CHHATRACHHAYA NIRMAN (P) LTD,INDORE vs. DCIT, 2(1), INDORE, INDORE

Per Paresh M Joshi, J.M:

This is an appeal filed by the Assessee under section 253 of

the income tax Act 1961,[ hereinafter referred to as the Act

for the sake of brevity] before this tribunal, as & by way of a

second appeal .The Assessee is aggrieved by the order

bearing No:-ITBA/APL/S/250/2025-26/1082805630(1)

dated 20.11.2025 passed by the Ld. CIT(A) u/s 250 of the

Act, which is hereinafter referred to as the “Impugned

Page 1 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 order”. The Relevant Assessment year is 2010-11 and the

corresponding previous year period is from 01.04.2009 to

31.03.2010.

2.1 That as and by way of an Assessment order made u/s

143(3) of the Act, the total income of the assessee was

computed and assessed at Rs. 11,32,270/-. The income as

per the ROI was at Rs. 9, 97,266/-. An addition of Rs.

1,35,000/- was made by virtue of Para 3.1 of the

aforesaid order. That the aforesaid order is dated

09.10.2017,which is hereinafter referred to as the

“Impugned Assessment Order” for sake of brevity.

2.2 The assessee company had filed its original ROI for the

Assessment Year 2010-11 on 27.09.2010 declaring total

income at Rs. 9,97,293/-.

2.3 The assessee company is engaged in the real estate

development.

Page 2 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 2.4 Subsequently DYCIT-1(1) Bilaspur had forwarded an

information in case of M/s Purvi finvest Ltd. Bilaspur for

Assessment Year 2010-11 stating that the M/s Purvi Finvest

has procured bogus share application money/premium from

paper companies of Kolkata and thereafter had advanced the

loans to the various person/entities/company. That the

company M/s Purvi Finvest Ltd., Bilaspur during the FY

2010-11 had advanced loan to the assessee company out of

its bogus funds and that the said company is the ultimate

beneficiary. That on the basis of such an information

received, the Ld. Assessing Officer had a “reason to belief”

that the assessee company has an income which was

chargeable to tax which has in fact escaped assessment

within the meaning of section 147 of the Act. In this

regard the Ld. Assessing Officer after recording the reasons

for initiating the proceeding u/s 147 issued a notice u/s 148

of the Act on 30.03.2017 which was served upon the

assessee company. In response thereto, the assessee

company filed it’s return of income dated 30.05.2017

declaring total income of Rs. 9,97,266/- and thereafter due

Page 3 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 to change of incumbent again a notice u/s 143(2) was issued

to the assessee company on 07.08.2017.

2.5 That In response to said notice, Shri Rajesh Rathi, CA

and authorised representative attended the assessment

proceedings from time to time as per order sheet entries with

whom the case was discussed. Written submission along

with copy of computation of income, audit report, Bank

account statement and other details as sought were filed

which were examined and placed on record. There was no

objection for reason recorded. Rather submission on merit

was filed.

2.6 That As per information received, the company M/s Purvi

Finvest Limited has given loan to assessee company in

previous years from the A.Y. 2010-11. As per information

received which is mentioned in the reason recorded, it was

established by the DCIT-1(1), Bilaspur that M/s Purvi

Finvest Limited is entry provider company only and no real

loan was given by it to all persons including the assessee

Page 4 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 company who are claiming to have received loan form M/s

Purvi Finvest Ltd. No evidence could be filed during the

course of assessment except saying the loan is not taken

in this year.

2.7 In view of the above factual position the Ld. Assessing

Officer in the Impugned Assessment Order has observed and

concluded as follows:-

“3.1 M/s Purvi Finvest Limited is in fact an entry

provider company and out of its bogus funds, the said

company has claimed loan to the assessee company. The

assessee company has claimed interest of Rs.1,35,000/-

during the F.Y. 2009-10 (Α.Υ. 2010-11) on loan taken

from company M/s Purvi Finvest Limited. It is pertinent

to mention here that when loan itself taken is not proved

genuine then interest paid thereon is also considered to

be bogus. Therefore, keeping the above view,

Rs.1,35,000/- which was paid as interest on loan is

added to the total income of the assessee company. I am

satisfied that assessee company has furnished

Page 5 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 inaccurate particulars of income, therefore penalty

proceeding u/s 271(1)(c) is also initiated on this issue.”

