RAJENDRA KUMAR AGRAWAL,JAIPUR vs. ACIT CEN CIR 1 , C-SCHEME, JAIPUR

C. Because Ld. CIT(A) has upheld the order of Ld. AO making addition under section 68 with respect to the fresh unsecured loan taken by the appellant with respect to 53 parties out of 70 parties in respect of which the appellant had failed to produce the balance confirmation during the course of assessment proceedings despite repeated requests and follow-ups by the Appellant from the parties from whom the loan was taken directly and repeated follow-up with finance brokers R.A. Gattani & Co. and Shree Ghiya Enterprises through whom the said unsecured loan was taken. The Ld. CIT(A) had failed to take cognizance of the fact that the Ld. Assessing Officer had incorrectly held in its order that the appellant did not file any information /details for establishing the genuineness and creditworthiness of the parties from which the unsecured loan was taken when on the contrary every information was available with the Assessing Officer such as the PAN No. and complete Address of such parties was already mentioned by the appellant in the schedule (marked as Annexure-VI and VII) of loans taken and repaid respectively which is part of Form 3CD of Tax Audit Report already in possession and records of the Income Tax department for the AY under consideration.

D. Because the Ld. CIT(A) had erred in not allowing the application filed by the Appellant under Rule 46A for taking additional evidence in the form of balance confirmation of remaining 53 parties on record, on the ground that the appellant failed to substantiate that he was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer and also for the reason that the Appellant had not adduce any evidence to establish that the delay was caused by the finance brokers in providing such details as it had failed to produce detail of any commission/service charges being paid to these brokers in respect of such unsecured loans. This contention is in incorrect and untenable as the Appellant had already stated in his application that the delay has been caused by the finance brokers in providing such balance confirmation and also on account of the fact that the appellant was suffering from severe spinal and back related problems for which doctors had advised him to undergo MRI scan on 28.09.2019 and after the MRI scan was done the doctors had advised him for complete bed rest for 6 weeks. The broker who facilitated the loans did not assist the appellant in procuring the necessary confirmations from the concerned parties. Appellant had acted diligently and has made all reasonable efforts to comply with the AO’s request, but the failure to obtain confirmations was due to circumstances beyond his control. Upon recovering form health issues, the Appellant had made all efforts in securing the balance confirmations from 53 creditors in respect of which the addition has been made therefore has discharged his burden of providing the genuineness of such loans. Further, the Appellant had also produced the quarterly TDS returns filed with the department before the Assessing Officer which itself shows that the brokerage of Rs. 4,04,458/- was paid to R.A. Gattani & Co. and Rs. 14,400/- was paid to Shree Ghiya Enterprises and applicable TDS under section 194H on such brokerage paid was duly deducted and deposited with the Income Tax Department. Moreover, payment of brokerage and Commission has also been reflected under sales and administrative expenses (Annexure-P) forming part of the audited financial statements of the appellant already available with the Income Tax Department. Hence, the Ld. CIT(A) had overlooked this aspect and has wrongly rejected the application of the Appellant.

E. Because the Ld. CIT(A) has erred in holding that none of the conditions as specified under rule 46A is fulfilled and categorically refused to admit the additional evidence and confirmed the action of the Assessing Officer whereas the appellant had substantiated that he was prevented by sufficient cause from producing the evidences which were called upon to produce before the Assessing Officer.

F. Because the Ld. CIT(A) in the interest of justice, equity and conscience ought to have admitted the said confirmation produced belatedly rather than rejecting it on hyper- technical grounds to meet the ends of justice as the entire addition has been made by the Ld. AO. on the premise that the appellant had failed to satisfy the genuineness of the unsecured loans taken during the year. As a matter of prudence it would have been more logical and lawful if the Ld. CIT(A) would have allowed the appellant’s application to take such 53 confirmation on record thereby giving an opportunity to the appellant to substantiate its case on merits rather than dismissing the appeal at very threshold of stage of application itself.

G. Because, the Ld. CIT(A) was not justified in not admitting the additional evidence under Rule 46A and in rejecting the admission of confirmatory letters straightway on the plea that the evidence was not filed before the Assessing Officer. The refusal of the Ld. CIT(A) to admit the additional confirmations deprived the Appellant of an opportunity to present crucial evidence that could have substantiated the genuineness and creditworthiness of the unsecured loans. As already explained the Appellant was genuinely prevented from submitting the confirmations earlier due to unavoidable circumstances and the Ld. CIT(A) ought to have adopted a liberal approach in deciding such application rather than dismissing it on technical grounds.

H. Because the Ld. CIT(A) and Ld. AO, without considering the documents furnished by the Appellant during the course of assessment and appeal proceedings has not given any findings and by a cursory observation that no substantial documents are furnished by the Appellant to prove the genuineness or creditworthiness of the unsecured loans received by the Appellant during the year, has made an addition u/s.68 of the Act. The observations made by Ld. Assessing Officer which has been upheld in the impugned order, are nothing but vague observations and are contrary to the facts on record. The Ld. CIT(A) had without any reference to any of the documents placed on record upheld the order of AO that no substantial document is furnished to prove the genuineness and creditworthiness of the unsecured loans received. The Ld. CIT(A) has failed to appreciate that Ld. AO could have conducted further independent inquiry to determine/evaluate the identity and creditworthiness of the parties on the basis of the documents and information available on record such as PAN No. and Address of the parties before concluding that such unsecured loans were not from genuine source and were un-explained.

I. Because the Section 250(4) empowers the Commissioner (Appeals) to make further inquiries on his own or to direct the Assessing Officer to make further inquiry and to report to him. At the outset, there cannot be any dispute on the settled legal proposition that the powers of the first appellant authority are very wide and co-terminus with those of the Assessing Officer and what Assessing Officer can do, he can do and what Assessing Officer fails to do, that also he can do. Sections 251 and 252 of the Act have also worded keeping the same spirit, as also the Rule 46A. Section 250(4) empowers the learned CIT(A) to make further inquiries on its own or to direct the Assessing Officer to make further inquiry and to report to him. The embargo put on his power under rule 46A(1) and (2) has also been loosened by sub-rule (4) which also empowers the learned CIT(A) to direct the production of any document, the examination of witness, to enable him to dispose of the appeal. Thus, the legislative intent is quite clear and the learned CIT (A) should not jump straightway to reject, if the appellant files some evidence before him under the pretense of rule 46A(1). In view of sub-rule (4) of rule 46A and provisions of section 250, Ld. Commissioner (Appeals) was not justified in rejecting confirmation produced by Appellant straightaway and he should have directed Assessing Officer to consider said confirmation letters and find out identity, creditworthiness, etc., of persons who had advanced money to appellant from their respective bank accounts.

J. Because the Appellant has furnished the complete details of the lender from whom he has borrowed money which had resulted into the loan in his books of in his financial statements, tax audit report forming part of income tax returns and therefore, the appellant has discharged its burden of providing the creditworthiness and genuineness. The Ld. AO has added the fresh unsecured loans taken during the financial year under consideration without carrying out any enquiry and merely on conjectures and surmises.

K. Because in any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burden of proof lies on the assessee, yet once he proves the identity of the creditors/share applicants by either furnishing their PAN numbers or income-tax assessment numbers and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the revenue which the revenue has failed to discharge.

L. Because the appellant did prove from where he has received the credits and once the identity of a person who has advanced money is disclosed, the amount is advance by bank transactions, the creditor is assessed to income tax, then the burden laid down on the appellant-assessee is duly discharged and onus then shifts on the AO. It is a settled legal position, that once the assessee provides evidence to establish the identity, genuineness, and creditworthiness of the lenders, the onus shifts to the revenue to prove otherwise. In the present case, the appellant has discharged its initial burden of proof, and the Assessing Officer has failed to discharge its burden.

