ACIT-CC-7(3), MUMBAI vs. CALCULUS PROPERTIES PRIVATE LIMITED, MUMBAI

Sr. Name of the Party Addition of loan Disallowance of No. taken under interest paid on section 68 loan under section 69C (Amount in INR) 1 Abhilasha Export Pvt. Ltd. 45,00,000 3,84,247

2 Alishan Estate Pvt. Ltd. 30,00,00 1,56,575 3 Suryamukhi Projects Pvt. Ltd. -- 3,00,000 4 Linkpoint Infrastructure Pvt. -- 1,12,500 Ltd Total 75,00,000 9,53,322 4.1. In the set aside proceedings, assessee was asked to submit the details and documents to prove the genuineness of the loans and details of their repayment. Ld. Assessing Officer also issued notices u/s. 133(6) to all the four lenders, two from whom fresh loans were taken, totalling to Rs.75 lakhs and the other two in whose case interest expenditure was added u/s. 69C. Out of the four parties, only one, i.e. Link Point Infrastructure Limited complied with the said notice. Assessee was also asked to produce the four lender parties for verification for which it expressed its inability by stating that parties won't comply with this request as the loans have already been repaid. On this, assessee requested the ld. Assessing Officer to issue summons to the said parties for necessary verification required by him. ld. Assessing Officer took an adverse view on expression of this inability by the assessee. He relied on the findings of the Investigation Wing, Kolkata in the case of Shri Praveen Agarwal where it was held that the said companies were used for providing accommodation entries and thus, completed the assessment by making an addition of Rs.75 lakhs as unexplained cash credits u/s. 68 and of Rs.9,53,322/- as unexplained expense u/s.69C.

4.2. In order to establish the identity and credit worthiness of the lender parties and genuineness of the transactions, assessee submitted all the corroborative documentary evidences which are placed on record. Details of the same is listed below: A. Alishan Estate Pvt. Ltd. i. Copy of assessee bank statements highlighting the bank transaction for loan ii. Copy of acknowledgement of return filed by Alishan Estate Pvt. Ltd. iii. Copy of loan conformation iv. Copy of financial of Alishan Estate Pvt. Ltd. B. Abhilasha Exports Pvt. Ltd. i. Copy of assessee bank statements highlighting the bank transaction for loan ii. Copy of acknowledgment of return filed for Abhilash Exports Pvt. Ltd. iii. Copy of loan conformation iv. Copy of financial of Abhilasha Export Pvt. Ltd. 4.3. On these set of documents and details furnished by the assessee, ld. Assessing Officer did not make any further enquiries so as to bring on record the evidences to establish that the loans were not genuine which would have met the compliance requirement of the direction of the coordinate bench so given. ld. CIT(A) analysed the documents and details furnished by the assessee for each of the lender parties and arrived at a conclusion that assessee has discharged its onus adequately as contemplated u/s.

5.1. Admittedly, it is a fact on record that the loans taken by the assessee have been repaid which has been established with corroborative documentary evidences. The stand taken by the assessee expressing its inability to produce the parties is justifiable and reasonable as the parties need not turn up once their loans have been repaid. Accordingly, the stand taken by the assessee u/s.133(6) and non-production of the lender parties is not a justifiable basis for making the addition. Nothing has been brought on record by the ld. Assessing Officer to disprove the documentary evidences placed on record and point out deficiencies or defects in the same. These documents evidently speak about the identity and credit worthiness of the lender companies as well as the genuineness of the transaction undertaken by the assessee. Ld. CIT(A) has considered all these factors and has held in favour of the assessee as the onus casted u/s. 68 has been adequately discharged. Loans have been repaid along with interest on which TDS has been done. There is no new evidence or record placed on the file to prove that the loans are not genuine.

5.2. In respect of addition made u/s. 69C towards interest expense on these loans, since the loans from the two lenders namely, Abhilasha Export Pvt. Ltd. and Alishan Estates Pvt. Ltd. have been upheld to be genuine and the addition so made has been deleted, the interest on the same is also an allowable expenditure and the addition so made u/s. 69C is not justified.

5.3. In respect of interest to the other two parties, it is noted that the loans were not taken in the year under consideration, but are opening balance from the earlier years. No addition has been made u/s.68 in respect of these loans from Suryamukhi Projects Pvt. Ltd. and Linkpoint Infrastructure Pvt. Ltd. Further, assessee has placed on record relevant documents to establish the genuineness of these parties. Thus, the interest expenditure on the outstanding loan brought forward as an opening balance in the year under consideration cannot be said to be non-genuine and the interest so paid is an allowable expenditure. Interest paid by the assessee is through proper banking channel and required TDS has been done. Considering overall facts of the case and documentary evidences placed on record, the addition so made in respect of loan taken during the year u/s.68 and interest expense u/s.69C are deleted. The findings arrived at by ld. CIT(A) are thus, upheld.

