Loading judgment…
Facts
The assessee received unexplained cash credits amounting to Rs. 78,00,000/- from two companies, Jay Jyoti India Pvt. Ltd and Jayant Securities Pvt. Ltd. The Assessing Officer added this amount to the assessee's income under Section 68 of the Income Tax Act, 1961.
Held
The Tribunal held that the assessee had discharged its primary onus by proving the identity, creditworthiness, and genuineness of the loans. The Tribunal also noted that the lender companies were 'active' and that the loans had been repaid. Relying on previous decisions, the Tribunal concluded that the issue was covered and the addition was not justified.
Key Issues
Whether the addition of Rs. 78,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act, 1961, was justified when the assessee provided evidence of identity, creditworthiness, genuineness, and repayment of the loans.
Sections Cited
253, 147, 148, 142(1), 143(2), 246A, 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT & SHRI PARESH M JOSHI
the order bearing Number ITBA/NFAC/S/250/2024- 25/1067032535(1) dated 25.07.2024 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the Page 1 of 11 “Impugned order”. The relevant Assessment Year is 2013-14 and the corresponding previous year period is from 01.04.2012 to 31.03.2013.
FACTUAL MATRIX 2.1 That as and by way of an assessment order bearing Number: ITBA/AST/S/147/2021-22/1035532390(1) dated 13.09.2021 passed by the NFAC, Delhi u/s 147 r.w.s. 144B of the Act the total income of the assessee company was computed at Rs.78,00,000/- + Returned Income of Rs.49,570/-. The assessee’s Return of Income as per ITR filed u/s 148 was Rs.49,570/- on 10.01.2021. An Addition of Rs.78,00,000/- was made on account of (1) unexplained cash credit u/s 68 of the Act r.w.s. 115BBE of the Act from two companies.
2.2 That the assessee is a company under company’s Act 2013.
Return of Income for the Assessment Year 2013-14 was filed on 03.10.2013 declaring income of Rs. 49,570/-.
2.3 That the Income Tax Department was in the possession of certain credible information as per which the assessee had Page 2 of 11 received unexplained credits amounting to Rs. 78,00,000/- in the form of accommodation entry from M/s Jay Jyoti India Pvt. Ltd (Rs.70,00,000/-) and M/s Jayant Securities Pvt. Ltd (Rs.8 lakhs) which are found to be bogus companies during the assessment year 2013-14.
2.4 That it was found that the assessee had received accommodation entry during the assessment year 2013-14 amounting to Rs.78,00,000/- from Jay Jyoti India P. Ltd (Rs.70,00,000/-) and M/s Jayant Securities Pvt. Ltd (Rs.8 lakhs). Thus unaccounted money of the assessee was rotated in the form of accommodation entry through Jay Jyoti India P.
Ltd) and M/s Jayant Securities Pvt. Ltd. which is controlled by Shri Sharad Darak group of companies.
2.5 That after recording the reasons for the reopening and after obtaining the prior approval from the competent authority, the case of the assessee was reopened u/s 147 of the Act.
Accordingly,a notice u/s 148 of the Act was issued to the assessee on 23.03.2020 and served through ITBA on the e-mail of the assessee.
Page 3 of 11 2.6 That subsequently notice u/s 142(1) & 143(2) of the Act was also issued. That during the course of reassessment, the assessee had submitted details as were called for.
2.7 That the objection was filed by the assessee on 09.03.2021 and same was disposed off later electronically.
2.8 That the Ld. A.O on internal pages 2 to 6 of the impugned assessment order has explained the modus operandi and brief facts of the case too.
2.9 That the Ld. A.O in view of the above observations (supra) keeping in mind the legal position with reference to the “credits entries” shown by the assessee as income from two companies (supra) added Rs.78,00,000/- u/s 68 of the Act r.w.s. 115BBE of the Act.
2.10 That it is also recorded in the aforesaid assessment order that the final show cause notice along with draft assessment order were all sent to the assessee during the proceedings.
Page 4 of 11 2.11 That the aforesaid assessment order is hereinafter referred to as the “impugned assessment order”.
2.12 That the assessee being aggrieved by the “impugned assessment order” prefers first appeal u/s 246A of the Act before Ld. CIT(A) who by the “impugned order” has dismissed the appeal of the assessee on grounds/reasons stated therein.
