PIYUSH ASHOK MEHTA,MUMBAI vs. DCIT, CENTRAL CIRCLE 6(4), MUMBAI, MUMBAI

As per the reason recorded for re-opening the assessment, a survey under Section 133A of the Act was conducted at the business premises of M/s Vinay Unique Developers, an associate concern of Cosmos Group. During the proceedings that followed it was detected that bogus unsecured loans aggregating to (a) INR.8,69,00,000/- were taken by Landmark Realty - a group concern of M/s. Vinay Unique Developers; and (b) INR.28,00,000/- were taken by the Assessee – a Partner in Landmark Realty from M/s. Cartier Gems.

Thus, the Assessing Officer noted that the Assessee had taken bogus unsecured loan amounting to INR.20,00,000/- during the Financial Year 2008-2009 (Assessment Year 2009-2010) and INR.8,00,000 during the Financial Year 2009-2010 (Assessment Year 2010-2011) from M/s. Cartier Gems. According to the Assessing Officer there was failure on the part of Assessee to disclose fully and truly all material facts necessary for assessment. Therefore, reassessment proceedings were initiated for the Assessment Year 2009-2010 and 2010-2011. The Assessee filed objections to the reopening of the assessment proceedings vide Letter, dated 23/03/2016, which were disposed off by the Assessing Officer vide Order, dated 29/03/2016. The Assessing Officer proceeded to pass order under Section 147 read with Section 143(3) of the Act and made addition of INR.20,00,000/- and INR.8,00,000/- for Assessment Years 2009-2010 and 2010-2011, respectively, giving the following reasoning: (a) During the course said survey proceedings carried on the business premises of M/s.Vinay Unique Developers, documents relating to unsecured loans by the Assessee were impounded. The said documents revealed that the Assessee had taken unsecured loans from M/s. Cartier gems. Assessment Year 2009-2010 & 2010-2011

The Learned CIT(A) dismissed the appeals preferred by the Assessee challenging the above additions made by the Assessing Officer for the Assessment Year 2009-2010 and 2010-2011.

Now, therefore, the Assessee has preferred the present appeals for the Assessment Year 2009-2010 and 2010-2011 before this Tribunal challenging the validity of the reassessment proceedings and the addition made by the Assessing Officer on merits.

When the appeals were taken up for hearing the Learned Authorised Assessment Year 2009-2010 & 2010-2011 Representative for the Assessee, at the outset, submitted that the Assessing Officer has in the reasons recorded for reopening assessment had referred to unsecured loans borrowed by M/s. Landmark Realty amounting to INR.8,69,00,000/- and by the Assessee amounting to INR.28,00,000/-. Identical additions giving identical reasoning were made in the hands of M/s. Landmark Realty and the Assessee in respect of unsecured loans. The Assessing Officer had made addition of INR.8,69,00,000/- in the hands of M/s. Landmark Realty and INR.28,00,000/- in the hands of the Assessee. The case of M/s. Landmark Realty had travelled to the Tribunal and a Co-ordinate Bench of the Tribunal has dismissed the appeal preferred by the Revenue challenging the relief granted by the Learned Commissioner of Income Tax Appeals in the case of M/s. Landmark Realty. Thus, the addition of INR.8,69,00,000/- made in the hands of M/s. Landmark Realty stands deleted by the Order, dated 07/12/2022, passed in & 3954/Mum/2019 pertaining to Assessment Year Assessment Year 2011-2012 and 2012-2013, respectively. It was further submitted that the Hon’ble Bombay High Court had declined to admit the appeal preferred by the Revenue against the aforesaid decision of the Tribunal, dated 07/12/2022. A copy of the judgment of the Hon’ble Bombay High Court in the case of Pr. CIT vs M/s. Landmark Realty [ITA (IT) 567 of 2024, dated 03/12/2025, 2025:BHC-OS:23419-DB] was placed on record by the Learned Authorised Representative for the Assessee. On the basis of the aforesaid, it was submitted that identical reasoning given by the Assessing Officer was rejected by the Tribunal and additions made by the Assessing Officer in respect of unsecured loans were deleted. After taking us through paragraph 12 to 14 of the decision of the Tribunal in the case of the of the M/s Landmark Realty [ITA No. 3953 & 3954/Mum/2019], the Learned Authorised Representative for the Assessee submitted that in the present case also the Assessee had discharged the onus in terms of Section 68 of the Act while the Assessment Year 2009-2010 & 2010-2011 Assessing Officer had simply rejected the documents/details filed without any inquiry or verification. In this regard reliance was placed upon the following: (a) Loan confirmation containing the PAN as well as the address of M/s. Cartier Gems. (b) Ledger account of M/s. Cartier Gems in the books of the appellant. (c) Reply u/s 133(6) furnished by M/s. Cartier Gems. (d) Income tax return ack of M/s. Cartier Gems. (e) Bank statement of M/s. Cartier Gems. (f) Balance sheet and profit & loss A/c of M/s. Cartier Gems. (g) Notice u/s 133(6) of the 1.T Act, 1961 issued to M/s. Cartier Gems.

