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Facts
The assessee, ESKAG Sanjeevani Pvt. Ltd., received unsecured loans from Asha Apartments Pvt. Ltd. amounting to ₹4,04,50,000/-. The Assessing Officer (AO) treated these loans as unexplained credit and added them to the assessee's income, along with interest paid. The AO's addition was based on the perceived lack of creditworthiness and genuineness of the lender, citing a statement recorded five years prior and the lender's limited income.
Held
The Tribunal held that the assessee had discharged its initial burden by providing all necessary documents to establish the identity, creditworthiness, and genuineness of the lender. The AO failed to conduct further investigation or point out any specific defects, shifting the burden to the revenue, which was not discharged. The Tribunal also noted that the loans were repaid, and the assessee was not the beneficiary of accommodation entries. Therefore, the addition made by the AO was deleted.
Key Issues
Whether the unsecured loans advanced by Asha Apartments Pvt. Ltd. to the assessee were genuine transactions, and if the assessee had discharged its onus of proof regarding the identity, creditworthiness, and genuineness of the lender.
Sections Cited
139(1), 153A, 133(6), 68
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM
These are appeals preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals), Kolkata-21 (hereinafter referred to as the “Ld. CIT(A)”] dated 28.05.2024 for the AY 2019-20.
At the outset, we observe from the appeal folder that there are delay of 9 & 8 days in & 1639/KOL/2024 respectively in filing the appeals by the department and in support of this condonation petitions were filed. It was stated in the condonation petitions that the delay had occurred due to obtaining the administrative approvals from the competent authorities and accordingly, the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay.
In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee on merit by observing and holding as under: - “Ground No. 2 This ground agitates against the additions made by the AO on merits of the case and that the AO did not take cognizance of the detailed submission made by the assessee regarding the loans received wherein copies of the requisite documents such as name, address, PAN, loan confirmation, MCA Data, Audited Accounts for the relevant F.Y, ITR for the relevant F.Y & bank statement etc of the lender company were submitted by the appellant. The appellant during the course of appellate proceedings has submitted copies of ledger accounts and the relevant bank statements to substantiate that the loans to the tune of Rs.4,04,50,000/- taken from M/s Asha Apartments Pvt. Ltd was repaid in subsequent years. The A/R of the appellant has drawn attention to the fact that the said loan from M/s Asha Apartments Pvt. Ltd was a running loan wherein an amount of Rs. 93,00,000/- was taken during the previous F.Y: 2017-18. During the F.Y: 2018-19 pertaining to AY: 2019-20, besides taking a further amount of Rs.4,04,50,000/- as loan, the appellant had repaid an amount of Rs. 1,57,47,589/-, which is even before the search was conducted. The closing balance of such loan from M/s Asha Apartments Pvt. Ltd on 31.03.2019 stood at Rs. 3,78,13,378/-. During the next F.Y also the appellant made a payment of Rs. 34,79,930/-. The appellant has adduced evidences to substantiate that the principal amount of the loan was repaid in full during the F.Y: 2023-24. The appellant in its submissions has also argued that the lender had sufficient own funds to advance unsecured loans to the assessee and in support of the same the appellant has adduced the audited accounts of the lender company for the AY: 2019-20. From the audited accounts the following details of the net own funds of the lender and the loans advanced by them were observed:
The appellant has also adduced evidences before the AO to substantiate that the loans were taken through banking channels and was repaid in full through banking channels
The ld. AR strongly argued that when the two constructions are there then the construction favorable to the assessee has to be followed as has been held by the Hon’ble Apex Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC).
After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has borrowed money from various lenders including Asha Apartments Pvt Ltd. for which the assessee filed all the details comprising names, addresses, PANs, audited balance sheets, confirmations, bank statements, etc. to prove the identity, creditworthiness of the lenders and genuineness of the transactions. We note that the ld. AO in order to independently verify the transactions issued notice u/s 133(6) of the Act to all the lenders who replied the said notices except Asha Apartments Pvt Ltd and thus, the ld. AO made an addition in respect of said party of ₹4,04,50,000/- along with interest of ₹34,79,930/- on the ground that 1639/KOL/2024 010. The issue raised in this appeal is in respect of disallowance of interest and is identical to one as decided by us in ITA No.
In the result, both the appeals of the Revenue are dismissed. Order pronounced in the open court on 08.10.2025.