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Facts
The Revenue filed an appeal against the order of the Ld. CIT(A) who deleted an addition of Rs. 5,26,26,000/- made by the AO on account of unexplained loan under Section 68 of the Income Tax Act. The AO's addition was based on a difference between the unsecured loan amount reported in the Tax Audit Report and the notes on unsecured loans.
Held
The Tribunal held that the AO erred in calculating the figures from the Tax Audit Report and failed to consider the amounts related to reimbursement transactions with sister concerns. These reimbursements were disclosed and documented, and the identity and creditworthiness of the lenders were not questioned. Therefore, the addition made by the AO was liable to be deleted.
Key Issues
Whether the addition made by the AO on account of unexplained loans, on the basis of a difference in figures, is sustainable when reimbursement transactions with related parties were not considered.
Sections Cited
68 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, DELHI
Dy. Commissioner of Income Vs M./s IT Enfraservices Private Tax, Central Circle-1 A.R.T.O Limited. 7th Floor, Tower-C, Complex, Sector-33 Noida Bhutani Alphatum, Janpath Marg, Sector-90, Noida, Uttar Pradesh PAN: AABCI0514K Appellant Respondent Assessee by Sh. Rohit Kapoor, Adv and Sh. Ashok Pandit, Adv Revenue by Sh. Mahesh Kumar, CIT DR Date of Hearing 04/02/2026 Date of Pronouncement 11/02/2026 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Revenue against the order of Ld.
Commissioner of Income Tax (Appeals)-3, (‘Ld. CIT (A)’ for short), Noida dated 09/07/2025 for the Assessment Year 2023-24.
Brief facts of the case are that, an order u/s 143(3) of the Income Tax Act, 1961 ('Act' for short) came to be passed on 31/03/2025 by DCIT, Central Circle-1, wherein the Ld. A.O. made addition of Rs.
5,26,26,000/- on account of unexplained loan u/s 68 of the Act.
Aggrieved by the order dated 31/03/2025, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 09/07/2025, deleted the addition. As against the order of the Ld. CIT(A) dated 09/07/2025, Revenue preferred the captioned Appeal.
The Ld. Department's Representative vehemently submitted that the Ld. CIT(A) erred in deleting the addition of Rs. 5,26,26,000/- made by the A.O. u/s 68 of the Act ignoring the fact that the Assessee failed to substantiate the source and nature of the said amount. The Ld.
Department's Representative relying on the order of the A.O., sought for allowing the Appeal.
Per contra, the ld. Assessee's Representative submitted that the Assessee has disclosed the amount in question as reimbursement in Clause 23 of the Tax Audit Report, however, the A.O. has not verified the same and without applying the mind, made the addition. The Ld. CIT(A)
after going through the material available on record rightly deleted the addition which requires at the hands of the Tribunal. Thus, sought for dismissal of the Revenue.
We have heard both the parties and perused the material available on record. The A.O. made addition of Rs. 5,26,26,000/- on account of unexplained loan u/s 68 of the Act in respect of two parties i.e. Good Living Infrastructure Pvt. Ltd. and Parmesh Constructions Co. Ltd. The Ld. CIT(A) deleted the addition in following manners:-
“5.1 Ground of Appeal
No. 1 In this ground, the AR has contested the addition of Rs. 5,26,26,000/- made by the AO. In this case, search u/s 132 was carried out on Bhutani Infra Group and Associates on 04.01.2024. During the assessment proceedings, the AO noticed that as per Form 3CD, the assessee has taken a loan from Parmesh Constructions Company Limited &Goodliving Infrastructure Pvt. Ltd. amounting Rs. 4315.50 lacs out of which Rs. 275.10 lacs was repaid. After reconciliation, the net loan amount as per AO stands at Rs. 4040.40 lacs. Further, as per AO, as per notes on unsecured loans, the reported increase in the loan is Rs. 4566.66 lacs. The AO noted that there is a difference of Rs. 526.26 lacs between the above figures which remains unexplained. The AO treated the difference as unexplained u/s 68 and made an addition of Rs. 5,26,26,000/- to the income of the assessee. During the appellate proceedings, the AR stated that there is no discrepancy between the figures as reported in the 3CD report viz. a viz. the notes on unsecured loans. The appellant further stated that replies were furnished to the AO during the assessment proceeding. As per AR, it was also submitted in the same reply before the AO that both the aforesaid lenders are group companies of the appellant and in order to prove the genuineness and creditworthiness of the lenders, the appellant had furnished a statement of Unsecured loans along with copy of:
1. Confirmation 2. Income Tax Returns 3. Copy of relevant bank account
4. Copy of Audit Report, Balance Sheet, Profit and Loss Account of the respective companies. As per AR, copies of the above-mentioned documents as furnished during the assessment proceedings on 13.02.2025 are also placed in the paper book filed during the appellate stage. Further, as per AR, in response to queries of the AO, the appellant furnished a detailed reply on 29.03.2025 wherein the appellant explained the transactions and the appellant also pointed out error in the department's calculation. The amounts mentioned at S.No. 23 of the Tax Audit Report are reproduced as under: xxxxxxxxxxxxxxxxxxx Further, as per AR, it can be inferred from the above table that the relevant figures that have to be considered by the AO were mentioned at S.No. 2, 3, 4, 5 and 6, the same are being reproduced below for ready reference:
Name Nature of Amount Transaction Goodliving Infrastructure Pvt. Loan taken 16,51,50,000/- Ltd. Goodliving Infrastructure Reimburseme 1,65,85,234/-
Pvt.Ltd. nt Loan taken 26,64,00,000/- Parmesh Construction Company Limited Loan taken -2,75,10,000/- Parmesh Construction Company Limited Reimburseme 3,60,41,089/- Parmesh Construction Company nt Limited Total 45,66,66,323/- Further, as per AR, it can be inferred from above that the main premise on which the addition has been made by the AO is a futile ground, i.e. AO erred in calculating the figures mentioned in the Tax Audit Report i.e. the amount that has to be considered was Rs. 4,566.66 Lacs and not Rs. 4,040.40 lacs. Further, as per AR, from the above table it appears that the AO failed to take into account the amounts mentioned at S. No. 3 and 6 of the related party transactions which are in respect of amounts which have been paid by the respective parties i.e. M/s. Goodliving Infrastructure Pvt. Ltd. and M/s. Parmesh Construction Company Limited, the total of both the amounts amounted to Rs. 5,26,26,323/- (Rs. 1,65,85,234 + Rs. 3,60,41,089). Finally, as per AR, the said amounts are already disclosed in the books of accounts and after considering A them no difference arises. Page 9 of 10 IT Enfraservices Private Limited, A.Y. 2023-24 Appeal No. CIT(Appeals), Noida-3/10088/2022-23 From the above discussion, it is apparent that the AO has made addition of Rs. 5.26 crores to the income of the assessee on account of alleged difference between the unsecured loan as per the 3CD report and the notes on unsecured loans. From the discussion carried out above, it is apparent that the AO has missed out on including the value of related party transactions i.e. the reimbursement to be made to Parmesh Construction Company Limited and Goodliving Infrastructure Pvt. Ltd. amounting to Rs. 3,60,41,089/- and Rs. 1,65,85,234/- respectively. The AR has explained that the related parties had paid the above money on behalf of the assessee company leading to the said amounts being considered as unsecured loans in the hands of the assessee company. It also needs to be emphasized that the AO has not questioned the identity, genuineness and credibility of the entities from whom loans have been received. The addition has been made solely on the basis of alleged difference between the amount of unsecured loans. The above discussion clearly reveals that there is no difference between the value of unsecured loans once the amount of reimbursement to the related parties is also taken into consideration. Hence, the addition made by the AO is liable to be deleted and this ground of appeal is allowed.”
As could be seen from the materials available on record, the two entities i.e. Good Living Infrastructure Pvt. Ltd. and Parmesh Constructions Co. Ltd.are the sister concerned of the Assessee. Further, Assessee explained before the A.O. that the transaction involved with those entities are towards reimbursement of GST, electricity charges, and statutory dues which were paid by those sister concerns on behalf of the Assessee and the said reimbursements were duly disclosed and reported in Clause 23 of Tax Audit Report. The Ld. CIT(A) verified the said factual aspects and deleted the addition. In the absence of any contrary material brought on record by the Revenue, we find no reason to interfere with the findings and the conclusion of the Ld. CIT(A). Accordingly we dismiss the Grounds of Appeal of the Revenue as devoid of merit.
In the result, Appeal of the Revenue is dismissed.
Order pronounced in the open court on 11th February, 2026
Sd/- Sd/- (KRINWANT SAHAY) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 11.02.2026 Reshma Naheed, Sr.P.S