M. Because it is a settled legal proposition that once an assessee has submitted the documents relating to identity and genuineness of the transaction, then it is for the Assessing Officer to conduct a further enquiry and call for more details before invoking Section 68 of the I.T. Act. N. Because the Appellant had furnished loan confirmations of 17 parties before the Ld. AO and 53 parties belatedly before the Ld. CIT(A). Despite the documents

O. Because the CIT(A) Section 68 per se cannot be invoked as all cash credits are fully explained by the Appellant through balance confirmation was submitted belatedly in respect of 53 parties out of 70 parties for reasons beyond the control of the appellant. P. Because the Ld. CIT(A) has erred in upholding the determination of demand under section 115BBE of the Act. Without prejudice to the above for the sake of an argument without admitting even if it is considered that section 68 is invokable then also tax rate of 60% as invoked in the present case under section 115BBE as per Taxation Laws (Second Amendment) Act, 2016 i.e. 60% will not apply in the present case. The Ld Appellate Authority has failed to appreciate that the amendment made by the Taxation Laws (Second Amendment) Act, 2016 was w.e.f. 1.4.2017 and thus applicable from the financial year 2017-18 onwards and not from the financial year 2016-17 relevant to the assessment year 2017-18, therefore, the demand computed was not only arbitrary but inflated.

Q. Because the Ld. CIT(A) has erred in making disallowance of Rs. 1,42,170/- in respect of late deposition of employees contribution towards ESI and PF.

R. That in the light of aforesaid submissions the action of Ld. CIT (A) is illegal, unjustified, arbitrary, and perverse and the impugned order deserves to be set aside and the demand/recovery/penalty proceedings initiated against the appellant deserve to be dropped.

S. The appellants crave leave to add, amend, alter or delete any one or all the above grounds/ submissions on or before the date of hearing.

3. Succinctly, the fact as culled out from the records is that the assessee filed his returns of income on 30.12.2017 declaring total income at Rs. 48,63,850/- for the year under consideration. After filling of return of income the case of the assessee selected for scrutiny assessment through CASS under "Complete Scrutiny" and accordingly notice u/s 143(2) of the Act was issued on 10.08.2018 through ITBA-portal which was duly served on 28.08.2018.

Record reveals that the assessee is the proprietor of M/s Manak chand Rajendra Kumar and earned income from business or profession.

Besides, that the assessee also earnes income from salary from Markk Business Pvt. Ltd. and has income from other sources.

Statutory notice u/s 142(1) of the Act along-with questionnaire was issued to the assessee on 20.05.2019 fixing the date for furnishing submission by 27.05.2019. On examination of the details so available on record with the ld. AO along with the Audit report, he noticed that the assessee took unsecured loans from the various parties during the year under consideration, which requires complete verification as these unsecured loans were fresh loan entries in the books of accounts of the assessee. Details on this aspect were called for examination, vide notice u/s 142(1) of the Act requiring details of such unsecured loan from various parties, their returns of income, computation sheet, etc. But, in response, the assessee furnished only some confirmation of accounts whereas other details of the parties have not been furnished by the assessee. Under these circumstances, these entries of fresh unsecured loans were treated as unexplained cash credits in his books of accounts for the year under various parties amounting to Rs. 2,01,92,401/- in his books of accounts for the year under consideration the assessee did not file any details/information for establishing the genuineness and creditworthiness of such fresh unsecured loans from the various parties, therefore, the same were treated as unexplained cash credits in the books of accounts of the assessee as per provision of section 68 of the Act. To support his view ld.

AO relied upon the decision of Hon'ble High Court of Delhi in the case of Commissioner of Income Tax-VI Vs. T. S. Kishan & Co. Ltd., [2014] 50 taxmann.com 368 (Delhi) and decision of Hon'ble High Court of Calcutta in the case of Shankar Industries Vs. Commissioner of Income Tax.

Ld. AO also noted that "Cash credit can be assessed even if transaction is through cheques" and in support of that he relied upon the following decisions: -

1. CIT Vs. precision Finance P. Ltd. (Cal) 208 ITR 465; 2. K.C.N. Chandrashekhar Vs. ACIT (ITAT, Bang) 66 TTJ 355; 3. CIT Vs. United Commercial & Industrial Co. (P) Ld. (Cal) 187 ITR 596;

Based on that finding ld. AO addition of unsecured loans amounting to Rs. 2,01,92,401/- was added. were deposited after due date of the payment of the PF and ESI, which are not allowable as per provisions of section 36(1) (va) of the Act. Further, the details of employee's contribution of Provident Fund and ESI of Rs.

1,42,170/- with delay and accordingly he disallowed.

4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:

In the light of overall facts of case as brought out by AO in the assessment order as above, on perusal of appellant grounds of appeal, it is noticeable that appellant is contending the order of AO as bad in law as it involves erroneous addition of fresh unsecured loans as unexplained for want of its genuineness, credit worthiness etc. as called for by AO and accordingly contended that such findings of AO as not maintainable as the same are illegal and unjust, is the contention of the appellant. Further, in these GOA, appellant contended that AO erred in holding that the fresh unsecured loan from 53 parties are to be treated as unexplained and thereby the order of AO is not maintainable, is the contention of the appellant. Further in these GOA, appellant contended that this information was not filed during the assessment proceedings before the AO as called for, as the same could not be obtained from the unsecured loan creditors as they were not cooperating with the appellant to provide such confirmations and accordingly, such adverse inference by AO on these unsecured loans is not acceptable when the same is duly provided by the tax auditors in audit report, is the contention of the appellant. Further in these GOA, AO erred in treating the fresh unsecured loans to the extent of Rs.2.01 crores as not explainable as appellant failed to prove genuineness and credit worthiness of these loans and thereby making such addition u/s.68 of I.T Act is not maintainable, is the contention of the appellant. Further in these GOA, appellant contended that the charging of interest and surcharge as per the provisions u/s 115BBE is not acceptable, is the plea of the appellant. Similarly, in these GOA, appellant further contended that the disallowance made on account of late remittances of ESI and PF as not maintainable as the same is paid before due date of filing of ROI and accordingly Rajendra Kumar Agrawal vs. ACIT contended to delete the addition as unjust and not maintainable. Precisely, in all these GOA, appellant is contending that the additions made on account of unexplained unsecured loans and late remittances of ESI / PF contrary to the provisions u/s 36(1)(va) of IT Act as not maintainable and also as appellant is duly prevented in providing these details of unsecured loans confirmations as the stated creditors / finance brokers are not cooperating with appellant and accordingly pleaded to delete the order of AO as not maintainable. However, on perusal of facts on record, as brought out by AO in the assessment order, it is clearly noticeable that, appellant is indeed involved in bringing substantial fresh unsecured loans during the year and same was categorically sought for explanation by the AO with all its supporting evidences to establish identity, credit worthiness and genuineness of these transactions as per I.T Act. However appellant failed to provide all these details as called for by AO inspite of availing sufficient time and opportunities provided by the AO from time to time. Appellant was issued 143(2) notice on 10.08.2018 and same was duly served on the appellant and subsequent hearing notices u/s. 142(1) of I.T Act were issued for which appellant sought adjournments and could able to file only part information on 5.06.2019, 13.08.2019 and 8.12.2019 even after availing sufficient time from August 2018 to December 2019. Accordingly, AO has considered the appellant submissions and reconciled such unexplainable fresh unsecured loans as at Rs.2.01 crores as tabulated and reasoned at para (4) of the assessment order and brought the same to tax as per law. However, in the GOA, appellant is contending that he was prevented by the sufficient cause to provide all these details of fresh unsecured loan confirmations from these parties as called for by AO with other supporting evidences such as ledger extracts as appearing in their books against the appellant, ROI etc. as needed to support the confirmations, and claimed the reason as attributable to these loan creditors being non cooperative to the appellant in providing these details. However, this plea of the appellant is not reconcilable as per the facts available on record as appellant nowhere adduced such contentions before AO by duly providing complete details with address and PAN details of these unsecured loans / loan creditors with their business addresses if any for further examination of AO as per the provisions u/s.133(6) of I.T Act so as to facilitate appellant in eliciting / obtaining these details as per law from these parties by AO. As appellant could not bring these details on record requesting AO to make further enquiries with these parties to establish the truthfulness of unsecured loans as claimed by the appellant, appellant mere claims to hold that the there exists sufficient cause which prevented appellant in obtaining these details from these non-co-operative loan creditors / finance brokers etc. is neither reasonable nor maintainable. Further, during the appeal proceedings also appellant filed an application under Rule 46A Rajendra Kumar Agrawal vs. ACIT adducing the same reasons that the loan creditors did not co-operate to appellant and appellant is also being sick could not pursue the details and thereby requested to consider additional evidences as justifiable under Rule 46A. Further in this application appellant also stated that these fresh unsecured loans are obtained not directly from these parties and mostly obtained through two finance brokers namely, M/s. Shree Ghiya Enterprise and M/s.R.A. Gattani & Co. and apparently claiming that these two brokers were not cooperative in providing the information as called for by AO to the appellant. However, appellant did not adduce any such supporting evidences to establish involvement of these finance brokers in availing these fresh unsecured loans by the appellant and consequent reflection of commission or service charges as paid or payable to these brokers as reflected in appellant books of account as the case may be so as to establish the genuineness of such claim in availing unsecured loans from various parties through these two finance brokers etc. and who in turn were non cooperative to appellant during assessment proceedings to establish the sufficiency of cause in preventing appellant in providing details as called for by AO. Considering all these apparent discrepancies involving availment of unsecured loans through these finance brokers which could not be verifiable and keeping in view the overall facts of the case as there involves sufficient time as given to the appellant by AO from the original notice of 143(2) dated 10.08.2018 to till the date of completion of assessment order i.e. 13.12.2019, there exists no justifiable reason and evidences on the part of the appellant to claim that the appellant was indeed genuinely prevented by the sufficient cause as advanced in Rule 46A application and related GOA as discussed above and accordingly same are treated as not acceptable and thereby appellant application under Rule 46A and relevant GOA are to be treated as not admissible and accordingly same are not maintainable as per IT Act as per facts available on record. Further with reference to the addition made appellant is contending that the same is not maintainable as there is no reason for AO to doubt fresh unsecured loans as verifiable and accordingly addition is not acceptable, is the contention of the appellant. This plea of the appellant is not acceptable as AO has categorically sought for details proofs of fresh unsecured loans as needed to reconcile during the complete scrutiny and there is no reason on the part of the appellant not to explain the same as admitted in the appellant books of accounts/certified by the auditors as per law. Appellant ought to have obtained all these details and kept ready as reflected in the books of accounts as audited so as to verify its correctness by the auditor and in such situation there is no need on the part of the appellant to contend that the unsecured loan creditors are non-cooperative to provide the details on its genuinity and same would have been cross examined by the AO as per law directly with these loan creditors, on such plea of the appellant by providing full Rajendra Kumar Agrawal vs. ACIT details of these unsecured loan creditors addresses, PAN etc. as the case may be. Further with reference to the finance brokers also, appellant did not adduce any such to establish the availment of services of finance brokers in availing these loans and thereby causing difficulty/ non-cooperation of these loan creditors in obtaining the proofs as contended and thereby the addition made by the AO by treating these unsecured loans as unexplained is apparently justifiable. Further appellant did not adduce any such details of commission/service charges as paid to these finance brokers as reconcilable from appellant books of accounts so as to adduce the correctness of these unsecured loans as availed from third parties through these brokers to establish its genuineness and credit worthiness and accordingly appellant mere claims to hold that the unsecured loans are explainable to AO is neither reasonable nor acceptable and thereby appellant various contentions as advanced on this issue of addition is to be treated as not maintainable and relevant GOA are dismissed as not maintainable. With reference to other addition on account of late remittances attributable to ESI / PF contribution of employees, appellant is contended the same as allowable is not acceptable as the same is paid beyond due date contrary to the provisions u/s.36(1)(va) of I.T Act as reasoned by AO in the assessment order. The addition as made by AO is in consolence with the Honorable Supreme Court adjudication on this issue in the case of Checkmate Service Pvt. Ltd Vs. CIT dated 12.10.2022 and accordingly the same is to be sustained as per the settled law on this issue. Considering all these facts of case, keeping in view the overall facts of case/ contentions of the appellant as reasoned and discussed supra, appellant various contentions /GOA as advanced involving inter-related / over lapping multiple grounds of appeal on the issues of additions made is to be treated as not maintainable and thereby appellant appeal is dismissed as not maintainable as per the facts available on record on merits as reasoned above as per law.

