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

1. ITA No.9091/Mum/2025 has been preferred by the Assessee against the Order, dated 13/10/2025, passed by the Commissioner of Income Tax (Appeals) – 54, Mumbai [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 20/04/2016, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2009-2010. 1.2. ITA No.9091/Mum/2025 has been preferred by the Assessee against

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:

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. 6. 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.

We would first take up appeal for the Assessment Year 2009-2010 preferred by the Assessee. Following grounds have been raised by the Assessee in ITA No. 9091/Mum/2025: “1. The Hon CIT(A) erred in upholding the re-opening of assessment u/s 147 of the I. Tax Act 1961, by issue of the notice u/s 148 on 23.03.2016, not appreciating that such re-opening of assessment u/s 147 was bad-in-law and the asst. order flowing therefrom, being the order u/s 143(3) r.w.s. 147 was also invalid and bad in law and hence the same was required to be quashed.

The Hon CIT(A) erred in upholding the addition of Rs.20,00,000/- made by the Id AO as unexplained cash credit u/s 68 of the IT Act 1961 on account of unsecured loan borrowed from one M/s Cartier Gems, not appreciating that the said unsecured loan was a genuine loan and duly supported by substantial evidence and that the appellant had fully discharged the onus placed by section 68 of the I.T. Act, 1961 and the addition was not justified and is required to be deleted.”

When the appeals were taken up for hearing the Learned Authorised

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

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.

Under section 68 of the I.T. Act, initial onus to prove the cash credit is placed upon the shoulders of the assessee i.e. the assessee has to prove the three main ingredients namely – identity of the creditor, creditworthiness of the creditor and genuineness of the transactions. In the instant case it is not the case of the Assessing Officer that the assessee has failed to discharge the initial onus placed upon it. It is also settled law that, once the assessee has discharged onus placed upon him, onus to disprove the evidences furnished by the assessee would shift to the shoulders of the Assessing Officer. In the instant case, admittedly, the Assessing Officer has not found any fault with the evidences furnished by the assessee and the lender. However, the AO did not bring any material on record to controvert the evidences furnished by the assessee, meaning thereby, the Assessing Officer has failed to discharge the onus shifted upon him under the provisions of section 68 of the Act.

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 ITA No.9091&9092/Mum/2025 Assessment Year 2009-2010 & 2010-2011

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

It is admitted position that vide Order, dated 03/12/2025, passed in ITA (IT) No. 567 of 2024, [2025:BHC-OS:23419-DB] the Hon’ble Bombay High Court has declined to admit the appeal preferred by the Revenue against the above order of the Tribunal.

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 2009-2010 is partly allowed.

Next, we would take up appeal preferred by the Assessee for the Assessment Year 2010-2011. The Assessee has raised following grounds of appeal :

The Hon CIT(A) erred in upholding the addition of Rs.8,00,000/- made by the Id AO as unexplained cash credit u/s 68 of the IT Act 1961 on account of unsecured loan borrowed from one M/s Cartier Gems, not appreciating that the said unsecured loan was a genuine loan and duly supported by substantial evidence and that the appellant had fully discharged the onus placed by section 68 of the I.T. Act, 1961 and the addition was not justified and is required to be deleted.”

During the course of hearing both the sides had agreed that in facts and circumstances identical to the Assessment Year 2009-2010, addition of INR.800,000/- was made in the hands of the Assessee under Section 68 of the Act in respect of unsecured loan taken by the Assessee from M/s Cartier Gems during the relevant previous year. Therefore, our findings/adjudication in relation to grounds raised in appeal for the Assessment Year 2009-2010 shall apply mutatis mutandis to the grounds raised in appeal for the Assessment Year 2010-2011. Accordingly, keeping in view identical facts and circumstances, and adopting the reasoning given while adjudicating for the Assessment Year 2009-2010 hereinabove, we proceed to adjudicate the ground raised in the present appeal. Accordingly, In view of our finding/adjudication in paragraph 10 to 14 above, we delete the addition of INR.8,00,000/- made in the hands of the Assessee under Section 68 of the Act for the Assessment Year 2010-2011. Accordingly, Ground No. 2 raised by the Assessee in the present appeal in 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.

अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent. 3. आयकरआयुƅ/ The CIT 4. Ůधान आयकर आयुƅ/ Pr.CIT 5. िवभागीयŮितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 6. गाडŊफाईल / Guard file.