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Facts
The Revenue appealed against the CIT(A)'s deletion of additions made under sections 68 and 69C. The AO had treated a loan of Rs. 10,00,000/- and a commission of Rs. 20,000/- as unexplained, alleging the lender was a shell company providing accommodation entries.
Held
The Tribunal upheld the CIT(A)'s order, noting that the lender company was found to be genuine in other cases and that the assessee had provided documentary evidence of loan repayment and interest payment. The Tribunal also noted a denial of natural justice as the AO relied on a statement without providing an opportunity for cross-examination.
Key Issues
Whether the loan and commission were genuine or accommodation entries, and whether proper procedure (natural justice) was followed by the AO.
Sections Cited
147, 148, 68, 69C, 139
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 18.03.2025 passed by learned Commissioner of Income-Tax (Appeals)-National Faceless Appeal Centre, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 08.09.2021 passed by learned National Faceless Assessment Centre, Delhi [“AO”] u/s 147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2014-15, the revenue has filed this appeal on following effective grounds:
“1. That on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 10,00,000/- u/s 68 without appreciating the finding of the AO and his observation in respect of findings of the Investigation Wing and that of the SEBI w.r.t shell companies managed
2. That on facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 20,000/- u/s 69C being commission @ 2% on the unsecured loan without appreciating the facts of the case and finding of the AO that the company M/s Jayant Security and Finance Pvt. Ltd is established to be a shell company which provided accommodation entry after charging commission.”
2. The background facts leading to present appeal are such that the assessee-individual filed his return of income of AY 2014-15 on 24.07.2014 u/s 139 declaring a total income of Rs. 4,03,740/- which was assessed.
Subsequently, taking into account an information received from Investigation Wing of Income-tax Department, the AO issued notice u/s 148 dated 19.03.2020 to assessee to initiate the proceeding of re-assessment u/s 147. In response, the assessee re-filed his return on 19.06.2020 declaring the same total income of Rs. 4,03,740/-. Ultimately, the AO passed assessment-order dated 08.09.2021 u/s 147 after making an addition of Rs. 10,00,000/- treating the loan taken by assessee from ‘M/s Jayant Securities and Finance Pvt. Ltd.’ as unexplained cash credit u/s 68 (+) an addition of Rs. 20,000/- u/s 69C on account of unexplained payment of estimated commission for arranging accommodation of loan entry.
Aggrieved, the assessee carried matter in first-appeal before CIT(A) whereupon the CIT(A) deleted the impugned additions. Now, the revenue has come in next appeal before us being aggrieved by order of CIT(A).
We have heard the learned Representatives of both sides and perused the documents held in case record including the orders of lower-authorities.
We have also considered the Written-Submission filed by assessee.
Page 2 of 5 “6. Decision:- 6.1 The appellant is aggrieved against two additions made in the Assessment order for Rs. 10,00,000/- made u/s 68 in respect of loan from Jayant Security and Finance Private Limited and Rs. 20,000/- made u/s 69 on account of commission on the said amount @ 2%. The appellant in his submissions says that: 1. The identity of the company is established with Permanent Account Number.
Loan has been taken and repaid through banking channel.
3. The interest has been paid.
No amount remained payable.
Shri. Sharad Darak whose statement has been relied upon for making the addition has no confirmed having given any accommodation entry to the assesse.
