ACIT, CC - 3(4), KOLKATA vs. RAMESWARA INFRASTRUCTURES LTD, KOLKATA

Per Pradip Kumar Choubey, Judicial Member:

The appeal has been preferred by the Revenue and cross-objection by the assessee against the order of the Commissioner of Income Tax
(Appeal)-21, Kolkata [hereinafter referred to as the ‘CIT(A)’] all dated
14.08.2024 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) for A.Y 2019-20. 2. At the outset, we notice that there is delay in filing of the appeal by the Revenue by 30 days and condonation petition for the said delay has ITA No.2692/Kol/2024 & C.O. 19/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 is a company engaged in real estate business and it filed its return of income u/s. 139(1) of the Act for the relevant assessment year on 30.09.2015 declaring a loss of Rs
57,854/-.
The return was subsequently processed u/s 143(1).
Thereafter, a search and seizure operation was conducted at the premise of Khetawat Group. In view of such search, notice u/s 153C of the Act was issued to the assessee and in response to which the assessee submitted its return of income u/s. 153C on 27-01-2022 and declared a loss of Rs.57,854/- as filed in original return of income u/s 139 of the Act. Subsequently statutory notices u/s 143(2) and 142(1) were issued to the assessee and in compliance to such notices, the assessee made time to time compliances and submitted details and explanations as called for. The Assessing Officer has completed the assessment by making an addition of Rs.10,00,000/- u/s 68 on account of bogus unsecured loans received by the assessee.
4. Aggrieved by the said order, the assessee preferred an appeal before the ld. CIT(A) by taking two grounds i.e. one being legal that no addition was permissible in the absence of any incriminating material found in the course of search and the other is on merits. The ld. CIT(A) has dismissed the legal ground of the assessee but allowed the appeal of the assessee on merits.
5. Being aggrieved and dissatisfied, the revenue has preferred the appeal on merits and the assessee filed corresponding cross-objections on legal ground.

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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6. First, we take C.O No.19/Kol/2025. The ld. AR has submitted that additions have been made by the Assessing Officer solely on the basis of statement of Shri Sunil Kumar Murmuria who is alleged to be an entry operator and engaged in the business of providing accommodation entries. The ld. AR submits that the additions made in the course of unabated assessment proceedings u/s 153A of the Act when there was no incriminating documents found in the course of search and seizure operation. The ld. AR had explained the seized materials in its paper- book and submits that there has been no connection of the seized materials with the assessee. He has placed reliance of the judgment of the Apex Court passed in PCIT vs. Abhisar Buildwell Pvt. Ltd. [2023] 149
taxmann.com 399 (SC) dated 24.04.2023. 7. The ld. DR supported the impugned order of the ld. CIT(A) by submitting that the assessee did not bring anything in the appellate proceedings which goes to prove that the Assessing Officer had not relied upon the incriminating material while making the impugned addition.
According to him, the assessee did not explain regarding loan taken by the assessee company.
8. Upon hearing the submissions of the counsels of the respective parties, we have perused the facts of the case and find that the seized materials with its explanation which have been given by the assessee in its paper-book are as under:

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
Rameswara Infrastructures Ltd