Per Contra, the Learned Authorised Representative for the Assessee placed reliance upon the order passed by the Assessing Officer and the Learned CIT(A). It was submitted that Assessing Officer had paragraph 6 of the Assessment Order recorded that during the survey action under Section 133A of the Act at the Business Premises of M/s. Vinay Unique Developers documents related to unsecured loans were impounded which revealed that the Assessee had taken unsecured loans from M/s. Cartier Gems engaged in providing accommodation entry. Statement of the Assessee was recorded under Section 131 of the Act on 03/03/2015 and that Assessee failed to prove the identity, genuineness & creditworthiness of the loans taken from M/s. Cartier Gems.

We have considered the rival submissions and have perused the material on record.

We note that the Assessing Officer has recorded in paragraph 6 of the Assessment Order that in response to show-cause notice, the Assessee Assessment Year 2009-2010 & 2010-2011 had filed reply Letter, dated 20/04/2016. On perusal of the same we find that the Assessee had placed before the Assessing Officer the following documents:

In our view, by furnishing the above documents the Assessee had discharged the onus cast upon the Assessee in terms of Section 68 of the Act. On perusal of the Assessment Order, we find that the Assessing Officer has not made any further inquiry or verification. By relying upon the statement of the Assessee recorded under Section 131 of the Act, the Assessing Officer has rejected the documents. We note that identical approach adopted by the Assessing Officer was rejected by the Tribunal in the case of M/s Landmark Realty [ITA No. 3953 & 3954/Mum/2019, Common Order, dated 07/12/2022]. The relevant extract of the said decision reads as under:

There is no dispute with regard to the fact that the assessee has furnished complete financial details of M/s. Centre Point Gems Pvt. Ltd., viz., financial statements, copy of bank statement, copy of income tax statement and confirmation letter. We noticed that the Assessing Officer himself has conducted an independent inquiry by issuing notice under section 133(6) of the Act to M/s. Centre Point Gems Pvt. Ltd and the said notice has been duly replied by the lender. We noticed that the Assessing Officer has not found fault with any of the information and explanations furnished both by the assessee and lender.

The Learned DR submitted that the financial position of the lender is not commensurate with the loan amount given by it. In this regard he invited our attention to the capital owned by the lender as well as profit earned by it. However, a perusal of the Balance-sheet of the lender would show that the lender was having enough funds in the form of its own funds and also by way of loans taken by it from others. Hence the lender was having sufficient funds for giving the impugned loan to the assessee. It is not the case of the Assessing Officer or learned DR that the borrowings disclosed in the balance sheet of the lender are bogus in nature. Hence, the source for giving loan to the assessee has been duly explained by the lender and cannot be doubted with.

We notice that the Ld CIT(A) has passed a detailed order, which is Assessment Year 2009-2010 & 2010-2011 extracted above, after duly verifying the facts prevailing in this case. The Ld CIT(A) has called for a remand report from the AO and in the remand report also, the AO could not point out any deficiency in the information and explanations furnished by the assessee. Hence, there is no reason for making addition u/s 68 of the Act and accordingly, we are of the view that the learned CIT(A) was justified in deleting the additions made u/s 68 of the Act as well in deleting the interest disallowances in both the years under consideration. Accordingly, we confirm the orders passed by the learned CIT(A) in both the years.

In the result, both the appeals filed by the Revenue are dismissed.”

In view of the above, given the parity in facts, respectfully following the decision of the Tribunal in the case of M/s Landmark Realty [ITA No. 3953 & 3954/Mum/2019, Common Order, dated 07/12/2022], we delete the addition of INR.20,00,000/- made in the hands of the Assessee for the Assessment Year 2009-2010. Thus, Ground No.2 raised by the Assessee is allowed. Ground No.1 raised by the Assessee challenging the validity of the reassessment proceedings is dismissed as having been rendered academic and therefore, not pressed by the Assessee.

In result, appeal preferred by the Assessee for the Assessment Year 2010-2011 is partly allowed.

In conclusion, both the appeals preferred by the Assessee are partly allowed.