TaxTMI 
TaxTMI 
2025 (12) TMI 780
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..../s 69A 87,25,098.00 Disallowance of CSR Expenses u/s 37(1) 41,72,005.00 Unexplained credit received from Hallow Securities Pvt Ltd. u/s 68 40,00,000.00 2. ACE MEGA STRUCTURE PVT LTD. 2019-20 Unsecured loan received from Hallow Securities Pvt Ltd u/s 68 40,39,05,000.00 Cash payment to M/s Gaursons Group u/s 69 C 6,90,00,000.00 3. ACE RESIDENCY PVT LTD 2021-22 Unsecured loan received from Hallow Securities Pvt Ltd u/s 68 12,30,00,000.00 Disallowance of Interest paid to M/s Hallow Securities Pvt Ltd u/s 37 38,75,590.00 4. AJAY REALCON INDIA PVT LTD 2020-21 Unsecured loan received from Hallow Securities Pvt Ltd u/s 68 8,25,00,000.00 Disallowance of Interest paid to M/s Hallow Securities Pvt. Ltd. u/s 69C 10,25,032.00 5. ALLURE DEVELOPER PVT LTD 2019-20 Unsecured loan received from Hallow Securities Pvt Ltd u/s 68 10,26,00,000.00 2020-21 Unsecured loan received from Hallow Securities Pvt Ltd u/s 68 17,74,00,000.00 2021-22 Disallowance of Interest paid to Hallow Securities Pvt Ltd u/s 37 3,53,04,903.00 6. BRIGHT BUILDTECH PVT LTD 2021-22 Unsecured loan received from ....
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....ng the course of search and also in the search conducted in 2017 in the case of some other group, the AO computed the total income of the assessee company at INR 17,75,25,380/- vide assessment order dated 26.03.2024 passed u/s 147 r.w.s. 143(3) of the Act wherein addition of Rs. 17,74,00,000/- was made u/s 68 of the Act towards the loans taken from one M/s Hallow Securities Pvt. Ltd. 5. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 12.03.2025, partly allowed the appeal of the assessee. 6. Aggrieved by the order of Ld. CIT(A), Revenue is in appeal before the Tribunal by taking following grounds of appeal:- 1. "Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs. 17,74,00,000/- made under section 68 r.ws 115BBE of the Income Tax Act, 1961 on amount of bogus unsecured loan allegedly taken from M/s Hallow Securities Pvt. Ltd. without appreciating the fact that the assessee failed to discharge the onus of proving the creditworthiness and genuineness of the transactions appearing in its books of accounts during the course of assessment proceedings. 2. ....
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....sactions and the sources of the loans. 8. Ld. CIT submits that the company M/s Hallow Securities Pvt. Ltd. has filed its ITR disclosing income of Rs.35,97,650/-. Ld. CIT DR submits that during the search, statements of Directors of the company Shri Nishant Chhajer and Shri Prakash Kumar Jha were recorded and it is observed that these persons are of no means and Shri Nishant Chhajer was one of the employee of one Shri Ashish Begwani in whose case search was conducted in 2017 when it was clearly established that he (Sh. Nishant Chhajer) was only a lower level employee working on the instructions of Shri Ahish Begwani. 9. Ld. CIT DR submits that from the key financials of the M/s. Hallow Security Pvt. Ltd., AO observed that the main shareholders of that company are two private limited companies namely M/s Honest Dealcom Pvt. Ltd and Paras Creations Pvt. Ltd. wherein both of the directors of the assessee are the directors. Ld. CIT DR further submits that looking to the financial status of both the companies viz., Honest Dealcom Pvt. Ltd and Paras Creations Pvt. Ltd. is very poor and both the directors are managing M/Hallow Securities and these tow shareholding companies. 10. L....
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....r making detailed enquiries with respect to the business activities of M/s. Hallow Securities Pvt. Ltd. AO concluded that the creditworthiness of this company is not established and accordingly her made the addition of loans of Rs. 17,74,00,000/- as unexplained & added u/s 68 of IT Act, 1961. Ld. CIT DR also refer the press release Press Release dated 08.06.2018 wherein the lender company M/s Hallow Securities was categorized as High-Risk Financial Institution by FIU-IND. Ld. CIT DR submits that ld. CIT(A) has deleted the additions made by accepting the additional evidences filed by the assessee without providing the opportunity to the AO to examine those details and without appreciating the fact that assessee has failed to make out the case that it was prevented by sufficient cause in not producing these details before the AO, he thus requested to confirm the additions made by the AO. It is alternatively, requested by ld. CIT DR that the matter may be set aside to the file of the AO for making fresh verification of the details filed by the assessee before the ld. CIT(A) for the first time. He prayed accordingly. 13. Per contra, ld. AR for the assessee vehemently supported the o....
