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Facts
The assessee received Rs. 5.25 lakhs from Amit Singhania via NEFT and subsequently gave it as an unsecured loan to M/s UB Investment. The Assessing Officer (AO) added this amount to the assessee's income, disallowing it as a loan, citing lack of confirmation and evidence of genuineness. The CIT(A) upheld the AO's order.
Held
The Tribunal observed that the transaction involved the assessee giving a loan, not receiving it as income. The Tribunal noted that the initial loan given by the assessee to Amit Singhania was Rs. 5 lakhs, and the repayment received was Rs. 5.25 lakhs, with the excess being interest. The Tribunal found that the AO had wrongly treated the loan given as income in the hands of the assessee.
Key Issues
Whether the amount given as a loan by the assessee to a third party can be treated as income in the hands of the assessee, and whether the reassessment proceedings were validly initiated.
Sections Cited
253, 143(3), 147, 246A, 148, 148, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
the order bearing Number ITBA/APL/S/250/2024- 25/1064426916(1) dated 29.04.2024 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Assessment Year is 2014-15 and the corresponding previous year period is from 01.04.2013 to 31.03.2014.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 143(3)/147 of the Act, the total income of the assessee was computed and assessed at Rs.7,00,230/-. Return of Income was at Rs.1,75,230/-. Addition of Rs.5,25,000/- was made (Rs.1,75,230/- + Rs.5,25,000/-). That the aforesaid assessment order is hereinafter referred to as “impugned assessment order”. The core issue of addition of Rs.5,25,000/- was that the assessee has failed to explain the source of Rs.5.25 lakhs. The assessee had received Rs.5.25 lakhs from one Amit Singhania by NEFT and thereafter by a cheque the said amount was given as unsecured loan to M/s UB Investment on 29.08.2013. In the “impugned assessment order” it is recorded by the Ld. A.O that the assessee has failed to give any confirmation letter of Shri Amit Singhania nor Shri Amit Singhania was produced by the assessee during the course of assessment proceedings. No documents/material/evidence was produced during the course of the assessment proceeding establishing any identity, creditworthiness and genuineness of transaction. The Ld. A.O has recorded that subject transaction of Page 2 of 9 loan to M/s UB Investment was done in order to show that M/s UB Investment has received the loan amount from the banking channels. Hence no loan is advanced to M/s UB Investment in real terms out of any self earned proceeds of the assessee.
2.2 That the assessee being aggrieved by the aforesaid “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 the grounds and reasons stated therein. The core ground and reason for dismissal of 1st appeal was as under:-
“4.1.3 In the appellate proceedings, burden of proof lies on the appellant to prove that the facts and the findings of the AO are incorrect. As stated above, no documentary evidence whatsoever regarding the assertions made by appellant in his statement of facts and ground of appeal have been filed during the appellate proceedings to disprove the finding of the AO. Considering the facts and circumstances of the case, no infirmity is observed in the order of the AO. Thus, there is no merit in the grounds of appeal taken by the appellant and accordingly the same. is rejected/dismissed”.
2.3 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. The Ld. CIT(A) has erred in confirming the addition of Rs 5,25,000/- without any basis and without appreciating the facts of the case that source of advance is from recorded source and no cash was found deposited in the Bank.
2. The Ld. CIT(A) has erred in confirming the addition of Rs 5,25,000/ without any basis and without appreciating the facts of the case that while recording reasons the Ld. AO has hold that source of deposit into bank A/c was provided by the Chetak group and at the time of assessment the Ld. AO has assessed the income in the hands of the appellant which is against the reasons recorded.
Ld. CIT has erred in confirming the reopening of the case U/s 148 merely on the basis of information received by ADIT (Inv)-1, Udaipur and confirming the act of the Ld. AO for reopening of case u/s 148 without proper satisfaction and merely on the basis of statement of some agents without verifying the fact that whether the said agent and statement there of is ead related to the assessee or not and has applied modus operandi adopted by some unknown persons to the assessee without having any material on record and further erred in disposing off the objections raised by the assessee for reopening of the assessment without considering the facts of the case and without applying his mind.
4. It is on the Facts and Circumstances of the case as well as in the law, the Ld. CIT(A) has erred in confirming the action of the Ld. AO for issue notice u/s Med 148 r.w.s. 147 of the IT Act, 1961 which is bad in law and unjustified because notice so issued has to meet the directions /instructions provided by the office of DDIT/ADIT and have some nexus with the opinion formed by the LD AO regarding escapement of income. Hence Order so passed deserved to be quashed.
5. Impugned Assessment order was passed by the AO and confirmed by Honorable CIT(A) in gross and serious violation of principles of natural justice without providing, relied upon material, and opportunity of A confrontation at any stage of case and without fair consideration of the submission made, explanations offered, and the material available, tado culminating in an order which disclose reasons for the decision sufficient to show that mind of the authority has been applied relevantly and rationally and without reliance on facts nor furnished to the affected party.