5.4. In the result, appeal by the Revenue for Assessment Year 2011- 12 is dismissed.

6.1. Additions made by the ld. Assessing Officer are on three counts. First, unexplained cash credit u/s.68 of Rs. 1,45,00,000/-; second, unexplained investment u/s.69 of Rs. 73,00,000/-; and third, unexplained expenditure u/s. 69C of Rs.18,26,044/-. It is worth noting that not only the addition has been made for loan taken by the assessee during the year, but also on the repayment of the loans. In this assessment year, case of the assessee was reopened u/s.147 on the basis of information received from DDIT (Inv.), Kolkata on the findings of the search action in the case of Shri Praveen Agarwal group. According to the ld. Assessing Officer, assessee is one such beneficiary company who had entered into transactions of accommodation entries with the concerns of Praveen Agarwal group and thus, the assessment was completed by making the aforesaid additions. In the course of assessment proceedings, assessee had furnished elaborate details along with documentary evidences for each of the parties for which addition has been made either u/s. 68 or section 69 or section 69C. The details so furnished by the assessee are taken note of by ld. CIT(A) in his order in a tabulated form. The same is extracted below for ready reference:

6.2. From the above table, it is noted that exhaustive details were furnished on record and the same forms part of the paper book placed before us. The index of the paper book containing the aforesaid details is reproduced for ready reference:

6.3. Ld. Assessing Officer did not point out any deficiency or defect in the details so furnished by the assessee. However, assessee was asked to produce the parties in person for verification which assessee could not. This led to an adverse view taken by the ld. Assessing Officer for making the addition. However, ld. CIT(A) analysed and examined the details so furnished by the assessee and recorded his observations for each of the parties. The observations made in respect of the four parties from whom loans were taken during the year and addition was made u/s. 68 aggregating to Rs.1,45,00,000 are reproduced for ready reference: A. Sampark Advisory Services Pvt ltd has returned income of Rs 14,078/-. It has shown reserves and surplus of Rs 49,50,90,580/-and turnover of Rs 30,37,67,187/-. Amount of Rs 60,00,000/- has be received by appellant through RTGS on 24/11/2011. Interest of Rs 1,96,721/- has been charged on the same. TDS of Rs 19,672/- has been deducted on the interest. The entire amount has been repaid with the interest on 7/2/2013, 12/2/2013 and 4/2/2014. B. Parmeshwar Merchandise Pvt ltd has returned income of Rs 3,68,742/-. It has reserves and surplus of Rs 88,65,59,378/-and turnover of Rs 53,96,61,749/-. Amount of Rs 10,00,000/- has is received through RTGS on 10/06/2011. Interest of Rs 60,656/- has been charged on the same. TDS of Rs 6,066- has been deducted on the interest. The entire amount has been repaid with the interest on 13/2/2014. C. Shridhan Jewellery Pvt ltd has returned income of Rs 73,408/-for the AY 2012-13. It has reserves and surplus of Rs 493,69,44,898/-and turnover of Rs 25,36,00,074/-. Amount of Rs 25,00,000/- has is received through RTGS on 26/05/2011. Interest of Rs 1,59,324/- has been charged on the same. TDS of Rs 15,932/- has been deducted on the interest. The entire amount has been repaid with the interest on 3/2/2014. D. Neelkamal Dealcomm Pvt Ltd has returned income of Rs 3,69,708/-. It has reserves and surplus of Rs 88,19,06,966/-and turnover of Rs 50,20,54,673/-. Amount of Rs 50,00,000/- is received by RTGS on 27/05/2011. Interest of Rs 3,17,623/- has been charged on the same. TDS of Rs 31,762/- has been deducted on the interest. The entire amount has been repaid with the interest on 11/1/2014 and 13/1/2014.

7.1. In respect of addition of Rs.18,26,044/- u/s. 69C, it is noted that the same represents interest on the unsecured loans taken from 9 parties by the assessee. According to the ld. Assessing Officer, since these loans were treated as non-genuine, the interest payment thereon was added as unexplained expenditure u/s.69C.

7.2. Ld. CIT(A) has given his fact-based findings on the submissions made by the assessee. From the perusal of the same, it is noted that out of the 9 parties, loan from four parties namely Skylight Distributors Pvt. Ltd., Jagaddhatri Deelcom Pvt. Ltd., Suryamukhi Projects Pvt. Ltd. and Link Point Infrastructure Pvt. Ltd. were taken in the earlier years. No addition was made u/s.68 in respect of loans taken from these four parties in the earlier years. Their loan balances are coming as opening balance in the year under consideration. Assessee has paid interest on these opening balances of the loans to these four parties which was subjected to TDS. These transactions are adequately reported and disclosed in the books of accounts. Furthermore, these loans along with interest have been repaid in the subsequent year for which documentary evidences are placed on record. Considering overall facts of the case and documentary evidences placed on record, the addition so made in respect of loans taken during the year u/s.68 are deleted. The findings arrived at by ld. CIT(A) are thus, upheld.