6. Accordingly, appellant appeal against the assessment order u/s. 143(3) of I.T Act dated 13.12.2019 for AY 2017-18, is dismissed on merits as not maintainable as per law as above.

7. In the result, appellant appeal for the AY 2017-18, is dismissed.

5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A)/NFAC, the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee, the ld. AR of the assessee, has filed the following written submissions:

Facts of the case

Particulars Date Amount of addition Return filed on 30.12.2017 48,63,850/- Assessment order under 31.12.2019 2,03,34,571/- section 143(3) CIT (A), Jaipur -1 06.02.2025 2,03,34,571/-

1. That the Appellant is the proprietor of M/s Manak Chand Rajendra Kumar engaged in the business of manufacturing and supplying of notebooks, examination answer books, accounting books like ledgers, cashbook, journals, stock registers, graph books, practical notebooks, long books, registers and other related items. The registered office of the Appellant is at 163-164, Chaura Rasta Road, Jaipur – 302003

6. The Appellant requested to allow him more time to file the remaining confirmations but before the remaining confirmations could be obtained and filed, the Ld. Assessing Officer (hereinafter referred to as AO) completed the assessment and passed the order u/s 143(3) on 13.12.2019 and without considering the submissions of the Appellant had made an addition of Rs. 2,01,92,401/- under section 68 of the Act in respect of the unsecured loan taken during the year from 53 parties for which the Appellant could not furnish the balance confirmation on the ground that the Appellant had failed to explain the genuineness and creditworthiness of the transactions of such unsecured loan and further made an addition on account of disallowance of Rs. 1,42,170/- due to late deposition of contribution to PF and ESI in violation of the provisions of section 36(1)(va) of the Act. Thus, Respondent No.1 made the total addition of Rs. 2,03,34,571/- to the returned income of Rs. 48,63,850/-, thereby assessing the income of the Appellant at Rs. 2,51,98,421/- Vide its Assessment Order dated 13.12.2019 and confirming the demand of Rs. 2,09,44,100/-. (Refer to page No. 45-62 of the Paper Book)

7. That being aggrieved by the order of Ld. AO, Appellant has filed an Appeal before the Commissioner of Income-tax (Appeals) (hereinafter referred to as CIT(A) u/s 246A of the Act in Form No. 35 on 26.12.2019 (Refer page No. 63-66 of Paper Book). During the pendency of the Appeal against the confirmed demand, Appellant’s return of income for AY 2018-19 was processed by the Centralized Processing Centre (CPC) vide Order dated 13.01.2020 issued under section 143(1) of the Act for refund of Rs. 70,86,950/-. However, the Respondent Department had adjusted the refund of Rs. 70,86,950/- processed for AY 2018-19 against the demand of Rs. 2,09,44,100/- confirmed for AY 2017-18. That meanwhile the appeal was pending against the demand confirmed for AY 2017-18, Appellant’s return of income for the AY 2019-20 was also processed by the Centralized Processing Centre (CPC) vide Order dated 25.02.2020 issued under section 143(1) of the Act for refund of Rs. 32,35,662/- and it was also adjusted against the balance demand of AY 2017-18 by the Respondent Department. During the pendency of Appeal before CIT(A), an amount to the tune of Rs.

1,03,22,612/- which was more than 50% of the total demand; was recovered/collected by Respondent Department by suo-moto adjusting the refunds of Assessment Years 2018- 19 and 2019-20. Appellant being aggrieved by such an arbitrary action of the Respondent Department had filed a Writ Petition bearing No. 11980/2021 before the Rajasthan High Court, Jaipur Bench wherein the Hon’ble High Court has allowed the writ petition vide its order dated 25.05.2022 and directed AO and other respondents to issue a refund to the Appellant-assessee alongwith interest as specified in law for an amount in excess of 20% of the disputed demand for Assessment Year 2017-18 within a period of thirty days from the date of passing of said order of the Hon’ble High Court. In compliance with the said order, Ld. AO has refunded the amount adjusted in excess of 20% of the disputed demand for AY 2017-18. However, the Income Tax Department had again adjusted the refund amount of Rs. 35,70,550/- of AY 2023-24 vide a challan dated 12.03.2024 in spite of the directions issued by the Hon’ble High Court for an earlier period. That amount of Rs. 77,59,370 [Refund of Rs. 35,70,550 for AY 2023-24 plus Rs. 41,88,820/- (20% of Rs.2,09,44,100/-)] has already been recovered from Appellant against the demand outstanding for the AY 2017-18 which is almost 37% of disputed demand.