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....s incorrect and he requested to ignore and excluded such findings of the AO. 17. The ld. AR also placed reliance on the detailed submissions filed before us, which reads as under: 1. That the CIT(A), while disposing of the appeal under section 250(6), conducted independent enquiries from the SFIO as well as Hallow Securities Pvt. Ltd. After due verification, the CIT(A) deleted the additions. A summary of the allegations raised and the findings of the CIT(A) is as under: S.No. Submissions of AR and CIT (A) findings 1. Issues No. 1, (Ground No1 of the lead case):- Financial strength of Hallow Securities Pvt. Ltd. 1. That M/s Hallow Securities Pvt Ltd. enjoys strong creditworthiness, as is evident from its substantial shareholder funds and other financial parameters discussed herein. It is pertinent to note that assessments in the case of Hallow Securities Pvt. Ltd. were completed under section 153C for Assessment Years 2011-12 to 2017-18, wherein the Department has duly accepted the shareholder funds in those assessments. Table:- B (Shareholder funds,Total Income and Assessment Orders) AY Shareholder fund ITR Assessment completed Addition ....
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.... Funds Non- Current Investment Remarks PB 2017-18 - - 75,52,19,179 Relevant Page No. 28 2019-20 11,50,00,000 - - Relevant Page No. 64 2020-21 6,10,00,000 1,17,05,00,000 - 66-79( ITR, PL & BS) 2021-22 6,50,00,000 25,10,00,000 - 80-96( ITR, PL & BS) 2022-23 11,49,00,000 46,50,00,000 - 97-112 ( ITR, PL& BS) 5. That the companies having sound creditworthiness have made investments in the form of CCDs, namely, Teesta Retails Pvt. Ltd. and Infotel Technologies Pvt. Ltd. These companies possess strong financial standing, and the same has already been accepted by the Ld. AO in the assessment orders of the Ace Group. The details of the same is tabulated below:- Table E ( Details of CCD's issued by Hallow) FY Name of the Entity to whom CCDs were issued. Amount Remarks PB 2019- 20 Teesta Retails Pvt Ltd 60,00,00,000 That the AO, in the assessment order of Bright Buildtech Pvt Ltd. for assessment year 2021-22, has acknowledged that Teesta Retails Private Limited belongs to the Reliance Group, where the Reliance Group has made substantial investments.( Ref....
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....ed in theyears 2016 and 2017. II. Statement of Nishant Chajjar, Director of Hallow Securities Pvt. Ltd.dated 29.07.2021 III. Statement of Vikas Kumar Agarwal recorded in Financial Year 2017-18. IV. Statement of Vishal Kumar a. That the AO himself has not given any importance to the statement. Had the statement been given due consideration, the entire addition in respect of loan raised from Hallow securities Pvt. Ltd.should have been confirmed. However, the AO has made an addition of only Rs.167 crore for the group, leaving aside Rs.137 crore." b. The Ld. CIT(A) has specifically mentioned Sh. Nishant Chajjar never admitted that any bogus loans were advanced to the Ace Group.( Refer Page No. 92 of the CIT (A) order of lead case M/s Allure Developers Pvt Ltd. for AY 2020-21) c. Furthermore, it has also been recorded that no incriminating documents were found during search, nor have any such documents been reproduced in the assessment order to substantiate the allegation that Hallow Securities was involved in providing bogus loans. .( Refer Page No. 75 para no.(f) of the CIT (A) order of lead case M/s Allure Developers Pvt Ltd. for AY 2020-21) d. ....
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....its statement cannot be used to determine the genuiness of unsecured loan raised by Ace Group during the assessment years from 2019-20 to 2022-23. .( Refer Page No. 75 para (e) of the CIT (A) order of lead case M/s Allure Developers Pvt Ltd. for AY 2020-21) j. The Ld. CIT(A) has also discussed that standalone statements without any corroborative evidence cannot be used for making additions, and in support, various judicial precedents were relied upon, ultimately deciding the issue in favour of the appellant. .( Refer Page No. 92 of the CIT (A) order of lead case M/s Allure Developers Pvt Ltd. for AY 2020-21) 4. Issue No. 4( Ground No.2 of the lead case):Reliance upon press release of Ministry of Finance dated 08.06.2018 (F/A: 2.1) based on SFIO and CBDT data under "confirmed list" of shell companies and treating the M/s Hallow Securities Pvt Ltd. as a shell entity. 1. The Ld. AO has placed heavy reliance on the CBDT press release by alleging that Hallow Securities Pvt. Ltd. is a shell company. That the Ld. CIT(A) has duly considered the CBDT Press Release dated 08.06.2018 and has reproduced the same while disposing of the appeal. The same is reproduced at pages 69-71 an....
