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Facts
The assessee company, engaged in investment and loans, filed its return for AY 2018-19. The AO initiated proceedings under Section 148A and later Section 148, treating a loan transaction of Rs. 8,00,000/- with a paper company as a bogus accommodation entry and added it to the assessee's income.
Held
The Tribunal held that if an assessee files all evidence regarding loan creditors and repayment before the Assessing Officer, such amounts cannot be added under Section 68 of the Act. The addition made by the AO was found not warranted based on a High Court ruling.
Key Issues
Whether the addition of Rs. 8,00,000/- as cash credit under Section 68 was justified when the assessee provided evidence of loan and its repayment, and whether the AO's action was warranted despite the evidence.
Sections Cited
148A, 148, 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2018-2019 M/s. Mirabelle Tradecomm Pvt. Limited,.……Appellant 85, Netaji Subhas Road, 3rd Floor, Kolkata-700001 [PAN:AABCM7418A] -Vs.- Income Tax Officer,…………………………..…..Respondent Ward-4(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri S. Jhajharia, A.R., appeared on behalf of the assessee Shri Kallol Mistry, JCIT, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: December 09, 2025 Date of pronouncing the order: December 31, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 03.07.2025 passed for Assessment Year 2018-2019.
(A.Y. 2018-2019) M/s. Mirabelle Tradecomm Private Limited 2. The facts in brief are that the assessee is a Private Limited Company, which filed its original return of income for the AY 2018- 19 on 30.10.2018 declaring total income at Rs.1,26,500/-. The assessee is engaged in business of investment in shares and securities and providing short-term loans and advances. Specific information was flagged as per Risk Management Strategy formulated by the CBDT through insight portal of the Department under the head “High Risk Transaction’. As per information received by the Jurisdictional Assessing Officer, the assessee had entered into bogus loan transaction of Rs.15,00,000/- with a paper company. Various notices were issued to the assessee-company and thereafter ld. Assessing Officer issued notice under section 148A(b) of the Act to the assessee requesting therein to show-cause as to why the transaction made with M/s. Dumpy Suppliers Pvt. Ltd. should not be treated as bogus as the alleged transaction was made with a company which had no financial rationale and involved in providing accommodation entry. In response thereto, the assessee submitted partial information before the ld. Assessing Officer and ld. Assessing Officer did not accept the same and held that the department had identified the above noted party as one of the shell companies involved in providing bogus accommodation entries to various concerns through layering and the party had not responded to the departmental enquiry. While passing the order, the ld. Assessing Officer concluded that the case of the assessee was fit for issuance of notice u/s 148 of the Act and accordingly notice under section 148 was issued to the assessee on 21.03.2022. The assessee was specifically requested vide show- cause notice issued on 08.03.2023 to explain the flow/routing of (A.Y. 2018-2019) M/s. Mirabelle Tradecomm Private Limited funds to the tune of Rs.8,00,000/- between Dumpy Suppliers Pvt. Ltd. and the assessee during the FY 2017-18. As the assessee had received such amount as fresh loan from the party, onus was cast upon the assessee to discharge its responsibility to offer the details thereof with relevant documentary evidence. As the assessee could not provide any satisfactory reply with regard to the nature and source of fresh loan to the tune of Rs.8,00,000/- received by it from the party, the amount of Rs.8,00,000/- was treated as cash credit under section 68 of the Act by the ld. Assessing Officer and brought to tax in the hands of assessee and taxed at special rates as per the provisions of section 115BBE of the Act. Finally, ld. Assessing Officer determined the total taxable income of the assessee at Rs.9,26,500/-.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee saying that as the assessee failed to explain the nature and source of the cash credit of Rs.8,00,000/-, the grounds of appeal are not tenable.
4. On being aggrieved, the assessee preferred an appeal before the Tribunal. It was the submission of the ld. Counsel for the assessee that the assessee has taken unsecured loan and the same was refunded in the same financial year and the said fact was mentioned in para 4.6.7 at page 18 of the ld. Assessing Officer’s order. The proof of repayment of unsecured loan is placed before the Tribunal by filing the paper book in page no.
He relied on the decision of the Hon’ble Jurisdictional High Court in the case of (A.Y. 2018-2019) M/s. Mirabelle Tradecomm Private Limited PCIT-2, Kolkata-vs.- Rahul Premier India Agency Private Limited in ITAT/133/2025, IT No. GA/2/2025 vide order dated 05.08.2025 in this regard. He pleaded to set aside the orders passed by the revenue authorities.
On the other hand, ld. Departmental Representative relied on the orders passed by the revenue authorities.
I have heard both the sides and perused the material available on record. It is an admitted fact that the assessee availed loan for an amount of Rs.15,00,000/- for the F.Y. 2017-18 relevant to the assessment year 2018-19. It is also an admitted fact that the assesee repaid the said loan on 26.03.2018 and squared off the transaction. The assessee also filed the proof of repayment, which reflects at page 70 of the paper book filed by the assessee. In the subsequent year, the party transferred Rs.15,00,000/- to the assessee on 14.06.2017 as against the actual outstanding amount of Rs.7,00,000/-. Out of this, even though the amount of Rs.7,00,000/- was treated as outstanding dues collected by the assessee, the balance amount of Rs.8,00,000/- represents the loan received by the assessee from the party. Thus, the assessee owed Rs.8,00,000/- to the party as on 14.06.2017. Subsequently the assessee paid Rs.8,00,000/- to the party on 26.03.2018 and squared off the transaction. I have also perused the decision of the Hon’ble Jurisdictional High Court in the case of PCIT-2, Kolkata- vs.- Rahul Premier India Agency Private Limited in ITAT/133/2025, IT No. GA/2/2025 vide order dated 05.08.2025, wherein the Hon’ble High Court held that where the assessee has (A.Y. 2018-2019) M/s. Mirabelle Tradecomm Private Limited filed all the evidences qua the loan creditors before the ld. Assessing Officer and loans are also repaid, then the same cannot be added under section 68 of the Act. Considering the ratio laid down by the Hon’ble jurisdictional High Court, I have no hesitation to come to the conclusion that the addition made by the ld. Assessing Officer under section 68 of the Act is not warranted. Therefore, I direct the ld. Assessing Officer to delete the addition made by the ld. Assessing Officer. The grounds of appeal raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 31/12/2025.