8. That the appeal filed by the Appellant has been dismissed and the Ld. CIT (A) upheld the order of the Ld. Assessing Officer and confirmed the addition of Rs. 2,03,34,571/- to the total income of the Appellant for the AY 17-18 vide its order dated 06.02.2025 (Refer page No. 67-84 of Paper Book) passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as the 'impugned order') on the ground that appellant failed to produce supporting evidences to establish genuineness of parties from whom fresh unsecured loans during the year were taken inspite of availing sufficient time and opportunities provided.

9. That it is pertinent to mention that as Appellant could not file remaining 53 confirmations during the course of the assessment proceedings before the Ld.AO due to his medical conditions, Appellant during the appeal proceedings before Ld. CIT(A) has filed an application on 05.12.2023 (Refer page No. 85-89 of Paper Book) for admission of additional evidence under Rule 46A of the Income Tax Rules to bring on record the remaining 53 confirmations as these confirmations have been obtained after completion of assessment by AO. The said confirmations contain complete details of the unsecured loan providers such as name, address. PAN etc. along with their confirmation in respect of the amounts lent and interest received. (Refer page No. 90 to 141 of Paper Book). However, Ld. CIT(A) did not decide the Application of the Appellant before deciding the Appeal and had passed the impugned order upholding assessment order thereby dismissing the application of the Appellant by stating that there exists no justifiable reason and evidences on the part of the appellant to claim that the appellant was indeed genuinely prevented by the sufficient cause as advanced in Rule 46A of the Income Tax Rules.

GROUNDS OF APPEAL

A. Because the demand upheld by Ld. CIT(A) of unsecured loans taken during the year from 53 parties amounting to Rs. 2,01,92,401/- under section 68 of the Income Tax Act, 1961 on the ground that the Appellant could not submit the proof of their genuineness in time before the AO is not sustainable. The Appellant had submitted the balance confirmation before the Ld. CIT(A) which were not considered on the ground that the same were not furnished before the Ld. AO even though there was a valid and justified reason. However, the Appellant submits that it had either repaid these loans during the financial year and in subsequent financial years through banking channel. Some of these loans were even repaid prior to the passing of the assessment order. From the perusal of ledger accounts (Refer page No. 242-343 of Paper Book) and relevant extract of the bank statements enclosed with the paper book (Refer page No. 344-383 of Paper Book) showing repayment of such loans; it is very evident that these unsecured loans were from genuine and explained sources and the addition of such loans taken as un-explained cash credit is perverse and arbitrary. Reliance is placed on the following cases:- a. DCIT Vs. Harsh Stock Portfolio Pvt. Ltd. ITA 1084/JPR/2024 Jaipur ITAT – 02.01.2025 Held: Para 9.2………. So far as merits of the case of the assessee ld. AR of the assessee submitted that the assessee has repaid those loans and that factual aspect of the case has not been denied before us by the ld. DR also. Thus, when the loans accepted were repaid in the same year no addition can be made as herein this case assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted. b. PCIT Vs. Ojas Tarmake (P.) Ltd. [2023] 156 taxmann.com

75. (Gujarat)[22-08- 2023] Held: Where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted. c. PCIT Vs. Bairagra Builders (P.) Ltd [2024] 164 taxmann.com 162 (Bombay) Held: Where assessee had taken unsecured loan from two companies and had submitted all evidences to substantiate loan including confirmation from creditors and loan was taken and repaid through banking channels, Assessing Officer was not justified in treating said unsecured loan as fake and unexplained cash credit. d. DCIT Vs. Rohini Builders [2003] 127 Taxman 523 (Gujarat) Held: The genuineness of the transaction was proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors was made by account payee cheques and the interest was also paid by the assessee to the creditors by account payee cheques. e. DCIT Vs. Supreme Holdings and Hospitality (India) Ltd [2025] 171 taxmann.com 309 (Mumbai - Trib.) Held: Para 14. To prove the genuineness, assessee had filed a copy of their bank statements wherein the amounts have been transferred through clearing and it is not the case that some unknown clearing has come from where they have given loan to the assessee. It appears that they had huge funds available in the form of credit balance and there has been regular transaction of business from where these parties had given loans to the assessee. Another important fact is that these loans were repaid either in the same assessment year or in the subsequent assessment year and the closing balance was nil. The loan has been repaid back through banking channels in a short span. This fact has already been noted by the ld. CIT (A) in the foregoing paragraphs. Thus genuineness of the transaction also cannot be doubted. f. RAS Concepts Pvt. Ltd. Vs. Income Tax Officer [2022] 95 ITR 46 (Ahmedabad- Tribunal) Held: Para 9.4 In view of the above, we are of the opinion that, though the transactions of the loan received by the assessee are not free from any doubt but in either of the case, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries. Thus in view of the above and after considering the facts in totality, we are not inclined to uphold the finding of the learned CIT-A. Accordingly we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

B. Because the Ld. CIT(A) has violated the principal of natural justice in passing the impugned order dated 06.02.2025 by not deciding the application filed by the appellant under Rule 46A of the Income Tax Rules, 1962 for taking the additional evidence on record of the balance confirmation produced before him regarding the unsecured loans taken during the year from 53 parties for which the addition to the declared income of Rs. 2,01,92,401/- was made by AO under section 68 of the Income Tax Act, 1961, before finally deciding the appeal in-spite of repeated request of the appellant. Thus, the appellant is prevented from making his submissions on the merits on the issues involved in the appeal.

C. Because in the facts and circumstances of the case, the Ld. CIT(A) had grossly erred in confirming the Income Tax demand of Rs. 2,09,44,100/- vide its Order u/s 250 dated 06.02.2025 by treating the fresh unsecured loan amounting to Rs. 2,01,92,401/- taken by the appellant during the financial year 2016-17 under consideration as un-explained by upholding invoking the provisions of section 68 and determining the tax demand under section 115BBE of the Act. The said order has been passed without considering the submission made and documents available on record, without appreciating the factual substratum of the case, statutory provisions of law, and as such addition so made is highly misconceived, based on assumption and presumption, arbitrary inferences and overlooks the factual position on record and therefore, the same is invalid, illegal and unsustainable. The Ld. CIT(A), without appreciating relevant facts, simply sustained the additions made by the AO.

D. Because Ld. CIT(A) has upheld the order of Ld. AO making an addition under section 68 with respect to the fresh unsecured loan taken by the appellant with respect to 53 parties out of 70 parties in respect of which the appellant had failed to produce the balance confirmation during assessment proceedings. The Appellant could not do so in- spite of repeated follow-up from the parties from whom the loan was taken directly or with the the finance brokers R.A. Gattani & Co. and Shree Ghiya Enterprises through whom the said unsecured loans were taken. The Ld. CIT(A) had failed to take cognizance of the fact that the AO had incorrectly held in its order that the appellant did not file any information/details for establishing the genuineness and creditworthiness of the parties from which the unsecured loan was taken, when on the contrary all the information was available with the AO, such as the PAN No. and complete Address of parties which is already mentioned by in the schedule (marked as Annexure-VI and VII) of loans taken and repaid respectively which is part of Form 3CD of Tax Audit Report already in possession and records of the Income Tax department for the AY under consideration (Refer page No. 142-187 of Paper Book).

E. Because the Appellant could not produce balance confirmation from 53 parties out of 70 parties before the Ld.AO. Despite repeated requests, follow-ups through telephone calls, messages, and personal visits by the Assessee's employees, confirmations from 53 creditors could not be obtained, as these creditors failed to cooperate. Moreover, Appellant was suffering from severe spinal and back related problems for which doctors had advised him to undergo MRI scan on 28.09.2019 and after the MRI scan was done the doctors had advised him for complete bed rest for 6 weeks. Furthermore, the broker who facilitated the loans did not assist the Appellant timely in procuring the necessary confirmations from the concerned parties. Appellant has made all reasonable efforts to comply with the AO’s request, but the failure to obtain confirmations was due to circumstances beyond his control. Upon recovering form health issues, the Appellant aggressively followed with the parties and brokers to obtain the confirmations and as soon as confirmation was received from all 53 parties, the Appellant filed before Ld. CIT(A) has filed an application on 05.12.2023 for admission of additional evidence under Rule 46A of the Income Tax Rules to bring on record those remaining 53 confirmations, as these confirmations were obtained post-passing of the Assessment Order. These confirmations contain complete details of the unsecured loan providers, such as name and address. PAN, etc., along with their confirmation in respect of the amounts lent and interest received. The appellant was prevented by sufficient cause from producing the documents/evidence before the AO. Despite providing all the confirmations from unsecured creditors Ld. CIT(A) failed to appreciate the same and blatantly refused to entertain the application of the Appellant on the ground that none of the conditions as specified under Rule 46A are fulfilled and categorically refused to admit the additional evidence and confirmed the action of the AO. It is submitted that the explanation of the appellant given in the application under rule 46A was bona fide and the Appellant was prevented by sufficient cause from producing the balance confirmations which were called by the AO. Therefore, the Ld. Commissioner (Appeals) was not justified in not admitting additional evidence under rule 46A of the Income-tax Rules, 1962, and in rejecting the admission of confirmatory letters straightaway on the plea that the evidence was not filed before the AO. The refusal of the Ld. CIT(A) to admit the additional confirmations deprived the Appellant of an opportunity to present crucial evidence that could have substantiated the genuineness and creditworthiness of the unsecured loans.

