N R FARMS PRIVATE LIMITED,NAGPUR vs. THE INCOME TAX OFFICER WARD - 2(2), NAGPUR, NAGPUR
Facts
The Assessee received a loan of Rs. 50 Lac from M/s. Purvi Finvest P. Ltd., which the department alleged to be an accommodation entry. The case was reopened u/Section 148, and the AO added the amount u/Section 68, which was confirmed by the Ld. Commissioner, citing lack of evidence from the assessee.
Held
The Tribunal found that the Assessee had provided sufficient evidence regarding the genuineness, creditworthiness, and identity of the lender, including bank statements and repayment details. The Tribunal concluded that the Assessee discharged its prima-facie onus, and the department failed to prove otherwise, thus deleting the addition.
Key Issues
Whether the addition made by the AO under Section 68 of the Income Tax Act for an alleged bogus accommodation entry (loan) was justified, considering the evidence provided by the assessee regarding the genuineness of the transaction.
Sections Cited
148, 250, 68, 115BBE, 58
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH :: NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY
This appeal has been preferred by the Assessee against the order dated 02/04/2025 impugned herein passed by the National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals), Delhi (in short, ‘Ld. Commissioner’) u/sec. 250 of the Income Tax Act, 1961 (in short, ‘Act’) for the A.Y. 2014-15.
2 ITA No.251/NAG/2025 (N.R. Farms Private Limited) 2. In this case, the Assessee had received an information from the office of Assistant Directorate of Income Tax (Inv.)-1, Bhopal that some of the companies which were run and controlled by Mr.Sharad Kumar Darak, providing accommodation entries through which the Assessee N.R.Farms India Ltd. and N. R. Multistructure India have received accommodation entries. M/s. Purvi Finvest P. Ltd. is one of the financial company who provides accommodation entry in the form of share capital, loans and advances or sale purchase of goods from whom the Assessee company has taken loan of Rs. 50 Lac. Consequently, the reasons for reopening of the case were recorded and by issuing notice u/sec. 148 of the Act, case of the Assessee was reopened and accordingly a show-cause notice along with draft assessment order was sent to the Assessee on 19/03/2022 & 22/03/2022. Against which, the Assessee by submitting reply along with loan confirmation by M/s. Purvi Finvest P. Ltd. for F.Y. 2013-14 claimed that if there is any adverse view taken against the Assessee, the Assessee may be provided opportunity of being heard to rebut its case and personal hearing through Video Conferencing may kindly be granted in the interest of justice. The Ld. AO by considering the fact that since the Assessee opted request for Video Conferencing through e-filing portal, no hearing through Video Conferencing is possible. The Ld. AO ultimately, treated the amount of Rs. 50 Lac as bogus entries and added the same to the income of the Assessee u/sec. 68 of the Act, taxing the same u/sec. 115BBE of the Act.
The Assessee, being aggrieved, challenged the said addition by filing first appeal before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner mainly by considering the fact that Assessee could not submit any material /additional evidence during the appellate proceedings to substantiate its grounds of appeal, which could not be produced before the Ld. AO, except the
3 ITA No.251/NAG/2025 (N.R. Farms Private Limited) documents submitted before the Ld. AO. It is clear that Assessee has no strong evidence to substantiate its grounds of appeal and, therefore, addition of Rs. 50 Lac made by the Ld. AO is justified and hereby confirmed.
The Assessee before this Court has claimed that it is engaged in the business of construction and had taken loan of Rs. 50 Lac from M/s. Purvi Finvest P. Ltd. during the assessment year under consideration through banking channel as long term borrowings and has also duly shown the said loan in its books of accounts and it is a fact that subsequently the Assessee repaid such loan through banking channel itself and duly reflected in the bank statement of the Assessee as the Ld. AO has also accepted such repayment of loan. The Assessee further claimed that even otherwise, the Assessee has submitted all the details qua the aforesaid transaction during the course of assessment proceedings before the Ld. Ld. AO, such as, copy of bank statement duly reflecting the amount received from M/s. Purvi Finvest P. Ltd., copy of confirmation of loan provided by M/s. Purvi Finvest P. Ltd. showing its name, address, PAN number and other details for a sum of Rs. 50 Lac.
On the contrary, learned Departmental Representative (DR) refuted the claim of the Assessee by submitting that according to judgment of Hon'ble Apex Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), the addition is liable to sustained as the Assessee has not been able to prove the ingredients of section 68 of the Act and thus both the authorities below have rightly made the addition under consideration.
This Court has given thoughtful consideration to the peculiar fact and circumstances. Admittedly, the Assessee before the authorities below has submitted PAN number, address of the
4 ITA No.251/NAG/2025 (N.R. Farms Private Limited) company, audit report, balance sheet showing the genuineness of the transaction, creditworthiness and identity of the company, who provided an amount of Rs. 50 Lac through banking channel. Further, the Assessee has also demonstrated that it has received an amount of Rs. 50 Lac from M/s. Purvi Finvest P. Ltd. and duly shown in its books of accounts as well as in audited balance sheet as long term loan-cum-borrowings, which is evident from audited balance sheet of the Assessee and other company. The Assessee also demonstrated that such amount has already been repaid in the subsequent A.Y. 2017-18 through banking channel itself and accepted by the AO.
Therefore, in the considered opinion of this Court, the Assessee has been able to discharge its prima-facie onus casted u/sec. 58 of the Act. Even otherwise, the Department has proved nothing contrary against the documents submitted by the Assessee. Thus, on the aforesaid analyzation, the addition in hand is unsustainable and therefore, the same is deleted, by allowing the appeal of the Assessee.
In the result, Assessee’s appeal is allowed.
Order is pronounced 23.09.2025 as per rule 34(5) of the Income Tax {Appellate Tribunal} Rule 1963.
Sd/- (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER vr/-
5 ITA No.251/NAG/2025 (N.R. Farms Private Limited)
Copy to: The Appellant The Respondent The CIT, Concerned, Nagpur The DR Concerned Bench
//True Copy//
By Order
Senior Private Secretary ITAT, Nagpur.