2.8 That the assessee being aggrieved by the aforesaid

“Impugned Assessment Order” prefers the first appeal u/s

246A of the act before the Ld. CIT (A) who by the

“Impugned Order” has dismissed the first appeal of the

assessee on the grounds and the reasons stated therein. The

core grounds and the reasons for the dismissal of the first

appeal were as under:-

“5.2.1 The Appellant has contended that the re-

opening proceedings are void as the reasons

recorded and communicated were incomplete

and the due procedure was not followed.

Further, the information on basis on which the

proceedings were initiated are incorrect and

non-existent. Also, the AO has failed to issue

an appropriate show-cause notice indicating

the reasons for the proposed allowances and

failed to give due consideration to the

Page 6 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 Appellant's submission before passing the final

order. The contentions of the Appellant are

perused and the judicial pronouncements relied

upon are duly taken into consideration.

5.2.2 The A.O. received information from DCIT-

1(1) Bilaspur in case of M/s Purvi Finvest

Limited that it has advanced loans out of its

bogus funds in A.Y. 2010-11 and the Appellant

is one of its beneficiary. The appellant was

served a notice u/s 148 dated 30.03.2017 of

the Act after recording the reasons and taking

due approval from Principal Commissioner of

Income Tax-1, Indore. The reasons for

reopening were provided to the Appellant.

Thus, before issue of notice us 148, the AO duly

completed requisite statutory procedure. As per

IT Act and Rules.

Page 7 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 5.2.3 Further the law is settled on this issue by

236 ITR 34 (SC) wherein it was held that in

Raymond Woollen Mills Ltd. v. ΙΤΟ [1999] 236,

the Hon'ble Supreme Court in the case of

determining whether commencement of

reassessment proceedings was valid it has only

to be seen whether there was prima facie some

material on the basis of which the department

could reopen the case. The sufficiency or

correctness of the material is not a thing to be

considered at this stage.

Also, the Hon'ble Supreme Court has in Phool

Chand Bajrang Lal vs. ΙΤΟ (1993) 203 ITR 456

(SC) held that while there must exist reasons

for holding a belief of escapement of income,

the question whether the reasons were

adequate or sufficient is not for the courts to

decide. Since the belief is that of an Income-tax

Page 8 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 Officer, sufficiency of the reasons for forming

the belief is not for the court to judge.

And the Hon'ble Gujrat High Court has held

Praful Chunilal Patel-Vasant Chunilal Patel V.

Asstt. CIT (1999) 236 ITR 832, 840-41 (Guj.)

that at the initiation stage, formation of

reasonable belief is needed and not a

conclusive finding on the facts.

5.2.4 In view of the settled legal position, it is

concluded that the instant case was reopened

based on proper information based on material

available on records which clearly indicated

that certain taxable income had escaped

assessment. The AO had valid reason to

initiate reassessment in this case. Moreover,

before issuing notice u/s 148, the AO had

recorded proper reasons and due procedure of

the law was followed. No infirmity is found in

the notice issued u/s 148. Subsequently the

Page 9 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 assessment has been completed by the AO duly

observing the principles of natural justice. The

reasons recorded were provided to the

appellant and the objections raised by the

Appellant against the assessment order were

duly disposed off by passing a speaking order

dated 09.10.2017. Therefore, the assessment is

found to be procedurally in order. The

contentions of the appellant are without any

legal merit. The same are rejected. Hence, the

grounds of appeal are dismissed.

5.3 The Ground of Appeal No. 3 is against the

addition made of interest paid amounting to

Rs. 1,35,000/-.

The Appellant has contended that proper

opportunity was not provided to prove the

genuineness of the loan and no proper enquiry

Page 10 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 was made by the AO before making the

addition.

The contention of the Appellant is perused

perused and it is observed that the Appellant

was given sufficient opportunities during the

appellate proceedings to put forth submissions

and other documentary evidence on record.

However, the Appellant has failed to submit

any documents to support the genuineness of

the loan taken by M/s Purvi Finvest Limited.

Accordingly, I hereby confirm the addition

made by the AO. Hence, the ground of appeal is

disallowed.

dismissed.”

