BSAS INFOTECH LIMITED,SURAT vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE -1(1)(1), SURAT

4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”

(A.Y. 2015-16) “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in making addition of Rs.75,00,000/- on account of loan received from the parties treated as alleged bogus unsecured loan u/s.68 of the Income Tax Act, 1961.

2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in making addition of Rs.44,82,660/- on account interest paid on unsecured loans treated as alleged unexplained expenses on bogus unsecured loans.

3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in making addition of Rs. 1,50,000/- on account of alleged commission paid to arrange unsecured loans treated as alleged unexplained expenses on bogus unsecured loans.

4. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 3– 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”

(A.Y. 2016-17) “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer has erred in making addition of Rs. 46,24,248/- on account of disallowance of interest expenses on unsecured loans.

2. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper.

3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” We shall first start with assessee’s appeal in A.Y. 2011-12. Since the facts and issues for consideration are largely similar for balance years as well, our observations for this year shall also apply to the balance years in appeal before us, as well.

“3.12 It is seen that a search and seizure action u/s 132 of the I T Act was carried out by the Investigation Wing, Mumbai in the case of Praveen Kurnar Jain and others, which resulted in collection of evidences and other findings, which conclusively proved that Shri Pravin Kumar Jain and other, through a benami concerns, run and operated BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 5– by them in the name of their employees, provided accommodation entries to various parties in respect of the bogus unsecured loan and bogus purchases. Various evidences found and seized from the premises of Shri Pravin Kumar Jain and others proved the above facts. As per list available with this office, it is found that the assessee company has received accommodation entries in the form of unsecured loan amounting to Rs.50,00,000/- from the concern M/s. Vanguard Jewels Limited of Pravinkumar Jain Group, a Mumbai based entry operator. The group was indulged in giving such accommodation entries and the directors/ proprietors of such paper companies/concerns admitted the entire nature of bogus transactions in their statements recorded on oath. Shri Praveen kumar Jain is the key person and looks after overall business of the bogus paper concern/companies. On the basis of report of Investigation Wing, Mumbai, it is clearly found that M/s. Vanguard Jewels Pvt. Ltd. is proved shell company, handled by Shri Pravin Kumar Jain, an entry provider. ….

4. Further, the Assessing Officer added a sum of Rs. 1,00,000/- being 2% of the commission paid by the assessee for obtaining accommodation entry of Rs. 50,00,000/-, as income of the assessee.

“In the above order, the Hon'ble ITAT placed the statement of Mr. Pravin Kumar Jain which was recorded u/s.132(4) of the Act, by the Investigation Wing of Mumbai, wherein Mr. Pravin Kumar Jajn given list of 52 companies, out of which 13 Mr. Pravin Kumar Jain is a director in 13 of them and the remaining concerns are shown in the name of dummy directors, partners and proprietors, whose effective control and management was under the control of Mr. Pravin Kumar Jain. In the list, Vanguard Jewels Ltd is mentioned at Sr.No.

6. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the additions in the hands of the assessee. Before BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 6– us, the Counsel for the assessee submitted that in the instant case, it is an undisputed fact that loans were received and repaid by the assessee within the same Financial Year. It is also an admitted fact that both the loans as well as repayment back to the lender were through banking channels. Accordingly, in the instant case, there is no question of invoking the provisions of Section 68 of the Act. The assessee also placed confirmation show of M/s. Vanguard Jewels Pvt. Ltd. alongwith bank statement to show that firstly, loan was taken and repaid back within the same Financial Year and also both the receipt as well as repayment of loan were through banking channels.

7. In response, Ld. DR placed reliance on the observations made by Assessing Officer and Ld. CIT(A), in their respective orders.

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 7– 9. We have heard the rival contention and perused the material on record.

