KESHVI DEVELOPERS PVT LTD,GOREGAON EAST vs. DCIT,CENTRAL CIRCLE 5(2), MUMBAI, BKC,BANDRA

The Ld. DR supported the findings of the revenue authorities and relied upon their orders. The relevant part of the observation of the Ld. AO is reproduced as below:- “4.2 The reply of the assessee has been perused but not found tenable. Before issuing show cause notice the assessee did not accept any transaction with the company of which registration has 3 ITA 640/Mum /2025 Keshvi Developers Pvt Ltd been struck off by the MCA and accepted the transaction after issuing show cause notice. Further, the assessee company has failed to submit any documentary evidences which can prove the creditworthiness of the lender company. In view of above narrated facts it is evident that the assessee company has failed to prove genuineness of transaction which was done a company whose registration has been cancelled.”

Upon careful consideration, we observe that although the loan creditor was struck off by an order of the MCA, the assessee subsequently repaid the loan amount to its sister concern. It is not in dispute that the loan was initially taken from a company registered under the Companies Act, 2013, and the transaction was routed through the banking channel. The evidence of repayment was placed before the Ld. AO but was not accepted. Furthermore, the Ld. CIT(A) did not properly consider the assessee’s submissions and upheld the addition. We find that the reasonable opportunity of the assessee is denied, and the assessee has in fact repaid the loan and reduced its liability. It was also claimed that the repayment was made as per the direction of the original loan creditor to its sister concern. Since the entire transaction, including the repayment, was conducted through banking channels, we are of the considered opinion that the matter requires proper verification, and the assessee should be allowed one more opportunity to establish the transaction with loan creditor. Accordingly, the matter is remanded to the file of the Ld. Jurisdictional AO (JAO) for the limited purpose of verifying the repayment made to the sister concern of the loan creditor and verification of the loan transaction. Both the Ld. DR and the Ld. AR have fairly accepted the observations of the Bench. Needless to say, the assessee shall be granted a reasonable opportunity of being heard during the set- aside proceedings.