INCOME-TAX OFFICER, WARD-1(3), JAIPUR, NCRB, JAPUR vs. M/S GIRDHAR JEWEELERS PRIVATE LIMITED, JAIPUR

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ITA 1856/JPR/2025Status: DisposedITAT Indore29 September 2026AY 2022-238 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal. Regarding Grounds 1 and 2, the Tribunal held that the CIT(A) correctly exercised powers under Section 250(4) by calling for a remand report. The additional evidence was not admitted directly but forwarded for verification. The AO examined the evidence and submitted findings, confirming the genuineness of transactions. Therefore, the admission of additional evidence did not violate Rule 46A. For the remaining grounds, the Tribunal noted that the AO's remand report contained no adverse remarks on the loan transactions. The report summarized the lenders: M/s Anantnath Skycon Pvt. Ltd. (Rs. 4.25 crore, repaid with interest, TDS deducted, lender's income Rs. 666.71 crore), M/s Pitamber Commodities Futures Pvt. Ltd. (Rs. 1 crore, related concern, squared up, lender's loss Rs. 31.68 lakh), M/s Motisons Commodities Pvt. Ltd. (Rs. 79.40 lakh, repaid with interest, TDS deducted, lender's income Rs. 1.08 lakh), and Shri Prashant Tibrewala (Rs. 3.09 crore, Director/shareholder, transactions through running account, lender's income Rs. 20.18 lakh). The Tribunal found that the AO was satisfied with the identity, creditworthiness, and genuineness of these transactions, as reflected in the remand report. Consequently, the remaining grounds raised by the Revenue were also found to be devoid of merit.

What were the facts?

The assessee, M/s. Girdhar Jewellers Private Limited, engaged in jewellery and bullion, filed its return for AY 2022-23 declaring Rs. 27,92,980. The return was selected for scrutiny due to large unsecured and squared-up loans. The Assessing Officer (AO) issued a show cause notice proposing to treat Rs. 9.14 crores as unexplained cash credit under Section 68, taxable under Section 115BBE. The AO made additions of Rs. 5.25 crores for squared-up loans and Rs. 3.89 crores for fresh unsecured loans. The assessee appealed to the CIT(A), providing additional documents. The CIT(A) called for a remand report from the AO, who verified the loan transactions, repayments, interest payments with TDS, and the lenders' financial standing and tax filings. Based on this report, the CIT(A) deleted the additions.

What were the issues?

1. Whether the CIT(A) was justified in deleting the addition of Rs. 9,14,00,000/- made by the AO under Section 68, considering the assessee's alleged failure to furnish adequate explanation or evidence during assessment proceedings? 2. Whether the CIT(A) was justified in admitting additional evidence under Rule 46A without recording a proper finding regarding "sufficient cause" for non-production before the AO? 3. Whether the CIT(A) was justified in relying on the remand report as conclusive proof of genuineness, ignoring that the AO had not verified the financial capacity or creditworthiness of the lenders and merely reproduced submitted documents? 4. Whether the CIT(A) failed to consider that the assessee did not establish the creditworthiness of lenders, many with meagre incomes or losses, thus lacking financial ability to advance the loans? 5. Whether the CIT(A) ignored the fact that the assessee failed to establish the source of repayment of over Rs. 5 crore, despite declaring a low income, thus failing to satisfy Section 68 requirements regarding the source of both receipt and repayment? Assessee's arguments: The assessee supported the CIT(A)'s order and the AO's remand report, highlighting no adverse remarks regarding loan transactions, repayments, interest, and TDS. They relied on Smt. B. Jayalakshmi Vs. ACIT (2018) for the proposition that if CIT(A) allows claims based on AO's remand report, the Revenue's appeal is not maintainable. Revenue's arguments: The Revenue supported the AO's order and requested confirmation of the addition. Their grounds of appeal focused on the CIT(A)'s alleged failure to appreciate the assessee's lack of explanation during assessment, improper admission of additional evidence, reliance on the remand report without proper verification of creditworthiness, and failure to establish the source of repayment.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 250(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, JAIPUR

Before: Smt. Annapurna Gupta & Shri T. R. Senthil Kumar

For Appellant: Shri Rohan Sogani, CA
For Respondent: Shri Anand Swaroop, CIT, Shri Rohan Sogani, CA

आदेश/ORDER

PER : T. R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 15.10.2025 passed by Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi, arising out of assessment order passed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to Asst. Year 2022-23.

