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Facts
The assessee filed a return declaring an income of Rs.88,37,270/-, which was assessed at Rs.4,55,31,490/-. The Assessing Officer made additions including Rs.99,07,825/- for O&M charges at Bhutan and Rs.2,00,00,000/- for bogus unsecured loans. The CIT(A) allowed the appeal on O&M charges but confirmed the addition of Rs.1,85,00,000/- for unsecured loans.
Held
The Tribunal found that the assessee had produced sufficient documentary evidence for the unsecured loan of Rs.1,85,00,000/- from Kailash Auto Finance Limited, including corporate identification, loan confirmation, audited accounts, and ITR acknowledgments. The lender company was found to be a corporate entity with a valid CIN, regular income tax assessee status, and sufficient net worth, and all transactions were through banking channels. Therefore, the addition made by the Assessing Officer was deleted.
Key Issues
Whether the addition of Rs.1,85,00,000/- on account of unsecured loans under Section 68 of the Income Tax Act, 1961, is justified when the assessee has provided sufficient documentary evidence and the lender is a credible corporate entity.
Sections Cited
250, 68, 133(6), 260A, 69C
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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: December 17, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 27.05.2025 of the NFAC, Delhi [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
Brief facts of the case are that the assessee filed the return of income for AY 2014-2015 declaring an income of Rs.88,37,270/- and was assessed to an income of Rs.4,55,31,490/-. The Assessing Officer passed assessment order in the case of the assessee by making the following additions /disallowances:
(a) Rs.99,07,825/- was disallowed on account of Operation & Maintenance charges at Bhutan.
(b) Rs.2,00,00,000/- was added on account of bogus unsecured loans u/s 68 of the IT Act 1961.
Beekay Vanijya Pvt. Ltd (c) Rs.65,86,000/- was disallowed on account of Operation & Maintenance charges (local) paid to M/s S.P. Mining.
Aggrieved by the said order, the assessee filed an appeal before the CIT(A) wherein the appeal of the assessee has been allowed on two counts i.e. Rs.99,07,825/- on account of Operation & Maintenance charges at Bhutan and Rs.65,86,000/- on account of Operation & Maintenance charges (local) paid to M/s S.P. Mining. The ld. CIT(A) confirmed the addition made by the Assessing Officer u/s 68 of the Act to the extent of Rs.1,85,00,000/-.
Being dissatisfied, the assessee is in appeal before us challenging the very impugned order thereby submitting that during the year under consideration, the assessee took loan for a sum of Rs.2,05,00,000 from various parties and out of which an unsecured loan of Rs.1,85,00,000/- was taken from Kailash Auto Finance Limited. The ld. AR submits that the assessee produced the following documents in support of the loan transaction: a) Details of loan obtained as certified by the statutory auditor b) Reply dated 29.06.2016 against notice issued u/s 133(6) c) Bank statement (Standard Chartered) for receipt of loan d) Balance confirmation certificate issued by lenders 4.1 The ld. AR further submits that the assessee explained the transaction details for loans taken from the said company namely Kailash Auto Finance Ltd with supporting documents and the said lender company responded to notice u/s 133(6). His submission is that the lender company is a corporate entity having CIN, filed income tax returns regularly, having substantial free reserves and transaction was Beekay Vanijya Pvt. Ltd done only through banking channel and loan confirmations were submitted and the following documents were submitted during the course of assessment proceedings in respect of the lender company namely Kailash Auto Finance: a) Corporate Identification certificate of MCA b) Loan confirmation with interest & TDS thereon c) Audited Accounts for the year ended 31.03.14 d) ITR return acknowledgement for AY 13-14 & 14-15 4.2 The ld. AR relied the following case laws: a. PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, b. PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 c. PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024 5. Contrary to that, the ld. DR supports the impugned order.
Upon hearing submission of the counsels of the respective parties and on perusal of the material available on record, we find that during the year under consideration, the assessee borrowed loan for Rs.2,05,00,000 from two parties namely (i) Kailash Auto Finance Limited of Rs.1,85,00,000/- (ii) Ambala Traffin Pvt. Ltd. of Rs.15,00,000 and the ld. CIT(A) has confirmed the addition u/s 68 of the Act made by the Assessing Officer of Rs.1,85,00,000/- in respect of unsecured loan taken from Kailash Auto Finance Limited. We further find that the assessee has produced the details such as details of loan taken, reply in respect of Beekay Vanijya Pvt. Ltd notice u/s 133(6) of the Act, bank statement, loan confirmation. We also find that the assessee submitted the following details in respect of loan of Rs.1,85,00,000/- taken from Kailash Auto Finance Ltd: a) Corporate Identification certificate of MCA b) Loan confirmation with interest & TDS thereon c) Audited Accounts for the year ended 31.03.14 d) ITR return acknowledgement for AY 13-14 & 14-15
It is pertinent to mention here that the said lender company duly responded to notice u/s 133(6) of the Act and the lender company has a valid CIN, is a regular income tax assessee, has sufficient net worth to give loan to the assessee company and all the transactions were done through banking channel. We have gone through the cited decisions of Hon’ble Jurisdictional High Court including the decision in the case of PCIT vs. Alom Extrusions Ltd. (supra), wherein, the Hon’ble High Court held as under:
“This appeal filed by the Income Tax Department under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated December 14, 2023 passed by the Income Tax Appellate Tribunal "A" Bench, Kolkata (The Tribunal) in for the assessment year 2015-16. The revenue has raised the following substantial questions of law for consideration : i) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in upholding the order of the Commissioner of Income Tax (Appeals) deleting the disallowance made under Section 68 of the Income Tax Act, 1961 on account of unsecured loan from shell companies amounting to Rs.3,00,00,000/- as unexplained cash credit without appreciating the materials brought on record and facts evaluated by the Assessing Officer in the Assessment Order ? ii) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in upholding the order of the Commissioner of Income Tax (Appeals) deleting the addition made under Section 69C of the Income Tax Act, 1961 on account of interest expenses on such unsecured loan ? We have heard Mr. Tilak Sharma, learned standing counsel appearing for the appellant and Mr. Amit Agarwal, learned counsel appearing for the respondent.
Beekay Vanijya Pvt. Ltd The Department was unsuccessful in their challenge before the learned Tribunal wherein they questioned the correctness of the order passed by the Commissioner of Income Tax (Appeals) - 27, Kolkata [CIT(A)] on 14 th June, 2023. By the said order, the [CIT(A)] allowed the appeal filed by the assessee and set aside the addition made by the Assessing Officer by invoking power under Section 68 of the Act. As could be seen from the order passed by the learned Tribunal, the Tribunal has examined the factual details after noting the factual findings recorded by the [CIT(A)], more importantly, the learned Tribunal found that all the loans stood repaid, which has also been factually ascertained by the [CIT(A)] and re-affirmed by the Tribunal. We find the order passed by the [CIT(A)] to be an elaborate order after discussing all the facts. The learned Tribunal has, in fact, quoted the relevant portions of the order passed by the [CIT(A)] and thereafter independently proceeded to examine the correctness of the finding and affirmed the same. Thus, we are of the view that no questions of law, much less substantial questions of law arises for consideration in this appeal. Hence, the appeal fails and the same is dismissed. 7.1 Going over the discussion made above and considering the judicial pronouncements, we find merit in the contention of the assessee and accordingly delete the impugned addition of Rs.1,85,00,000/- made u/s 68 of the Act.
In the result, the appeal of the assessee is allowed.
Kolkata, the 17th December, 2025.