TIRUMALA STOCK BROKING PVT. LTD.,,KOLKATA vs. DCIT, CIRCLE 1(1), KOLKATA,, KOLKATA

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ITA 2122/KOL/2026Status: DisposedITAT Kolkata30 October 2026AY 2022-202310 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of ₹18,98,50,000/- as unexplained cash credit under Section 68 was not justified. The Tribunal noted that while notices under Section 133(6) to the lenders remained uncomplied with, the assessee had furnished all details and evidences regarding these loan creditors. Crucially, the Tribunal observed that the assessee's name, initially appearing in an interim SEBI list concerning malpractices, was deleted in the final SEBI order, with no penalty levied on the assessee, unlike other entities. The Tribunal found that the lower authorities had relied on an interim SEBI order without considering the final order. Furthermore, the Tribunal noted that the unsecured loans were repaid either in the current or subsequent year, and the assessee had provided ledger accounts and bank statements for these transactions. Citing decisions of the Hon'ble Gujarat High Court in 'Ambe Tradecorp (P.) Ltd.' and other High Court decisions, the Tribunal held that where the assessee has filed all evidences regarding loan creditors and the loans have been repaid, the addition under Section 68 cannot be sustained. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.

What were the facts?

The assessee, Tirumala Stock Broking Pvt. Ltd., filed its return of income for AY 2022-23 declaring a total income of ₹85,755/-. The case was selected for scrutiny. The Assessing Officer (AO) observed that the assessee received unsecured loans totaling ₹18,98,50,000/- from two parties, M/s Dharshan Multi Trade LLP and Shri Manish Vyas, which were used to purchase equity shares of Brightcom Group Ltd. The AO noted that SEBI had issued a confirmatory order against Brightcom Group Ltd. for fraudulent practices. Notices issued under Section 133(6) to the lenders and Brightcom Group remained unreplied. Consequently, the AO treated the unsecured loans as unexplained cash credits under Section 68 and added the amount to the assessee's income. The National Faceless Appeal Centre, Delhi (NFAC), confirmed this addition. The assessee appealed to the ITAT.

What were the issues?

1. Whether the addition of ₹18,98,50,000/- as unexplained cash credit under Section 68 of the Income Tax Act, 1961, is justified, given that notices under Section 133(6) to the loan creditors remained unreplied, despite the assessee furnishing other evidences? Assessee's contentions: - The assessee had explained the nature and source of the loans and submitted all relevant evidences, including confirmations of accounts and bank statements. - Mere non-compliance by loan creditors with Section 133(6) notices should not be the sole basis for treating loans as unproved or making additions under Section 68, especially when other acceptable evidences were provided and not assailed by the lower authorities. - The loan amounts have been repaid in subsequent and current years. Revenue's contentions: - The Revenue relied on the orders of the lower authorities (AO and CIT(A)).

Which sections of the Income-tax Act were involved?

Section 68,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Anil Kochar, AR
For Respondent: Shri Sanat Kumar Raha, DR
Hearing: 25.08.2026Pronounced: 30.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 27.05.2026 for the AY 2022-23.

2.

The ground no.1 is general in nature.

3.

The sole issue raised in ground no.2 is against the order of ld. CIT (A) confirming the addition of ₹18,98,50,000/- as made by the ld. AO u/s 68 of the Act in respect of unsecured loans raised during the year from three parties.

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 4. The facts in brief are that the assessee filed the return of income on 05.1.2022, declaring total income of ₹85, 755/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were duly issued and served upon the assessee. The assessee accordingly replied the questionnaire issued by the ld. AO from time to time by filing all the details and evidences as called for by the ld. Assessing Officer. The assessee furnished the bank statements, ITRs, Form 16, Form 10DB, 26AS, contract notes, Computation of income, bank book, CFL loss, stock broking details etc. The ld. AO observed that the assessee has received the unsecured loans to the tune of ₹18,88,15,000/- which was used to purchase 50 lac equity shares of Brightcom Group Ltd. (BCG), whereas in the books the assessee has shown different figure. Thereafter, the ld. AO noted that SEBI issued confirmatory order against the Brightcom Group Ltd (BCG) for fraudulent practices in preferential allotment of shares. The market regulator has affirmed its directives concerning 20 out of the 25 entities involved in the Brightcom Group Ltd. Thereafter, the notices were issued u/s 133(6) of the Act to both parties from whom the assessee borrowed the money however the same remained unreplied. AO also issued notices u/s 133(6) of the Act to the Brightcom Group however the same also remained unreplied. Thereafter, the ld. AO held that the unsecured loans to the extent of ₹18,98,50,000/- are bogus and accommodation entries. The ld. AO noted that the assessee has raised from M/s Dharshan Multi Trade LLP a sum of Page 2 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 ₹ 12,79,00,000/- and Shri Manish Vyas of ₹6,09,50,000/- .Finally, the ld. AO treated the said amount as unsecured loans as unexplained cash credit on the ground that notice issued u/s 133(6) of the Act were not replied and therefore, the creditworthiness and genuineness of the unsecured loans remained unverified. Accordingly, the amount was treated as unexplained cash credit and added to the income of the assessee. Besides ,the ld. AO added the business loss of ₹ 19,19,459/- by noting that as per the reply of the assessee the profit shown was ₹63,84,680/- in F & O scheme, whereas it is shown as ₹51,64,509/- in the Profit and Loss account. Accordingly, there was a short fall of ₹19,19,959/- which was treated as misreported income and added to the income f the assessee in the assessment framed u/s 143(3)/ 144B of the Income-tax Act, 1961 (the Act) dated 26.03.2021.