Page 11 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 2.9 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

tribunal and has raised the following grounds of appeal in

the form no. 36 against the “Impugned Order” which are as

under:-

“1. That the Ld. CIT(A) erred in upholding the

action of the Assessing Officer in re-opening of

assessment u/s 147 based on report of

Investigation Wing which constitutes borrowed

satisfaction and hence the assessment order

framed u/s 143(3)/147, on the basis of a

borrowed opinion is without jurisdiction and

hence bad in law which may very kindly be

quashed.

action of the Assessing Officer in passing of

the reassessment order without passing a

speaking order against the objections filed

before the Assessing Officer and hence the

Page 12 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 reassessment order framed without passing a

speaking order against the objections filed by

the assessee against reopening of assessment

is bad in law which may very kindly be

quashed.

action of the Assessing Officer where he erred

in not supplying the report of the Investigation

Wing and using the same against the assessee

without affording an opportunity of rebuttal to

the appellant which is against the principles of

natural justice and hence under the facts and

in circumstances of the case and as per law,

the reassessment order is bad in law which

may very kindly be quashed.

Without prejudice to Ground nos 1 to 3 above

and only in the alternate:

Page 13 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 4. That the Learned CIT(A) erred in upholding

the action of the Assessing Officer in

disallowing interest paid on unsecured loan of

Rs. 1,35,000/- and treating it as bogus. That,

on the facts and in the circumstances of the

case the said disallowance of interest of Rs.

1,35,000/- is wrong and uncalled for and same

may very kindly be deleted.

alter, amend, modify, substitute, delete and/or

rescind all or any of the grounds of appeal on

or before final hearing, if necessity so arises.”

3.1 The hearing in the matter took place before this Tribunal

on 12.10.2026 & 13.10.2026 when the Ld. AR for & on

behalf of the Assessee appeared before us and interalia

Page 14 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 contended that the “Impugned Order” is bad in law, illegal

and not proper. It therefore deserves to be set aside.

3.2 The Ld. AR has placed on the record of this tribunal a

paper book containing pages 1 to 100. A paper book of case

laws from pages 1 to 203. Submissions from pages 1 to 20

and a letter dated 13.10.2026 in response to query by

Bench on 12.10.2026. A request was also made for

admission/adjudication of additional grounds vide letter

dated 15.10.2026 to treat ground no 1 to 3 as legal ground

although not raised in the first appeal in view of the

judgement of the Hon’ble Supreme Court of India in case of

NTPC v/s CIT 229 ITR 383.

3.3 The Ld. AR then submitted that the relevant assessment

year under consideration is Assessment Year 2010-11. It is

a case of re-assessment u/s 147/148 of the Act. The

assessee is a company under the Co’s Act. It is engaged in

the development of commercial buildings and residential

plots at Indore and Pithampur. It is an old company

Page 15 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 established way back in year 1990. The “Impugned

Assessment Order” was read out by the Ld. AR. Our

attention was then invited PB page 33 which contains

reasons and same were read out. It was brought to our

notice that in fact an amount of Rs. 15 Lakh was taken by

the assessee company in the preceding year i.e.

Assessment Year 2009-10 @ 9% interest PA. In this regard

our attention was invited to paper book page 32 which was

a copy of ledger account of the assessee company for

Assessment Year 2009-10, (FY 2008-09). Our attention

was then invited to paper book page 43 which was a ledger

account evidencing payment of Rs. 1,35,000/- with entry

date of 19.03.2010. There is a debit of Rs. 1,21,500/- and

debit of Rs. 13,500/- as TDS on 19.03.2010. The Ld. AR

then submitted that in the Assessment Year 2011-12 the

amount is repaid and in this regard our attention was

invited to paper book page 44 which is a copy of ledger

account of the assessee for the Assessment Year 2011-

12, [FY 2010-11] wherein by the several tranches (5) and

an amount of Rs. 1,51,12,920/- was repaid to Purvi

Page 16 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 Finvest Ltd. which was principle+ interest. Our attention

was invited to paper book page 28 which was a copy of notice

dated 30.03.2017 u/s 148 of the Act, a letter cum reply

dated 20.04.2017 to notice dated 30.03.2017 wherein

reasons were sought too [PB page 29]. Reasons were given to

the assesse company on 05.06.2017 by the revenue paper

book page 32. The assessee company filed reply dated

14.06.2017 paper book page 36 to 37. Our attention was

invited to PB page 38 a letter dated 20.08.2017 of the

assessee to the Ld. Assessing Officer enclosing important

documents. Thereafter the Ld. AR invited our attention to

internal page 5 of the Impugned Order and highlighted Para

5.3. Thereafter out attention was invited to paper book page

57 to 73 which were the assessee’s submissions to the Ld.

