DCIT, CC-1(4), AHMEDABAD vs. RIDDHI SIDDHI ESTATE CREATORS LLP, AHMEDABAD

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ITSSA 41/AHD/2024Status: DisposedITAT Ahmedabad29 July 2025AY 2018-199 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal (IT(SS)A No. 41/Ahd/2024) for AY 2018-19 due to low tax effect, citing CBDT Circular No. 05/2024. The Tribunal dismissed the assessee's appeal (IT(SS)A No. 29/Ahd/2024) for AY 2018-19, upholding the CIT(A)'s finding that the addition of Rs. 25,00,000/- as unsecured loan from Jignesh A. Dhamecha was justified due to the assessee's failure to furnish documentary evidence proving the lender's genuineness and creditworthiness. The corresponding interest expense addition was also confirmed. The assessee's appeal (ITA No. 1014/Ahd/2024) for AY 2019-20 was dismissed, upholding the CIT(A)'s decision on the addition of Rs. 3,07,368/- as interest on unsecured loans. The appeal filed by Safari Biotech Pvt. Ltd. (ITA No. 1016/Ahd/2024) for AY 2019-20 was partly allowed for statistical purposes. The Tribunal directed the AO to verify the assessee's claim regarding the reduction of Rs. 23,01,432/- in addition under Section 43CA and to decide as per law, considering the DVO's report for the addition of Rs. 1,92,206/- under Section 43CA. The ratio is that the burden to prove the genuineness and creditworthiness of unsecured loans lies with the assessee, and failure to do so justifies additions under Section 68.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, heard appeals concerning Riddhi Siddhi Estate Creator LLP and Safari Biotech Pvt. Ltd. for assessment years 2018-19 and 2019-20. The appeals arose from orders passed by the CIT(A)-11, Ahmedabad. During a search under Section 132 of the Income Tax Act, 1961, loose papers and a diary were seized, containing details of loans. The Assessing Officer (AO) added Rs. 89,00,000/- as unexplained unsecured loans and disallowed interest of Rs. 2,29,000/-. The CIT(A) partly allowed the assessee's appeal. The assessee contended that the CIT(A) erred in upholding additions related to unsecured loans and interest. The Revenue also appealed against the deletion of certain additions by the CIT(A).

What were the issues?

1. Whether the addition of Rs. 25,00,000/- as unsecured loan under Section 68 of the Income Tax Act, 1961, is justified, considering the assessee's alleged failure to prove the genuineness and creditworthiness of the lender (Assessee's appeal)? 2. Whether the addition of Rs. 68,219/- as interest expense under Section 37 of the Income Tax Act, 1961, related to unsecured loans is justified (Assessee's appeal)? 3. Whether the deletion of Rs. 64,00,000/- on account of unexplained unsecured loan under Section 68 of the Income Tax Act, 1961, by the CIT(A) was erroneous (Revenue's appeal)? 4. Whether the deletion of Rs. 1,61,030/- on account of interest expenses under Section 69C of the Income Tax Act, 1961, by the CIT(A) was erroneous (Revenue's appeal)? 5. Whether the addition of Rs. 3,07,368/- as interest expense under Section 37 of the Income Tax Act, 1961, related to unsecured loans is justified (Assessee's appeal)? 6. Whether the CIT(A) erred in directing the AO to verify the claim regarding the addition of Rs. 23,01,432/- under Section 43CA of the Income Tax Act, 1961, instead of deleting it (Assessee's appeal)? 7. Whether the CIT(A) erred in upholding the addition of Rs. 1,92,206/- under Section 43CA of the Income Tax Act, 1961, despite it being within the 10% tolerance limit (Assessee's appeal)? Assessee's Contentions: The CIT(A) erred in upholding additions of Rs. 25,00,000/- (unsecured loan) and Rs. 68,219/- (interest) as all relevant documents were provided. The CIT(A) also erred in directing verification for Rs. 23,01,432/- and upholding Rs. 1,92,206/- under Section 43CA. Revenue's Contentions: The CIT(A) erred in deleting the addition of Rs. 64,00,000/- (unsecured loan) and Rs. 1,61,030/- (interest expenses).

Which sections of the Income-tax Act were involved?

Section 68,Section 37,Section 69C,Section 43CA,Section 132,Section 153A,Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH

Before: Dr. BRR Kumar & Ms. Suchitra Kamble

For Appellant: Shri Tushar Hemani, Sr. A.R, Shri Parimalsinh B. Parmar &, Shri Sunil Maloo, ARs
For Respondent: Shri Sher Singh, CIT-D.R. &, Shri Rajeev Garg, Sr. D.R

आदेश/ORDER Per Suchitra Kamble, Judicial Member:

IT(SS)A No. 29/Ahd/2024 & ITA No. 1014/Ahd/2024 for assessment year 2018-19 & 2019-20 filed by assessee, Riddhi Siddhi Estate Creator LLP & IT(SS)A 41/Ahd/2024 filed by the revenue are against the order dated 26-03-2024 passed by CIT(A)-11, Ahmedabad. ITA No. 1016/Ahd/2024 for assessment year 2019-20 filed by assessee, Safari Biotech Pvt. Ltd. is against the order dated 20-03-2024 passed by CIT(A)-11, Ahmedabad.

