HARESH RAVJI MAJETHIA ,MUMBAI vs. ACIT -29(1), MUMBAI

Haresh Ravji Majethia vs ACIT-29(1) 1903 Tridev CHS, Bhakti Marg Room No.108, 1st floor, C-10, Mulund West, Mumbai- PratyakshaKarBhawan, 400080 BandraKurla Complex, Bandra East, Mumbai-400051 PAN:AEQPM5542P APPELLANT RESPONDENT Assessee by : Ms. Ritika Agarwal, Adv. (virtually appeared) Respondent by : Shri Ritesh Misra (CIT DR) Date of hearing : 29/01/2026 Date of pronouncement : 09/02/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee filed against the order of the ld. Commissioner of Income Tax appeal ADDL/JCIT-A to Vadodara [for brevity ‘the ld. CIT(A)], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2014-15, date of order 28.07.2025. The impugned order emanated from the order of the ld. Commissioner of Income Tax 29(1), Haresh Ravj iMajethia Mumbai (for brevity the Ld. AO) order passed under section 143(3) of the Act date of order 26.12.2016.

1. BECAUSE, Id. CIT(A) erred in law and on facts in holding that the assessment order passed u/s. 143(3) is not invalid, despite the absence of a valid jurisdiction transfer order u/s. 127 merelybecause the Appellant continued to participate in the assessment proceedings.

2. BECAUSE, Id. CIT(A) erred in law and on facts in holding that the violation of CBDT Instruction No. 7/2014 dated 26.09.2014 by the AO is a mere procedural irregularity which is a curable defect u/s 292BB whereas the said CBDT Instruction statutorily mandates disclosure of reasons for scrutiny selection.

3. BECAUSE, Id. CIT(A) erred in confirming the disallowance of interest of Rs.7,64,336/- on unsecured loans u/s 68 of the Act ignoring the fact that all details establishing the genuineness of such loan transactions had already been submitted during the course of assessment proceedings and all these loans have been repaid by the Appellant in subsequent years.

4. BECAUSE, Id. CIT(A) failed to appreciate that once the identity, creditworthiness of lenders, and genuineness of transactions were proved, interest on such loans could not be disallowed particularly where such loans had already been repaid and repayment details have also been provided. 5.BECAUSE, Id. CIT(A) erred in upholding the disallowance of Appellant's claim to set off of brought forward losses of Rs.48,37,961/- from AY 2013-14 solely on the ground that brought forward losses were not allowed set off during earlier years.”

3. The brief facts of the case are that the assessee filed its return of income declaring a total income of Rs.84,73,920/-. The assessment was completed by disallowing the interest paid during the impugned assessment year on loans obtained from certain creditors, from whom the assessee had accepted unsecured loans in earlier years, i.e., AYs 2010-11 to 2013-14. During the said assessment years, the revenue treated the loans as accommodation entries and added back the loan amounts to the income of the assessee in the respective Haresh Ravj iMajethia years. In another issue pertaining to the impugned assessment year, the assessee’s claim of brought-forward loss amounting to Rs.48,37,961/- was also rejected by the Ld. AO. On perusal of the records, it is observed that additions were made during assessment years 2011-12 to 2013-14, on account of which the assessee’s claim of brought-forward losses was disturbed. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who rejected the grounds raised by the assessee. Being aggrieved, the assessee has filed the present appeal before us, challenging the impugned order on both legal and factual grounds.

Haresh Ravj iMajethia 6. We have heard the rival submissions and perused the material available on record. We find that the assessee paid interest amounting to Rs.7,64,336/- during the impugned financial year. Tax was duly deducted at source, and the relevant documents such as confirmations from loan creditors, details of TDS deducted, and issuance of TDS certificates were duly furnished before the revenue authorities. The assessee had contended before the Ld. CIT(A) that the interest was paid to genuine loan creditors. We find that the issue regarding the genuineness of the loans already stands settled in favour of the assessee by the order of the Ld. CIT(A) for the earlier assessment year. Once the loans have been accepted as genuine, the interest paid thereon cannot be disallowed. Accordingly, the addition made by the Ld. AO on account of interest expenditure amounting to Rs.7,64,336/- is hereby deleted. Thus, Ground No. 3 of the assessee’s appeal is allowed.