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....ed to the Assessing Officer.(Refer Page 80 of CIT(A)) The Ld. CIT(A) has also duly verified the 'source of source' by applying the same methodology as was followed by the Assessing Officer. Since the Assessing Officer failed to appropriately verify the 'source of source' before making the addition in respect of the loans advanced to the appellant, the conclusion drawn by the Assessing Officer is erroneous and unsustainable in law. The inquiry replies received from Hallow Securities are placed at Page Nos. 286-374 of the Paper Book. Copy of the reply in respect of the inquiry conducted by CIT(A) from Hallow Securities has been duly furnished and shared with both the Assessing Officer and the appellant." PB CIT(A) order Allure Developers Pvt. Ltd. for AY 2019-20 286-293 48-52,57-62 Allure Developers Pvt. Ltd. for AY 2020-21 294-305 48-56,64-69 Ace Residency Pvt. Ltd. for AY 2021-22 306-314, 326-358 56-62,70-74 Ace Mega Structures Pvt. Ltd. (AY 2019-20), 315-316, 326-358 108 to 109 M/s Star landCraft Pvt. Ltd (AY 2020-21) 317-322 56-60,63-95 M/s Star landCraft Pvt. Ltd(AY 2022-23), 326-358 5-9,12-43 Bright Buildtech Pvt....
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.... 2 0 - 2 1 ALLURE DEVELOP ER PVT LTD(Pg 95-102 of CIT (A) order) Page No.111( Para No.1) 17,74,00,0 00.00 17,74,00,0 00.00 NIL 2 0 - 2 1 STAR LANDCRA FT PVT LTD(Pg 139-158 of CIT (A) order) Page No.166 (Para No.1) 64,00,00,0 00.00 48,50,00,0 00.00 15,50,00,0 00.00 2 1 - 2 2 ACE RESIDENC Y PVT LTD(Pg 102- 108of CIT (A) order) Page No.117 (Para No.1) 12,30,00,0 00.00 9,30,00,00 0.00 3,00,00,00 0.00 2 1 - 2 2 BRIGHT BUILDTEC H PVT LTD(Pg 164-174 of CIT (A) order) Page No.183 (Para No.1) 9,60,00,00 0.00 8,60,00,00 0.00 1,00,00,00 0.00 2 2 - 2 3 STAR LANDCRA FT PVT LTD(Pg 122-128 of CIT (A) order) Page No.166 (Para No.1) 4,50,00,00 0.00 1,50,00,00 0.00 50,00,000. 00 1,00,00,00 0.00 1,50,00,00 0.00 2 2 - 2 3 ACE INFRACI TY DEVELO PERS PVT LTD. (Pg 19-23 of CIT (A) order) NA 40,00,000. 00 (Not an unsecured loan merely a journal entry) 5) Furthermore, in some cases where unsecured loans raised by Hallow Securities, were ultimately advanced to the appellant companies (ACE Group). That the CIT(A)....
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....54 of the order noted that the lender's ITRs were furnished, and its credibility is evidenced by Teesta Retails Pvt. Ltd. (considered part of the Reliance Group) investing Rs. 20 crores, which remained outstanding as on 31.03.2020. Balance sheets reflect Rs. 16 crores fully convertible debentures, investments in Network 18, TV 18 Broadcast and Media Matrix Worldwide, and regular revenues of Rs. 9.85 crores (2016-17) Rs. 11.98 crores (2017-18) and Rs. 9.5 crores (2018-19), thereby affirming the strong financial standing of Parmesh Finlease Ltd. 157-158 Pioneer Deal trade Private Limited Hallow Securities Pvt. Ltd. raised a fresh unsecured loan from Pioneer Dealtrade Pvt. Ltd. and advanced it to the appellant. It is also a matter of record that the AO has already added credits in the hands of Hallow Securities Pvt. Ltd., though the funds advanced to the appellant were excluded. As the assessment order does not specify the entities whose credits were taxed, a query letter dated 03.04.2025 has been issued in the pending appeal of Hallow Securities Pvt. Ltd. (AY 2020-21) to ensure that credits from Pioneer Dealtrade Pvt. Ltd. are taxed appropriately in its hands. ....
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.... placed upon following judicial pronouncements:- i. 2025 (7) TMI 1285 - ITAT DELHI ACIT, ARA Centre, DCIT, New Delhi Versus Filatax India Limited And (Vice-Versa)[Refer Page No. 1-37 of Case Law PB] ii. [2010] 189 Taxman 141 (Rajasthan) HIGH COURT OF RAJASTHAN Labh Chand Bohra * v. Income-tax Officer[Refer Page No. 38-42 of Case Law PB] iii. [2003] 127 Taxman 523 (Gujarat) HIGH COURT OF GUJARAT Deputy Commissioner of Income-tax v. Rohini Builders[Refer Page No. 43 of Case Law PB] iv. [2005] 147 TAXMAN 448 (ALL.)HIGH COURT OF ALLAHABAD Commissioner of Incometax*v.Jauharimal Goel[Refer Page No. 44-48 of Case Law PB] v. Gaurav Triyugi Singh vs. Income Tax Officer 24(3)(1), Mumbai [2020] 121 taxmann.com 86 (Bombay)/[2020] 423 ITR 531 (Bombay)[22-01-2020] [Refer Page No. 49-51 of Case Law PB] vi. Assistant Commissioner of Income-tax vs. Radha Madhav Developers [2024] 165 taxmann.com 578 (Nagpur - Trib.)[29-07-2024] [Refer Page No. 52-75 of Case Law PB] Issue No. 6(Ground No 1 of the lead case):No Comments on repayment of loan The Ld. AO, while making the addition, failed to appreciate that all the loans and advances....