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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during the search. The assessee had already filed its original return of income for the Assessment Year 2019-20 on 09.10.2019 and time limit for issuance of notice u/s 143(2) of the Act for the Assessment Year
2019-20 was on 30.09.2020 and the date of search was 01.12.2020
hence the date of issuance of notice u/s 143(2) had expired on the date of search. Hence the date of search of the said assessment year falls under the category of unabated assessment.
9. Going over the order of the Assessing Officer and keeping in view the explanation on seized materials and considering the Apex Court’s judgment passed in PCIT vs. Abhisar Buildwell Pvt. Ltd. (supra), we do not find any hesitation to hold that in the present case, no incriminating materials found in the course of search that relates to the assessee company. The Hon’ble Supreme Court in the Abhisar Buildwell Pvt.
Ltd.’s case (supra) has clearly held that in case, no incriminating material has unearthed during the search, the Assessing Officer cannot assess or reassess taking into consideration of other material in respect of completed/unabated assessment. Meaning thereby that in respect of completed/unabated assessment, no addition can be made by the Assessing Officer in the absence of any incriminating material found during the course of search. Keeping in view the said decision and going over the facts of the case, we find substance in the argument of the ld.
counsel for the assessee. We hold that in the present case, no incriminating material was found during the course of search, hence the addition cannot be made and we, therefore, allow the cross-objection filed by the assessee.
10. ITA No.2692/Kol/2024 - Now, we come to the merits of the case as the department has preferred appeal by taking the ground that the ld.
CIT(A) has erred in deleting the addition of bogus unsecured loan to the tune of Rs.10,00,000/- made u/s 68 of the Act when the genuineness of ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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the transaction and identity and creditworthiness of the creditors could not be established.
10. We have gone through the order passed by the ld. CIT(A) and find that the ld. CIT(A) has passed an exhaustive order and thereafter allowed the appeal of the assessee. It is important to mention here that the assessee has furnished the complete details of loans to prove the identity, genuineness and creditworthiness of the said unsecured loans during the course of assessment which includes name, address, PAN, loan confirmations, MCA data, audited accounts, ITR copies, bank statements etc. and the Assessing Officer without pointing out any defect or discrepancy in the details furnished by the assessee made the addition merely on the basis of a retracted statement of Sunil Kumar
Murmuria treating the amount as unexplained cash credit. It is important to mention that Murmuria Promoters (P) Ltd. had opening balance of Rs.70,17,792/- and the entire transactions were made through banking channels and copies of audited accounts reflecting the transaction. The ld. CIT(A) in its order has discussed this issue at length and it is relevant to reproduce the operative portion of the ld. CIT(A) which is as under:
“Grounds 2, 3 & 5
In these grounds, the appellant has agitated against the action of the AO in making an addition of Rs. 10,00,000/- as unexplained cash credit u/s 68 of the Act by treating unsecured loans received from companies controlled by Sunil Kumar Murmuria as bogus as well as the action of the AO in stating that during the year when profit will be booked the assessee will not be entitled for the credit of the interest expenses to the tune of Rs.43,33,083/- and the assessee should not claim such interest in their
Profit & Loss A/c during that AY. The Assessing Officer has recorded that an amount of Rs.10,00,000/- was received as loans from the companies controlled by Sunil Kumar Murmuria in his assessment order in Page No.
2. Opening
Balance
Loans
Received
Repai d
Interest
TDS
Closing

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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during the year

Rs.6,83,03,595
/-
Rs.10,00,000
/-
-
Rs.43,33,083
/-
Rs.4,33,30
8 /-
Rs.7,32,03,370
/- /-

On perusal of the documents submitted by the appellant, it is observed that such loan amounting to Rs.10,00,000/- was received from M/s Murmuria Promoters Pvt. Ltd during the F.Y: 2018-19. Before proceeding further it is imperative to mention here that as per the notings of the AO in his assessment order as well as the statement recorded by Surendra Kumar Khetawat u/s 132(4) on 02.12.2020, an amount of Rs.22 crores was disclosed by Surendra Kumar Khetawat as undisclosed income of Khetawat Group. In the disclosure petition dated
27.01.2021 submitted before the DDIT, Investigation, the breakup of the said disclosure was provided in the manner mentioned below:
Si. No.
Name of the Entity
Assessment Year
Amount (Rs.
In Lacs)
Manner derived
1
Khetawat
Properties
Ltd
2020-21
1700
Cessation of Liability
2
Rameshwara
Infrastructure Pvt Ltd
2021-22
500
Cessation of Liability

Total

2200

Therefore it is evident that the appellant company has made a disclosure of Rs. 5 crores by writing off the liability of certain unsecured loans existing in the books of the appellant company during the AY: 2021-
22. The details of such unsecured loans which have been written off and disclosed as additional income by the appellant company in a lender wise manner is as follows:
SL
Name
Loan Amount Written
Off
1. Murmuria
Infrastructure
(P) Ltd
27,65,780
2. Murmuria
Promoters
(P)
Ltd
72,80,617

