, 7th Avenue, Chetpet, Chennai – 600 031. (अपीलधर्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलधर्थी की ओर से/Appellant by : Ms. Anshu Sharawat, Addl.CIT प्रत्यर्थी की ओर से/Respondent by : Shri. N.Arjun Raj, Advocate

सुिवधई की तधरीख/Date of Hearing : 30.07.

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