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Facts
The assessee company received share application money and unsecured loans from four parties during the financial year. The Assessing Officer (AO) treated these amounts as unexplained cash credit under section 68 of the Income Tax Act and added them to the assessee's income. The Commissioner of Income Tax (Appeals) upheld the AO's decision.
Held
The Tribunal found that the assessee had provided sufficient documents, including ITRs, balance sheets, and bank statements, to establish the identity, creditworthiness, and genuineness of the transactions for the funds received. The authorities below had not pointed out any defect in these documents. Therefore, the Tribunal disagreed with the CIT(A)'s conclusion.
Key Issues
Whether the addition made by the AO on account of unexplained cash credit under section 68 of the Income Tax Act, as confirmed by the CIT(A), is justified when the assessee has provided documentary evidence to prove the genuineness of the transactions.
Sections Cited
68, 143(3), 144B, 250, 142(1), 142(3), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH,KOLKATA
Date of concluding the hearing : 28.01.2026 Date of pronouncing the order : 17.02.2026 O R D E R Per Rajesh Kumar, AM
The present appeal filed by the assessee arises from order dated 16.09.2025passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld.CIT(A)].
The assessee has raised the following grounds:
“1. That the order passed by the Ld.CIT(A) u/s 250 of the Act dated 16.09.2025 read with assessment order u/s 143(3)/144B of the Act dated 17.04.2021 is contrary to the law and the facts of the appellant's case.
That, the assessment order u/s 143(3) r.w.s 144B of the Act was passed on 17.04.2021 without issuing show cause notice leading to violation of provision of section 142(3) of the Act and therefore order u/s 143(3) of the Act is ab- initio-void and bad in law.
That, the assessment order u/s 143(3) r.w.s 144B of the Act was passed on 17.04.2021 without issuing draft order u/s 144B(1)(xiv) of the Act and therefore the order passed u/s 143(3) r.w.s 144B of the Act is in violation to the provision of section 144B of the Act which was introduced and mandatorily made applicable w.e.f. 01.04.2021 and so the order passed is without the mandate of law and unmaintainable.
That, the Ld.CIT(A) erred in upholding the order passed u/s 143(3) r.w.s 144B of the Act rejecting the plea of the assessee that the assessment order passed without a show cause notice or draft order is bad in law.
That the Ld.CIT(A) erred in confirming the addition made u/s 68 of the Act of Rs.86,90,575/- although the appellant has established identity, creditworthiness and genuineness of transactions.
That, the case of the assessee was selected for limited scrutiny under CASS for verification of business loss and so the additions made in the assessment order u/s 68 of the Act is without jurisdiction.
That, the appellant craves leave to amend. alter, modify. substitute, add to, abridge and/ or rescind any or all of the above grounds.”
The Ld. Counsel of the assessee argued at length the grounds challenging the validity of the assessment framed u/s 143(3) r.w.s. 144B of the Act dated 17.04.2021 and submitted that the assessment framed by the AO is bad in law and may be quashed. We are not inclined to decide these grounds on legal issue as argued by the Ld. AR and these are left open to be adjudicated at later stage if the need raised from the same.
The issue raised in Ground No. 5 is against the confirmation of addition of Rs. 86,90,575/- by Ld. CIT(A) which was made by the AO on account of unexplained cash credit u/s 68 of the Act qua the money borrowed by the assessee from 4 parties.
The facts in brief are that the assessee filed return of income on 11.03.2019 declaring total income at Rs. ‘Nil’. The assessee is engaged in the business of manufacturing of tea. The case of the assessee was selected for scrutiny under CASS and notice u/s 143(2) and 142(1) of the L.R. Agro Product Pvt. Ltd. Act along with questionnaire were duly served upon the assessee. The said questionnaire was duly replied by the assessee by furnishing all the details and evidences qua the unsecured loand and share capital money raised by the assessee during the impugned financial year. The AO after taking into consideration the details and evidences filed by the assessee in response to various notices issued u/s 142(1) of the Act made addition in respect of loans/share application taken by the assessee from four parties namely Meera Devi Agarwal share application money (Rs. 30,00,000/-), Ramabta rBerlia (share application money Rs. 20,00,000/-) Narendra Berlia (share application money Rs. 30,00,000/-) and Nupur Berlia unsecured loan (Rs. 6,90,575/-). The AO treated the amount raised by the assessee by way of unsecured loan/share application money as unexplained cash credit u/s 68 of the Act and added the same to the income of the assessee in the assessment framed u/s 143(3) r.w.s. 144B of the Act.