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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3. Nandkunj Nirman (P) Ltd.
73,33,954
4. Prachur
Commercial
(P)
Ltd.
1,31,98,958
5. Shree Durga Paints Ltd
29,21,945
6. Total (1)
3,35,01,254
7. Builcon Textiles (P) Ltd.
65,51,100
8. Goodward Tradelink PVT
LTD
54,39,520
9. Stalk Tracom Pvt Ltd.
55,59,435
10. Suruchi Vanijya Pvt Ltd.
37,82,874
11. Veeline Holding Pvt Ltd
15,85,000
12. Verma Commercial Pvt Ltd
23,18,080
13. Payable
Agnst.
Land
2,39,890

Total (2)
2,54,75,899

TOTAL
5,89,77,153
The appellant during the course of assessment as well as appeal proceedings had filed various documents pertaining to these unsecured loans such as the loan confirmation statements for the period 01.01.2014
to 31.03.2020 along with PAN, audited accounts of the lender companies, copies of ITR filed by them in the respective years, and assessment orders passed in respect of some of these concerns pursuant to the search and seizure operation. From such details submitted by the appellant, it is observed that the loans taken by the appellant company from M/s
Murmuria Promoters Pvt Ltd, are part of the disclosure of Rs. 5 crores made by the appellant company. On perusal of the ledgers of these companies, it is observed that these loans were ongoing loans wherein certain payments were also made during the period 01.04.2014 to 31.03.2020 and the closing balance of these loans were disclosed.
Murmuria Promoters (P) Ltd

AY
Opening balance as on 1st April of relevant
Loans taken during the year
Loans repaid during the year
Interest charged
Closing balance
(excluding
TDS) as on ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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FY

31st
March of relevant
FY
2015-16
55,05,792

4,20,000
58,83,792
2016-17
58,83,792

4,20,000
62,61,792
2017-18
62,61,792

4,20,000
66,39,792
2018-19
66,39,792

4,20,000
70,17,792
2019-20
70,17,792
10,00,000

4,08,083
83,85,067
2020-21
83,85,067

15,00,000
4,39,500
72,80,617
Since the closing balance of these loans as on 31.03.2020 have been written off by the appellant and the amounts have been included in the disclosure in the aftermath of search, the AO`s action therefore in adding the amount of loan received during the FY: 2018-19 in respect of M/s Murmuria Promoters Pvt Ltd is leading to double taxation as ultimately the outstanding balance in respect of these loans as on 31.03.2020 has been offered to tax by the appellant.
It is also pertinent to mention that the same AO has assessed this lender pursuant to search, from AY: 2015-16 to AY: 2021-22, wherein no adverse inferences have been made and the investments made by such lender companies have not been placed under doubt.
The additions made by the AO u/s 68 towards loans received from M/s Murmuria Promoters Pvt Ltd, to the tune of Rs. 10,00,000/- therefore cannot be sustained and stands deleted.
In page 5 of the assessment order, the AO has commented that the assessee will not be entitled for the credit of this interest expenses to the tune of Rs. 43,33,083/- when profit will be booked. It has been observed that as on 01.04.2014 there was an opening balance to the tune of Rs.5,20,92,195/- from the lender companies allegedly being controlled by Sunil Murmuria and that there was substantial opening balance in respect of all such lender companies. It has already been held earlier that the action of the AO in making an addition u/s 68 towards fresh loans received during the year is unsustainable. The interest paid on such loans were included in income by the respective lender companies and the corresponding TDS credit was also claimed by the lenders in the ITR filed for AY: 2019-20 as well as earlier A.Ys. The appellant has submitted that ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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it was explained to the AO that all these interest which were paid/payable were capitalised to the cost of land, which were held as stock in trade since long time past. The appellant has also submitted that all documents were filed to establish the genuineness of loans which were verified and not disputed by the AO in course of assessment proceedings. On perusal of the documents filed by the appellant it is observed that majority of the loans were pre-existent as on 01.04.2014 which have not been placed under doubt during the previous years and various repayments were also made prior to initiation of search. The accounting practice of the appellant also stands accepted. I find that these facts have been ignored by the AO and no specific findings have been given by him in his order. I therefore cannot concur with the AO and the action of the AO in this regard is not sustained.
These grounds of appeal are therefore allowed.”

[Pradip Kumar Choubey]
Accountant Member

Judicial Member

Dated: 22 .09.2025. RS

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

ITA No.2692/Kol/2024 & C.O. 19/Kol/2025
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By order