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2.

Brief facts of the case are that the assessee is a private limited company engaged in the manufacture and trading of gold and silver jewellery and bullion. For the AY 2022-23, assessee filed its return of income on 10.10.2022 declaring total income of Rs. 27,92,980/-. The return was processed u/s. 143(1) of the Act on 21.02.2023 and taken for complete scrutiny assessment, since large unsecured loans and squared up loans reported in the Tax Audit report. Hence, a show cause notice dated 10.03.2024 was issued, as to why not to treat the entire sum of Rs. 9.14 crores as unexplained cash credit u/s. 68 of the Act and liable to the taxed u/s. 115BBE of the Act. In response the assessee did not furnish full explanation and documentary evidences till completion of the assessment. Therefore, Ld. AO made addition of Rs. 5.25 crores as unexplained squared up loans and Rs. 3.89 crores on the fresh unsecured loans availed during the year by the assessee.

3.

Aggrieved against the assessment order, the assessee filed the appeal before Ld. CIT(A) and also filed addition documents. Based on the same, Ld. CIT(A) called for remand report from the AO. The relevant part of the remand report submitted by the Ld. AO reads as follows:-

"On perusal of the case record and reply it is found that the assessee company is engaged in the business of manufacture and trading of gold and silver jewellery and bullion and is based in, Jaipur, Rajasthan. The assessee company obtained loans from various entities and Individual. All transactions pertaining to the receipt of such loans were undertaken through proper banking channels. The amount received during the year under consideration from all parties was solely for business purpose. The amount was received as well as repaid through banking channel. In this connection the assessee has submitted party wise confirmation of loan account, Bank Statement of the lender and assessee company, copy of ITR filed of the lenders, Audited Financial Statements, details of unsecured loan received and repayments, Certification of incorporation of the lender company and Form No. 16A in the case of TDS deducted.

I.T.A No. 1856/JPR/2025 Page No 3 M/s. Girdhar Jewellers Private Limited

M/s Anantnath Skycon Pvt. Ltd.: This company has been incorporated on 28th January, 2019. This company has given unsecured loan of Rs. 4,25,00,000/- to the assessee during the year and the same amount received back through banking channel along with interest of Rs. 3,43,997/-thereon. The TDS was also made accordingly. Unsecured loan was squared up during the year. The lender company has filed ITR-6 for relevant A.Y. 2022-23 declaring total income of Rs. 666,71,64,986/-.

M/s Pitamber Commodities Futures Pvt. Ltd.: This company has been incorporated on 17th July, 2007. This company has given unsecured loan of Rs. 1,00,00,000/- to the assessee on 30.10.2021 during the year and the same amount received back through banking channel during the year consideration itself. The lender company was a related concern of the assessee. The company has not charged interest. The lender company has filed ITR-6 for relevant A.Y. 2022-23 declaring total loss of Rs. 31,68,630/-. It is noticed that this company was a debtor of the assesse at opening balance during the year and financial transactions have been made with the assesse throughout the year and squared up also during the year.

Motisons Commodities Pvt. Ltd.: This company has been incorporated on 5thJune, 2009. This company has given unsecured loan of Rs. 79,40,000/- to the assessee on 03.04.2021 during the year and the same amount received back Rs. 75,00,000/- on 22.09.2022 and balance amount on 24.09.2022 with running account through banking channel along with interest of Rs. 25,25,148/. The TDS was also made accordingly. The lender company has filed ITR-6 for relevant A.Y. 2022-23 declaring total income of Rs. 1,08,670/-. It is noticed that financial transactions have been made with the assesse during preceding and succeeding years also.

