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Facts
The Revenue appealed against the CIT(A)'s order which deleted an addition of Rs. 10,75,05,000/- made on account of unsecured loans. The Assessing Officer (AO) considered these loans from five companies as fictitious or bogus.
Held
The CIT(A) was justified in deleting the addition because the AO failed to provide any evidence to prove the loans were bogus. The lenders were registered with ROC and their status was active on the Ministry of Corporate Affairs website, with no adverse findings from the Investigation Wing.
Key Issues
Whether the addition of unsecured loans from five companies is justified when the AO could not prove they were bogus, and whether the CIT(A) erred in deleting the addition without sufficient evidence from the AO.
Sections Cited
143(3), 144B, 35D, 28(iv)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
Appellant Respondent Assessee by Dr. Rakesh Gupta, Adv and Sh. Somil Aggarwal, Adv Revenue by Sh. A. S. Rana, Sr. DR Date of Hearing 07/07/2025 Date of Pronouncement 27/08/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Revenue against the order of CIT(A)/National Faceless Appeal Centre (‘Ld. CIT(A)’/NFAC’ for short), Delhi dated 18/09/2024 for the Assessment Year 2018-19.
The grounds of Appeal are as under:-
“1. On facts and circumstances of the case and in law, whether the CIT (A) has erred in deleting the addition of Rs. 10,75,05,000/-made on the issue of the loans or liabilities as attributed in its books by the assessee to five companies/firms were found fictitious or bogus one.
On facts and circumstances of the case and in law, whether the CIT (A) is justified in holding the financial entries attributed to five companies in question/firms by the assessee as genuine while completely ignoring the circumstantial evidences or human probabilities as described and relied on by the Assessing Officer for holding said entries as bogus one or mere accommodation entries or routing of its own funds by the assessee.”
Brief facts of the case are that, the Assessee being a Private Limited Company engaged in the business of hotels, restaurants and Hospitality Services, filed its return for Assessment Year 2018-19 declaring NIL income with a current year’s loss of Rs. 4,24,36,003/-.
The case of the Assessee was selected for scrutiny under CASS. An assessment order came to be passed u/s 143(3) r.w. Section 144B of the Income Tax Act, 1961 ('Act' for short) on 21/04/2021 by assessing the income of the Assessee at Rs. 11,17,16,165/- by disallowing a sum of Rs. 41,77,095/- u/s 35D of the Act, Rs. 34,070/- on account of interest on delayed payment of service tax and TDS and Rs.
10,75,05,000/- on account of unsecured loans from Directors and share holders and other entities.
Aggrieved by the assessment order dated 21/04/2021, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A)
vide order dated 18/09/2024, allowed the Appeal of the Assessee. As against the order of the Ld. CIT(A) in deleting the addition of Rs.
10,75,05,000/- made on the issue of the loan or liabilities as attributed in the books of the Assessee to five companies/firms, the Department of Revenue preferred the present Appeal on the grounds mentioned above.
The. Ld. Departmental Representative submitted that the five Companies/firms were found to be fictitious or bogus ones by the A.O.
however, the Ld. CIT(A) erroneously deleted the addition of Rs.
10,75,05,000/- made on the issues of loans or liabilities. The Ld.
Departmental Representative further submitted that the Ld. CIT(A) has not justified in holding that the financial entries attributed to five companies in question/firms by the Assessee as genuine while completely ignoring the circumstantial evidence or human probabilities which have been discussed by the A.O. in detail for holding those entries as bogus ones or mere accommodation entries or rooting of its own funds by the Assessee. Thus the Ld. Departmental Representative sought for allowing the Appeal.
Per contra, the Ld. Assessee's Representative relying on the order of the Ld. CIT(A), sought for dismissal of the Appeal of the Department.
We have heard both the parties and perused the material available on record. The Ld. A.O. made addition of Rs. 10,75,05,000/- on account of unsecured loans received from M/s. Ice Globe Promoters Pvt. Ltd. for a sum of Rs. 6,77,00,000/-, Ignace Infrastructure Pvt. Ltd. for a sum of Rs. 1,10,00,000/-, S.W.
Consultant Pvt. Ltd. for a sum of Rs. 1,00,00,000/-, Trade Link Trading Pvt. Ltd. for a sum of Rs. 84,00,000/- and M/s. Vibhu International Pvt. Ltd. for a sum of Rs. 1,04,05,000/-).
The Ld. A.O. observed that the said lenders are nothing but Jama-Kharchi companies from whom certain loans were taken in Assessment Year 2017-18 and neither the loans were repaid nor any interest were paid on such loan. Therefore, the A.O. by doubting the loan transactions, added u/s 28(iv) of the Act. Before the Ld. CIT(A), the Assessee contended that there had been no benefit or perquisite of any kind, which was received in monetary terms, arising from the business of the assessee, which can be equated with the receipt of unsecured loans from these parties. The assessee emphatically stated that there is absolutely no basis or material or evidence on the basis of which the impugned amounts can be said to be the income or benefit or perquisite to the assessee. Moreover, the assessee also stated that all these loans are standing in credit of the balance sheet of the assessee since many past years and during the year, the assessee has not received any fresh loan from the said companies, whose credit- worthiness are doubted by the AO.
The Ld. CIT(A) after considering the submissions of the parties opined that in case of doubt regarding credit-worthiness of the said lenders, the AO should have reopened the assessment of the Assessment Year in which such loans were received and no action could be taken after three years of receipt of such fund by the assessee from those lenders. It is found that except observing that the lenders have no creditworthiness, the A.O. has failed to bring any evidential proof. Nothing has been brought on record by the A.O. to conclude that such loans are bogus and no investigation has been carried out by the A.O. on the credential of the lenders. The Ld. CIT(A)
has specifically observed that, all the Companies status are active in the website of Ministry of Corporate Affairs. Thus observation of the A.O. that those Companies are having suspicious relation with Kolkata based Jama-Kharchi Companies, no material has been brought on record to prove the same. The Ld. CIT(A) has also observed that those lenders are registered with ROC, Delhi and the names of those Companies do not appear in the list of apparent shell companies as prepared by the Investigation Wing at Kolkata, accordingly, deleted the addition, which is our opinion requires no interference in the absence of any contrary material or facts brought on record by the Department. Accordingly, the Grounds of Appeal of the Revenue are dismissed.
In the result, the Appeal of the Revenue is dismissed.
Order pronounced in the open court on 27th August , 2025 Sd/- Sd/-
(MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 27.08.2025 R.N, Sr.P.S*