DCIT CENTRAL CIRCLE-1, NOIDA vs. NIVEDAN FIN-INVEST LEASE LTD.,, DELHI

O R D E R

PER Ms. MADHUMITA ROY, JM:

“1. On facts and circumstances of the case, the L'd CIT(A)-IV, Kanpur has erred in deleting the addition of Rs. 25.00 Crore made by the AO on the basis of statement of 2 directors of the Airwill Group namely Sh. Vikas Bhagat and Sh. Manoj Chaudhary. The statements recorded on oath have evidentiary value and cannot be ignored. The statements clearly state that loan of Rs. 35.00 Crore was given by the assessee at interest of @ 12%. Out of this, the loan of Rs. 10.00 Crore only was taken by cheque. No satisfactory explanation was given by the assessee in respect of remaining amount of Rs. 25.00 Crore taken in cash.

2. On facts and circumstances of the case, the L'd CIT(A)-IV, Kanpur has erred in relying the loan agreement furnished by the assessee, however, the loan agreement was only prepared for the amount of loan received through cheque. The amount of cash loan cannot be included in the formal agreement. 3 On facts and circumstances of the case, the L'd CIT(A)-IV, Kanpur has erred in admitting the additional evidences at the stage of appeal, ignoring the fact that the assessee failed to furnish any reply to the queries despite providing numerous opportunities during the course of assessment proceedings.

4. That the appellant craves leave to add, modify, amend or delete any of the grounds of appeal

at the time of hearing and all the above grounds are without prejudice to each other.

3. Facts, in brief, are that for A.Y. 2015-16 the assessee filed its original return declaring income of Rs. 78,80,197/-. The case was selected for complete scrutiny under CASS and the assessment was completed at Rs 83,04,340/-. Subsequently, on receipt of information from Investigation Wing, Noida that the assessee company had given loan of Rs.25,00,00,000/- in cash to M/s JBK Developers Pvt.

Ltd., after recording satisfaction approval u/s 151 of the Act, notice u/s 148 was issued in response whereof the assessee has filed its ITR on 23.04.2021 declaring total income of Rs.83,04,330/- and also filed objection vide letter dated 05.07.2021 time were complied by the assessee. In response to show cause notice dated 10.03.2022, issued by the AO, requiring the assessee to show as why the loan of Rs 25,00,00,000/- given in cash to M/s IBK Developers Pvt. Ltd. may not be treated as unaccounted income/money and added to the total income of the assessee, the assessee filed its reply dated 12.03.2022. Thereafter, a notice u/s 133(6) was issued to the Borrower Company to verify the assessee’s claim but no reply was submitted by the borrower company. In the absence of any reply from the borrower company, relying on the statements of directors namely Sh. Manoj Kumar Chaudhary and Sh. Vikas Bhagat of Airwill group that the loan was taken by borrower company at the rate of 12%, a final show cause was issued to the assessee company as why Rs. 25,00,00,000/- given in cash to M/s JBK Developers may not be treated as unaccounted income and added to the total income of the assessee company. No compliance made by the assessee in response to final show cause. Therefore, the AO added Rs.25,00,00,000/- to the income of the assessee treating the same as unexplained money/income of the assessee u/s 69A read with section 115BBE of the Act.