5.

In the appellate proceedings, the ld. CIT (A) confirmed the addition in respect of unsecured loans amounting to ₹18,98,50,000/- by noting that the unsecured loans raised by the assessee from Manish Vyas of ₹6,09,50,000/- and M/s Dharshan Multi Trade LLP of ₹12,97,00,000/- were utilized for applying 50 lacs equity shares of Brightcom group Ltd. The ld. AR referred to the specific finding of the ld. AO that assessee has filed the financials of both the creditors which were analyzed by the ld. Assessing Officer. The ld. AO noted that Shri Manish Vyas has very meagre income and his bank showed huge cash entries from the third-party M/S Mangal Timber Pvt. Ltd. which were immediately transferred to the Page 3 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 assessee meaning thereby that those were only accommodation entries. The ld. CIT (A) noted that M/s Dharshan Multi Trade has capital of only of ₹10,000/- with small reserves. However, the loans and advances were running into crores with negligible profit/ income, no inventory, no income, no turnover, no profit, no expenses, no interest income, which showed that the said company is a paper company. The ld. CIT (A) referred to the notices issued u/s 133(6) of the Act to both the lenders however, there were no compliance . The ld. CIT (A) thereafter, simply by ignoring the evidences filed by the assessee confirmed the addition by dismissing the appeal of the assessee.

6.

It has been contended by the Ld. Counsel of the assessee that in respect of loans obtained the assessee had explained the nature and source of the same and had submitted all relevant evidences such as confirmation of accounts, bank statement, etc. as mentioned by the A.O. It is submitted that meagre non-compliance to the notice of the A.O. issued u/s 133(6) of the Act to the loan creditors cannot render the matter against the assessee as because there are other acceptable evidences which the A.O. has himself referred to in the order of assessment. It is further contended that the evidences adduced by the assessee has neither been assailed nor controverted by the lower authorities. Non-compliance by a loan creditor with a notice issued under Section 133(6) of the Income-tax Act, 1961 cannot by itself be the sole or decisive factor in treating a loan as unproved or making an addition Page 4 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 under Section 68 of the Act. Accordingly, it is submitted that non-compliance to the notices issued u/s 133(6) cannot render the other relevant evidences and explanation so as to treat the loans as not explained with evidences adduced by the assessee. Further it is submitted that the loans amounts have been repaid in the subsequent and current year which is the vital fact to be noted

7.

Per contra the ld. DR relied on the orders of the lower authorities.

8.

After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has borrowed money by way of unsecured loans from two lenders namely Shri Manish Vyas and M/s Dharshan Multi Trade LLP. We note that the assessee during the course of assessment proceedings furnished all the details and evidences qua these loan creditors. We also note that the notice u/s 133(6) of the Act were also issued to the lenders, which remain uncompiled. We note that these unsecured loans were also repaid either in the current year or in the subsequent year. The copy of account in respect of the Shri Manish Vyas is available from page no. 83 and 84 and bank statement of HDFC Bank from page no. 285 to 385/-. Similarly, in respect of M/s Dharshan Multi Trade, LLP, we note that the amount borrowed was repaid back in the subsequent year and the copy of account of Brightcom Group Ltd. is available at page no. 135 and bank statement of HDFC Bank, whereby the repayments were made is available Page 5 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 at page no.136 to 139. We note that undisputedly the name of the assessee was appearing in the last list published by the SEBI, which was qua the probable names who indulged in malpractices. However, the name of the assessee was deleted in the final order passed by the SEBI and there is no penalty levied on the assessee whereas on the other entities, the penalty were levied. The assessee placed before the Bench the copy of order passed by the Securities Exchange Board of India (SEBI) u/s 11(1)/ 11(4) and 11B of SEBI Act, 1992. We have also perused the final order passed by SEBI dated 6th February, 2025which is placed before us, and note that assessee’s name is nowhere appeared in the said final list. Therefore, the basic presumption on which the ld. AO made the addition and the ld. CIT (A) confirmed the same is no more there with the passing of final SEBI order as referred to above. Moreover, we note that the assessee has filed all the evidences before the authorities below and they have not conducted any enquiry or investigation on the evidences filed and merely relied on the interim order passed by the SEBI. We note that the assessee has sold these preferential shares and proceeds realized from sale of preferential shares were utilized to repay the unsecured loans to these parties. We have already referred to the relevant pages i.e. copy of ledger along with banks statement, which are available in the paper book which evidenced the repayment of loans either in the current year or in the subsequent year. Therefore, once, it is established that assessee has filed all the evidences and the ld. AO has not been pointed out any defect or deficiency in the Page 6 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 documents filed by the assessee and the loans were repaid either in the current or subsequent year, then no addition can be made. The case of the assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid ,then the same cannot be added us/ 68 of the Act. Similarly, the of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :-

"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in Page 7 of 10

ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information." 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied.

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ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. " 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 9. We therefore, respectfully following the ratio laid down by the Hon’ble Gujarat High Court and the Hon'ble Calcutta High Court in the above decisions, set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. The appeal of the assessee is allowed.

10.

In the result, the appeal of the assessee is allowed.

Order pronounced on 30.10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 30.10.2026 Sudip Sarkar, Sr.PS Sudip Digitally signed by Sudip Sarkar Date: Sarkar 2026.10.30 09:38:18 +05'30'

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ITA No. 2122/KOL/2026 Tirumala Stock Broking Pvt. ltd; A.Y. 2022-23

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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