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Facts
The assessee company, engaged in manufacturing and trading, faced additions totaling Rs. 4,62,76,370/- after a search assessment following a search and seizure operation, which found no incriminating material. The additions included Rs. 28,00,000/- for bogus unsecured loans under Section 68 and Rs. 12,730/- as disallowance under Section 14A read with Rule 8D. The CIT(A) subsequently allowed the assessee's appeal, deleting both additions, leading the revenue to file an appeal before the ITAT, which was condoned for a delay of 186 days.
Held
The ITAT upheld the CIT(A)'s decision, confirming that the assessee had discharged the onus to prove the identity, creditworthiness, and genuineness of the unsecured loans, thereby deleting the Rs. 28,00,000/- addition under Section 68. Furthermore, the tribunal affirmed the deletion of the Section 14A disallowance of Rs. 12,730/- as there was no dividend income and no separate expenses were incurred, making Section 14A inapplicable. The ITAT found no infirmity in the CIT(A)'s order.
Key Issues
Whether the CIT(A) erred in deleting the addition of bogus unsecured loans under Section 68 and disallowance under Section 14A read with Rule 8D.
Sections Cited
250, 143(3), 132(1), 133A, 153A, 139, 143(2), 142(1), 68, 14A, Rule 8D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
Assessment Year: 2014-15 DCIT, Central Circle -1(1), Kolkata.…..………………….……….……….……Appellant vs. Bentec India Ltd………………. ………..…………...……………………..…..Respondent Phase-II, Kasba Industrial Estates, Plot No.11, Kol-700107.. [PAN: AABCB0647G] Appearances by: Pradeep Dung Dung, Sr. DR, appeared on behalf of the appellant. Manish Tiwari, FCA appeared on behalf of the Respondent. Date of concluding the hearing : December 02, 2025 Date of pronouncing the order : December 17, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the revenue is directed against the order dated 26.11.2024 of the Commissioner of Income Tax (Appeals)-27, Kolkata [‘CIT(A)’] passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2014–15.
The appeal has been filed by the revenue with a delay of 186 days. The revenue has filed a petition for condonation of the delay. After considering the reasons cited in the petition for condonation of delay, we find that the reasons are valid and consequently, the delay in filing the appeal is hereby condoned and we proceed to dispose of the appeal on merits.
Brief facts of the case are that the assessee company is engaged in manufacture, trading and maintenance work of Energy Meters and other Bentec India Ltd electrical accessories. The original assessment u/s. 143(3) of the Act was completed on 30.12.2016 and at the time of passing the assessment order the AO did not make any addition in respect of unsecured loan. Subsequently, a Search and seizure operation u/s. 132(1) of Act was conducted at the residential premises of directors and office premises of Bentec Group of cases on 21.03.2018 and survey operation u/s. 133A of the Act was also conducted in respect of some business premises of this group and the assessee-company also covered under the Search and seizure operation. In course of search and seizure operation, no incriminating material was found. The A.O. issued notice u/s 153A directing the assessee to file return u/s 153A of the Act and in response to such notice, the assessee filed its return of income electronically on 19.08.2019 declaring total income at Rs. 1,17,20,770/- as was declared u/s 139 of the Act. Thereafter, statutory notices u/s 143(2) and u/s 142(1) were issued along with questionnaire and the assessee appeared to explain the return and submitted further documents which included hard copy of return, computation of income, audited accounts, apart from accounting details, clarifications etc. The A.O. completed the search assessment u/s 153A/143(3) determining the assessed income at Rs. 4,62,76,370/- by making the certain additions i.e. unexplained cash credit u/s. 68 in respect of bogus loans of Rs. 28,00,000/-, disallowance of expenses towards interest on TDS, penalty etc. Rs. 1,81,854/- and disallowance of expenses u/s. 14A read with Rule 8D Rs. 12,730/-.
Aggrieved by the said order, the assessee filed an appeal before the CIT(A) wherein the appeal of the assessee has been allowed on the addition of bogus loans of Rs. 28,00,000/- and the disallowance of expenses u/s. 14A read with Rule 8D Rs.12,730/-.