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....2023] 154 Taxmann.Com 432 (Gujarat) - Pcit V. Hareshkumar Manilal Somaiya, Gujarat Hc, 03-05-2023. [Refer Page No. 94-96 of Case Law PB] v. [2021] 131 Taxmann.Com 158 (Chennai - Trib.)/[2022] 96 Itr(T) 657 (Chennai - Trib.)/[2021] 191 Itd 548 (Chennai - Trib.) - K.P. Manish Global Ingredients (P.) Ltd. V. Acit, Itat Chennai, 09-06-2021. [Refer Page No. 97-101 of Case Law PB] vi. [2023] 151 Taxmann.Com 403 (Surat - Trib.)/[2023] 201 Itd 404 (Surat - Trib.) - Ito V. Mega Collections (P.) Ltd., Itat Surat, 17-04-2023. [Refer Page No. 102-114 of Case Law PB] vii. [2023] 148 Taxmann.Com 26 (Delhi)/[2023] 291 Taxman 606 (Delhi)/[2023] 455 Itr 664 (Delhi) - Pcit V. Enrich Agro Food Products (P.) Ltd., Delhi Hc, 23-12-2022. [Refer Page No. 115-118 of Case Law PB] viii. [2018] 96 Taxmann.Com 402 (Delhi)/[2018] 257 Taxman 390 (Delhi) - Pcit-4 V. HiTech Residency (P.) Ltd., Delhi Hc, 07-07-2018. [Refer Page No. 119-120 of Case Law PB] ix. [2015] 58 Taxmann.Com 226 (Madras)/[2015] 232 Taxman 197 (Madras)/[2015] 373 Itr 115 (Madras) (Mag.) - Cit V. Mark Hospitals (P.) Ltd., Madras Hc, 03-12-2014. [Refer Page No. 121-124 of Case Law PB] ....
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....sa). [Refer Page No. 274-310 of Case Law PB] iii. Commissioner of Income-tax vs. Dilbagh Rai Arora [2019] 104 taxmann.com 371 (Allahabad)/[2019] 263 Taxman 30 (Allahabad)[15-03-2019]. [Refer Page No. 311-315 of Case Law PB] iv. Principal Commissioner of Income-tax vs. Agson Global (P.) Ltd. [2022] 134 taxmann.com 256 (Delhi)/[2022] 286 Taxman 519 (Delhi)/[2022] 441 ITR 550 (Delhi)[19-01-2022]. [Refer Page No. 316-341 of Case Law PB] v. Principal Commissioner of Income-tax (Central) vs. K.R. Pulp and Papers Ltd. [2025] 175 taxmann.com 278 (Delhi)[31-05-2025]. [Refer Page No. 342-354 of Case Law PB] vi. [2024] 162 taxmann.com 792 (Allahabad) - PCIT v. Anshika Consultants (P.) Ltd., Allahabad HC, ITA No. 32/2024, 25-04-2024. [Refer Page No. 355-358 of Case Law PB] vii. [2023] 148 taxmann.com 94 (Calcutta) - PCIT v. Overtop Marketing (P.) Ltd., Calcutta HC, ITAT/243/2022, 03-01-2023. [Refer Page No. 359-360 of Case Law PB] viii. [2024] 159 taxmann.com 604 (Allahabad) - DCIT v. Paswara Papers Ltd., Allahabad HC. [Refer Page No. 361-363 of Case Law PB] ix. [2019] 111 taxmann.com 89 (Delhi - Trib.) - Prime Comfort Produc....
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....efer Page No. 428-432 of Case Law PB] v. [2024] 164 taxmann.com 764 (Gujarat) HIGH COURT OF GUJARAT Principal Commissioner of Income-tax v. Merrygold Gems (P.) Ltd. [Refer Page No. 433-437 of Case Law PB] vi. [2022] 145 taxmann.com 27 (Gujarat) HIGH COURT OF GUJARAT Principal Commissioner of Income-tax v. Ambe Tradecorp (P.) Ltd. [Refer Page No. 438-440 of Case Law PB] vii. [2023] 156 taxmann.com 75 (Gujarat) HIGH COURT OF GUJARAT Principal Commissioner of Income-tax v. Ojas Tarmake (P.) Ltd. [Refer Page No. 441-446 of Case Law PB] d. Submission in respect of Ground No. 4 raised by department regarding Independent enquiry made by CIT(A) in the case of Allure Developers Pvt Ltd. AY 2020-21 being a lead case. The Ld. CIT(A), exercising powers u/s 250(4), conducted independent enquiries from SFIO ( Refer Page 70 of CIT(A)) and M/s Hallow Securities Pvt. Ltd., which confirmed that the lenders were regularly assessed to tax, had made all statutory filings with ROC and RBI, and no proceedings were pending against them. During the enquiry, M/s Hallow Securities furnished only the documents called for under section 250(4). This issue has been ad....