6. No opportunity of cross examination of Shri Sharad Darak has been provided. 6.2 The appellant has stated that he had borrowed loan of Rs. 5,00,000/- only and not Rs. 10,00,000/-, Since, the company has wrongly remitted Rs. 10,00,000/- to the assessee, the Assesse returned Rs. 5,00,000/- by RTGS on the same day which was wrongly remitted. The credit entry of Rs. 10,00,000/- and debit entry of Rs. 5,00,000/- is appearing in the bank account of the assessee on the same day which is evident from the copy of bank passbook. Further, the said loan of Rs. 5,00,000/- and interest amounting to Rs. 1,32,000/- (total of Rs. 6,32,000/-) were returned to the creditor company on 03.05.2016. The appellant also raises a plea that the AO except relying on the statement and some list, has not brought any positive material on record to discredit the explanation and documentary evidences furnished by the appellant. In further submissions, the appellant has submitted that in case of ITO vs Hi Link Society Homes Pvt. Ltd. (2022) 45 ITJ 209 (Indore ITAT), the matter of loans raised from Jayant Security and Finance Private Limited was considered and the judgement reads as under. "During hearing before us, representatives of both sides fairly agreed that the lenders i.e. Jayant Securities & Finance Limited have been found as genuine companies and the loans taken by other assessees from those lenders have been found to be genuine and additions made by revenue u/s 68 in the assessment of those assessees, have been deleted in a plothera of decisions by ITAT, indore bench." 6.3 The appellant has also relied upon following judgements related to Jayant Securities & Finance Limited: a) Radhistwari Developers Pvt Ltd. s Pr CIT (2021) 9 TJ Online 249 (Trib-Indore) in ITA NO. 493/Ind/2018
Page 3 of 5 Rajat Sureka AY 2014-15 b) Sanjay Shukla v. ACIT, (2022) 31 ITJ Online 422 (Trib-Indore) in C) Global Realcon Ltd. v. ACIT, (2022) 31 TJ Online 423 (Trib-Indore) in ITS(SA) No. 170 to 174/1nd/2020. d) Ad-manum Finance Limited v. DCIT, (2020) & ITJ Online 356 (Trib- Indore) in e) Tirupati Construction v. DCIT, (2018) 6 ITJ Online 503 (Trib-Indore) in ITA No. 522/Ind/2014. 6.4 I have considered these submissions. As regards the loan of Rs. 10,00,000/-, I find that actual loan was Rs. 5,00,000/- only as the amount of Rs. 5,00,000/- was returned to the Jayant Securities & Finance Limited and even balance Rs. 5,00,000/-along with interest of Rs. 1,32,000/- was re-paid on 03.05.2016. The appellant has enclosed the confirmation from Jayant Securities & Finance Limited. The decision of Honourable ITAT, as quoted (supra) whereby loans taken by other assesse's from those lenders including Jayant Securities & Finance Limited have been found to be genuine and the additions made u/s 68 of the IT Act, are deleted for those assessees also strengthens the appellant's claim. I also find that there is denial of natural justice as the AO has relied on the statement of Sh. Sharad Darak and did not give any opportunity of cross examination to the appellant assesse. Given these facts and circumstances, I delete the addition of Rs. 10,00,000/- made by Assessing officer u/s 68 of the IT Act. Consequentially the 2% commission estimated at Rs. 20,000/- is decision, Ground No. becomes consequential in nature. The Ground is allowed.
In result, the appeal is allowed.”
5. Thus, the AO has made impugned additions on an understanding that the lender “M/s Jayant Securities and Finance Pvt. Ltd.” was a shell company operated by one accommodation entry provider ‘Shri Sharad Darak’ and hence the loan taken by assessee from “M/s Jayant Securities and Finance Pvt. Ltd.” was not genuine, it was an accommodation obtained by assessee. However, the Ld. CIT(A) has passed a reasoned order reversing the action of AO. In coming to his conclusion, the Ld. CIT(A) has made a careful analysis of the factual matrix and submissions made by assessee.
Further, the Ld. CIT(A) has also followed pre-existing judicial precedents in which the lender company “M/s Jayant Securities and Finance Pvt. Ltd.”
Page 4 of 5 AY 2014-15 and the loans taken by various other assessees from the very same lender, have been found genuine and the additions made by assessing authorities in assessments of those other assessees, have been deleted. Therefore, we do not find any error, adversity or perversity in the impugned order of first- appeal passed by Ld. CIT(A). Accordingly, the same is upheld and the grounds raised by revenue are dismissed.
Resultantly, this appeal is dismissed.
Order pronounced in open court on 20/03/2026