“6.6 In the reasons recorded for reopening and in the assessment order Ld AO states that Sh. Vikas Bhagat, director of Airwill Group of Companies, in the statement given us 131(1)(a) of IT Act dt 29/30.10.2015 has admitted that Air Will Group has taken money in cash as loan from few people and provided the details of the same. He further admitted that the rate of interest on such loans was. 12% per annum. In the reasons, a list of such persons is produced from whom loan has been taken. In this list name of Mis. Nivedan Fin-Invest Lease Ltd appears and for interest amount of Rs 35,00,000/- per month, by considering rate of interest of 12% per annum, total amount of loan has been estimated as Rs. 35 crores In the reasons of reopening, Ld. AO states that search was conducted in case of Air Will Group of Companies on 30.09.2015 and during post search investigation, statement of Sh. Manoj Kumar Chaudhary director of Air Will Group of companies was recorded on oath u/s 131(1)(a) of IT Act on 07.12.2015 During the statement, he was confronted with his mobile phone data for the period of July August & September, 2015. Ld. AO states that during the statement Sh. Manoj Kumar Chaudhary admitted the names as mentioned in the mobile phone/ whatsapp/ message details of different investors of his group and replying to question no. 10 of his statement, Sh. Manoj Kumar Chaudhary has provided the total unaccounted interest and amount of loan taken from various lenders In the reasons recorded there is a list of 8 persons, of such lenders, whose name details of contact person, address, PAN, Contact number. amount of interest paid @12% per annum and total amount is mentioned. Name of M/s. Nivedan Fin-Invest Lease Ltd appears in serial number 2 and for this concern unaccounted interest @12% per annum is mentioned as Rs. 35,00,000/- per month and total amount of cash loan is mentioned as Rs. 35 crores In the reasons of reopening, Ld. AO states that statement of Sh. Vikas Bhagat was also recorded u/s 131(1)(a) of IT Act on 29/30 10.2015 and part of his statement is also produced. In reply to question no 43 he states that there are some persons who have made partial investments in Air Will Group of Companies for months or years and this entire dealing is done by Sh. Manoj Chaudhary and such investments are taken either on monthly interest basis or these are time linked. He has also given 6 names to whoth interest rate is paid 12% per annum and the name of Nivedan Finance, Ghazipur, Delhi appears in serial number 5 In the reasons of reopening, it is stated that from the page no. 4 of mobile data of Sh. Manoj Kumar Chaudhary, it was found that Sh Ramesh Chand Agrawal, B-306, New Friends Colony, New Delhi has given loan of Rs. 5.92 crores at the monthly interest of Rs. 5.92 Lacs per month @12% per annum interest in the reasons of reopening Ld AO produced data taken out from mobile and relied on the contents of page no 4 of mobile data and stated that perusal of this data clarifies that on 01.09.2015 interest of Rs 4,67,500/- was due in case of Sh Ramesh Chand Agrawal, and on 15.09.2015 interest of Rs 1.25,000/- was due in case of Sh. Ramesh Chand Agrawal. Therefore for the month of Sept 2015 total interest of Rs. 5.92 Lacs was due and this shows that interest of Rs 5.92 Lacs per month was paid and hence the figure is identically matched with the loan amount of Sh Ramesh Chand Agrawal. And hence monthly interest payment @ 12% per annum is made In this page 4 of mobile data from the careful perusal it can be seen that name of Nivedan appears with details "20.08.2015, 7:32, Mr. Tarun from Nivedan asking for two cheques of Rs. 35,00,000/-, each which has been already due as interest." Based on these findings, Ld. AO concluded that since Rs 35,00,000/- is paid by M/s JBK Developers Pvt Ltd to the appellant on monthly basis and since rate of interest paid by this concern of Air Will Group is 12% per annum, total amount of loan taken from M/s. Nivedan Fin-Invest Lease Ltd should be Rs. 35 crore and since Rs 10 crores have been taken through cheque and the same are reflected in the books of accounts, balance amount of Rs 25 crores should be in cash. And hence addition of Rs. 25 crore has been made u/s 69A of IT Act 6.7 On the other hand Ld. AR submits that appellant is an NBFC company engaged in the business of financing activities ie obtaining loans and giving loans and the main source of its income during the year is interest. Ld AR submits that the original assessment proceedings were undertaken as per CASS for complete scrutiny by issuing statutory notices u/s 143(2) of the Income Tax Act and all the details as sought by the Ld AO for carrying out complete scrutiny were furnished and examined by the Ld. AO as noted in Para 2 & 3 of the Assessment Order u/s 143(3) dated 20 12 2017. Assessment proceedings u/s 143(3) of IT Act were completed at a taxable income of Rs 83,04,340/- by disallowing certain amounts by which the declared income of Rs. 78.80.197/- was enhanced by the said amount of addition Ld AR submits that as per reasons recorded for initiating income escaping assessment proceeding, main reason was that some search was conducted on Airwill Group of the company