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....o. 447-448 of Case Law PB] * 2015 ] 53 taxmann.com 306 (Andhra Pradesh) HIGH COURT OF ANDHRA PRADESH Commissioner of Income-tax-II, Hyderabad v. Naresh Kumar Agarwal. [Refer Page No. 449-454 of Case Law PB] * [2016] 74 taxmann.com 35 (Madras) HIGH COURT OF MADRAS Commissioner of Incometax, Tiruchirapalli v. Smt. S.Jayalakshmi Ammal. [Refer Page No. 455-462 of Case Law PB] * [2023] 156 taxmann.com 346 (Gujarat) HIGH COURT OF GUJARAT Principal Commissioner of Income-tax (Central) v. Naresh Nemchand Shah. [Refer Page No. 463-466 of Case Law PB] * 2024] 164 taxmann.com 162 (Bombay) HIGH COURT OF BOMBAY Principal Commissioner of Income-tax v. Bairagra Builders (P.) Ltd. [Refer Page No. 467-469 of Case Law PB] Annexure-A No increase in the share capital of Hallow Securities Pvt. Ltd. and as such the creditworthiness of Shareholders for the concerned years is not relevant AY Name of the Entity Relevant Page No. of AO order Relevant Page No. of CIT(A) order 20-21 AJAY REALCON INDIA PVT LTD Internal Page No. 10 to 18 of the order Para r (Page 83) 20-21 ALLURE DEVELOPER PVT LTD Internal Page No. 9 to 17 of the order ....
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....,00,000/- made by AO by holding the loans taken from M/s Hallow Securities Pvt. Ltd as unexplained u/s 68 of the Act which stood deleted by ld. CIT(A). Before going further, the facts leading to the issue are summarized as under: "A search action us/ 132 was carried out on ACE group of cases on 28.07.2021 and further on 04.01.2022. During the year assessee received loan of Rs. 26,74,00,000/- from a company M/s Hallow Securities Pvt. Ltd. which is a NBFC. The AO examined the genuineness of loan and after considering the financials of the lender company M/s Hallow Securities Pvt. Ltd., observed its financial position is not satisfactory to grant such a huge loan to the assessee." 20. The AO has referred the statements of Sh. Nishant Chajjar, Director assessee company who was also the director of lender company M/s Hallow Securities Pvt. Ltd. who in reply to Q. NO. 14 stated that the cash/Hawala Transaction were handled by the other director of assessee company Sh. Prakash Kumar Jha. AO further observed that Shri Nishant is also directors of many companies managed and controlled by one Shri Ashish Begwani who alleged the key person and engaged in providing accommodation lo....
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....ntries. The Hon'ble Supreme Court in the case of CIT-III, Pune vs Singhad Education Society in Civil Appeal No.11080/2017 arising out of SLP (C) No.25257/2015 has held as under:- "The seized incriminating material have to pertain to the AY in question and have co-relation, document-wise, with the AY. This requirement u/s 153C is essential and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S.153A." 24. The Hon'ble Supreme Court in the case of Pr.CIT v. Abhisar Buildwell (P.) Ltd. reported in [2023] 149 taxman.com 399 (SC) has also held that "no addition could be made dehorse the incriminating material". 25. Further no addition could be made solely on the basis of statements of third party without bringing on record any corroborative evidence. In this regard we are in agreement with the observations made by the ld. CIT(A) at pages 91 to 95 of the order which is reproduced as under: Standalone statements without corroborative evidence: "Th....
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....on 68 without probing deeper into income-tax returns of creditor companies and without scrutinizing documents furnished by assessee to prove genuineness of such credits, impugned addition was to be set aside - Whether SLP filed by revenue against impugned order was to be dismissed - Held, yes [Para 1] [In favour of assessee]" Further, the judgment of Hon'ble High Court of Andhra Pradesh in the case of Commissioner of Income-tax-ll, Hyderabad vs. Naresh Kumar Agarwal reported at [2015] 53 taxmann.com 306 (Andhra Pradesh) has held as under: Where in absence of any incriminating material etc., found from premises of assessee during course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Further, the judgment of Hon'ble High Court of Madras in the case of Commissioner of Income-tax, Tiruchirappalli reported at [2016] 74 taxmann. com 35 Madras) has held as under: Where addition of undisclosed income was made on basis of mere statement given by his son under section 132(4) which was not corroborated by any material evidence, neither such statement would be a conclusive evidence, nor any additi....