F. Because the Ld. CIT(A) had erred in not allowing the application filed by the Appellant under Rule 46A for taking additional evidence in the form of balance confirmation of remaining 53 parties on record, on the ground that the appellant failed to substantiate that he was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO and also for the reason that the Appellant had not adduce any evidence to establish that the delay was caused by the finance brokers in providing such details as it had failed to produce detail of any commission/service charges being paid to these brokers in respect of such unsecured loans. This contention is in incorrect and untenable as the Appellant had already stated in his application that the delay has been caused by the finance brokers in providing such balance confirmation and also on account of the fact that the appellant was suffering from severe spinal and back related problems for which doctors had advised him to undergo MRI scan on 28.09.2019 and after the MRI scan was done the doctors had advised him for complete bed rest for 6 weeks. The broker who facilitated the loans did not assist the appellant in procuring the necessary confirmations from the concerned parties. Appellant had acted diligently and has made all reasonable efforts to comply with the AO’s request, but the failure to obtain confirmations was due to circumstances beyond his control. Upon recovering from health issues, the Appellant had made all efforts in securing the balance confirmations from 53 creditors in respect of which the addition has been made therefore, has discharged his burden of providing the genuineness of such loans. Further, the Appellant had also produced the quarterly TDS returns filed with the department before the AO which itself shows that the brokerage of Rs. 4,04,458/- was paid to R.A. Gattani & Co. and Rs. 14,400/- was paid to Shree Ghiya Enterprises and applicable TDS under section 194H on such brokerage paid was duly deducted and deposited with the Income Tax Department. Moreover, payment of brokerage and Commission has also been reflected under sales and administrative expenses (Annexure-P), forming part of the audited financial statements of the appellant already available with the Income Tax Department (Refer page No. 184 of Paper Book). Further, the appellant had also deducted TDS on such brokerage and commission which is evident from the quarterly returns of TDS filed by the appellant in Form 26Q (Refer page No. 188-241 of Paper Book). Hence, the Ld. CIT(A) had overlooked this aspect and has wrongly rejected the application of the Appellant. G. Because the Ld. CIT(A) and Ld. AO, without considering the documents furnished by the Appellant during assessment and appeal proceedings has not given any findings and by a cursory observation that no substantial documents are furnished by the Appellant to prove the genuineness or creditworthiness of the unsecured loans received by the Appellant during the year, has made an addition u/s.68 of the Act. Such adverse inference by AO on these unsecured loans is not acceptable when the name, PAN No., address of such parties were duly provided by the tax auditors in Clause 31 of the Form- 3CD forming part of Tax Audit Report. (Refer page No. 150 to 157 of Paper Book).

H. Because the Ld. CIT(A) has failed to appreciate that AO could have conducted an independent inquiry to determine/evaluate the identity and creditworthiness of the parties based on the documents and information available on record, such as PAN No. and the Address of the parties before concluding that such unsecured loans were not from a genuine source and were unexplained.

I. Because Section 250(4) empowers the Commissioner (Appeals) to make further inquiries on his own or to direct the AO to make further inquiries and to report to him. At the outset, there cannot be any dispute on the settled legal proposition that the powers of the first appellant authority are very wide and co-terminus with those of the AO and what AO can do, he can do and what AO fails to do, that he can also do. Sections 251 and 252 of the Act have also been worded keeping the same spirit, as also Rule 46A. Section 250(4) empowers the learned CIT(A) to make further inquiries on its own or to direct the AO to make further inquiries and report to him. The embargo put on his power under Rule 46A(1) and (2) has also been loosened by sub-rule (4), which also empowers the learned CIT(A) to direct the production of any document, the examination of a witness, to enable him to dispose of the appeal. Thus, the legislative intent is quite clear, and the learned CIT (A) should not jump straightaway to reject the appellant’s contention if the appellant files some evidence before him under the pretense of Rule 46A(1). In view of sub-rule (4) of Rule 46A and provisions of section 250, Ld. Commissioner (Appeals) was not justified in rejecting confirmation produced by Appellant and should have directed AO to consider said confirmation letters and find out the identity, creditworthiness, etc., of persons who had advanced money to the appellant from their respective bank accounts. Reliance has been placed on following case laws:- a. Anmol Colours India Pvt. Ltd. Vs. ITO [2009] 31 SOT 18 (Jaipur) (URO)] Held: Para 5. At the outset, there cannot be any dispute on the settled legal proposition that the powers of the first appellant authority are very wide and co- terminus with those of the Assessing Officer and what Assessing Officer can do, he can do and what Assessing Officer fails to do, that also he can do [refer CIT v. Kanpur Cool Syndicate [1964] 53 ITR 225 (SC)]. Sections 251 and 252 of the Act have also worded keeping the same spirit, as also rule 46A. Section 250(4) empowers the learned CIT(A) to make further inquiries on its own or to direct the Assessing Officer to make further inquiry and to report him. The embargo put on his power under rule 46A(1) and (2) has also been loosened by sub-rule (4) which also empowers the learned CIT(A) to direct the production of any document, the examination of witness, to enable him to dispose of the appeal. Thus, the legislative intent is quite clear and the learned CIT (A) should not jump straightway to reject, if the appellant files some evidence before him under the pretence of rule 46A(1). The powers of the learned CIT(A) as submitted above are also to be interpreted in the context of the amended law, wherein he is no more empowered to restore back any matter which was earlier under section 251(1)(a), necessitating a compulsory admission of the evidence before him in the interest of justice. This matter has recently been dealt with elaborately in CIT v. K. Ravindranathan Near [2003] 131 Taxman 743 (Ker.) which has held that the learned CIT(A) was not justified in rejecting the admission of confirmatory letters straightway on the plea that the evidence was not filed before the Assessing Officer (at p. 47, Pr. 6). This ratio squarely applies on the facts of the present case inasmuch as here also his allegation was that the evidences were not filed before Assessing Officer, which is not justified ground for rejection. Also, kindly refer to Smt. Prabhavati Shah v. CIT [1998] 231 ITR 1 (Bom.), it is also a decision directly supporting the case of the assessee. The present case of the assessee also finds support from the decision of Hon'ble Bombay High Court in the case of CIT v. Suretech Hospital & Research Centre Ltd. [2007] 293 ITR 53 where the Hon'ble Court has held that its view of the finding recorded by the Tribunal that the documents produced by the assessee before the CIT(A) were necessary for disposal of the appeal on merits, it was justified in holding that the CIT(A) ought to have exercised its power to admit additional evidence. Therefore, in the present circumstances and facts of the case, the learned CIT(A) was not justified in not admitting the additional evidences which were necessary for the disposal of the case. Since all the evidences have to be examined by the Assessing Officer, therefore, in the interest of justice, the matter is restored to the file of the Assessing Officer who will examine the evidences filed by the assessee before the learned CIT(A) and decide the issue de novo but by providing the adequate opportunity of being heard to the assessee. The assessee may submit further documents or evidences as required in support of his claim before the Assessing Officer. The Assessing Officer is directed to act accordingly. b. CIT Vs. K. Ravindranathan Nair [2003] 131 Taxman 743 (Kerala)] In the instant case the first appellate authority, as already noted, has rejected the additional evidence solely on the ground that the assessee did not satisfy the provisions of Rule 46A of the Rules. We find that the Tribunal has considered the matter keeping in mind the provisions of sub-rule (4) of Rule 46A and the provisions of section 250 of the Income-tax Act though the provisions are not specifically mentioned and observed that the Commissioner of Income-tax (Appeals) was not justified in rejecting the confirmation letters straightaway and that he should have directed the Assessing Officer to consider the said confirmatory letters and to find out the identity, creditworthiness, etc. of the persons who had made the Fixed Deposit. It is on the above circumstances the Tribunal directed the Assessing Officer to consider the two confirmatory letters produced by the assessee before the first appellate authority and to decide the question afresh. Here it must be noted that, neither the Assessing Officer, nor the first appellate authority had any case that the appellant was given several opportunities to produce the confirmatory letters and that the assessee did not avail the said opportunity by obtaining and producing the confirmatory letters from the two persons mentioned above. Only reason stated is, as already noted, no evidence produced. It must be noted that the Allahabad High Court denied relief to the assessee only because the assessee did not avail the several opportunities given. We do not find any reason to interfere with the order of the Tribunal on this issue. We accordingly answer questions 1 to 4 in favour of the assessee and against the revenue.