7.3. In respect of the other four parties wherein the additions were made u/s. 68 for loans taken during the year, the same have been held to be genuine and the addition so made u/s.68 has been deleted. These four parties are Samparg Advisory Services Pvt. Ltd., Parmeshwar Merchandise Pvt. Ltd., Shridhan Jewelry Pvt. Ltd. and Neel Kamal Deelcom Pvt. Ltd. Since unsecured loans from these parties has been treated as genuine, the interest payment on the same are also held to be genuine and allowable. Addition so made by ld. Assessing Officer u/s.69C is not justified and is deleted. The findings arrived at by ld. CIT(A) are thus, upheld.

7.4. In respect of unsecured loan from Abhilasha Exports, the said loan has been treated as genuine while adjudicating appeal for Assessment Year 2011-12 in the above paragraphs. The addition made by ld. Assessing Officer u/s.68 in that Assessment Year has been deleted. Accordingly, interest on the said loan added by the ld. Assessing Officer u/s.69C stands deleted. The findings arrived at by ld. CIT(A) are thus, upheld.

7.5. Considering the overall facts and circumstances as discussed above, the entire addition of Rs.18,26,044/- u/s.69C towards interest expense on unsecured loans is deleted. The findings arrived at by ld. CIT(A) are thus, upheld.

8.1. Provisions of section 69 are applicable only if any investment is found to be made outside the books of accounts. In the present case, the repayments of unsecured loan have been made through the bank account of the assessee and are duly recorded in the books. Accordingly, the addition so made by the ld. Assessing Officer, treating these repayments of loan as unexplained investment u/s.69 are deleted. The findings arrived at by ld. CIT(A) are upheld.

8.2. Considering the above discussion and factual matrix and the details and documents placed on record and adequately examined and verified by ld. CIT(A) to give his fact-based findings, the additions made by ld. Assessing Officer in Assessment Year 2012-13 are deleted and the findings so arrived at by ld. CIT(A) are upheld.

10.1. From the above tabulated details, it is noted that assessee repaid the loans taken by it in the preceding years from six parties. The additions made in respect of these parties in the preceding years i.e., 2011-12 and 2012-13, specially in the case of Sampark Advisory Services Pvt. Ltd. Parmeshwar Merchandise Pvt. Ltd. and Neelkamal Dealcomm Pvt. Ltd. have been upheld to be genuine and the additions made by ld. Assessing Officer u/s.68 in Assessment Year 2012-13 has already been deleted in terms of our above observations and findings by upholding the findings of ld. CIT(A). In the present year, assessee has made the repayment of these loans, taken in the earlier years and therefore, cannot be treated as a transaction u/s.69 to hold them as un-explained investments.

10.2. In respect of repayment of loan to Skylight Distributions Pvt. Ltd., we have already given our observations and findings, while dealing with the same party in Assessment Year 2012-13, when part repayment was made. In the year under consideration, assessee has repaid amount of Rs.62 lakhs for which addition has been made u/s.69. Our observations and findings given in respect of this party in Assessment Year 2012-13 applies mutatis mutandis in this year. Furthermore, in respect of the other two parties, namely, Jagadhatri Dealcomm Pvt. Ltd. and Suryamukhi Projects Pvt. Ltd., it is noted that the loans were taken by the assessee in the earlier years, which have not been added u/s.68 by the Revenue. In the year under consideration, assessee has only repaid the unsecured loans from the two parties taken in the earlier years. Corroborating all the documentary evidences placed on record, it is not a case of unexplained investments falling within the meaning u/s.69, all these loans and their subsequent repayments are have been duly recorded in the books of accounts in their respective years and therefore, the primary condition for applying section 69 is not satisfied.

10.3. The details of documentary evidences in respect of each of the six parties furnished by the assessee before the authorities below are placed in the paper book. The index of the paper book is reproduced for ready reference:

12.1. Considering the overall factual matrix and the documentary evidences placed on record, corroborated by explanations furnished which has been adequately analysed by ld. CIT(A), we do not find any reason to interfere with the findings of ld. CIT(A), to uphold the deletion so made.

14.1. From the perusal of the aforesaid decisions, we draw force for upholding the findings arrived at by the ld. CIT(A) in all the three appeals.

14.2. We also draw our force from the decision of the Hon’ble jurisdictional High Court of Bombay in the case of PCIT v. Paradise Inland Shipping Pvt. Ltd. [2017] 84 taxmann.com 58 (Pan) wherein it was held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies (lender companies in the present case), the burden would shift on the revenue to establish their case. We also draw our force from the decision of Hon’ble Jurisdictional High Court of Bombay in the case of CIT vs. Orchid Industries Pvt. Ltd. 397 ITR 136 (Bom) wherein it was held that mere non-compliance of summon under section 131 would not disprove the transaction and other documents filed on record cannot be brushed aside by the Ld. Assessing Officer.

14.3. Also, it is relevant to quote the decision of Hon’ble jurisdictional High Court of Bombay in the case of CIT v. Creative World Telefilms P. Ltd. (2011) 333 ITR 100 (Bom) wherein it was held as under:

“In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable". The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.''

Order is pronounced in the open court on 28 August, 2025