Being dissatisfied, the revenue is in appeal before us challenging the very impugned order by raising the following grounds of appeal: 2
Contrary to that, the ld. AR supports the impugned order thereby submitting that the unsecured loan amounting to Rs. 28,00,000/- received by the assessee during the relevant assessment year from three parties, the details are as follows:
Hello Communication Pvt. Ltd. 10,00,000/- Shree Balaji Mercantiles Pvt. Ltd. 4,00,000/- Good Hope Software Pvt. Ltd. 14,00,000/- Total 28,00,000/- Bentec India Ltd 6.1 The ld. AR submits that the initial onus cast upon the assessee to establish the identity and creditworthiness and genuineness of unsecured loan was duly discharged by the assessee by furnishing the following documents in respect of all the loan parties: a) Registered Address of the company. b) PAN Details c) Copy of ITR Acknowledgement d) Copy of Audited Financial statements e) Copy of relevant Bank Statements f) Copy of Loan confirmation and source of funds.
6.2 The ld. AR further submits that the Assessing Officer has not found any defect and discrepancy in the documents submitted by the assessee to establish the transaction of loan as bogus and the said addition of Rs.28,00,000/- on account of bogus unsecured loan may be deleted. In respect of disallowance of Rs.12,730/- u/s. 14A read with Rule 8D is concerned, the ld. AR submits that there was no dividend income and no separate expenses were incurred, therefore, the said disallowance u/s 14A is not justified.
Upon hearing submission of the counsels of the respective parties and on perusal of the material available on record, we find that the unsecured loan amounting to Rs. 28,00,000/- received by the assessee during the relevant assessment year from the following parties:
Hello Communication Pvt. Ltd. 10,00,000/- Shree Balaji Mercantiles Pvt. Ltd. 4,00,000/- Good Hope Software Pvt. Ltd. 14,00,000/- Total 28,00,000/- a) Registered Address of the company. b) PAN Details c) Copy of ITR Acknowledgement d) Copy of Audited Financial statements e) Copy of relevant Bank Statements f) Copy of Loan confirmation and source of funds. 7.2 We further find that the loan creditors have enough net-worth to advance loan to the assessee company and the details are as under:
Name of Loan parties Share Capital, Unsecured loan Reserves & (Rs.) Surplus Hello Communication Pvt. Ltd. 179,039,411/- 10,00,000/- Shree Balaji Mercantiles Pvt. Ltd. 6,78,76,798/- 4,00,000/- Good Hope Software Pvt. Ltd. 50,35,35,809/- 14,00,000/- Total 28,00,000/- 7.3 We also find that all the alleged loan creditors are registered with the Ministry of Corporate Affairs and they are regularly assessed to tax, books of accounts are duly audited and audited financial statements and copies of the bank statement of each of these companies were submitted and the revenue authorities failed to find any defect to the details and documents furnished by the assessee in respect of all the loan creditors. We find that the ld. CIT(A) in his order has elaborately discussed the entire issue and allowed the appeal of the assessee after considering various judicial pronouncements, the relevant part of the order of the ld. CIT(A) is essential to reproduce as under:
“4.2.11 From the above discussion and depiction, I am of the opinion that the A.O. has not brought enough material on record, so as to establish that the transaction of loan/borrowing amounting to Bentec India Ltd Rs.28,00,000/- are bogus/sham transaction, especially in a case where assessment was already completed u/s.143(3) of the Act and nothing adverse was found in enquiry conducted in said assessment regarding the investment in loan. In view of the above discussions, it is held that addition of Rs.28,00,000/- on account of bogus unsecured loan is not sustainable in law and thus the same is deleted.” 7.4 In respect of disallowance of Rs.12,730/- u/s. 14A read with Rule 8D, we find that there was no dividend income and no separate expenses were incurred during the year and the disallowance under section 14A read with Rule 8D does not apply in absence of any exempt income derived in the relevant previous year and the ld. CIT(A) has rightly deleted the said disallowance of Rs.12,730/-. 7.5 Going over the above discussion and considering the facts of the case, we find that the ld. CIT(A) has elaborately discussed the facts and after considering the various judicial pronouncements passed the impugned order in favour of the assessee on the above two issues. We, therefore, do not find any infirmity in the order of the ld. CIT(A) and the same is upheld. Accordingly, the appeal of the revenue is dismissed.
In the result, the appeal of the revenue is dismissed.
Kolkata, the 17th December, 2025.