J. Because the Appellant has furnished the complete details of the lender from whom he has borrowed money which had resulted into the loan in his books of in his financial statements, tax audit report forming part of income tax returns and therefore, the appellant has discharged its burden of providing the creditworthiness and genuineness. The Ld. AO has added the fresh unsecured loans taken during the financial year under consideration without carrying out any enquiry and merely on conjectures and surmises.

K. Because in any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burden of proof lies on the assessee, yet once he proves the identity of the creditors/share applicants by either furnishing their PAN numbers or income-tax assessment numbers and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the revenue which the revenue has failed to discharge.

L. Because the appellant did prove from where he has received the credits and once the identity of a person who has advanced money is disclosed, the amount is advance by bank transactions, the creditor is assessed to income tax, then the burden laid down on the appellant-assessee is duly discharged and onus then shifts on the AO. It is a settled legal position, that once the assessee provides evidence to establish the identity, genuineness, and creditworthiness of the lenders, the onus shifts to the revenue to prove otherwise. In the present case, the appellant has discharged its initial burden of proof, and the AO has failed to discharge its burden.

M. Because reliance on the decision in Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) is placed to contend that once an assessee has submitted the documents relating to identity, genuineness of the transaction and creditworthiness, then it is for the AO to conduct a further enquiry and call for more details before invoking Section 68 of the I.T. Act.

N Because the Appellant had placed on record confirmations of parties with PAN No. (ii) copy of ledger account from the books (iii) copy of bank statements all of which aided the assessee in discharging his initial burden of proof that the persons from whom the amounts were received had advanced these amounts as loans to the assessee and they were persons who had the requisite means to advance the said amounts and moreover, these transactions had taken place through banking channels. Reliance has been placed on the following case laws:- a. ITO Vs. Amar Pratap Steels Pvt. Ltd. [2025] 170 taxmann.com 197 (Jaipur - Trib.)] Para 11…….. at the assessee-appellant filed various documents so as to prove the identity, creditworthiness and genuineness of the transaction. Thereby the assessee has placed on record, Copy of Return of Income of the investor and schedules reflecting transaction with the appellant, Copies of bank statements evidencing the investment of share application money through banking channels, and Copy of confirmation letters from the investor. Thus, he noted that the assessee discharged its onus as per 68 of the IT Act. Now onus is on AO to disprove the genuineness of the investments. However, the AO has not made efforts to conduct enquiries and to establish the genuineness of the investors. From the materials filed, it is understood that the assessee filed all relevant details which are needed to explain genuineness, creditworthiness and identification of investors. b. PCIT Vs. Haresh kumar Manilal Somaiya [[2023] 154 taxmann.com 432 (Gujarat)[03-05-2023] Held: Where assessee received unsecured loans and produced confirmation of lenders and other relevant documents such as copy of PAN, ledger account, bank statement and audited books so as to establish creditworthiness, genuineness and identities of lenders in transactions, impugned addition made under section 68 on account of said unsecured loan by AO without considering such documents/details produced by assessee was unjustified. c. K.P. Manish Global Ingredients Pvt. Ltd. Vs. ACIT, Company Circle-II(4), Chennai [2021 131 taxmann.com 158(Chennai-Trib)] Held: Para 9……. Therefore, we are of the considered view that the assessee has discharged its burden caste upon u/s. 68 of the Income-tax Act, 1961 by filing various details including financial statement of creditors, their bank statements and confirmation letters to prove transactions. Once an assessee discharged its burden, then burden shifts to Assessing Officer to prove otherwise that said transaction was nothing but undisclosed income of the assessee. In this case, the Assessing Officer has not brought on record any evidence to prove that said sum was undisclosed income of the assessee. Therefore, we are of the considered view that the Assessing Officer was completely erred in making additions towards unsecured loans received from three companies of assessee group. We further noted that the Hon'ble Supreme Court in the case of CIT v. Lovely Exports [Application No. 11993 of 2007, dated 11- 1-2008] has clearly held that once initial burden of identity was proved, then the Assessing Officer is at liberty to proceed on the creditors in accordance with law, but said sum cannot be treated as unexplained credit of the assessee. d. ITO Vs. Mega Collections Pvt. Ltd. [2023] 151 taxmann.com 403 (Surat-Trib.) Held: Where assessee-company by submitting PAN number, address, income tax returns, audited financial statements of creditors and bank statement of share applicants had discharged onus to prove identity, creditworthiness and genuineness of its loan transactions with various companies and source of source had also been proved by assessee, impugned loan transactions could not be treated as unexplained cash credit under section 68. e. Rajuram Savaji Purohit Vs. ITO [2024] 169 taxmann.com 18 (Mumbai - Trib.)] Held: Where assessee had taken loan from a company and all ingredients of a genuine loan transaction like loan taken and even its repayment by assessee were through banking channels and identity of lender, genuineness of transaction as also credit worthiness of lender had not been disproved by Assessing Officer, impugned loan could not be treated as unexplained credit. O. It is a settled legal position, as held by the Hon'ble Gujarat High Court in CIT v. Ranchod Jivabhai Nakava [2012] 21 taxmann.com 159/208 Taxman 35 (Gujarat) and CIT v. Chanakya Developers [2014] 43 taxmann.com 91/222 Taxman 164 (Gujarat), that once the assessee provides evidence to establish the identity, genuineness, and creditworthiness of the lenders, the onus shifts to the Revenue to prove otherwise. In the present case, the assessee has discharged its initial burden of proof, and the AO has failed to rebut the evidence submitted.

P. Because the Ld. AO invoked provisions of Section 68 in respect of unsecured loan. Section 68 deems non-income to be income. In the instant case, the credits by way of unsecured loan have already been explained by way of confirmation of accounts. Hence, Section 68 per se cannot be invoked. Provisions of Section 68 can only be invoked in cases where an Appellant is unable to explain the source of a particular receipt to the satisfaction of the AO. Sections 68 creates deeming fiction whereby certain amounts which are not considered as income by the Appellant, are deemed to be income of the Appellant. A deeming fiction of income cannot apply to an item which is already accounted for in the books of accounts and its genuineness is explained with documents.

Q. Because the Ld. CIT(A) has erred in making disallowance of Rs. 1,42,170/- in respect of late deposition of employees contribution towards ESI and PF. P. Tax rate of 60% made effective from on 15.12.2016 by Taxation Law (Second Amendment) Act, 2016 is not applicable on transactions entered before that date Without prejudice to the above for the sake of an argument without admitting even if it is considered that section 68 is invokable then also tax rate of 60% as invoked in the present case under section 115BBE as per Taxation Laws (Second Amendment) Act, 2016 i.e. 60% will not apply in the present case. The Ld. Appellate Authority has failed to appreciate that the amendment made by the Taxation Laws (Second Amendment) Act, 2016 was w.e.f. 1.4.2017 and thus applicable from the financial year 2017-18 onwards and not from the financial year 2016-17 relevant to the assessment year 2017-18, therefore, the demand computed was not only arbitrary but inflated.