on 30.09.2015 and during the search statements of certain persons appeared to have been recorded u/s 131(1)(a) of the Income Tax Act. It is understood that in these statements and based on some details recovered from the mobile phones of some persons of that group, assessee is claimed to have charged interest @12% and since Rs. 35,00,000/- interest is paid by Mis. JBK Developers Pvt Ltd on monthly basis, total amount of loan has been estimated as Rs 35 crores Ld AR submits that entire amount of Rs 35,00,000/- which is charged from M/s JBK Developers Pvt Ltd. was based on Loan Agreement between M/s Nivedan Fin-Invest Lease Ltd. and Mis. JBK Developers Pvt Ltd dt. 27.03.2015 Para-1 of this Loan Agreement has been relied in which it is stated that said loan shall carry interest 3.5% per month Based on this Loan Agreement Ld. AR submits that entire interest of Rs. 35,00,000/- per month which was appearing in the phone data of Sh Manoj Kumar Chaudhary, director of Air Will Group of Companies was accounted for and the same corresponds to loan amount of Rs 10 crores which is duly mentioned in the first page of Loan Agreement dt. 27.03.2015. Ld. AR submits that Sh. Virender Pal Singh, director of appellant company was recorded on 10 12.2015 u/s 131(1)(a) of IT Act and he also produced loan agreement dt. 27.03.2015 and duly clarified that interest @3.5% per month was charged on this short term loan amount of Rs. 10 crore, which corresponds to Rs. 35,00,000/- per month but the same has been ignored by Ld AO. Ld. AR submits that it has been alleged that as per the answer of Question No. 10 of the statement of Sh. Manoj Kumar Chaudhary of Airwill Group, such interest income is unaccounted, however this entire amount of interest of Rs 35,00,000/- per month, which is appearing in the phone data is duly accounted for and TDS is deducted, in the same and hence the statement of Sh Manoj Kumar Chaudhary does not apply. It has also been stated that during the post search investigation a statement of Sh. Virender Pal Singh, Director of this assessee company was also recorded on 10.12.2015 wherein it has been admitted that loan of Rs. 10 Crores has been advanced to Mis. JBK Developers Pvt Ltd. and not Rs. 35 Crores. The appellant submits that the short term loan is advanced for the interest @ 42% per annum and whole of the interest of Rs. 35 Lacs per month which was being received, has been duly accounted for in the books of accounts of the appellant company.

6.8 Ld. AR submits that copy of Agreement of Loan of Rs. 10 Crores to M/s J B. K Developers Ltd. was also provided during the recording of such statement u/s 131(1)(a) of IT Act of Sh. Virender Pal Singh, Director of this assessee company on 10 12 2015 Ld AR submits that in the reasons recorded, it is mentioned that Sh Manoj Kumar Chaudhary and Sh. Vikas Bhagat who were claimed to have been main persons of Airwill Group have admitted that cash loan was taken by J. B. K Developers Pvt Ltd., however fact is that the entire amount of loan of Rs. 10 crore was accounted for. It is submission of Ld. AR that in the reasons of reopening certain details of some Sh. Ramesh Chand Aggarwal etc, have been given, which are not concerned with the assessee It is submission of Ld. AR that Ld. AO could not appreciate that there are short term lendings, which bear abnormal interest rates and in case of appellant there are many other borrowers which have taken such borrowings @3.5% per month ie @42% per annum. Ld. AR submits that due to difference in the rate of interest, which had been accounted for by the assessee being @ 42% and as generically claimed by directors of searched group ie. Air Will Group of companies ie. @12% per annum as cash interest on cash loans, an inference has been drawn by Ld. AO that Rs 25 Crores has been advanced by the assessee in cash Ld. AR clarifies that as against the claim of Sh. Manoj Kumar Chaudhary and Sh. Vikas Bhagat that interest amount is in cash, entire amount of interest of Rs. 35,00,000/- per month is accounted for and is charged in cheques. Attention has been drawn on the contents of phone data of Sh. Manoj Kumar Chaudhary in which it is clearly mentioned as - Mr. Tarun from Nivedan asking for two cheques of Rs. 35,00,000/- each, which has been already due as interest. Ld AR submits that after the receipt of reasons from the Ld. AO, assessee filed detailed objections and raised various arguments, but Ld AO brushed aside these objections and disposed off objections by an order dated 14 02.2022 While disposing off these objections, the Ld AO again relied upon the statements of Sh. Manoj Kumar Chaudhary and Sh. Vikas Bhagat and rejected the contentions that all the details/information had been duly enquired at the time of original assessment of the director of the appellant company i. e Sh. Virender Pal Singh on 10.12.2015 It is submission of Ld. AR that entire details were furnished during regular assessment proceedings and the loans were verified and no addition was made in this regard in the assessment order dt. 20.12.2017. Ld. AR submits that therefore this is a clear case of change of opinion since there was no material on record, which may be relied for making addition.