Prashant Tiberwala: Prashant Tiberwala has given Rs.3,09,60,000/- to the assessee on various dates during the year and the same has been received back with running account through banking channel. He is a related concern of the assesse. He has made financial transaction with the assessee throughout the year. He holds a significant position in the management of assessee company as a Director. Additionally, he is a substantial shareholder owing 40% of the company's shareholding. He has not charged interest. The lender has filed ITR-3 for relevant A.Y. declaring total income of Rs. 20, 18,480/-. It is noticed that financial transactions have been made with the assessee during"

4.

After considering the above remand report, Ld. CIT(A) deleted the addition made by the AO by observing as follows:-

I.T.A No. 1856/JPR/2025 Page No 4 M/s. Girdhar Jewellers Private Limited

“5.1.4 I have carefully considered the assessment order, the remand report and the material available on record. It is an admitted position, emerging from the AO's own remand verification, that all lenders are identifiable tax-assessees, the transactions are through banking channels, and in several cases, the loans were repaid with interest after deduction of TDS. These facts, verified by the Assessing Officer himself, clearly establish the three requisite conditions under section 68 i.e. identity, creditworthiness, and genuineness.

5.1.5 On merits, each of the creditors stands established:

 Anantnath Skycon Pvt. Ltd. is a company with declared income of Rs.666.71 crore; the entire loan was repaid during the year with interest.  Pitamber Commodities Futures Pvt. Ltd. is a related concern, engaged in commodity trading, and transactions were squared up within the year.  Motisons Commodities Pvt. Ltd. is a regular group concern, to whom interest with TDS was paid and duly reflected in Form 16A.  Shri Prashant Tibrewala, being a director and major shareholder, represents a transparent intra-group financing transaction.

None of the transactions indicate any cash involvement or accommodation entry.

5.1.6 The judicial principle enunciated by the Hon'ble Supreme Court in CIT v. Orissa Corporation (P) Ltd. (159 ITR 78) and CIT v. Lovely Exports (P) Ltd. (216 CTR 195) is that once the assessee provides identity, PAN, and banking trail of the creditors, the onus shifts to the Department to disprove the same through independent enquiry. The Delhi High Court in CIT v. Kamdhenu Steel & Alloys Ltd. (361 ITR 220) and PCIT v. Diamond Products Ltd. (372 ITR 128) has further held that receipt and repayment through account-payee cheques suffices to prove genuineness. The appellant's case is fully covered by these rulings.

5.1.7 In light of the factual verification by the AO and the settled law, I hold that the addition of Rs.9,14,00,000 under section 68 is unsustainable. The AO's own remand report substantiates the genuineness of the transactions, and there is no contrary evidence brought on record. Accordingly, the addition made under section 68 and taxed under section 115BBE is directed to be deleted in full.”

5.

Aggrieved against the appellate order, the Revenue is in appeal before us raising the following grounds of appeal:-

1.

"Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 9,14,00,000/- made by the Assessing Officer under section 68 of the Income-tax Act, 1961, without appreciating that the assessee had failed to furnish any explanation or

I.T.A No. 1856/JPR/2025 Page No 5 M/s. Girdhar Jewellers Private Limited

evidence during assessment proceedings despite repeated statutory opportunities?"

2.

"Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) was justified in admitting extensive additional evidence under Rule 46A of the Income-tax Rules, 1962, without recording a proper finding regarding the existence of "sufficient cause" for non-production of evidence before the Assessing Officer, thereby violating Rule 46A(2) and rendering the appellate order invalid?"

3.

"Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in relying upon the remand report as conclusive proof of genuineness, ignoring that the Assessing Officer had not verified the financial capacity or creditworthiness of the lenders and had merely reproduced documents submitted by the assessee during appellate proceedings?"

4.