CIT (A). The hearing at this stage was adjourned to

13.10.2016 for acknowledgment of reply/ submission

made before the Ld. CIT (A) basis paper book page 57 to

tendered a copy of acknowledgment before the Ld. CIT (A)

dated 29.01.2021 in support thereof. Per contra on

Page 17 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 12.10.2026 & 13.10.2026 the Ld. DR placed reliance on the

orders of the lower authorities and stated that no

intervention of this tribunal is required and same be upheld.

Addition made be sustained. The Ld. DR however by referring

to Para 5.2.4 on the internal page 5 of the Impugned Order

submitted that no formal order was passed by the revenue

on reasons. The Hearing was over and closed.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case & after hearing & further

upon examining the rival contentions of the Ld. AR & the Ld.

DR canvassed before us are of the considered opinion that

the “Impugned Order” is bad in law, illegal and not proper

in as much as detailed submissions basis paper book pages

Page 18 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 53 to 73 with necessary proof of acknowledgement

placed on record on 13.10.2026 are all proof enough that

on 29.01.2011 exhaustive submissions were made in

writing by the assessee company. The Ld. CIT (A) in Para

5.3 has erred in law by holding that “Contention of the

appellant is perused and it is observed that the appellant

was given sufficient opportunity during the appellate

proceedings to put forth submissions and other

documentary evidence on record. However appellant has

failed to submit any documents to support the

genuineness of the loan taken by M/s Purvi Finvest Ltd.

Accordingly I hereby confirm the addition made by the

AO. Hence ground of appeal is disallowed.”

4.4 We basis perusual of the record which were examined

by us minutely hold that addition was not at all justified

basis any reasons whatsoever and same were effectively

rebutted by the assessee both before the Ld. Assessing

Officer and the Ld. CIT (A) by brining on record all that was

required. The Ld. DR too has failed to defend the

Page 19 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 contentions canvassed by the Ld. AR during the hearing held

on 12.10.2026 and 13.10.2026 save and except by stating

that orders of lower authorities requires no intervention but

conceding that no reasoned order was passed on reasons

furnished by the department. Under these facts and

circumstances we hold that loan taken was repaid with

interest and all that were duly recorded in the books of

account which fact has gone unrebutted during the

course of hearing held before us basis any tangible

material and contentions. We hold that it is incumbent

upon the Ld. CIT (A) to take into consideration all the

submissions of the assessee before passing the

“Impugned Order”. In the instant case basis records we

say that the assessee was diligent and compliant

throughout from beginning to the end and was fully

conscious of both his rights and corresponding

obligations. The assessee was not non-compliant but was

compliant on the contrary the lower authorities were not

diligent enough to analyse the reply/submissions of the

assessee on merits and therefore have erred in law. Under

Page 20 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11 these facts and circumstances we accept the contentions of

the Ld. AR and set aside the “Impugned Order” and allow

the appeal of the assessee with admonition to the Ld. CIT

(A) to be careful in passing the Impugned Order on

subsequent occasions as appellate powers are to be

exercised with care and caution keeping in mind that in

just cases the assessee deserves a relief by deleting

addition particularly so when the assessee basis material

has demonstrated the same before us which are all

recorded by us (supra).

4.4 In the premises laid down by us Impugned Order is set

aside and the appeal of the assessee is allowed. Addition is

deleted.

5 Order

5.1 The appeal of the Assessee is allowed.

Pronounced in open court on 30.10.2026.

Sd/- Sd/- (ARVIND SONI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Page 21 of 22

CHHATRACHHAYA NIRMAN (P) LTD. ITA No. 47/Ind/2026 - A.Y. 2010-11

Indore Dated : 30/10/2026

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative Akhilesh Kumar Digitally signed by Akhilesh Kumar Date: 2026.11.02 17:38:28 +05'30' (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

Page 22 of 22