2.

The grounds of appeals are as under:- IT(SS)A No. 29/Ahd/2024 A.Y. 2018-19 “1 The Ld. CIT(A) grossly erred in law and facts in upholding the addition of Rs 25,00,000/- u/s 68 being unsecured loan taken by the Assessee alleging Assessee's failure to prove genuineness and creditworthiness of lender [Total tax effect of disputed addition of Rs 25,00,000/- is Rs 19,50,000/-.] 2 The Ld CIT(A) grossly erred in law and facts in upholding the addition of Rs 68,219/- u/s 37 being interest accounted in books for unsecured loan taken by the Assessee. [Total tax effect of disputed addition of Rs 68,219/- is Rs 23,194/-.] 3 The Appellant reserves the right to add, alter, amend, or modify any of the grounds of appeal during the course of the appellate proceedings.”

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20

IT(SS)A No. 41/Ahd/2024 A.Y. 2018-19

“1) "In the facts and on the circumstances of the case and in law, the ld CIT(A) has erred in deleting the addition of Rs. 64,00,000/- on account of unexplained unsecured loan u/s 68 of the IT Act "

2) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.1,61,030/- on account of disallowance of the interest expenses u/s 69C of the It Act"

3) "The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal."

ITA No. 1014/Ahd/2024 A.Y. 2019-20

“1. The Ld CIT(A) grossly erred in law and facts in upholding the addition of Rs 3,07,368/- u/s 37 being interest accounted in books for unsecured loan taken by the Assessee [Tax effect of disputed addition of Rs 3,07,368/- is Rs 1,04,505/-].

2 The Appellant reserves the right to add, alter, amend, or modify any of the grounds of appeal during the course of the appellate proceedings.”

ITA No. 1016/Ahd/2024 A.Y. 2019-20 “1. The Ld CIT(A) grossly erred in law and facts in directing the Assessing Officer to verify the claim of Assessee regarding erroneous addition of Rs 23,01,432/- u/s 43CA instead of deleting the same based on concrete documentary evidence placed on record [Tax effect of disputed addition of Rs 23,01,432/- is Rs. 7,82,487/-]

2.

The Ld CIT(A) grossly erred in law and facts in upholding the addition of Rs 1,92,206/- u/s 43CA despite the same being within the tolerance limit of 10% as prescribed in first proviso to Section 43CA. [Tax effect of disputed addition of Rs 1,92,206/- is Rs. 65,418/-]

3.

The Appellant reserves the right to add, alter amend, or modify any of the grounds of appeal during the course of the appellate proceedings.”

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 3. Firstly, we are taking IT(SS)A no. 29/Ahd/2024 for assessment year 2018-19 filed by the assessee. The assessee is engaged in real estate business. The original return of income was filed by the assessee on 08-10-2018 declaring loss of Rs. (-)5,37,923/-. The return was processed u/s. 143(1) of the Act. Search u/s. 132 of the Income Tax Act was carried out on 01-02-2019 in Riddhi Siddhi Group cases and the business premises of the assessee namely Riddhi Siddhi Creator LLP which is also one of the group concerns was searched. Notice u/s. 153A was issued on 14-11-2019 for the year under consideration in response to which the assessee furnished return of income on 09-12-2019 declaring total loss of Rs. (-) 5,37,923/-. The notice u/s. 143(2) of the Act was issued on 07-01-2010 and subsequently notices u/s. 142(1) along with questionnaire was issued on various dates. In response to the notices, the assessee filed submissions along with supporting evidences on 06.03.2021. The Assessing Officer observed that the business of various concerns/persons of the group as well as that of assessee’s business were conducted in the premises being 10- Abhishree Corporate Park, Ambli-Bopal Road, Ahmedabad.

3.1 During the course of search action u/s. 132 of the Income Tax Act, certain loose papers were found which were seized and marked as annexure A/4 containing 1-163 pages. The diary was also seized and marked as annexure A-4 containing the details of holding off immovable property like land, flat, office, shop etc. by RSGBL, which is a group

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 concerns and its director/partners. The said pages more particular page no. 42 of Annexure-A/4 contained details of loans to various parties. During the assessment proceedings when confronted to assessee about the said page, the assessee vide letter dated 15.05.2019 submitted that “the jotting on these page is outstanding payment of parties as per books.”

3.2 The Assessing Officer has given the details in the assessment order related to the documents seized during the search action. After taking cognizance of the assessee’s explanation, the Assessing Officer held that the assessee used unsecured loan taken from Shri Jigensh A. Dhamecha Proprietor of Shreejee Enterprises, Shri Salim Mod. Ajmervala, Proprietor of M/s. Rolex Finance as a colorable device to introduce its unaccounted income in the books of the assessee. The Assessing Officer held that the presence of the said copies of bank statements in the premises of the assessee shows and proves the dubious nature of the bank account and proves that the account was under control of the assessee to prevent the unaccounted fund of the assessee in its books of account as unsecured loan. Thus, Rs. 89,00,000/- was added to the total income of the assessee u/s. 68 of the Act as unexplained unsecured loan. The Assessing Officer also disallowed the interest of Rs. 2,29,000/- u/s. 69C related to Rolex Finance and Shreejee Enterprises as well as Shree Ram Enterprises.