Ld AR submits that in response to the notice issued by the Ld. AO to complete the proceedings u/s 148, assessee also submitted that a writ has been filed in this matter before the Hon'ble Allahabad High Court against the disposal of the objections and the assessment proceedings may be kept in abeyance because the writ was filed against erroneous assumptions of jurisdiction by the Ld. AO. However this has also not been accepted by the Ld AO and he has passed the Assessment Order against which this appeal has been filed Ld. AR submits that Ld. AO issued show cause notice dated 22.03.2022 and due date for filing response to the show cause notice was fixed for 24th March 2022 le only 2 days time was given for making addition Rs 25 Cr as per show cause notice and before the assessee could fie the response to the said show cause notice, even in such short time, the AO has already passed income escaping assessment order uis 147 rw.s. 143(3) of IT Act dated 23 03 2022 without waiting for the assessee's reply. Ld AR submits that the writ before Hon'ble Allahabad High Court was withdrawn subsequently as the same became in-fructuous on passing of the assessment order by Ld. AO 6.9 Ld., AR submits that in the case of the assessee the, notice u/s 148 for the AY 2015-16 empowering the AO to reopen an assessment was issued to the assessee on 31.03.2021 le after 31.03.2020 le after the expiry of four years and since the assessee has neither failed to file a retum as required under the law nor has the Ld. AO alleged that the assessee failed to disclose any material facts at the time of assessment, both the specified conditions are satisfied. Ld AR submits that the assessee furnished the detail of advances paid/ outstanding during the year vide reply dated 14.07.2017 (copy enclosed PB 78-82) in response to specific question asked in questionnaire dated 06.07.2017 (copy enclosed PB82A-82B) The detail furnished comprised of loan/ advance given to Mis JBK Developers Pvt Ltd as well along with other parties Other comprehensive documentation in audited financials, tax audit report, return of income etc were also available with AO. He states that it is the responsibility of the Assessing Officer to assess the income of the assessee on the basis of various documents submitted by the assessee and relying on the evidences provided by the assessee in support of the declared income. It has been further submitted that the appellant has charged interest 42% from M/s. JBK Developers Pvt Ltd. and almost similar rates from other borrowers as well is very much part of assessment records, scrutinized and accepted by the AOand the original 20.12.2017. Therefore the income escaping assessment proceedings cannot be sustained. 6.10 It is submission of Ld AR that the re-assessment is made based on some alleged statements of Sh Manoj Kumar Chaudhary during search/post search investigation on some Airwill Group of companies. Similarly, statement of Sh. Vikas Bhagat another person of Airwill Group is relied where it is alleged to have come to the notice of the department that the searched group companies have taken loans in cash and have paid interest in cash on such loans. Ld AR submits that it has been wrongly alleged that this assessee had also advanced loan to Airwill Group on which interest, as per statement of these persons, was being paid @ 12% whereas the assessee has claimed that interest was being charged @ 42% per annum on the loan advanced by the assessee company It is submission of Ld AR that it can be noticed from the said reasons provided to the assessee that statement of Sh Virender Pal Singh, director of the assessee company had been recorded where it was admitted that a sum of Rs. 10 Crores was given as loan to one of the companies of Airwill Group namely M/s. JBK Developers Pvt. Ltd. in March 2015 on which interest @ Rs. 35 lacs per month was being charged which works out to interest of 42% per annum The same is also disclosed in audited financials in note 6(a)- Loans and Advances in the name of M/s JBK Developers(PB 11) Ld. AR submits that the statement of outsiders have been believed that unaccounted interest has been charged on the unaccounted loans but statement of director of appellant company has been disbelieved, which is duly backed by documentary evidences. It is submission of Ld AR that since Ld. AO had all such cross claims through the statements, he should have allowed opportunity of cross examinations of the persons whose statements have been relied upon. 6.11 Ld AR submits that based on such statements, which the department has claimed to have recorded, it has been found that there is difference in the versions on the statements of 2 persons of Airwill Group, who claim payment of interest @12% per annum and statement of director of the assessee company, in which he has claimed payment of interest @42% per annum. It is submission of Ld AR that the books of account of appellant show entire amount of Rs. 10 crore as short term loan, from which interest of Rs. 35,00,000/- per month has been charged. Ld. AR claims that in none of the seized material, such evidence is found, from which it may be inferred that cash loan of Rs. 25 crore has been advanced to M/s. JBK Developers Pvt Ltd. Ld. AR submits that the department suspected that assessee has actually charged interest @12% per annum and thus concluded that cash amount of Rs 25 Crores must have been given 6.12 Ld. AR submits that the assessee is an NBFC company engaged in the business of financing activities i.e obtaining loans and giving loans. This fact has been duly acknowledged by the Ld. AO in Para 3 of his order u/s 143(3) dated 20.12.2017 at the time of original assessment During the year under consideration the assessee declared its taxable income at Rs. 78,80,197/- The return was filed in time as per law The case was selected in scrutiny and all the details as per the detailed questionnaires issued by the AO were called for and assessment proceedings were completed at a taxable income of Rs. 83,04,340/- by disallowing certain amounts, by which the declared income of Rs 78,80,197/- was enhanced by the said amount of addition. It is this assessed income at which the return u/s 148 has been filed. He submits that as per requirements of the Ld. AO names and address and PAN of the persons to whom loans were advanced during the year under consideration along with the relationship of the assessee with such persons as also the rates of interest on which amounts were advanced had been submitted vide detailed submissions dated 14.07.2017. From the said reply it would be noticed that following loans/advances had been granted by the assessee to the various parties as would be noticed from the said reply:- (i) JBK Developers (P) Ltd. Rs. 10 Crores amount advanced on 30.03.2015 @ 3.5% per month i.e. 42% per annum. Since the amount was advanced on the last working day of the year, no amount of interest either accrued or received was accounted for as income in A. Y. 2015-16 on this amount. (ii) BRYS International (P) Ltd Rs 3,50,00,000/- advance during the year 3.5% per month ie. 42% per annum on which interest income of Rs. 1,22,00,500/- have been received during the year which was included in the total income of the assessee as per its audited account. Credit for TDS made by the said borrower was claimed and allowed (iii) Rakesh Kumar individual to whom a loan of Rs 1,50.00.000/- has been granted 3% per month ie 36% per annum from whom interest income of Rs. 49,55,000 was received during the year which has been included in the audited accounts of the assessee Credit for TDS deducted was claimed and allowed (iv) Vibhor Vaibhav Infra Home (P) Ltd. - Rs. 5 Crores have been granted in the earlier year @ 3.5% per month le 42% per annum from whom the interest income of Rs. 2,37,41,667/- have been received and accounted for in the audited accounts. Credit for TDS claimed and allowed. (v) Rs 2.35,00,000/- to Mis. Metenere Global Ltd towards the end of the year @ interest rate of 3% per month ie. 36% per annum to whom interest during the year for the few days was received @ Rs. 22,742/- during the year and duly accounted for in the audited accounts of the assessee Ld AR submits that from the aforesaid details which were filed during the assessment proceedings, as per the requirement of Ld. AO, it would be noticed that the assessee as an NBFC has granted loans to various companies and individuals at the rates ranging between 36% to 42% and has received interest on such rates only. He submits that even TDS has been deducted by all the borrowers, the credit for which was claimed in the ITR and has been allowed to the assessee 6.13 It is submission of Ld AR that the present notice u/s 148 has been issued on the suspicion that perhaps assessee has granted substantial amounts in cash to M/s. JBK Developers Pvt Ltd., which is an Airwill Group company. This inference has been drawn based on interest @ 42% which, in the opinion of Ld. AO, is not possible in the present times However from the details given above, it would be noticed that not only this company of Airwill Group has paid interest to the assessee @ 42%, but various other companies including some individual have paid interest to the assessee at the similar rates. Therefore any allegation to the contrary in the reasons recorded has no basis and is ill-founded especially when the rate of interest charged by assessee from all the borrowers is almost identical and comparable. 