Your appellant craves leave to add, alter, modify or withdraw any of the grounds of appeal on or before the date of hearing”.
3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 24.07.2025 when the Ld. AR for and on behalf of the assessee contended that Ground No. 3 & 4 are not pressed. The loan given is made the subject matter of addition at the hands of the assessee which is not permissible in law. Generally loan taken is added as income of the assessee.
3.2 The relevant extract of pass book of the assessee was shown by the Ld. AR during the hearing wherein our attention was invited that on 28.03.2012 as and by way of a cheque an amount of Rs.5 lakh is debited and in “particulars column” name of “Amit Singhania” appears. On 27.08.2013 there is a credit entry of Rs.5,25,000/- (Five lakhs twenty five thousand) and in the “particulars column” name of “Amit Singhania” appears and the amount is remitted through NEFT. Thus what is received is Rs.5,25,000/- from the “Amit Singhania” and what is paid to “Amit Singhania” is Rs.5 lakh as and by way of loan on 28.03.2012. In the “impugned assessment order” the amount loan advanced is found to be exigible to tax which is wrong. The Ld. AR has placed reliance on order of ITAT, Indore
Page 5 of 9 Bench dated 31.10.2023 in case of Smt. Neeta Devi Goyal V/s wherein in para 10 following is held:-
“10. We have considered rival submissions of both sides and perused the order of AO. There is no dispute on the fact that the AO has made addition qua the loan given' by assessee and not loan taken by assessee. We agree that under the scheme of Income-tax act and it is logical also, there can be an addition for bogus loan/accommodation taken' by a person but certainly there cannot be any addition for bogus 'loan/accommodation given. If the loan given by "X" to "Y" is found bogus/accomodation, the department can. make addition in the hands of "Y" but certainly not in the hands of "X". In fact, Ld. DR also understood this basic point and that is why he simply supported the AO's order and left it for the Bench to take a call. As far as the source of cash-deposit of Rs. 2,25,000/- in bank a/c, prior to giving loan, is concerned, Ld. AR has successfully demonstrated that the assessee made a withdrawal of enough amount from same bank a/c which was available for re-deposit. Thus, looking into these very aspects, we need not go further to examine the genuineness or otherwise of the loan given by assessee, suffice it to say that the AO has wrongly made addition of Rs. 6,75,000/- given by assessee in assessee's hands. We, therefore, direct the AO to delete the addition”.
3.3 Per contra Ld. DR for the Revenue submitted that the “impugned assessment order” and so also the “impugned order” is correct and no interference of Tribunal is called for.
3.4 A clarificatory hearing was fixed by this tribunal on 05.08.2025 when the Ld. AR for the assessee appeared and filed a clear photo copy of bank pass book of Punjab National Bank.
He was advised to file the same in proper format as per rules of Page 6 of 9 ITAT which was complied. The Ld. AR was asked to clarify the transaction as earlier copy of Punjab National Bank pass book was not readable. The Ld. AR then clarified the transaction that on 28.03.2012 the assessee had advanced a loan of Rs.5,00,000/- (Five lakhs) to one Amit Singhania as and by way of cheque and the amount was debited in the pass book. That on 27.08.2013 Amit Singhania has repaid sum of Rs.5,25,000/- (Rupees Five lakhs twenty five thousand) to him. Excess amount of Rs.25,000/- is towards interest amount and therefore an income in the hand of the assessee. Upon a query by the Bench whether this excess amount of Rs.25,000/- which is treated as interest income forms part of Return of Income the Ld. AR replied “No”. Further the Ld. AR contended that on 28.08.2013 he advanced loan of Rs.5,25,000/- (five lakh twenty five thousand) to UB Investment. Upon a further query by the Bench as to why no documentary evidence was filed before Ld. CIT(A). The Ld. AR fairly stated that it was not filed. The clarificatory hearing was then concluded.
Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietary 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 after hearing and upon examining the rival contentions are of the considered view that in the “impugned assessment order” act on part of assessee in giving loan of Rs.5,25,000/- to M/s UB Investment is found to be income of the assessee exigible to tax which fact is wrong as on 28.03.2012 an amount of Rs.5 lakh is debited by cheque to “Amit Singhania” and on 27.08.2013 an amount of Rs.5,25,000/- is credited by NEFT from “Amit Singhania”. On 28.03.2013 an amount of Rs.5,25,000/- is paid to UB Investment. In clarificatory hearing held on 05.08.2025 new facts have surfaced as recorded aforesaid. In these facts and circumstances we deem it fit to set aside the “impugned order” and remand the back to the file of Ld. A.O to examine the case afresh on denovo basis. Accordingly impugned order is set aside and the case is remitted back to Ld. A.O to pass a fresh order on Page 8 of 9 denovo basis. Assessee is directed to raise all pleas canvassed before us before Ld. A.O.
Order 5.1 The aforesaid “impugned order” is set aside as and by way of remand back to the file of Ld. A.O on denovo basis.
5.2 In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in open court on 18.08.2025.