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

The Ld. A.R. submitted that the CIT(A) was not right in upholding the addition of Rs. 25,00,000/- u/s. 68 being unsecured loan taken by the assessee alleging assessee’s failure to prove genuineness and creditworthiness of the loan. The Ld. A.R. submitted that the assessee received unsecured loan of Rs. 25,00,000/- from one Shri Jignesh A. Dhamecha also paid interest on such unsecured loans in assessment year 2018-19 and 2019-20. The Ld. A.R. submitted that all the relevant documents were provided to Assessing Officer as well to the CIT(A) and thus confirmation of addition of Rs. 25,00,000/- u/s. 68 and Rs. 68,219/- u/s. 37 of the Act by the CIT(A) is not justified. The Ld. A.R. submitted that once the CIT(A) accepts the entire amount and grants the relief to the extent of Rs. 51,17,603/- then the same cannot restricted.

6.

The Ld. D.R. relied upon the assessment order and submitted that the Department is also in appeal IT(SSA)A 41/Ahd/2024 which is a low tax effect.

7.

We have heard both parties and perused all the relevant material available on record. Though the Revenue has filed the appeal for assessment year 2018-19, the tax effect is low as mentioned in the CBDT Circular No. 05/2024 dated 15.03.2024. Thus, IT(SS)A No.41/Ahd/2024

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 for A.Y. 2018-19 filed by the Revenue is dismissed. As regards IT(SS)A No. 29/Ahd/2024 filed by the assessee for assessment year 2018-19, the CIT(A) has given a categorical finding that the addition of unsecured loan of Rs. 25,00,000/- received from Jignesh A. Dhamecha, proprietor of Shreejee Enterprises has to be disallowed for the reason that despite receiving the said amount of loan of Rs. 44,01,227/- , the assessee has not furnished necessary documentary evidence to prove the genuineness and creditworthiness of the lender. In para 5.4 of the order, the CIT(A) categorically gave this finding. Thus, there is no need to interfere with the findings of the CIT(A). The interest portion also is qua related with this component of the unsecured loan and therefore the corresponding interest expenses was also rightly confirmed by the CIT(A). Thus, the appeal filed by the assessee being IT(SS)A No. 29/Ahd/2024 is dismissed.

8.

As regards ITA 1014/Ahd/2024, the assessee has filed the appeal being ITA No. 1014/Ahd/2024 for assessment year 2019-20. The issue contested therein is related to the addition of Rs. 3,07,368/- u/s. 37 being interest accounted in books for unsecured loan taken by the assessee. The CIT(A) has given a detailed finding and the unsecured loan which was confirmed the interest expenses qua the said unsecured loan is rightly dealt with by the CIT(A). Thus, ITA No. 1014/Ahd/2024 filed by the assessee for assessment year 2019-20 is dismissed.

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 9. As regards ITA No. 1016/Ahd/2024 for assessment year 2019-20 filed by Safari Biotech Pvt. Ltd., the Ld. A.R. submitted that there was mistake in taking the valuation and after rectifying the said mistakes, addition of Rs. 24,93,638/- would get reduced by Rs. 23,01,432/- as tabulated below: Particulars Value as per Correct Valuation Difference to be Stamp Duty (In INR) reduced from Authorities (As per addition Assessing Officer) (In INR) (in INR) Shed No. 80 24,69,388 17,67,196 7,02,192 Shed No. 53 20,83,673 12,83,926 7,99,747 Shed No. 55 20,93,877 12,94,384 7,99,493 Total 23,01,432

Therefore, the CIT(A) has categorically directed the Assessing Officer to verify the claim of the assessee and if found correct, reduced the amount of addition accordingly. Thus, there is no need to interfere with the findings of the CIT(A). The contention of the Ld. AR that as regards Ground no. 2, the CIT(A) uphold the addition of Rs. 1,92,206/- under Section 43CA despite the same being within the tolerance limit of 10% as prescribed in first proviso to Section 43CA of the Act, the Assessing Officer is directed to consider the same as per the DVO’s report and the decide as per law. Thus, ITA No. 1016/Ahd/2024 for A.Y. 2019-20 filed by the Safari Biotech Pvt. Ltd. is partly allowed for statistical purpose.

I.T(SS).A No. 29 & 41/Ahd/2024 & 1014 & 1016/Ahd/2024 Riddhi Siddhi Estate Creator LLP & Safari Biotech Pvt. Ltd., A.Y. 2018-19 & 2019-20 10. In the result, IT(SS)A No. 41/Ahd/2024 for assessment year 2018-19 filed by the Revenue, IT(SS)A No. 29/Ahd/2024 filed by the assessee and ITA No. 1014/Ahd/2024 for assessment year 2019-20 filed by the assessee are dismissed and ITA No. 1016/Ahd/2024 being for assessment year 2019-20 is partly allowed for statistical purposes. Order pronounced in the open court on 29-07-2025

Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 29/07/2025 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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