In the appellate proceedings, the Ld.CIT(A) simply affirmed the order of AO by holding the documents filed by the assessee were not capable of the establishing the genuineness of the transactions and held that these were nothing but accommodation entries intended to bring assessee’s own money into books of accounts. The Ld. CIT(A) also relied on some decisions while upholding the order of the AO as discussed in para 5.
After hearing the rival submission and perusing the material 7. available on record. We find that the assessee has raised during the year by way of share application money of Rs. 3,24,00,000/- and unsecured loans of Rs. 5,53,32,042/- aggregating to Rs. 8,77,39,042/-. During the course of assessment proceedings, the AO called upon the assessee to furnish the details qua these share application money and unsecured loans which were accordingly filed by the assessee before the AO comprising the names, addresses, PANs, copies of balance sheets, bank accounts etc. We note that both the authorities below have not pointed L.R. Agro Product Pvt. Ltd. out any defect or deficiency in the said documents and simply affirmed the addition without doing any enquiry. We have examined the documents furnished before us by the assessee in respect of Meeradevi Agarwal such as copies of ITR, computation of income, balance sheet, capital account and bank account which are available at page no. 41 to 49 of the paper book. We find that the assessee is a regular filer of return and during the year filed the return of income declaring total income at Rs. 8,44,630/- We have examined balance sheet attached at page no. 43 and find that the investment in shares were Rs. 56,50,240/- and the details are available at page no.
We find that the said investments are inclusive of investment made in the assessee company amounting to Rs. 30 lacs. We note that from the bank statement of the subscriber that the money was paid through banking channel. Similarly, in the case of Ramabatar Berlia copies of above documents are available from page no. 66 to 74 and the amounts invested in the assessee’s company was duly disclosed and shown in the balance sheet. The money was also paid through banking channel as apparent from the bank account filed in the paper book. Similarly, we find from the perusal of the documents furnished before us from page no. 66 to 74 in respect of Nupur Berlia at page no. 75 to 84 that the lender had adequate source to lend to the assessee company. Thus, the loan was given out of explained source and duly shown in the books of accounts. Therefore, we are not in agreement with the conclusion drawn by the CIT(A) on this issue. Consequently, we are inclined to set aside the order of CIT(A) and direct the AO to delete the addition. The case of the assessee is squarely covered a series of decisions of Hon’ble Calcutta High Court namely, PCIT Vs. Goodview Marketing P. Ltd. in ITAT/114/2025, GA/2/2025 vide order dated 3rd September, 2025, in case of PCIT vs. Kunjal Synergies Private Limited in ITAT/42/2025, IA No: GA/2/2025, in case of PCIT vs. M/s Jealous Commercial private Limited in ITAT/138/2025, IA No.GA/2/2025 vide order dated 28.10.2025, in case of ITAT/286/2024, IA No. GA/2/2025
L.R. Agro Product Pvt. Ltd. vide order dated 17.07.2025, in case of PCIT Vs. True man Consultants Pvt. Ltd. in ITAT/203/2024, IA No.GA/I/2024, vide order dated 25th April, 2025, in case of PCIT vs. Atlantic Dealers Pvt. ltd., ITAT/41/2024, IA No. GA/2/2024 vide order dated 03.05.2024. in case of PCIT Vs. Balaka Vinimay Private Limited, ITAT/131/2025, IA No.GA/1/2025, vide order dated 21st July, 2025, in case of PCIT Vs. M/s DevbhumiVinimay Pvt. Ltd. in ITAT/16/2025, IA No.GA/2/2025, vide order dated 22nd July, 2025.
Consequently, respectfully the above the decisions of the Hon'ble Kolkata High Court, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. The ground no. 5 is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on 17.02.2026
Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) Judicial Member Accountant Member Dated: 17.02.2026 AK,Sr. P.S. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)