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....ide these evidences was utterly perverse and liable to be quashed - Held, yes [Paras 4 and 5] [Matter remanded] Further, the Hon'ble High Court of Kolkata in the case of Principal Commissioner of Income-tax vs. Golden Goenka Fincorp Ltd. reported at [2023] 148 taxmann. com 313 (Calcutta) has held as under: Where Assessing Officer solely based on statement of assessee's director recorded during search operation treated share application money received by assessee-company as undisclosed income and made additions under section 68, since said statement was retracted during search operation and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were to be deleted. Further, the Hon'ble High Court of Gujarat in the case of Commissioner of Income-tax vs. Shardaben K. Modi reported at [2013] 35 taxmann.com 264 (Gujarat) has held as under: In absence of any independent material, statement of assessee's son recorder during survey would not form a valid basis for reopening assessment of assessee Further, the Hon'ble High Court of Mumbai in the case of Principal....
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....unts to cherry-picking. Appeal allowed." Further, in the judgment of Ld. ITAT Delhi Bench E in the case of M/s Lumax Industries Limited vs. DCIT, Central Circle-28, Delhi in ITA No. 947/Del/2021 vide its order dated 0d4.04.2024, it has been held as under: "24. In the case in hand, the Ld. AO grossly erred in not taking cognizance of all the material found during the course of the search and not making any observation/comments on the other seized material. The Ld. AO cannot just cherry pick a particular piece of information to put reliance while concluding the proceedings of incragainst the Assessee. The Ld. A.O. cannot blow hot and cold at the same time by accepting and making a particular piece of evidence found during the course of search as his sole basis of addition and ignore the other documents/material, more particularly relating to the impugned transaction, found during the course of same sealeh proceedings. Further, the Ld. ITAT Bangalore Bench in the case of Mohammed Ibrahim Mohideen, Kerala vs. Assistant Commissioner of IncomeTax, reported at ITA Nos.463 to 466, 485 & 486/Bang/2024 on 8 July, 2024 has held as under: In our opinion, eve....
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....ks; or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offer no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. 27. In the instant case as observed above, assessee has filed following documentary evidences in support of the loan from M/s Hallow Securities Pvt. Ltd. :- (i) Confirmed Copy of account statement; (ii) Bank statement of the lender company; (iii) Audited financial statement of the lender company; ....
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....ns taken by the lender company whereas the same were repayment of the loans given by the lender company to all those companies thus the allegations made about the financial statements of the companies whose sums were credited in the bank account of the assessee prior to the funds transferred to the assessee is totally uncalled for and thus ignored and excluded and cannot be considered for examining the genuineness and creditworthiness of the lender company. 33. It is also relevant to state that the lander company has received funds in the shape of CCD from M/s Teesta Retails Pvt.Ltd who is having strong net worth and during the year assessee has received a sum of Rs. 60.00 crores out of total 300.00 crores received in FY 201920 to 2021-22. It is also observed by ld. CIT(A) that the RBI license issued was also submitted and in the assessment proceedings of one of the group company M/s Bright Buildtech Pvt. Ltd., who is also before us in the captioned appeals, loan received from M/s Hallow Securities Pvt. Ltd. out of the funds received from Teesta Retails were also accepted by the department, thus the funds to such extent cannot be held as unexplained. 34. Another issue raised ....
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....ny, proceedings were pending with the Nodal Authority against M/s. Hallow Securities Pvt. Ltd. The response of SFIO authorities has already been reproduced in the body of the order above. The Nodal Authority (SFIO) has clearly reported that no proceedings are pending against M/s. Hallow Securities Pvt. Ltd. with their office" 35. Further from the perusal of observations at page 79 onwards of the order of ld. CIT(A) we find that CIT(A) has provided numerous opportunities to the AO for rebuttal/objections however, the AO has not availed any of the opportunity therefore, the ld. CIT(A) has made the enquiries in terms of the power conferred upon it in section 250(4) of the Act. The relevant observations of ld. CIT(A) are as under: Reply of AO "During the course of appellate proceedings, various reminders were issued to the Ayide this office emails dated 15.02.2025, 08.02.2025, 01.02.2025, 25.01.2025, 24.01.2025, 18.01.2025, 15.01.2025, 14.01.2025 & 08.01.2025 on various issues including enquiries conducted with Hallow Securities Pvt. Ltd., SFIO Report, Additional Grounds of Appeal etc. But no objections have been received from the AO till the date of final....
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.... basis of the tax under the Act being to levy tax, as far as possible, on the real income, the approach should be liberal in applying the procedural provisions of the Act. An appeal is but a continuation of the original proceeding and what the Income-tax Officer could have done, the appellate authority also could do." [Emphasis supplied] (p. 673) Further, the Hon'ble High Court of Allahabad in the case of Smt. Mishingar Kaur vs. Central Government reported at (1976) 104 ITR 120 (ALL.) has held as under: "The AAC could while disposing of an appeal, make such inquiry as he thought fit. He could permit a fresh or new ground to be raised in the appeal.No part of rule 46A whittles down or impairs the power to make further inquiry conferred upon the AAC by section 250. Similarly, sub-section (5) of the said section confers a power on the AAC to permit the appellant to raise a fresh point. This power has not been even touched by rule 46A." Further, the Hon'ble High Court of Bombay in the case of Smt. Prabhavati S. Shah vs. Commissioner of Income-tax reported at [1998) 100 TAXMAN 404 (BOM.) has held as under: It is, thus, clear that the powers of....