“6. Having heard Shri Pranav Desai, learned Counsel appearing on behalf of the revenue and on perusal of the order passed by the CIT(A) confirmed by the ITAT, it appears that CIT(A) was satisfied with respect to the genuineness of the transaction and creditworthiness of Shri Ishwar Adwani and, therefore, deleted the addition of Rs.1,45,00,000/- made by the Assessing Officer. It is required to be noted that as such an amount of Rs.1,00,00,000/- vide cheque no. 102110 and an amount of Rs.60 lakh vide cheque no. 102111 was given to the assessee and out of the total loan of Rs.1.60 crore, Rs.15 lakh vide cheque no. 196107 was repaid and, therefore, an amount of Rs.1,45,00,000/- remained outstanding to be paid to Shri Ishwar Adwani. It has also come on record that the said loan amount s been repaid by the assessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the ITAT has held that the matter is not required to be remanded as no other view would be possible, we see no reason to interfere with the impugned order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed.”

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 8– “5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied.

7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed.”

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 9–

“7. We have heard the rival contentions and perused the material on record. With regards to addition under section 68 of the Act, we are of the considered view that the Ld. CIT(Appeals) has after appreciation of evidence placed on record by the assessee during the course of appeal proceedings has deleted the additions. During appeal, the assessee was able to produce the confirmation from the creditors in support of genuineness of the transaction, loan agreement with M/s Sandesh Procon LLP, bank statement and audited balance sheet of M/s Sandesh Procon LLP evidencing the above transaction were also placed on record to prove the genuineness of transaction. Further, the fact that the loan was repaid back with interest, on which TDS was duly deducted also lends support to the genuineness of transaction. In the case of Shree Samruddhi OverseasTrading Co. v. DCIT in ITA Number & 910/Ahd/2018, the Ahmedabad ITAT held that repayment of loan points towards genuineness of transaction in the following words: The repayment of loan exists as a strong mitigating circumstance and transcends all considerations. We thus find that the documents placed by the assessee before the Revenue authorities sufficiently discharge the onus towards the identity and genuineness of the transaction and creditworthiness of the lender contemplated under s.68 of the Act. 7.1 In the case of Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 (Gujarat), Hon'ble Gujarat High Court held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. In view of the above facts and the judicial precedents by the jurisdictional High Court, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in deleting the additions made by the Ld. Assessing Officer u/s 68 of the Act. 7.2 In the result, ground number 1 of the Revenue’s appeal is hereby dismissed.”

“5. We have heard the rival contentions and perused the material on record. In our considered view, the assessee has reasonably discharged the onus case upon it in the instant set of facts. We note that the assessee has been able to demonstrate that he has repaid the loan amount back to the lender in the subsequent year through banking channels. The fact that the loan was repaid back, in our view, also lends support to the genuineness of transaction. In the case of Shree Samruddhi OverseasTrading Co. v. DCIT in ITA Number & 910/Ahd/2018, the Ahmedabad ITAT held that repayment of loan points towards genuineness of transaction in the following words:

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 10–

The repayment of loan exists as a strong mitigating circumstance and transcends all considerations. We thus find that the documents placed by the assessee before the Revenue authorities sufficiently discharge the onus towards the identity and genuineness of the transaction and creditworthiness of the lender contemplated under s.68 of the Act. 5.1 In the case of Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 (Gujarat), Hon'ble Gujarat High Court held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. 5.2 We further note that all details regarding the parties in respect of the loan transaction were duly submitted before the Revenue Authorities. The additions are proposed to be made on the basis of statement of by Shri Praveen Kumar Jain who stated that he was engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus share application money etc. The Department has made addition on the ground that the assessee company had received a sum of 1,00,00,000/- from M/s Nakshatra Business Private Limited (Hema trading company Private Limited), which was one of the companies operated by Shri Praveen Kumar Jain Group. However, apparently this figure too was incorrect since the Ld. CIT(Appeals) observed that the assessee had taken loan of Rs. 50 lakhs only and accordingly gave part relief to the assessee. We further note that the Tribunals on various occasions have deleted the additions made in respect of loans taken from the above entities which were later found be repaid back in subsequent years. In the case of Deepak Shah v. ACIT in ITA number 4206/Mumbai/2017, the Mumbai ITAT has on similar facts given relief to the assessee with the following observations: 5. Learned AR vehemently submitted that the order of learned CIT(A) upholding the order of the Assessing Officer is contrary to the law as order of the Assessing Officer was confirmed despite the fact that the assessee has filed all necessary evidence before the AO in the assessment proceedings. Learned AR submitted that by various communications to the Assessing Officer, the assessee filed necessary details submitting therein that the assessee has taken temporary business loans from three companies in the month of March 2012, which were repaid within a period ranging from two to six months duly corroborated with all necessary evidences such as copies of bank statements, ledger accounts, confirmations from the parties, their PANs etc. Learned AR submitted that vide letter dated 8.2.2017, the assessee informed the Assessing Officer on the date of hearing i.e. 9.2.2017 that the assessee is not in a position to attend hearing as the assessee is preoccupied in High Court on 9.2.2017, which was proved by learned AR by placing before the bench a copy of the order from High Court filed at page No. 34 of the paper book. Learned AR submitted that even notices were issued u/s. 133(6) by the Assessing Officer to these parties were duly responded by the said parties by drawing our attention to page No.38 to 40 of the paper book wherein all details as required by the Assessing Officer were duly filed. Thus, learned AR submitted that the assessee has filed copies of confirmations, ledger accounts, bank statements evidencing transactions through banking channel, ITRs, PAN and annual reports alongwith audited profit and loss accounts and balance sheets of these parties. Learned AR submitted that the assessee has repaid BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 11– loan within a span of two to six months.Thus, the Assessing Officer has totally failed to conduct any meaningful and objective investigation and merely relied on the statement of Shri Praveen Kumar Jain that they were engaged in the business of providing hawala entries though nowhere assessee's name was ever taken by the said person. Similarly, learned CIT(A) has affirmed the order of Assessing Officer by simply relied on the statement recorded in the course of search u/s. 132(4) of the Act and further harping on the fact that summons issued u/s. 131 were not complied with. Learned AR also referred to the decision of the Coordinate Bench in the case of ACIT Vs. Shreedham Builders (ITA No. 5589/Mum/2017 for A.Y. 2012-13), wherein all these three entities have lent money and the Coordinate Bench has taken the view that no addition to be made u/s. 68 of the Act as the assessee has duly discharged burden cast upon it u/s. 68 of the Act. Learned AR therefore prayed before the Bench that the order of learned CIT(A) may be set aside and the Assessing Officer be directed to deleted the addition.

6. Per contra, learned DR relied on the order of learned CIT(A) heavily by submitting that facts revealed during the course of search unequivocally proved that the assessee was beneficiary of hawala racket which was being operated by Shri Pravin Kumar Jain and Associate concerns and he even admitted during the course of statement recorded u/s. 132(4) of the Act that business was not being done but only accommodation entries were provided on commission basis. Under these circumstances, learned DR prayed that the order of learned CIT(A) may be affirmed.

BSAS Infotech Ltd. vs. DCIT Asst. Years –2011-12, 2015-16 & 2016-17 - 12– 16. Accordingly, looking into the facts of the assessee’s case we observe that in this case, the assessee had received loans, which were repaid back by the assessee either within the same Financial Year, or during the subsequent Financial Years alongwith interest (on which necessary tax deduction at source was also done by the assessee company). Both the receipt of loans and repayment thereof was through banking channels. For A.Y. 2015-16 and 2016-17 the assessee also furnished confirmation of the concerned parties. We note that the Gujarat High Court on several occasions has held that when loan taken by the assessee has been repaid back alongwith interest back to the lender through banking channels, no addition is called for under Section 68 of the Act. Accordingly, lookin into the assessee’s facts and the judicial precedents discussed above, the appeals of the assessee are allowed.

Sd/- Sd/- (BIJAYANANDA PRUSETH) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/07/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, सूरत / DR, ITAT, Surat 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,