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Facts
The assessee took a loan of Rs. 10,00,000/- from Banas Finance Ltd. during the financial year 2011-12. The Assessing Officer (AO) reopened the assessment, treating the loan as unexplained money under Section 69A and also made an addition for commission under Section 69C.
Held
The Tribunal held that there was no material to demonstrate that the loan was bogus. Both the loner and loanee confirmed the transaction with sufficient documentation, establishing its genuineness, creditworthiness, and identity.
Key Issues
Whether the loan transaction was genuine and properly documented, and if the reassessment proceedings were validly initiated and additions were justified.
Sections Cited
147, 148, 142(1), 133(6), 69A, 69C, 68, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 28/05/2025 passed by Ld.CIT(A) - Panchkula, for assessment year 2012-13 on following grounds of appeal :
“1. On the facts and circumstances of the case and in law, the Id. CIT(A) has grossly erred in confirming the Action of AO of reopening of the assessment proceedings u/s147 read with section 148 of the Income tax Act which is bad in law.
A.Y. 2012-13 Santoshkumar Gograj Adukia HUF 2. On the facts and circumstances of the case and in law, the Id. CIT(A) has grossly erred in confirming the Action of AO of making additions of Rs.10,00,000/- being loan from M/s. Banas Finance Limited by treating the same as unexplained money under Section 69A.
3. On the facts and circumstances of the case and in law, the Id. CIT(A) has grossly erred in confirming the Action of AO of erred in making additions of Rs. 50,000/- as alleged commission paid for obtaining accommodation loan entry under Section 69C.” Brief facts of the case are as under:
The information was received by the assessing officer from the DDIT investigation unit 8(2) Mumbai, based on search and seized action u/s.132 conducted in the case of Banas Finance limited that was alleged to be a penny stock. The information stated that the assessee took loan of Rs.10,00,000/- from Banas Finance Ltd., during the financial year 2011-12 relevant to assessment year under consideration. The case of the assessee was reopened u/s.147 and notice u/s. 148 was issued on 30/03/2019. In response to the notice assessee filed return of income on 18/04/2019 declaring total income at Rs.05,25,260/-. Subsequently, statutory notice u/s.142(1) and 143 was issued along with notice dated 17/06/2019. The assessee objected to the reopening of the assessment vide its letter dated 11/06/2019. The Ld.AO rejected the objection vide order dated 05/11/2019. 2.1 Subsequently, during assessment proceedings, Ld.AO issued 133(6) notice to Banas Finance Ltd. Banas Finance Ltd. vide email dated 12/11/2019 filed requisite details as called for, that included details of loan give to the assessee, the ledger extract of the transaction for assessment year 2012-13 and copy A.Y. 2012-13 Santoshkumar Gograj Adukia HUF of bank statement highlighting the transaction. Banas finance also furnished its ITR for the year under consideration. The Ld.AO after considering all the details came to the conclusion that Banas Finance Ltd. has unaccounted income and filed nil return for the year under consideration after set off. He thus treated the loan give to the assessee of Rs. 10,00,000/- to be bogus and made addition in the hands of the assessee u/s.69A of the Act as unexplained money. The Ld.AO also made addition u/s.69C being the commission 15% on the alleged bogus loan.
Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld.CIT(A).
The Ld.CIT(A) upheld the addition made by the Ld.AO after considering various submission furnished by the assessee.
Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before this Tribunal.
The Ld.AR raised multiple propositions challenging the validity of the reassessment in Ground 1. However, in my view assessee has good case on merits. Accordingly I am considering ground no. 2-3 first.
Ground no. 2-3
It is submitted that, the entire addition is based on the premises that Banas Finance Ltd. is a penny stock and that it did not have any credit worthiness to make such payment. The Ld.AR drew my attention on affidavit and the loan confirmation filed by Banas Finance Ltd. at page 15-19 of the paper book.
A.Y. 2012-13 Santoshkumar Gograj Adukia HUF 6. The assessee also placed at page 54 bank statement of Banas finance ltd. indicating the payment made on 02/02/2012 and 02/08/2011 amounting to Rs. 05,00,000/- each by two cheques bearing 345968 and 317921 to the assessee from the bank statement. He submitted that Banas Finance Ltd. has sufficient funds to give loan to the assessee of Rs.5,00,000/- each on two different dates. The Ld.AR submitted that, assessee furnished all the relevant material to discharge its onus u/s.68 of the Act. He submitted that the Ld.AO also received response from Banas finance ltd. to the notice issued u/s. 133(6) confirming the loan transaction with assessee. He submitted that merely on the statement recorded of the persons reproduced in the assessment order, the addition was made in the hands of the assessee, without granting an opportunity to cross examination even though several request were made in writing during the assessment proceedings.
The Ld.AR further submitted that, the entire addition is made on the premise that price of the shares of Banas Finance Ltd. was rigged. However there is no discussion about any accommodation entry of bogus loan. He submitted that, none of the persons whose submission were recorded have named assessee to be a beneficiary of alleged bogus loan.
The Ld.AR further submitted that the entire loan was subsequently, paid off during the assessment year 2013-14 along with interest there on, and thus the genuineness of the transaction cannot be doubted. He thus submitted that there is no evidence against assessee in the statements recorded of the persons holding Banas Finance Ltd. The Ld.AR thus submitted A.Y. 2012-13 Santoshkumar Gograj Adukia HUF that there is no corroborative evidence with the revenue that assessee was beneficiary of alleged bogus loan.
On the contrary, the Ld.DR placed heavy reliance on the orders passed by the Ld. CIT(A) and the view expressed in para 2 of the impugned order.
I have perused the submissions advance by both sides in the light of record placed before me.
There is no denial of the fact that the assessee has taken loan from Banas Finance Ltd. during the year under consideration amounting to Rs. 10,00,000/- which has been repaid in the subsequent assessment year along with interest. Further there is no material in possession of the assessing officer to demonstrate that the said loan was bogus. The loner and the loanee has confirmed the transaction with sufficient documentation to establish genuineness of the transaction, credit worthiness and identity. Under such circumstances, I do not find any reason to uphold the addition made by the Ld.AO u/s.68 as well as 69 of the Act and the same is directed to be deleted. Accordingly the grounds raised by the assessee stands allowed on merits. In the result the appeal filed by the assessee stands allowed on merits. Order pronounced in the open court on 29/08/2025