BHAWANI CONSTRUCTION PVT. LTD.,HOWRAH vs. DCIT, CEN. CIR.3(2), KOLKATA

आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOMETAX APPELLATE TRIBUNAL “A”BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member IT(SS)A. No.13/Kol/2024 Assessment Year: 2019-20 Bhawani Construction Pvt. Ltd.………………….……………..…..........……….Appellant vs. D.C.I.T., Cen. Cir.3(2) Shanti Pally, Eastern Metropolitan, Opposite Ruby, Kolkata West Bengal- 711204 [PAN: AABCB1996N) Appearances by: Shri Miraj D. Shah, AR, appeared on behalf of the appellant. Shri Anup Biswas, CIT, DR, appeared on behalf of the Respondent. Date of concluding the hearing : February 09, 2026 Date of pronouncing the order : March 17th , 2026 ORDER Per Pradip Kumar Choubey, Judicial Member: The instant appeal has been filed by the assessee against the order dated 27.12.2023 passed by CIT(A) Kol, under Section 250 of the Act for the assessment year 2019-20. 2. The brief facts of the case of the assessee is that assessee engaged in the business of healthcare, filed its return of income in response to notice under Section 153(A) declaring total income at Rs. 63,31,900/-. A search and seizure operation u/s 132 of the Act was conducted and during the course of search and seizure, some books of accounts were seized anditcame into the notice that during the year

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 under assessment, the assessee company has taken bonafide business loan from five entities and paid interest on loan to them. The Ld AO after going over the submission made by the assessee disallowed a sum of Rs. 9,50,000/- under Section 68 and bonafide interest paid after due deduction of TDSan amount of Rs. 1,3,59,816/-. 3. Aggrieved by the said order, assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been partly allowed at the CIT(A) has deleted the addition of Rs. 5,00,000/- and also deleted the addition of Rs. 19,39,16/-, but sustained the addition to the tune of Rs. 4,50,000/- u/s 68 towards M/s Scope Vintrade Pvt. Ltd. and tune of Rs. 11,43,000/- towards M/S Surana Trading Company Pvt. Ltd. u/s 69C of the Act. Being aggrieved and dissatisfied, the assessee preferred an appeal before us. 4. The Ld AR challenges the very impugned order by submitting that the Ld. CITA was not justified in sustaining addition to the tune of Rs. 4,50,000/- in respect of loan taken from Scope Vintrade Pvt. Ltd and addition to the tune of Rs. 11,43,400/- in respect of interest paid to Surana Trading Pvt. Ltd company and Raina Vyapaar Pvt. Ltd, without assigning any cogent reason for sustaining such addition. The Ld. AR further submits that AO in its assessment order recorded a findings that the notices were issued to the concerned party and the said parties has duly responded and further gave finding that assessee submitted all relevant documents to establish loan transactions and the interest payment even though he added the said loan amount and interest paid their own by relying upon third party statement recorded in earlier parties and available in the departmental data base. The Ld AR further submits that the loan giver company has

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 also offered the interest paid by the assessee company as their income in their income tax return, furthermore, the same has been duly and fairly reflected in the books of accounts of the assessee. The Ld AR further submits that the loan creditors has suitable amount of reserves and entire amount of loan was repaid in the subsequent years. Ld. AR placed has reliance on the judgment passed by the Hon’ble Kalkata High Court in the case of Sree Leathers reported in 448 ITR 332 (Cal). 5. Contrary that Ld DR supports the impugned order. 6. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that during the year under assessment, the assessee company has taken bona fide business loan from following concerns and paid interest on

loanto them 7. We further find that facts on record will reveals that the assessee submitted all relevant document to establish the loan transaction and the interest payment. The AO has also recorded that in

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 response to the notice u/s 133(6), the requisites documents were submitted by the loan creditors barring one concern viz. Kanha dealers Pvt. Ltd..We further find that assessee has furnished documentary evidence to substantiate that some of the loans were also squared up.It is pertinent to mention here that loan taken from Kanha Dealers Pvt. Ltd an amount of Rs. 5,00,000/- has been deleted by the CITA in its order. We further find that AO did not do anything such as further inquiry when the documents and the reply has been submitted by the assessee with regard to the loan and unpaid thereof. The Assessing Officers has failed to bring any cogent material or corroborative evidences on record to establish in nexus between the alleged entry operator and the loan transaction made by the assessee. It is further important to mention here that lender companies had already confirmed transaction. Hon’ble Calcutta High Court in case of Sree Leathers has discussed this issue and held as follows:

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression "money laundering." We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different.

Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraph 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assessing officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under Section 68 of the Act.

The Ld Court further explained as follows:

Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under Section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual findings that the net worth of those companies is in crores of rupees and they have declared income to the tune of Rs. 45,00,000/- and 75,00,000/-. Therefore, the assessing officer if in his opinion found the explanation offered by the assessee to be not satisfactory, he should have recorded so with reasons. We find that there is no discussion on the explanation offered by the assessee qua,such expression when it was never the case that there was any allegations of money laundering. Paragraph 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assessing officer ignored the settled legal principle and in spite of the

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under Section 68 of the Act.

The Ld Court further explained as follows:

Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under Section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual findings that the net worth of those companies is in crores of rupees and they have declared income to the tune of Rs. 45,00,000/- and 75,00,000/-. Therefore, the assessing officer if in his opinion found the explanation offered by the assessee to be not satisfactory, he should have recorded so with reasons. We find that there is no discussion on the explanation offered by the assessee qua, one of the lenders. Admittedly, the assessee was not issued any show cause notice in respect of other lenders. However, they are able to produce the details before the CIT(A) who had in our view rightly appreciated the facts and circumstances of the case. As pointed out earlier, the assessing officer brushed aside the explanation offered by the assessee by stating that merely filing PAN details, balance sheet does not absolve the assessee from his responsibilities of proving the nature of transactions. It is not enough for the assessing officer to say so but he should record reasons in writing as to why the documents which were filed by the assessee along with the reply dated 22.12.2017 does not go to establish the identity of the lender or prove the genuineness of the transaction or establish the creditworthiness of the lender. In the absence of any such finding, we have to hold that the order passed by the assessing officer was utterly perverse and rightly interfered by the CIT(A). The Tribunal re-appreciated the factual position and agreed with the CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under Section 133 (6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue.

I.T..A. No.13/Kol/2024 Assessment year: 2019-20 requisites were submitted by the loan creditors. The assessee has also furnished documentary evidence to substantiate that some of the loans were squared up. Quarterly interest was paid to the loan creditors after deduction of TDS. 9. Keeping in view of the discussion made above we allow the appeal of the assessee by deleting the addition made by the CIT(A) Appeal of the assessee is allowed. Kolkata, the 17th March, 2026. Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member D.C. (PS) Dated: 17th March, 2026. 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 Benche