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Facts
The assessee received an unsecured loan of Rs. 70,00,000/- from one Neeta Rajendra Sheth, for booking shops. The Assessing Officer (AO) treated Rs. 19,00,000/- (for AY 2016-17) and Rs. 51,00,000/- (for AY 2017-18) as unexplained and added to the income. The assessee contended that the loan was confirmed by the creditor, who had indeed purchased properties, and the amount was subsequently transferred to a firm where the assessee was a partner.
Held
The Tribunal held that the creditor had confirmed the transaction and provided evidence of property purchase. The AO was incorrect in treating the loan as unexplained, as the identity of the creditor was proved and the transaction was genuine. The addition was deleted as there was no merit.
Key Issues
Whether the loan transaction was genuine and whether the addition made by the AO on account of unexplained loan was justified.
Sections Cited
147, 144B, 68, 133(6), 115BBE
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI TR SETHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
These two appeals are filed by the assessee against the separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] both dated 09.06.2025 for the Assessment Years (A.Y.) 2016-17 and 2017-18 in the proceeding u/s 147 r.w.s. 144B of the Income Tax Act.
As the issues involved were common, both the matters were heard together and are being disposed of vide this common order for sake of convenience. We will take the appeal in for A.Y. 2016-17 as the lead case.
& 1597/Ahd/2025 Raghav Ashwinkumar Sheth Vs. ITO, AY- 2016-17 & 2017-18 2 ITA No. 1596/Ahd/2025
The brief facts of the case are that the assessee had filed his return of income for A.Y. 2016-17 on 10.07.2016 declaring total income of Rs.10,18,840/-. The AO had received an information from Investigation Wing that the assessee had taken unsecured loan of Rs. 70,00,000/- from one Neeta Rajendra Sheth, out of which Rs. 19,00,000/- pertained to this year and the balance amount of Rs. 51,00,000/- was received in the next financial year. In the course of assessment, the AO inquired about this transaction and he was not convinced with the genuineness of the loan transaction. Therefore, the loan of Rs. 19,00,000/- taken during the year was treated as unexplained and added to income. The assessment was completed u/s. 147 r.w.s. 144B of the Act on 28.03.2022 at total income of Rs. 29,18,840/-
Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
1. That on facts, and in law, the learned NFAC has grievously erred in confirming the re-opening of assessment u/s 147 of the Act.
2. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition without supplying or granting opportunity of cross-examination of the person whose statement/reply is referred in the order under appeal.
& 1597/Ahd/2025 Raghav Ashwinkumar Sheth Vs. ITO, AY- 2016-17 & 2017-18 3 3. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition of Rs.19,00,000/- made u/s 68 of the Act towards alleged unexplained money.
4. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition, ignoring the fact that the amount is given by appellant to firm M/s Aarya Infra, and the said firm has offered it as income, hence, it has resulted in double taxation of same amount.
5. The appellant craves leave to add, alter, amend any ground of appeal.
6. Shri M. K. Patel, the Ld. AR of the assessee submitted that the loan transaction was duly confirmed by the creditor in the course of assessment proceeding. He explained that the AO had issued notice u/s. 133(6) of the Act to Neeta Rajendra Sheth, in response to which she had confirmed the loan transaction and her reply was also reproduced in the assessment order. As explained by her, she had booked three shops with Aarya Infra, a group entity in which the assessee was a partner. Accordingly, the total amount of Rs.70,00,000/- was given to the assessee spread over two years for booking of these shops. Subsequently, this amount of Rs.70,00,000/- received from Neeta Rajendra Sheth was transferred by the assessee to the partnership firm Aarya Infra. He submitted that considering the evidences brought on record by the assessee in respect of these transactions, the AO was not correct in treating the amount received from Neeta Rajendra Sheth as unexplained.
Per Contra Shri Abhijit, the Ld. SR-DR submitted that no explanation was given by the assessee as to why the cheque amounts were received by the assessee when the shops were booked with the firm Aarya Infra. He, therefore, supported the order of the lower authorities.
& 1597/Ahd/2025 Raghav Ashwinkumar Sheth Vs. ITO, AY- 2016-17 & 2017-18 4 8. We have considered the rival submissions. There is no dispute to the fact that the sum of Rs. 70,00,000/- was received from Neeta Rajendra Sheth towards booking of shops, out of which Rs.19,00,000/- was received during the current year. On inquiry made by the AO, Neeta Rajendra Sheth had duly confirmed these transactions and also stated that this amount was paid as part of purchase consideration of the property and was not in the nature of loan and advance. In view of this specific and categorical reply of the Neeta Rajendra Sheth, the AO was not correct in treating the transaction of Rs. 19,00,000/- as unexplained. Not only the identity of the creditor was proved but there was no material for the AO to treat the transaction as non-genuine. Further the amount received was also not in the nature of loan or advance taken by the assessee. The assessee has also brought on record the evidence to effect that the sum of Rs. 19,00,000/- received during the year was subsequently transferred to Aarya Infra. A copy of the sale deed executed between Aarya Infra and Neeta Rajendra Sheth has also been brought on record which establishes that Ms. Neeta Rajendra Sheth did purchase the properties, as stated in her confirmation filed before the AO. Under the circumstances, there was no merit in the addition of Rs. 19,00,000/- made by the AO on account of unexplained loan transaction and accordingly the addition is deleted.
The grounds taken by the assessee are allowed.
The following grounds have been taken in this appeal:
& 1597/Ahd/2025 Raghav Ashwinkumar Sheth Vs. ITO, AY- 2016-17 & 2017-18 5 1. That on facts, and in law, the learned NFAC has grievously erred in confirming the re-opening of assessment u/s 147 of the Act.
2. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition without supplying or granting opportunity of cross-examination of the person whose statement/reply is referred in the order under appeal.
3. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition of Rs.51,00,000/- made u/s 68 of the Act towards alleged unexplained money, and in taxing the same u/s 115BBE of the Act.
4. That on facts, and in law, the learned NFAC has grievously erred in confirming the addition, ignoring the fact that the amount is given by appellant to firm M/s Aarya Infra, and the said firm has offered it as income, hence, it has resulted in double taxation of same amount.
5. The appellant craves leave to add, alter, amend any ground of appeal.
The facts involved in the present case are identical to and our decision taken in that case is applicable mutatis mutandis to this appeal as well. Accordingly, the addition of Rs.51,00,000/- made by the AO on account of unexplained loan taken from Neeta Rajendra Sheth, is deleted.
The grounds taken by the assessee are allowed.
In the final result, both the appeals of the assessee are allowed.
Order pronounced in the Court on 07/04/2026 at Ahmedabad.