2.14 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this Tribunal and has raised following grounds of appeal in Form No.36 against the “impugned order” which are as under:-
“1. On the facts and circumstances of the case and applicable law, the Learned CIT(A) has erred in making confirmation of reopening of the case U/s 148 of the Act and further initiating assessment proceedings of the case U/s 147 of the Act.
2. The Learned CIT(A) has erred in making confirmation of the addition made by Learned Assessing Officer of Rs.7800000/- on account of unexplained cash credit U/s 68 of the Act. I have taken unsecured loan from M/s Jay Jyoti India Pvt Ltd and Jayant Securities and Finance Limited of Rs.70,00,000/- and Rs.8,00,000/- respectively. Out of Rs. 8 Lakhs taken from M/s Jayant Securities 5 Lakhs has been repaid in the same year itself and balance in next year itself. The amount taken of Rs.70,00,000/-, Rs. 10Lakhs has been repaid in the same year itself and balance in subsequent years, Interest has been paid along with TDS been duly deducted.
3. The Assessee craves to add/amend/alter/substitute to any grounds of appeal before or at the time of hearing of the case”.
Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 13.10.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia brought to our notice that the instant appeal is a covered matter and that there are numbers of orders of this tribunal wherein it has been held that broad issue with regard to M/s Jay-Jyoti (India) Pvt. Ltd being paper company and other companies of Sharad Darak Group including M/s Jayant Securities Pvt. Ltd. has not been accepted. In the paper book/synopsis filed reliance was placed on the following decisions of this Tribunal:-
(i) Sanjay Shukla vs ACIT, Central-2 ITA No.333/Ind/2020
(ii) ACIT Central-1 vs. Akash Shukla ITA No.43/Ind/2022
It was pleaded that by applying above orders and decisions of ITAT, Indore Benches including of Global Realcon Pvt. Ltd v/s ACIT (IT(SS)A No. 170 to 174/Ind/2020 dated 26.04.2022) & ACIT V/s Krishna Devcon Pvt. Ltd (ITA No.8 to 10/Ind/2022 dated 21.08.2023) etc. this tribunal should too set aside the impugned order and allow the appeal. The Ld. AR
Page 6 of 11 has also placed reliance on synopsis filed by the assessee in this regard which is reproduced below:-
Per contra Ld. DR stated that revenue places reliances on the impugned assessment order and impugned order but he maintained studded silence on the issue that matter is covered one indeed as pleaded by the Ld. AR.
Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case.
4.3 We basis records of the case and so also after hearing and upon examining the contentions are of the considered opinion that credit loan entry shown by the assessee of Rs.78,00,000/- (supra) cannot be added u/s 68 of the Act. Hence addition aggregating to Rs.78,00,000/- (supra) is deleted which was added to the Return of Income. We refer to the following cases:-
Sanjay Shukla V/s ACIT Central Circle-2, Indore. ITA (i) No.333&49/Ind/2020 order dated 15.03.2022
M/s Hi Link City Homes Pvt. Ltd V/s ITO 21), Indore. (ii) order dated 19.09.2022.
ACIT, Central-2, Indore V/s Shri Sanjay Shukla. ITA (iii) No.333/Ind/2020 order dated 15.03.2022.
ACIT, Central-1, Indore V/s Shri Krishna Devcon Ltd. (iv) to 10/Ind/2022, IT(SS)A No.11&3/Ind/2022, C.O. No.03/Ind/2022 order dated 21.08.2023.
Joint CIT (OSD)-CC-7(4) V/s M/s. Shalimar Housing & (v) Finance Ltd. order dated 01.06.2021.
ACIT,3(1), Indore V/s Shri Pramod Kumar Sethi. ITA (vi) No.382 & 383/Ind/2014 order dated 06.11.2018.
Sanjeev Kumar Agrawal V/s ACIT(Cntral)-2, Bhopal ITA (vii) No.899/Ind/2024 order dated 24.06.2025 (viii) Globus Housing V/s Assessment Unit, NFAC, Delhi order dated 10.10.2025 Wherein this Tribunal has held that M/s Jay-Jyoti (India)
Pvt. Ltd and other companies of Sharad Darak group including Jayant Securities Pvt. Ltd are not a paper company nor a shell company. Hence we too respectfully following above decisions (supra) concur with the view of Ld. AR that the issue in appeal is covered one. Consequently we set aside the “impugned order” and allow the appeal of the assessee.
Order 5.1 The appeal of the assessee is allowed and the “impugned order” is set aside.
5.2 In result, appeal of the assessee is allowed.
Order pronounced in open court on 16.10.2025.