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....y 'ATPL' and 'ALPL' confirmed transactions With assessee company with necessary documents and evidences - These Confirmations were not controverted by Assessing Officer by way of bringing anything adverse on record - Further in spite of availability of all documents transaction with share applicant companies who had made share application on record, nothing had been brought on record by Assessing Officer to doubt in assessee company - Whether, on facts, Commissioner (Appeals) rightly deleted addition made by Assessing Officer - Held, yes [Paras 7, 8 and 11] [in favour of assessee]" Further, the Hon'ble Supreme Court in the case of CIT vs. Kanpur Coals Syndicate [1964] 53 ITR 225 has held that "the appellate Commissioner has plenary powers in disposing of an appeal. The Hon'ble Court further held that the scope of the power of CIT(A) is coterminous with the AO." Further, the Hon'ble High Court of Karnataka in the case of CIT vs. K. S. Dattatreya [2011] 197 taxman 151 has held that "as a revisional authority commissioner appeal can revise not only the ultimate computation arrived at but every process which lead to the ultimate computation....
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....ies and had submitted all evidences to substantiate loan including confirmation from creditors and loan was taken and repaid through banking channels, Assessing Officer was not justified in treating said unsecured loan as fake and unexplained cash credit" Further, the Hon'ble HIGH COURT OF GUJARAT in the case of Principal Commissioner of Income-tax (Central vs. Dharmesh Padamshibhai Patel soner reported at [2023] 156 taxmann.com 491 (Gujarat) has held as under: However, Tribunal remanded matter back to Assessing Officer to verify identity of parties -It was noted that Tribunal had observed that assessee had furnished bank accounts of all lenders wherein loans claimed were duly reflected - Creditors were assessed to tax and their confirmations were filed - Further, loans were returned through banking channels before close of subsequent Financial year - Whether, on facts, an opportunity was rightly allowed by Tribunal to assessee to prove identity of lenders when their creditworthiness and genuineness of transactions as was held by Commissioner (Appeals), were already proved - Held, yes [Paras 15 and 16] In favour of assessee] Further, the Hon'ble H....
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....m 75 (Gujarat) has held as under: Where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted." 39. We find that the sole allegation of the AO was that the assessee has taken the bogus accommodation entries in the shape of unsecured loans however, as discussed above, the revenue has failed to controvert the finding of the ld. CIT(A) who not only appreciate the facts of the case and the submissions made by the assessee but also make verification at his own end in terms of the powers u/s 250(4) of the Act when the AO has filed to response on the request of ld. CIT(A) of making verification of the submissions made by the assessee. It is further seen that the assessee has discharged the burden casted upon it of establishing the genuineness of the loans and creditworthiness of the lender company and further established the source of source though was not requi....
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....he reason that the corresponding credits in earlier years have already been added to the income in the case of Hallow Securities Pvt. Ltd. Hence, once the original advances and credits forming the substratum of these transactions have been added to the income of Hallow Securities Pvt. Ltd., any subsequent reduction from the credits in accounts of Hallow Securities Pvt. Ltd. of the advances given to the ACE Group does not materially impact the overall transactions which need to be brought to tax. 5. The loans received from M/s. Hallow Securities Pt. Ltd. have been returned back in future years. 6. The statement of Sh. Vishal Kumar is without corroborative documentary evidence meaning that the said statement is standalone. 7. The statement of the Directors i.e. Sh. Pratap Singh Rathi (who has denied the facts as narrated by Sh. Vishal Kumar) rebuts the statement of sh. Vishal Kumar. 8. The AO has applied the source of source theory in ACE Group while giving relief with respect to the funds received from Hallow Securities Put. Ltd. via Teesta Retails Pvt. Ltd. Applying the same theory as applied by the AO to the other funds received by the appellant....
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....ee, in the instant case, has sufficiently demonstrated the genuineness of transaction and creditworthiness of the loan creditors. On a broader reckoning, the apprehension raised by the Revenue authorities militates against the tangible material and is thus extraneous. Accordingly, we find no infirmity in the order of ld. CIT(A) in deleting the additions made u/s 68 towards the unsecured loans of Rs. 17.74 crores by holding the same as accommodation entries. Accordingly, all the grounds of appeal of the revenue are dismissed. 42. In the result, appeal of the Revenue in ITA No.3559/Del/2025 is dismissed. 43. Now we take up the appeal filed by the revenue bearing ITA No. 3558/Del/2025 for AY 2019-20 in the case of M/s Allure Developers Pvt. Ltd. ITA No. 3558/Del/2025 (Revenue Appeal) (AY 2019-20) In the case of M/s Allure Developers Pvt. Ltd. 44. This appeal is filed by the revenue against the order of ld. CIT(A) dt. 12.03.2025 in appeal No. CIT (Appeal), Noida-3/10037/2018-19 for AY 2019-20. All the grounds of appeal raised by revenue in present appeal are identical as were taken in Assessment Year 2020-21 in ITA No. 3559/Del/2025 except for the amount of addition which i....