6.14 Ld. AR submits that it is not understood as to how and under what circumstances and why the statement referred to in the reasons recorded of the alleged directors of the Airwill company te JBK Developers (P) Ltd is being believed and the facts as already available on records duly substantiated by the evidences on records including the statement of Sh. Virender Pal Sigh, director of the company is being disbelieved It is submission of Ld. AR that the rate of interest to be paid and charged depend upon the mutual agreements between the parties i.e. borrower and the lender. Simply because rate of interest charged is high, which rate of interest has been charged by the assessee from so many other borrowers also, there can be no inference that assessee has lent any more money over All other documents, such as Loan Agreements (PB 56-68) and Guarantee Agreement (PB 69-73), which clearly convey that Rs 10 Crores were advanced as loan to the said party, clearly prove that there is no basis to make such inferences and assumptions that some cash loan has been advanced. Ld. AR submits that there is no evidence whatsoever on records, except the so called statements of the directors of Airwill Group of Companies from where such inferences are drawn, in the reasons recorded by Ld. AO in this case. He further submits that without cross examination such statements have no evidentiary value Furthermore without other corroborative evidences, such statements cannot be relied upon 6.15 Ld. AR submits that M/s JBK Developers Pvt Ltd. went to insolvency and Resolution professional (RP) was appointed for this purpose. He submits that the appellant filed its claim in Form C dated 25.01 2021 (PB 83-88) as a Financial Creditor before the RP in response to RP requirement and from Col 5 of the relevant Form, the claim was in respect of Rs 10 Cr only which was given pursuant to Loan Agreement dated 27 03.2015 @ 3.5% per month. The claim amount involves interest rate @ 3.5% as well as penal interest as per Loan Agreement. Ld. AR has furnished copy of Loan Agreement between Nivedan Fin-Invest Lease Ltd. and M/s. JBK Developers Pvt Ltd dt. 27.03.2015, and has drawn attention towards para-1 of the same in which it is stated that the said loan carry interest @3.5% per month compounding on monthly basis. He further submits that RP rejected this claim on technical grounds of delay in filing claim against which the assessee also filed petition before NCLT (PB 89-100) against rejection of assessee's claim on account of delayed filing of claim, wherein also the purpose and the amount of Rs. 10 Cr advanced to Mis. JBK Developers Pvt Ltd was also mentioned in reference to Loan Agreement dated 27.03.2015. This petition is pending as on date Ld. AR claims that this further demonstrates that the assessee had given only Rs. 10 Cr and no cash was paid as alleged by the Ld. AO 6.16 Ld AR has placed reliance on various judicial pronouncements and submits that it is a settled law that additions cannot be made solely based on statement of an individual which is not corroborated by any material evidence, Reliance in this regard is made on the decisions of Hon'ble Karnataka High Court in the case of CIT v/s. Bharat R Gajaria-2022-TIOL- 109-HC-Karnataka-IT, S. R. Mining v/s. Union of India-2022-TIOL-1112- HC-Madras. He submits that it is equally settled law that statement, which Bhatia Diamonds vs. ITO -2019-TIOL-1553- ITIAT-Delhi 6.17 It is submission of Ld. AR that similar view was also taken by Hon'ble High Court of Rajasthan in the case of CIT vs Smt. Sunita Dhadda (supra) wherein Hon'ble Court has considered the judgment of Hon'ble Supreme Court in the case of Mis Andaman timber Industries vs. CCE (supra) and confirmed the view taken by the Tribunal holding that "if the assessee is not provided any opportunity to cross examine the person who stated to have received 'on-money is a violation of principles of natural justice. We thus called for the deletion of addition so made by the Ld. Assessing Officer 6.18 Ld. AR submits that Mumbai ITAT in case of Shaf Broadcast Pvt. Ltd vs ACIT, ITA 1819/Mum/2012 observed by Hon'ble ITAT as under: Para 20 Considering the facts of the case before us in the light of the above decisions (supra), we observe that the Assessing Officer has initiated reassessment proceedings Assessment Year 2003-04 merely on the facts that there was a search in the case of Shri. Mukesh Choksi and he in his statement stated that he was a director in various concerns including M/s. Talent infoway Ltd Shn Mukesh Chokar in his statement u/s 132:4), made on 25.11.2009 admitted that he was in the business of giving bogus bills and bogus share capital entries through a number of its company's including M/s Talent Infoway. Ltd. On the basis of said admission/statement of Shri Mukesh Chokal, we observe that the assessing officer has stated that there were bogus purchases by the assessee to the tune of Rs. 3.11.25,000/- relevant to assessment year 2003-04 from M/s Talent Infoway Ltd. of which Shri Mukesh Choksi was a director and thus the assessee failed to disclose fully and truly all material facts due to which assessment to the extent of Rs 3.11.25,000/- escaped assessment We observe that Assessing Officer has no other material to torm the above belief that the said purchases were bogus by the assessee in financial year 2002-03, nor in the statement made by Shri Mukesti Choksi there is any reference of said purchases by the assessee from Mis Talent Infoway Ltd There is nothing in the said statement that said concern issued bogus bills to the assessee in the financial year 2002-03 There is no specific reference/confession in respect of the transaction with the assessee that the said purchases made by the assessee were bogus. In wiew of above decision of the Hon'ble Apex Court (supra), we observe that in the absence of any confession related to the transaction with the assessee, it could not be said that there is a live link or close nexus between the Officer and the statement of Shri Mukesh Choksi to form a belief that there is an escapement of income for assessment year 2003-04 because of assessee's failure or omission to disclose fully and truly all material facts The said nexus is missing in the case before us We hold that the statement of Shri Mukesh Choksi, on which reliance has been placed by the assessing officer to reopen the assessment, is a general statement and there is no specific reference to the assessee's transaction and the year of the assessment. On the other hand, we observe that the assessee has placed copies of the invoices to prove the genuineness of the transaction and the Assessing Officer rejected the same as genuine only on account of the statement of Mr. Mukesh Choksi that he was issuing bogus bills and bogus share capital entries through his various concerns, in which he is a director, including Talent Infoway Ltd though in the said admission there is no specific Assessment Year 2003-04 reference of the transaction entered into by the assessee with M/s Talent Infoway Ltd. in financial year 2002-03 Para 22- Since we have observed hereinabove that the inference drawn by an Assessing Officer on the basis of a general confession made by Mr. Mukesh Choksi in his statement does not relate to the assessee of the transaction specifically, the belief which the Assessing Officer formed that there was escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts is vague and farfetched. Thus, we hold that requisite conditions for exercise of jurisdiction under section 147 of the Act are not fulfilled. Hence even otherwise on the basis of the facts on record the initiation of reassessment proceedings by the Assessing Officer is barred by limitation 23. In the result we hold that the initiation of reassessment proceedings by the Assessing Officer is not valid and consequently assessment order passed is quashed Hence ground Nos 1 and 2 of the appeal taken by the assessee are allowed. 7.1 In the ground of appeal no. (1), the appellant submits that the order of assessment passed by the Ld. AO u/s 147 rws 143(3) of the Act is bad in law. The same is prayed to be quashed. This ground of appeal is general in nature, hence the same is hereby dismissed. 7.2 In the ground of appeal no. (ii), the appellant submits that the Ld. AO ie DCIT CC-Noida had no jurisdiction to make assessment on assessee as the assessee is being regularly assessed by the Ld. AO in Delhi. This ground of appeal is factually incorrect since vide order F. No. PCIT-06/ u/s 127/2017- 18/2149 dt. 03 11.2017, Ld. PCIT

