DEPUTY COMMSSIONER OF INCOME TAX, CENTRAL CIRCLE, 4(3), KOLKATA, KOLKATA vs. PRIVI EXPORTS PRIVATE LIMITED, KOLKATA

Per Pradip Kumar Choubey, Judicial Member:

The appeal has been preferred by the Revenue and cross-objection by the assessee against the order dated 21.03.2025 of the NFAC, Delhi
[hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax
Act, 1961 (hereinafter referred to as the ‘Act’).
2. The Registry informed that there is delay in filing of the appeal by the Revenue by 15 days and condonation petition for the said delay has ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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been filed by the revenue. On perusal of the contents of the condonation petition, we find that the reasons mentioned therein are valid and reasonable. Hence, we condone the delay and admit the appeal of the revenue for adjudication.
3. Brief facts of the case are that the assessee company being a group company of ‘Avima Group’ was engaged mainly in trading of rice products, plastic products, cashew nut, peas and other products.
Original Return of income was filed u/s 139 of the Act on 10.09.2018
declaring total income at Rs.1,12,05,620/-. A Survey operation u/s 133A of the Act was conducted in the Avima Group of cases on 04.11.2019 at Avani Signature, Office No. 2, Ground Floor, 91A/1, Park Street, Kolkata
- 700016. Several documents including soft data in mobiles and computers were found, examined, inventoried and impounded bearing identification mark AEPL/01 to AEPL/04 (documents) and AEPL/HD/01
to AEPL/HD/04 (computer hard discs). It is also noticed by the DDIT that such unsecured loan was admitted by Shri Vishwanath Gupta, key person of the group, as bogus in his sworn statement recorded u/s 131
of the Act during the said survey proceedings. Subsequent to the said reason, the case was selected for scrutiny through CASS and as such a statutory notices u/s 143(2) & u/s 142(1) of the Act were issued along with detailed questionnaire were and in response to these notices, the assessee submitted the books of accounts and reply was made before the Assessing Officer. Later, the Assessing Officer passed the assessment order u/s 143(3) of the Act on 30.06.2021 by determining the total income of the assessee at Rs.2,24,12,240/- making additions in three grounds viz. a) unexplained cash credit u/s 68 of the Act in the form of bogus unsecured loan Rs.75,00,000/- and b) disallowance of relatable interest expenses against such aforesaid unsecured loan and the loan

ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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taken in earlier years of Rs.28,47,646/- u/s 69C of the Act and c)
Disallowance of Car running expenses of Rs.8,58,976/-.
4. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee has been partly allowed by allowing the additions of Rs.75,00,000/- relating to unexplained cash credit u/s 68 of the Act and Rs.28,47,646/- relating to disallowance of relatable interest expenses against the unsecured loan u/s 69C of the Act but dismissed the car expenses claimed by the assessee by estimating 30% of the disallowance of Rs.8,58,976/-
5. Being aggrieved and dissatisfied, the revenue has preferred the present appeal whereas the assessee has filed the present cross- objection.
6. ITA No.1605/Kol/2025 - The revenue has filed the present appeal challenging the very impugned order by submitting the following grounds of appeal:

ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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7. Contrary to that, the ld. AR supports the impugned order thereby submitting that the assessee company is engaged in business of export of all type of jute products, Rice, Refractories, import of LDPE,
Reprocessed Granules, Plastic Agglomerates and Raw Cashew nuts and in order to meet the day-to-day business requirements, it took loan from various parties and the assessee has taken the unsecured loan amounting to Rs. 75,00,000/- form Jatashiv Plazza Pvt. Ltd. The ld. AR further submits that that the said loan was paid off during the relevant assessment year and during the course of assessment proceedings, the assessee had submitted the details of the lender company from whom the assessee had taken loan such as PAN, CIN, complete postal address of the loan party, data in website of MCA and the lender company is an Income tax assessee and the assessee had duly paid interest on the loan availed after deducting applicable TDS on the interest paid the entire loan during the year and the bank statements showing the entire loan transactions and also repayment of loan was routed through the banking channel through RTGS/Account Payee Cheque. He further submits that the ffollowing details and documents regarding the loan creditors were duly submitted before the Assessing Officer to substantiate the transaction with the assessee company:
i.
Copy of Audited Financial Statement of loan Creditor ii.
Copy of Relevant Bank Statement reflecting transactions iii.
Copy of Loan Confirmation iv.
Source of Funds of the loan creditor company v.
Copy of ITR Acknowledgement of the loan creditor company vi.
Copy of PAN card

ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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vii.
Copy of ledger Account
7.1
The ld. AR’s submission is that all the corroborative evidences to substantiate the genuineness of the transaction has been furnished by the appellant during the course of assessment proceedings and the Assessing Officer has also not doubted the veracity of the documents so furnished and the addition of Rs.75,00,000/- u/s 68 of the Act may be deleted. The ld. AR in respect of the addition of Rs.6,45,066/- submits that the ld. CIT(A) has rightly deleted the addition on holding that interest paid against the unsecured loan of Rs.75,00,000/- by the assessee through proper banking channel and the same was reflected in the audited P&L A/c and books of the assessee.
8. Upon hearing the submissions of the counsels of the respective parties, we have perused the facts of the case and find that the assessee company is engaged in business of export of all type of jute products,
Rice, Refractories, import of LDPE, Reprocessed Granules, Plastic
Agglomerates and Raw Cashew nuts and in order to meet daily requirements, the assessee took loan from various parties including a loan of Rs. 75,00,000/- from Jatashiv Plazza Pvt. Ltd. during the year.
We find that the lender company from whom the assessee took the unsecured loan have a valid PAN number, CIN, the assessee furnished complete postal address of the said party which is verified by MCA website, the assessee paid interest on the said loan after deducting TDS on the interest paid the entire loan during the year, the lender company has regularly been assessed under Income Tax, the said lender company is a registered with ROC. We note that the said loan was paid during the relevant assessment year and all the transactions were done through proper banking channels. We further find that during the assessment

ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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proceedings; the assessee also submitted the documentary evidences regarding the loan creditor to substantiate the transaction with the assessee company:
i.
Copy of Audited Financial Statement of loan Creditor ii.
Copy of Relevant Bank Statement reflecting transactions iii.
Copy of Loan Confirmation iv.
Source of Funds of the loan creditor company v.
Copy of ITR Acknowledgement of the loan creditor company vi.
Copy of PAN card vii.
Copy of ledger Account

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the transaction with reference to transaction between assessee and creditor and the same cannot be extended to include source of such creditor for the purpose of section 68 of the Act. The burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. In the present case, the assessee had received unsecured loan of Rs.75,00,000/- from the said lending entity (supra) through banking channel and also repaid the same during the subsequent years through banking channel and the same is well reflected in the Tax Audit Report. The acceptance of loan has been established vide the confirmation and bank statements filed during the appellate proceedings. Hence, the addition of Rs.75,00,000/- made by the AO u/s 68 of the Act is liable to be deleted. Therefore, this ground of appeal raised by the assessee is allowed.”
8.2
We find that the ld. CIT(A) rightly deleted the addition of interest payments against the such loan of Rs.6,45,066/- as the same was paid by the assessee through proper banking channel and the transaction was duly reflected in the audited P & L A/c and books of account of the assessee. Going over the above discussion, we do not find any infirmity in the impugned order wherein the ld. CIT(A) has discussed all facts as well as judicial pronouncements and allowed the appeal of the assessee on both the issues. Accordingly, appeal filed by the revenue bearing ITA
No.1605/Kol/2025 is hereby dismissed.
9. C.O No.67/Kol/25 – The assessee has challenged the disallowance by the Assessing Officer in respect of car expenses of Rs. 8,58,976/-. We find that during the F.Y-2017-18, the assessee owned two luxury cars of make Mercedes Benz and Hyundai Creta for which opening WDV of Rs.46,53,188/- and 13,75,376/- totalling to Rs.60,28,564/-. We further find that the Assessing Officer disallowed 30% of the total expenses relating to the running and maintenance cars amounting to Rs.8,58,976/- (30% of Rs.28,63,269/-) as the assessee has not submitted any relevant documents to establish that the car was used exclusively for business purposes. The ld. AR submitted that there was no disallowance in respect of Car running expenses in any of the earlier

ITA No.1605/Kol/2025 & C.O. No.67/Kol/2025
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assessment years and no material has been brought on record by the Assessing Officer to suggest any disallowance that too on an estimate basis and the expenses are in similar lines with respect to turnover achieved by the assessee the Car running expenses is miniscule and by no standard it can be said to be excessive. Under the circumstances, we are inclined to restore the matter to the file of the Assessing Officer for re-examination after giving sufficient opportunity of being heard to the assessee. Thus, C.O 67/Kol/2025 is allowed for statistical purposes.
10. In the result, the appeal filed by the revenue is dismissed and cross-objection of the assessee is allowed for statistical purposes.
Kolkata, the 12th December, 2025. [Rajesh Kumar]

[Pradip Kumar Choubey]
Accountant Member

Judicial Member

Dated: 12.12.2025. RS

Copy of the order forwarded to:
1. Appellant -
2. Respondent -
3. CIT(A)-
4. CIT- ,

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By order