"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to consider that the assessee did not establish the creditworthiness of the lenders, many of whom had meagre incomes or losses, and therefore had no demonstrable financial ability to advance unsecured loans aggregating to Rs. 9.14 crore."

5.

"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has ignored the fact that the assessee failed to establish the source of repayment of more than Rs. 5 crore despite declaring an income of only Rs. 27.92 lakh, thereby failing to satisfy the mandatory requirement under section 68 relating to the source of both receipt and repayment."

The appellant craves the right to amend alter or add to any of the grounds of appeal given above.

6.

Ld. CIT-DR appearing for the Revenue supported the order passed by AO and requested to confirm the addition.

7.

Per contra, Ld. Counsel appearing on behalf of the assessee supported the order passed by Ld. CIT(A) as well as remand report passed the AO where no adverse remarks against whole loan transactions, repayment of loans and payment of interest with appropriate TDS, thus requested to uphold the order of Ld. CIT(A).

I.T.A No. 1856/JPR/2025 Page No 6 M/s. Girdhar Jewellers Private Limited

Further, Ld. Counsel relied upon the judgment of Hon’ble Madras High Court in the case of Smt. B. Jayalakshmi Vs. ACIT (2018) 96 taxmann.com 486, wherein it is held that Ld. CIT(A) allows the claim on the basis of the AO’s remand report, the Revenue is not entitled to maintain any appeal before the Tribunal and the revenue’s appeal is liable to be dismissed. Ld. Counsel also relied upon other case laws.

8.

We have given our thoughtful consideration and perused the materials available on record. From the perusal of the order of Ld. CIT(A), we find that;

i. The CIT(A) exercised powers under Section 250(4) of the Act, which allows the appellate authority to call for further inquiry before disposing of an appeal.

ii. The additional evidence was not admitted directly by CIT(A) but was forwarded to the AO for verification through a remand report.

iii. The AO examined the additional evidence and submitted his findings, confirming the genuineness of most expenses by way of a remand report.

iv. Since the AO had full opportunity to verify the documents, the admission of additional evidence does not violate Rule 46A.

Thus Ground No. 1 and 2 are devoid of merits and liable to be dismissed.

8.1. As far as remaining Grounds, the remand report summarised the lenders as follows:-

Lender Amount (Rs.) AO's Remand Remarks M/s Anantnath Skycon 4,25,00,000 Loan repaid during the year Pvt. Ltd. through banking channels with interest of Rs. 3,43,997; TDS deducted; ITR filed showing

I.T.A No. 1856/JPR/2025 Page No 7 M/s. Girdhar Jewellers Private Limited

income of Rs. 666.71 crore. M/s Pitamber 1,00,00,000 Related concern; squared up Commodities Futures during the year; ITR filed Pvt. Ltd. showing business loss of Rs. 31.68 lakh.

M/s Motisons 79,40,000 Loan repaid in Sept. 2022; Commodities Pvt. Ltd. interest Rs. 25,25,148 with TDS deducted; ITR filed showing income of Rs. 1.08 lakh. Shri Prashant 3,09,60,000 Director holding 40% shares; Tibrewala transactions through running account; ITR filed showing income of Rs. 20.18 lakh.

9.

There is no any adverse remark by the Ld. AO in the Remand Report on the loan transactions made by the assessee with the third parties. The AO himself is fully satisfied with identity, creditworthiness and genuineness of the transactions which are reproduced in paragraph 3 above. Therefore, the remaining grounds raised by the Revenue are also devoid by merits and liable to be dismissed.

10.

In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 29-09-2026

Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated 29/09/2026 Dhananjay K., Sr. PS

आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue

I.T.A No. 1856/JPR/2025 Page No 8 M/s. Girdhar Jewellers Private Limited

3.

Concerned CIT 4. CIT (A) 5. DR, ITAT 6. Guard file. By order/आदेश से, सहायक पंजीकार आयकर अपील�य अ�धकरण, जयपुर

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