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Facts
The Revenue appealed against the order of CIT(A) which deleted additions made on account of alleged unexplained cash credit and commission for obtaining bogus entry. The assessee had taken a loan from M/s. Satsai Finlease P. Ltd., an RBI registered NBFC, and provided documentation to prove its genuineness and creditworthiness of the lender.
Held
The Tribunal noted that the AO did not record any adverse comments on the creditworthiness of the lender during the assessment proceedings. The CIT(A) had considered the documents provided by the assessee, including the loan agreement, bank statement, and ITRs of the lender, and found the transactions to be genuine. The Revenue failed to show any infirmity in the CIT(A)'s findings.
Key Issues
Whether the additions made by the AO on account of unexplained cash credit and commission for bogus entry are sustainable when the assessee has provided documentary evidence for the loan and creditworthiness of the lender.
Sections Cited
68, 69C
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Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
(A.Y.2019-20) Income Tax Officer, Ward-1(1), R. No.199F, Central Revenue Building, ...... अपीलार्थी/Appellant I.P Estate, Delhi 110002 बिाम Vs. Adonia Systems P. Ltd., BN-5, West Shalimar Bagh, Delhi 110088 .....प्रनिवादी/Respondent PAN: AAKCA-8790-Q अपीलार्थी द्वारा/ Appellant by: Shri Om Prakash, Sr. DR प्रधििािीद्वारा/Respondent by: S/Shri Manoj Kumar Aggarwal & Rahul Gaur, Chartered Accountants सुिवाई की निथर्थ/ Date of hearing : 03/02/2026 घोषणा की निथर्थ/ Date of pronouncement : 03/02/2026 आदेश/ORDER PER VIKAS AWASTHY, JM:
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 18.12.2024, for AY 2019-20.
The Revenue in appeal has assailed the order of CIT(A) in:
(i) deleting the addition of Rs.1,12,95,342/- u/s.68 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) allegedly being unexplained cash credit; deleting the addition of Rs.5,64,767/- u/s.69C of the Act allegedly being unexplained expenditure (payment of commission) for obtaining bogus entry of loan from entry operator.
Shri Om Prakash, representing the department vehemently defending the assessment order dated 19.02.2024 submitted that a search and seizure operation was conducted on Ankit Bhageria on 01.09.2021 in the case Filatex Group. Shri Ankit Bhageria is an entry operator. During the course of search, it was found that Ankit Bhageria was providing accommodation entries against cash through its several shell entities. The assessee was one of the beneficiaries. The assessee during assessment proceeding was unable to prove creditworthiness of the lender. The assessee has taken loan of Rs.1,12,95,342/- from one of the companies i.e. M/s. Satsai Finlease P. Ltd., managed by Ankit Bhageria. The ld. DR submitted that the CIT(A) deleted the addition on the basis of documents provided by the assessee during the First Appellate proceedings. No remand report was sought by the CIT(A) from the AO before allowing assessee’s claim. He thus, prayed for reversing the order of CIT(A) and allowing appeal of the Revenue.
Shri Manoj Kumar Aggarwal, appearing on behalf of the assessee submitted that the assessee had taken loan from M/s. Satsai Finlease P. Ltd. a RBI registered Non-Banking Finance Company (NBFC). The said loan amount along with interest was repaid by the assessee by 14.03.2023. An interest installment of Rs.7,15,808/- was paid on 03.05.2019 after deducting TDS. During the course of assessment proceedings, the assessee had furnished various documents to substantiate genuineness of loan including loan agreement, ITRs of M/s. Satsai Finlease P. Ltd. for AY 2019-20 to 2021-22. Thus, the assessee had discharged its onus in proving
creditworthiness of the lender and genuineness of the transaction. However, the AO failed to take note of the documents furnished during assessment proceedings. No fresh additional evidences were filed by the assessee before the CIT(A). The First Appellate Authority has decided the appeal of assessee on the basis of documents already on record. Hence, there was no requirement for seeking remand report from the AO. The ld. AR of the assessee prayed for upholding the impugned order and dismissing appeal of the Revenue.
We have heard the submissions made by rival sides and have examined the orders of authorities below. The short issue for consideration in Revenue’s appeal before us is with regard to the genuineness of loan taken by the assessee from . M/s. Satsai Finlease P. Ltd. The assessee had taken loan of Rs.1,12,95,342/-from . M/s. Satsai Finlease P. Ltd. The contention of the Revenue is that that said loan is fictious and is merely an entry obtained by the assessee from one of the shell company operated by Ankit Bhageria. The assessee on the other hand in order to discharge its onus to prove genuineness of the loan had furnished before the AO Loan Agreement, bank statement and to prove creditworthiness of the lender furnished ITRs of lender company for AY 2019-20 to 2021-22. We find that there is no discussion in the assessment order on the documents furnished by the assessee. During the course of hearing, the ld. AR of the assessee was specifically asked to show as to when and how the documents were furnished to the AO. The ld. AR of the assessee placed on record copy of the acknowledgments vide which these documents were uploaded on the Department’s portal during reassessment proceedings as well as in the proceedings u/s.148A of the Act. A perusal of the acknowledgment reveals that the documents viz. Balance Sheet of the assessee, Loan Agreement, ITRs for three years of M/s. Satsai Finlease P. Ltd. for AY 2019-20
to 2021-22 were furnished by the assessee on 19.03.2023. Thereafter, the assessee on 07.11.2023 had furnished Audited Balance sheet of the assessee company and finally on 12.12.2023 assessee had furnished copy of bank statement of the assessee company. The Assessing Officer without taking note of documents already placed on record by the assessee completed the assessment holding that loan taken by the assessee from M/s. Satsai Finlease P. Ltd. is fictitious and made addition of Rs.1,12,95,342/-. Further, the AO made addition of Rs.5,64,767/- on account of commission paid by the assessee for obtaining bogus entry. In First Appellate proceedings, the CIT(A) after examining the documents already on record and the details of loan repayment the proof of which was placed on record by the assessee, deleted the addition. The relevant extract of findings of the CIT(A) are:-
“8.7 During the course of assessment proceeding, the AO has not recorded any adverse comments over the creditworthiness of the M/s. Satsai Finlease Private Limited. Moreover, the appellant has stated that M/s. Satsai Finlease Private Limited is a RBI Registered Non-Banking Finance Company and involved in providing the Loan facilities. The appellant has also submitted the Loan agreement executed before availing the Loan. Further the affidavit of Mr. Ankit Bhageria clearly states that the Appellant company availed a loan facility of Rs. 1,05,00,000/- at the interest rate of 8%. The appellant company had also made payment of Rs. 7,15,808/- towards the interest on 03.05.2019 after deducting the TDS over the same. Mr. Ankit Bhageria has also claimed that the entire loan amount has been repaid by the appellant and there is not outstanding amount towards the same. Considering these facts along with the above discussion and the case laws, no adverse inference can be drawn towards these transactions.”
8.8 Therefore, considering the facts of the case, the details furnished by the appellant during the course of the 148A proceeding, submission of the appellant and the above discussion, the addition made by the AO of Rs. 1,12,95,342/- (as fictitious loan availed) is hereby deleted. Further as the addition of Rs. itself is hereby deleted which is the basis of second addition of Rs. 5,64,767l- (towards the commission for provision bogus entry, the addition made by the AO of Rs. 5,64,767/-also cannot be sustained and hereby deleted. Accordingly, these grounds of appeal are hereby allowed.”
6. The Revenue has not been able to controvert findings of the CIT(A) or show any infirmity in the findings of CIT(A), hence, the same are upheld.
In the result, appeal of the Revenue is dismissed.