06. Delhi has passed order u/s 127 of IT Act and assigned the jurisdiction of this case to DCIT CC-Noida, In the light of these facts, this ground of appeal is hereby dismissed 7.3 in the ground of appeal no. (iii), the appellant submits that the re- opening of the proceedings beyond the period of 4 years without even an allegation that the assessee had failed to disclose truly all facts is bad in law and the order passed is prayed to be quashed. In the ground of appeal no. (iv), the appellant submits that the order passed u/s 147 is based merely on change of opinion as no new information came to the knowledge of AO and is bad in law and is prayed to be quashed In this regard it has been found that from the search conducted on Air Will Group of cases and statement given by Sh. Vikas Bhagat u/s 131(1)(a) of IT Act dt. 29/30.10.2015 and statement of Sh. Manoj Kumar Chaudhary dt. 07.12.2015, it was believed that since the interest amount of Rs 35,00,000/- has been paid in a month and since these persons claimed that interest has been paid 12% per annum, it was concluded that the appellant might have advanced loan of Rs

35. Crores and since Rs 10 crores was accounted for Rs. 25 crores in cash was considered as quantum of income which escaped assessment. In this regard it has been found that scrutiny assessment proceedings u/s 143(3) of IT Act have been conducted and assessment order uis 143(3) of IT Act was passed on 20 12 2017 The details regarding to loans were fumished This is a fact that since the income escaping assessment proceedings were initiated after a period of four years, Ld. AO was duty bound to bring on record some new material, based on which these proceedings were necessary This new fact was in the form of statements of Sh Vikas Bhagat u/s 131(1)(a) of IT Act dt. 29/30.10.2015 and statement of Sh. Manoj Kumar Chaudhary dt. 07.12.2015, which were given in post search investigation of Airwill Group of companies. The appellant furnished detailed explanation of charging of interest amount of Rs. 35,00,000/- per month on the prime amount of Rs. 10 crores. The Loan Agreement dt. 27.03.2015 executed in judicial stamp paper between M/s Nivedan Fin- Invest Lease Ltd and M/s JBK Developers Pvt Ltd. was also furnished in this regard and the same explains interest amount as well as prime amount. Para 1 of this Loan Agreement clearly states that lender shall charge interest @3.5% per month Once this interest rate is applied, there remains no scope for any speculation that the interest has been charged from M/s JBK Developers Pvt Ltd. 12% per annum, thus the possibility of advancement of cash amount of Rs. 25 crores was completely ruled out Though these facts were glaring in front of Ld. AO, yet reopening of the case and income escaping assessment proceedings cannot be held invalid since in the light of statements of Sh. Vikas Bhagat u/s 131(1)(a) of IT Act dt. 29/30.10 2015 and statement of Sh. Manoj Kumar Chaudhary dt. 07 12.2015, which were given in post search investigation of Airwill Group of companies, there was scope of escapement of income in accordance to provisions of section 147 of It Act And the same needed further inquiry. In various judicial pronouncements, sufficiency of reasons is not issue under consideration at the time of reopening of the case. Hon'ble Supreme Court in the case of Raymond Woolen Mills Ltd Vs ITO (1999) 236 ITR 34 SC has ruled that at the stage of reopening it is only to be seen as to whether there was prima facie some material on the basis of which the Department could reopen the case The sufficiency or correctness of the material is not a thing to be considered at this stage Relying on this decision, the Apex Court, in the case of ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC), while considering the issuance of notice under section 147 of the Act has held that the final outcome of the proceedings is not relevant and at the initial stage, what is required to be seen is reason to believe but not established fact of escapement of income. It further held that at the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief whether the material would conclusively prove the escapement is not the concern at this stage. In this view of the matter I am of the considered opinion that the issuance of notice in the case on hand is justifiable In the light of these observations, these grounds of appeal are hereby dismissed 7.4 The grounds of appeal no (v) to (x) challenge the addition of Rs 25 crores u/s 69A of IT Act and taxation of the same in accordance to provisions of section 115BBE of IT Act From the facts of the case, it has been found that Ld AO has initiated income escaping assessment proceedings based on the statements of Sh. Vikas Bhagat given u/s 131(1)(a) of IT Act dt. 29/30.10.2015 and that of Sh Manoj Kumar Chaudhary given u/s 131(1)(a) of IT Act dt. 07.12.2015. These directors of Airwill. Group of Companies have given statements in the post search investigations relating to Air Will Group of companies in which search was conducted on 30.09.2015. From the page no. 4 of mobile data of Sh Manoj Kumar Chaudhary, it was found that Sh. Ramesh Chand Agrawal, B-306, New Friends Colony, New Delhi has given loan of Rs. 5.92 crores at Rs 5.92 Lacs per month @12% per annum interest. In the reasons of reopening Ld AO produced data taken out from mobile of Sh. Manoj Kumar Chaudhary and relied on the contents of page no. 4 of mobile data and stated that perusal of this data makes it clear that on 01.09.2015 interest of Rs 4,67.500/- was due in case of Sh. Ramesh Chand Agrawal, and on 15.09.2015 interest of Rs 1,25,000/- was due in case of Sh. Ramesh Chand Agrawal, therefore for the month of Sept. 2015 total interest of Rs 5.92 Lacs was due and this shows that interest of Rs 5.92 Lacs per month was paid and hence the figure is identically matched with the loan amount. And hence monthly interest payment @12% per annum is made. This analogy of interest of 12% per annum has been applied in case of the appellant The statement of these persons has also been relied in this regard. The statements of these persons was generic and referred to those short term borrowings which have been taken by Airwill Group of Companies and in the statement of Sh Vikas Bhagat name of 8 persons have been given and name of the appellant appears in the second number Sh. Vikas Bhagat also stated that dealing of such loan is done by Sh. Manoj Kumar Chaudhary, But the matter of fact is that in the content of mobile data, it was mentioned that Mr. Tarun from Nivedan asking for two cheques of Rs. 35,00,000/- each, which has been already due as interest- this clarifies that there was no mention of interest paid in cash by the appellant company Further the statement of Sh. Virender Pal Singh, director of appellant company was also recorded on 10.12.2015 and he clarified that the monthly interest of Rs. 35,00,000/- is all accounted for and the same corresponds to interest rate of 3.5% per month and the same was duly backed by Loan Agreement dt. 27.03.2015, which duly mentioned accounted for loan amount of Rs. 10 crores. After this statement, the onus shifted on Ld AO to bring some positive evidence, which may prove that cash loan is given to the searched group. But without discharging such onus, addition has been made and no inquiries have been conducted which may support conclusions of Ld. AD. This is a fact that opportunity of cross examination of the directors of Airwill Group of Companies have also not been provided to the appellant. Further the appellant furnished details regarding to loans ie, Loan Agreement dt. 27.03.2015 which was signed in judicial stamp paper and as per para-1 of this agreement this loan earned interest @3.5% per month. Further there were Loan Bond, frrevocable power of attorney and Guarantee Agreement dt. 27.03.2015 which supported this Loan Agreement in the light of this Loan Agreement, the interest amount of Rs. 35,00,000/per month was explained in totality and there was no scope of speculation of 12% per annum. Further this loan of appellant given to Mis JBK Developers Pvt Ltd. was not only loan which was bearing interest rate of 42% per annum In-fact the appellant has given details of such loans, which bear high Interest rate as under: (i) JBK Developers (P) Ltd. - Rs.