That reliance has been place on the decision of Hon'ble Supreme Court in the case of Vatika Township (P) Ltd. [2014] 367 ITR 466 (SC) observed that of the various rules guiding how a legislation must be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities, which is based on the principle of law known as ‘lex prospicit non respicit’: law looks forward not backward. Thus, legislation which modifies accrued rights, or which imposes obligation or imposes new duties or attaches a new disability, has to be treated as prospective, unless the legislation is for the purpose of supplying an obvious omission in a former legislation or to explain a former legislation. Q. The amendment to Section 115BBE is penal in nature, which aims to penalize the Appellant, if additions referred to in Section 68 to 69A are made. Penal statutes which have the effect of increasing penalties for existing offenses will only be prospective by reason of the constitutional restriction imposed by Article 20 of the Constitution of India. Therefore, if an Act creates a new offense, it will bring into its fold only those offenders who commit all ingredients of the office after the Act comes into operation. This rule of construction against retroactivity of penal laws is not restricted to criminal offenses punished with imprisonment but also applies to laws that provide for other penal consequences, such as fines and penalties. R. That the case laws relied upon by the department [(2014) 50 taxmann.com 368 Del), (1978) 114 ITR 689 (Cal), (1994) 208 ITR 465 (Cal)] are distinguishable, as in those cases the assessee could not provide PAN No., balance confirmation to prove the credit worthiness of the parties. In contrast, in the present case the Appellant had produced the balance confirmation from all the creditors apart from the PAN no. and address of the assessee. The appellant had even produced the ledger accounts for the subsequent period, evidencing that most of these outside loans had been repaid.

S. The appellant is prepared to submit any additional document/information which are required for just and proper adjudication of the case. T. It is, therefore, prayed that the additions confirmed by the Ld. CIT(A) may kindly be deleted, the appeal of the appellant may kindly be allowed by setting aside the impuged order passed by the Ld. CIT(A) and AO and the demand/recovery/penalty proceedings initiated against the appellant, deserve to be dropped. U. The appellants crave leave to add, amend, alter or delete any one or all the above grounds/ submissions on or before the date of hearing. V. It is further requested that the appellants be accorded an opportunity for hearing.

6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions:

Sr. No. Particulars Page No.

1. Copy of Income Tax Return for FY 2016-17 along with computation filed 1-3 on 30.12.2017

2. Copy of Notice u/s 143(2), dated 10.08.2018 4-5

3. Copy of Notice u/s 142(1) dated 20.05.2019 with questionnaire 6-11

4. Copy of reply dated 05.06.2019 submitted by Appellant 12-16

5. Copy of reply dated 13.08.2019 submitted by Appellant 17-20

10. Copy of impugned order passed by CIT(A) dated 06.02.2025 67-84

Further evidence

A. When the loans accepted were repaid, no addition can be made 1. DCIT Vs. Harsh Stock Portfolio Pvt. Ltd. ITA 1084/JPR/2024 1-38

Jaipur ITAT 02.01.2025 2. PCIT Vs. Ojas Tarmake (P.) Ltd. [2023] 156 taxmann.com 75 39-44 (Gujarat)[22-08-2023] 3. PCIT Vs. Bairagra Builders (P.) Ltd [2024] 164 taxmann.com 162 45-47 (Bombay) 4. DCIT Vs. Rohini Builders [2003] 127 Taxman 523 (Gujarat) upholding 48-50 the decision of the ITAT (Ahmd) [2001] 117 Taxmann 25 (ITAT-Ahmd)]

5. DCIT Vs. Supreme Holdings and Hospitality (India) Ltd [2025] 171 51-59 taxmann.com 309 (Mumbai - Trib.) 6. RAS Concepts Pvt. Ltd. Vs. Income Tax Officer ITA No. 60-64

2352/AHD/2018 [2022] 95 ITR 46 (Ahmedabad- Tribunal) B Where the assessee received unsecured loans and produced confirmation of lenders to establish creditworthiness, genuineness, and identities of lenders in transactions, the impugned addition under section 68 cannot be made 1 ITO Vs. Amar Pratap Steels Pvt. Ltd. [2025] 170 taxmann.com 197 65-91 (Jaipur - Trib.)] 2. K.P. Manish Global Ingredients Pvt. Ltd. Vs. ACIT, Company Circle-II(4), 92-96 Chennai [2021 131 taxmann.com 158(Chennai-Trib)] 3. ITO Vs. Mega Collections Pvt. Ltd. [2023] 151 taxmann.com 403 (Surat- 97-109 Trib.) 4. Rajuram Savaji Purohit Vs. ITO [2024] 169 taxmann.com 18 (Mumbai - 110-116 Trib.)]

C. Once the assessee provides evidence to establish the identity, genuineness, and creditworthiness of the lenders, the onus shifts to the Revenue to prove otherwise. 1. CIT v. Ranchod Jivabhai Nakava [2012] 21 taxmann.com 159 117-120 2. CIT v. Chanakya Developers [2014] 43 taxmann.com 91 121-123

D. Once an assessee has submitted the documents relating to identity, genuineness of the transaction and creditworthiness, then it is for the AO to conduct a further enquiry and call for more details before invoking Section 68 of the I.T. Act 1. Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) 124-128 E. CIT(A) was not justified in not admitting the additional evidence filed under Rule 46A, which was necessary for the disposal of the case, when there was justified and reasonable cause for not producing the same before AO 1. Anmol Colours India Pvt. Ltd. Vs. ITO [2009] 31 SOT 18 (Jaipur) (URO)] 129-132

2. CIT Vs. K. Ravindranathan Nair [2003] 131 Taxman 743 (Kerala)] 133-137

7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee was suffering from the slip disc and there was a sufficient ground that he could not comply in full of the proceeding before the ld. AO. When the proceeding before the ld. CIT(A) assessee has submitted all the details by making an application u/r 46A along with the reasons as to why that additional evidence were not submitted to the AO. He also submitted that the assessee has obtained all the loan through the broker to whom the commission was paid. Not only that on that commission, TDS was also deducted. After the submission no enquiry was conducted and the issue of additional evidence filed were not discussed with while rendering the finding by the ld. CIT(A). the online application for additional evidence relied upon. Ld. CIT(A) neither discussed that submission nor allowed an opportunity of being heard and thereby his order is against the principles of natural justice and only that count the appeal of the assessee is required to be allowed. The assessee submitted all the details so as to prove, identity, capacity and genuineness of the transaction. The assessee contended that they have also repaid these loans and therefore, as held by Gujarat High Court when the assessee repaid the loan genuineness of those depositors cannot be disputed.

8. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He vehemently submitted that the assessee has not submitted any reason as to why the details were not placed on record. He submitted that the benefit of reducing the addition may be given considering the rule 46A application placed on record but for that he prayed to remand the matter to the file of the ld. AO. On the issue of ESI/PF disallowance he supported the addition. record and the orders of the lower authorities disputed before us. The bench noted that the ground no Q raised by the assessee is for disallowance of Rs. 1,42,170/- in respect of late deposition of employee’s contribution towards ESI and PF. The said ground is not pressed by the ld. AR of the assessee and therefore, the same is dismissed.

Ground no. P raised for the charge of higher tax rate as per section 115BBE of the Act which is consequential in nature and does not require our finding. Ground no. R being general does not require any finding.

Vide various ground no. A to O the assessee challenges the finding of the lower authority while making the addition of Rs. 2,01,92,401/- under section 68 of the Act. Since all these grounds challenge the only one addition of unsecured loans taken by the assessee the same are dealt together and decided in the subsequent paras.

The brief facts related to the dispute are that the assessee filed his returns of income on 30.12.2017 declaring total income at Rs. 48,63,850/- for the year under consideration. That return was selected for scrutiny assessment through CASS under "Complete Scrutiny". Record reveals that the assessee is the proprietor of M/s Manak Chand Rajendra Kumar and earned income from business or profession. Besides, that the assessee income from other sources. As the assessee accepted unsecured loans from the various parties during the year under consideration, which requires complete verification as these unsecured loans were fresh loan entries in the books of accounts of the assessee.