10. Crores amount advanced on 30.03.2015 @ 3.5% per month i.e. 42% per annum. Since the amount was advanced on the last working day of the year, no amount of interest either accrued or received was accounted for as income in A. Y. 2015-16 on this amount. (ii) BRYS International (P) Ltd. Rs 3,50,00,000/- advance during the year @ 3.5% per month e. 42% per annum on which interest income of Rs 1,22,00,500/- have been received during the year which was included in the total income of the assessee as per its audited account Credit for TDS made by the said borrower was claimed and allowed (iii) Rakesh Kumar individual to whom a loan of Rs. 1,50,00,000/- has been granted @3% per month ie 36% per annum from whom interest income of Rs. 49,55,000/-was received during the year which has been included in the audited accounts of the Credit for TDS deducted was claimed and allowed (iv) Vibhor Vaibhav Infra Home (P) Ltd. - Rs

5. Crores have been granted in the earlier year 3.5% per month i.e. 42% per annum from whom the interest income of Rs. 2,37,41,667/- have been received and accounted for in the audited accounts Credit for TDS claimed and allowed. (v) Rs. 2.35,00,000/- to M/s Metenere Global Ltd towards the end of the year @ interest rate of 3% per month e. 36% per annum to whom interest during the year for the few days was received Rs. 22.7421- during the year and duly accounted for in the audited accounts of the assessee From the aforesaid details it would be noticed that the assessee as an NBFC has granted loans to various companies and individuals at the rates ranging between 36% to 42% and has received interest on such rates only, Even TDS has been deducted by all the borrowers, the credit for which was claimed in the ITR and has been allowed to the assessee 7.5 Ld. AO has relied on statements of Sh. Vikas Bhagat u/s 131(1)(a) of IT Act dt. 29/30 10.2015 and statement of Sh. Manoj Kumar Chaudhary dt. 07 12 2015 but the appellant furnished detailed explanation of charging of interest amount of Rs. 35,00,000/- per month on the prime amount of Rs. 10 crores The Loan Agreement dt. 27.03.2015 executed in judicial stamp paper, M/s. Nivedan Fin-Invest Lease Ltd. and M/s JBK Developers Pvt Ltd is a conclusive evidence in this regard and explains interest amount as well as prime amount. Once interest rate of 3.5% per month is applied in the prime amount of Rs. 10 crores in accordance to Para -1 of this Loan Agreement, there remains no scope of any possibility of cash loans. Therefore co-existence of this Loan Agreement and advancement of cash loan of Rs. 25 crores to M/s: JBK Developers Pvt Ltd is not possible Ld. AO failed to prove as to how there was possibility of cash amount of Rs 25 crores without discarding the existence of Loan Agreement dt. 27.03.2015 which was duly agreed upon. There is force in the submission of Ld AR that even the subsequent events speak volume that the Loan Agreement dt. 27.03.2015 was foundation stone of this loan. Ld. AR has explained in detail that M/s JBK Developers Pvt Ltd. went to insolvency and Resolution Professional (RP) was appointed for this purpose and the appellant filed its claim in Form C dated 25.01.2021 as a Financial Creditor before the RP in response to RP requirement and from Col 5 of the relevant Form the claim was in respect of Rs

10. Cr only which was given pursuant to agreement dated 27.03.2015 @3.5% per month. He has further submitted that RP rejected this claim on technical grounds of delay in filing claim against which the assessee also filed petition before NCLT (PB 89-100) against rejection of assessee's claim on account of delayed filing of claim, wherein also the purpose and the amount of Rs

10. Cr advanced to Mis JBK Developers Pvt Ltd was also mentioned in reference to Loan Agreement dated 27.03.2015 7.6 in this regard, it is to be noted that in page 4 of mobile data of Sh. Manoj Kumar Chaudhary it can be seen that name of Nivedan appears with details "20.08.2015. 7:32, Mr. Tarun from Nivedan asking for two cheques of Rs. 35,00,000/-, each which has been already due as interest." And in this seized detail, there is no mention of any cash amount in-fact 12% interest rate per annum has been sweepingly considered in case of appellant also along with other lenders without conclusively bringing anything on record, just based on statements of Sh. Vikas Bhagat di 26/30 10.2015 and that of Sh. Manoj Kumar Chaudhary dt 07.12.2015 In the remand proceedings, all the submissions of appellant have been brushed aside and no inquiries have been conducted to counter the submission of the appellant Ld. AO concluded that since Rs. 35,00,000/- is paid by M/s JBK Developers Pvt Ltd. to the appellant on monthly basis and since rate of interest paid by this concern of Air Will Group is @12% per annum, total amount of loan M/s Nivedan Fin-Invest Lease Ltd. should be Rs. 35 crore and since Rs. 10 crores have been taken through cheque and the same are reflected in the books of accounts, balance amount of Rs 25 crores should be in cash. And hence addition of Rs. 25 crore has been made u/s 69A of IT Act. This conclusion fails to explain Loan Agreement dt. 27.03.2015 between the appellant and M/s. JBK Developers Pvt Ltd., which duly explains monthly interest amount of Rs. 35,00,000/- due to high interest rate of 3.5% per month The Loan of Rs.

10. Crores to M/s. J BK. Developers Ltd which is based on Loan Agreement dt. 27 03 2015 and statement of Sh. Virender Pal Singh, Director of this assessee company cannot be brushed aside without bringing any other corroborative evidences to support the statements of Sh. Manoj Kumar Chaudhary and Sh. Vikas Bhagat, specially when the opportunity of cross examination was not given to the appellant. In the assessment order dt. 23.03.2022 Ld. AO simply stated that notice uls 133(6) of IT Act was issued to the borrower company to verify the claim of the appellant made during reassessment proceedings dt 12.03. 2022 but the same remained un- complied Thus the assessment proceedings were not brought to the logical conclusions but were left half baked Thus, on the face of evidences brought on records and in view of the cogent submission filed by the appellant, the approach of the AO cannot be appreciated either on facts or in law. The action of the AO is largely influenced by consideration not borne from records it is settled position in law that suspicion however so strong, cannot be allowed to take the place of proof. The revenue authorities have to be watchful and ensure that conjectures and suspicions do not take the place of legal proof. In various judicial pronouncements it is observed that caution must be borne in mind that in cases depending largely upon circumstantial evidence there is always a danger that the conjecture or suspicion may take the place of legal proof and such suspicion however strong cannot be allowed to take the place of proof. 7.7 Looking to the facts and circumstances of the case, the addition of Rs. 25 crores cannot be sustained and hence the same is deleted and relief is allowed to the appellant. All the concerned grounds of appeal are adjudicated accordingly.”

AO, the Revenue has preferred the instant appeal before the Tribunal. The Ld. DR submitted that the Learned First Appellate Authority was not justified in deleting the impugned addition of Rs. 25,00,000/-. He relied upon the order of the Assessing Officer. We have heard the parties at length and perused the materials available on record.

5.1 Admittedly the assessee is an NBFC company engaged in the business of financing activities. For A.Y. 2015-16 the assessee declared its taxable income at Rs. 78,80,197/-. The case was selected for scrutiny under CASS. The scrutiny assessment was finalized at a taxable income of Rs. 83,04,340/-. Subsequently, on the basis of information received that the assessee had given loan of Rs. 25,00,00,000/- in cash to M/s JBK Developers Pvt. Ltd., the case was reopened and in response to the notice under Section 148 of the Act the assessee filed its return at the assessed income of Rs. 83,04,340/-. The assessee’s stand is that during scrutiny assessment, as per requirements of the Ld. AO names, addresses and PAN of the persons to whom loans were advanced during the year under consideration along with the relationship of the assessee with such persons as also the rates of interest ranging between 36% to 42% were furnished and TDS had also been deducted by all the borrowers, the credit for which was claimed in the ITR and has been allowed to the assessee. However, rejecting the explanation furnished by the assessing total income at Rs. 25,83,04,330/- by adding Rs. 25,00,00,000/- as unexplained income of the assessee under Section 69A of the Act. In appeal the Ld. CIT(A) after detailed discussion has allowed the assessee’s claim by deleting the impugned addition of Rs. 25,00,00,000/-. After giving our thoughtful consideration to the submissions made by the parties and carefully going through the orders passed by the authorities below, at the cost of repetition, it is found that the Ld. First Appellate Authority has allowed the assessee’s claim, inter alia, by observing as under:

“From the aforesaid details it would be noticed that the assessee as an NBFC has granted loans to various companies and individuals at the rates ranging between 36% to 42% and has received interest on such rates only, Even TDS has been deducted by all the borrowers, the credit for which was claimed in the ITR and has been allowed to the assessee 7.5 Ld. AO has relied on statements of Sh. Vikas Bhagat u/s 131(1)(a) of IT Act dt. 29/30 10.2015 and statement of Sh. Manoj Kumar Chaudhary dt. 07 12 2015 but the appellant furnished detailed explanation of charging of interest amount of Rs. 35,00,000/- per month on the prime amount of Rs. 10 crores The Loan Agreement dt. 27.03.2015 executed in judicial stamp paper, between M/s. Nivedan Fin-Invest Lease Ltd. and M/s JBK Developers Pvt Ltd is a conclusive evidence in this regard and explains interest amount as well as prime amount. Once interest rate of 3.5% per month is applied in the prime amount of Rs. 10 crores in accordance to Para -1 of this Loan Agreement, there remains no scope of any possibility of cash loans. Therefore co-existence of this Loan Agreement and advancement of cash loan of Rs. 25 crores to M/s: JBK Developers Pvt Ltd is not possible Ld. AO failed to prove as to how there was possibility of cash amount of Rs 25 crores without discarding the existence of Loan Agreement dt. 27.03.2015 which was duly agreed upon.

There is force in the submission of Ld AR that even the subsequent events speak volume that the Loan Agreement dt. 27.03.2015 was foundation stone of this loan. Ld. AR has explained in detail that M/s JBK Developers Pvt Ltd. went to insolvency and Resolution Professional (RP) was appointed for this purpose and the appellant filed its claim in Form C dated 25.01.2021 as a Financial Creditor before the RP in response to RP requirement and from Col 5 of the relevant Form the claim was in respect of Rs 10 Cr only which was given pursuant to agreement dated 27.03.2015 @3.5% per month. He has further submitted that RP rejected this claim on technical grounds of delay in filing claim against which the assessee also filed petition before NCLT (PB 89-100) against rejection of assessee's claim on account of delayed filing of claim, wherein also the purpose and the amount of Rs 10 Cr advanced to Mis JBK Developers Pvt Ltd was also mentioned in reference to Loan Agreement dated 27.03.2015 7.6 in this regard, it is to be noted that in page 4 of mobile data of Sh. Manoj Kumar Chaudhary it can be seen that name of Nivedan appears with details "20.08.2015. 7:32, Mr. Tarun from Nivedan asking for two cheques of Rs. 35,00,000/-, each which has been already due as interest." And in this seized detail, there is no mention of any cash amount in-fact 12% interest rate per annum has been sweepingly considered in case of appellant also along with other lenders without conclusively bringing anything on record, just based on statements of Sh. Vikas Bhagat di 26/30 10.2015 and that of Sh. Manoj Kumar Chaudhary dt 07.12.2015 In the remand proceedings, all the submissions of appellant have been brushed aside and no inquiries have been conducted to counter the submission of the appellant Ld. AO concluded that since Rs. 35,00,000/- is paid by M/s JBK Developers Pvt Ltd. to the appellant on monthly basis and since rate of interest paid by this concern of Air Will Group is @12% per annum, total amount of loan taken from M/s Nivedan Fin-Invest Lease Ltd. should be Rs. 35 crore and since Rs. 10 crores have been taken through cheque and the same are reflected in the books of accounts, balance amount of Rs 25 crores should be in cash. And hence addition of Rs. 25 crore has been made u/s 69A of IT Act. This conclusion fails to explain Loan Agreement dt. 27.03.2015 between the appellant and M/s. JBK Developers Pvt Ltd., which duly explains monthly interest amount of Rs. 35,00,000/- due to high interest rate of 3.5% per month The Loan of Rs. 10 Crores to M/s. J BK. Developers Ltd which is based on Loan Agreement dt. 27 03 2015 and statement of Sh. Virender Pal Singh, Director of this assessee company cannot be brushed aside without bringing any other corroborative evidences to support the statements of Sh. Manoj Kumar Chaudhary and Sh. Vikas Bhagat, specially when the opportunity of cross examination was not given to the appellant. In the assessment order dt. 23.03.2022 Ld. AO simply stated that notice uls 133(6) of IT Act was issued to the borrower company to verify the claim of the appellant made during reassessment proceedings dt 12.03. 2022 but the same remained un- complied Thus the assessment proceedings were not brought to the logical conclusions but were left half baked Thus, on the face of evidences brought on records and in view of the cogent submission filed by the appellant, the approach of the AO cannot be appreciated either on facts or in law. The action of the AO is largely influenced by consideration not borne from records it is settled position in law that suspicion however so strong, cannot be allowed to take the place of proof. The revenue authorities have to be watchful and ensure that conjectures and suspicions do not take the place of legal proof. In various judicial pronouncements it is observed that caution must be borne in mind that in cases depending largely upon circumstantial evidence there is always a danger that the conjecture or suspicion may take the place of legal proof and such suspicion however strong cannot be allowed to take the place of proof.” 5.2 After going through the order passed by the Ld. First Appellate Authority it reveals that the Ld. CIT(A) after taking into consideration the explanation furnished by the assessee coupled with the loan agreement entered into between M/s. Nivedan Fin-Invest Lease Ltd. i.e. the assessee and M/s JBK Developers Pvt Ltd. giving loan of Rs. 10 crores @ 3.5% per month to M/s JBK Developers Pvt.

Ltd. observed that assessee as NBFC had granted loans to various entities ranging between 36% to 42% and had received on such rates, TDS had been deducted by the borrowers and the credit thereof claimed in the ITR was allowed to the assessee. Needless to mention, the authenticity of the loan agreement has not been infirmity in the impugned order passed by the Ld. First Appellate Authority so as to take a contrary view in the matter. Thus, we are constrained to uphold the decision of the Ld. CIT(A) in deleting the impugned addition of Rs.25,00,00,000/-.

Ordered accordingly.

Order pronounced in open court on 03.12.2025.