Details on this aspect were called for examination, vide notice u/s 142(1) of the Act requiring details of such unsecured loan from various parties, their returns of income, computation sheet, etc. But, in response, the assessee furnished only some confirmation of accounts whereas other details of the parties have not been furnished by the assessee. Under these circumstances, these entries of fresh unsecured loans were treated as unexplained cash credits in his books of accounts for the year under consideration. Ld. AO noted that in respect of fresh unsecured loans from various parties amounting to Rs. 2,01,92,401/- in his books of accounts for the year under consideration the assessee did not file any details/information for establishing the genuineness and creditworthiness of such fresh unsecured loans from the various parties, therefore, the same were treated as unexplained cash credits in the books of accounts of the assessee as per provision of section 68 of the Act. While making the addition ld. AO relied upon the decision of Hon'ble High Court of Delhi in [2014] 50 taxmann.com 368 (Delhi). This decision deals with the share capital credit and not the unsecured loan. Here in this case the assessee accepted the unsecured loans and also repaid the same as tabulated herein below, so the facts of that case law relied on are different. As regards the other decision of Hon'ble High Court of Calcutta in the case of Shankar Industries Vs. Commissioner of Income Tax. [ 114 ITR 689 ] wherein the facts of the case were that no one appearing and no confirmation were filed herein this case the assessee has filed the confirmation and even the loan taken were repaid as per the additional evidence filed before the ld. CIT(A). Ld. AO also noted that "Cash credit can be assessed even if transaction is through cheques" and in support of that he relied upon the following decisions: -

On this aspect of the matter the bench noted that the assessee has taken the unsecured loans through the broker, he paid commission on that brokerage, the loan being for short term even paid as per the details filed before the ld. CIT(A) in the form of additional evidence and therefore, the decision cited has different facts and therefore, the same are not applicable.

The ld. CIT(A) for the reasons best known to him has not dealt with that additional evidence nor sent it to ld. AO for his comments on that additional evidence. The bench noted that the assessee has filed the paper book in advance and the ld. AO through ld. DR did not controvert the evidence that has been filed under rule 46A.

The bench noted that the assessee has filed the ledger account of the 53 loan depositors wherein the details of the loan repayment the evidence there to has been placed on record. The details in the form of chart was submitted which reads as under :

RAJENDRA KUMAR AGRAWAL AY 2017-18 PAN NO. AAUPK1887H Sr. Name of the Lender or Depositor Amount (In Repayment date Page No. 1 AC AND COMPANY 10,62,500 05.04.2018 243 2 ANJANA JAIN 10,00,000 16.03.2020 245 ASHISH GATTANI HUF 3 1,51,270 Not repaid fully 4 ASHOK DUSAD 12,00,000 12.06.2020 252 5 CHANDRA KANTA PARMAR 75,000 03.05.2016 and 253 23.06.2016 6 GAURAV AGARWAL 2,65,790 Son 7 GIRISH BHANDARI 17,42,500 16.12.2017 258 8 GOURESH KUMAR GUPTA 1,25,000 17.06.2019 260 9 KIRAN AGARWAL 1,23,675 22.01.2019, 01.04.2020 262,263 10 K.K. SONS 1,75,000 15.06.2019 266 11 KRISHNA KUMAR GUPTA HUF 5,37,500 12.07.2020 269 12 MISHARI LAL KUNDAN MAL-NEW 5,25,000 22.03.2018 270 13 NAD KISHORE BOHRA HUF 2,47,000 10.01.2019, 03.02.2019 272 14 NATRAJ PAPERS 35,10,761 05.10.2020, 27.09.2021 276 15 NEETA AGARWAL 3,22,500 14.06.2019 279 16 NIMIT AGARWAL 78,964 Son NISHA MAHESHWARI 17 1,69,000 18.01.2017 285 18 N.K. JEWELLERS 25,000 15.05.2016 286 19 RAJ KUMARI JAIN 1,57,500 10.01.2020 288 20 RAM NARAIN GATTANI HUF 1,45,625 13.03.2018 289 21 ROOPA KHIPAL 1,50,000 12.07.2018 292 22 S.D INTERNATIONAL 5,37,500 06.08.2019 294 23 SHANTI LAL JAIN 1,57,500 Not paid 24 SUBHASH CHAND PATNI 10,50,000 25.07.2017 296 25 SU NIT A AGARWAL 75,000 12.07.2018 298 26 SURAJ MAL 1,87,500 20.04.2018 300 27 SWATI AGARWAL 2,06,526 Not paid 28 VIMLA AGARWAL 1,01,690 29.09.2020 305 29 ALOK PATNI 1,12,400 20.07.2020 309 30 DINESH AGARWAL 1,07,500 10.06.2019 301 31 DINESH KUMAR SONKHIYA 1,05,000 07.04.2018 312 32 DINESH KUMAR SONKHIYA 1,02,500 08.03.2018 313 33 JAMNA DAS MOHAN DAS RAJORIYA 5,25,000 06.06.2019 315 34 JAMNA DAS TEXTILES 2,15,000 Not paid 35 JAMNDA DAS TWXTILES 2,05,000 26.07.2019 318 36 KALA AGENCIES 1,02,500 04.11.2017 319 37 LAD KANWAR PATNI 4,52,100 31.05.2016 320 38 LALITA GHIYA 3,15,000 21.11.2017 322 39 MOHAN DAS RAJORIA 1,07,500 07.06.2017 323 40 OM PRAKASH GHIYA 3,15,000 22.11.2017 324 41 OM PRAKASH GHIYA HUF 4,02,150 22.11.2017 325 42 PRAGYA SONKHIYA 3,44,700 31.07.2018 327 43 PRIYANKA AGARWAL 5,25,000 21.06.2017 328 1,05,000 08.03.2018 329 44 PUSHPA SONKHIYA 45 RAJESH KUMAR RAJORIA 2,05,000 26.07.2019 331 46 SHOBHA DEVI 4,30,000 02.06.2017 332 47 SHRUTI BHAMA 1,07,50023.06.2017 . 333 48 SHRUTI BHAMA 7,52,500 04.02.2019 335 49 SITARAM BHAMBA 3,87,000 12.09.2018 336 50 SULABH BHAMBA 3,22,500 18.01.2019 339 51 URMILA BHAMBA 4,30,000 01.01.2019 341 52 YASH AGARWAL 1,57,500 01.01.2019 342 53 YASH AGARWAL 1,57,500 01.01.2019 343 21,092,401 controverted by the ld. AO through ld. DR and thus, it is not the fact of the case that the assessee has not repaid to those creditors as listed herein above. The bench noted that out of the addition of Rs. 2,01,92,401/- made in the hands of the assessee, the assessee has repaid the loan to the majority of the parties which were obtained through the broker except the loan to the parties listed at Sr no. 23, for an amount of Rs. 1,57,500/- and at Sr. no. 27 for an amount of Rs. 2,06,526/- [ credit in the name of son and partly paid is not considered as unexplained credit] totaling to Rs.

3,64,026/- is confirmed in the hands of the assessee as the assessee failed to establish as to the confirmation and other information so as to treat this amount as unsecured loan when it was accepted. Whereas for the balance the assessee submitted by filling the details of the repayment showing the payment along with the bank statement placed on record. The ledger account that placed on record show that the assessee has paid the interest which was not disallowed by the ld. AO. The assessee has also deducted TDS on the interest paid by the assessee. Thus, when the claim of interest is not disallowed considering that the fact that the same has been subjected to TDS wherein the details of the deductor is already available with the revenue. The assessee submitted that when the case taken up he assessee has paid the brokerage to the broker. Not only that on that brokerage the assessee also deducted TDS and since the assessee was medically ill was not able to file the confirmation and that is why he filed the additional evidence. But the assessee when the matter was taken up before the ld. CIT(A) the assessee with that facts filed the additional evidence as discussed here in above. Considering the fact that the assessee has accepted the loan, the loan were obtained through normal banking channel and through the broker. The brokerage and interest were paid and the same were not disputed. The brokerage as well as that of the interact were subjected to TDS were allowed. The assessee repaid those loan taken from the broker and thus, in the absence of the details we confirm the addition to the extent of Rs. 3,64,026/- of the depositors for which details of credit or repayment and interest paid or not was not placed on record we cannot considered the prayer of the assessee for that amount and thereby we confirm that unsecured deposit for an amount of Rs. 3,64,026/-. Thus, the assessee get relief for an amount of Rs. 1,98,28,375/- [ Rs. 2,01,92,401 less 3,64,026 ]. Thus, when loan stands repaid no addition under Section 68 can be made and is held by the judgment of Hon’ble Gujarat High Court in case of Rohini Builders [2002] 256 ITR 360 is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques."

Based on the discussion so recorded herein above the ground no. A to O are partly allowed.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 12/08/2025.

Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa- ,l-lhrky{eh½ (Dr. S. Seethalakshmi) (RATHOD KAMLESH JAYANTBHAI) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 12/08/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Rajendra Kumar Agrawal, Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Central Circle-01, Jaipur vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 538/JP/2025) vkns'kkuqlkj@ By order,

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