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....ns solely following the appellate orders for AY 2020-21 in assessee's own case. 51. As there is no change in the circumstances, therefore, by following the observations made by us while dismissing the appeal of the Revenue in ITA No.3559/Del/2025, all the grounds of appeal taken by the revenue in the present appeal are dismissed. 52. In the result, appeal of the Revenue in ITA No.4108/Del/2025 in the case of M/s Allure Developers is dismissed. 53. Now we take up the appeal filed by the revenue in the case of Ajay Realcon Pvt. Ltd. in ITA No. 3560/Del/2025 for AY 2020-21. ITA No. 3560/Del/2025 (Revenue's Appeal) for AY 2020-21 In the case of DCIT CC-1 Vs. Ajay Realcon Pvt. Ltd. 54. This appeal is filed by the revenue against the order of ld. CIT(A) dt. 22.03.2025 in appeal No. CIT (Appeal), Kanpur-4/10017/2019-20 for AY 2020-21. 55. All the grounds of appeal raised by revenue in present appeal are identical as were taken in the case of M/s Allure Developers Pvt. Ltd. in Assessment Year 2020-21 in ITA No. 3559/Del/2025 except for the amount of addition which is Rs. 8,25,00,000/- in the instant case made u/s 68 towards the loan taken from M/s Hallow Securities Pvt. L....
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....Vs. Ace Residency Pvt. Ltd. 62. This appeal is filed by the revenue against the order of ld. CIT(A) dt. 22.03.2025 in appeal No. CIT (Appeal), Noida-3/10139/2020-21 for AY 2021-22. 63. All the grounds of appeal raised by revenue in present appeal are identical as were taken in the case of M/s Allure Developers Pvt. Ltd. in Assessment Year 2020-21 in ITA No. 3559/Del/2025 except for the amount of addition which is Rs. 12,30,00,000/- in the instant case made u/s 68 towards the loan taken from M/s Hallow Securities Pvt. Ltd. by holding the same as unexplained as against Rs. 17,74,00,000/- in the case of M/s Allure Developers Pvt. Ltd. in AY 2020-21. Besides this the revenue has further challenged the deletion of interest of Rs. 38,75,590/- paid on such loan taken from M/s Hallow Securities Pvt. Ltd. 64. From the perusal of the assessment order, it is seen that an addition of INR 12,30,00,000/- was made by holding the same as accommodation entries u/s 68 of the Act received during the year from M/s Hallow Securities Pvt. Ltd. The AO further observed that the assessee had paid interest of INR 38,75,590/- on the entire loan amount which was also disallowed. The facts and circums....
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....20-21 in ITA No. 3559/Del/2025 except for the amount of addition which is Rs. 64,00,00,000/- in the instant case as against Rs. 17,74,00,000/- in the case of M/s Allure Developers Pvt. Ltd. in AY 2020-21. Besides this the revenue has further challenged the deletion of interest of Rs. 2,83,12,326/- paid on such loan taken from M/s Hallow Securities Pvt. Ltd. 72. Before us, this fact is admitted by both the parties during the course of hearing where arguments were made in the case of M/s Allure Developers in AY 2020-21 in ITA No. 3559/Del/2025 by taking the same as lead case on the issue of loan from M./s Hallow Securities Pvt. Ltd. 73. Admittedly there is no change in the facts and circumstances regarding the issue of loan taken from M/s Hallow Securities Pvt. Ltd. where in the case of M/s Allure Developers Pvt. Ltd while dismissing the appeal of the Revenue in ITA No.3559/Del/2025 for AY 2020-21, we held the same as genuine, therefore, by following the said observations made by us, the addition made of Rs. 64,00,00,000/- u/s 68 of the Act towards the loan taken from M/s Hallow Securities Pvt. Ltd. is hereby deleted. Regarding the payment of interest on such loan of Rs. 2,83,1....
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....venue in present appeal are dismissed. 81. In the result, appeal of the Revenue in ITA No. 4117/Del/2025 is dismissed. 82. In the final result, following appeals filed by the revenue are dismissed:- S. No. Appeal No. AY Name of Assessee 1. 3558/Del/2025 2019-20 M/s. Allure Developers Pvt. Ltd. 2. 3559/Del/2025 2020-21 -do- 3. 4108/Del/2025 2021-22 -do- 4. 3560/Del/2025 2020-21 M/s. Ajay Realcon Pvt. Ltd. 5. 4116/Del/2025 2020-21 Star Landcraft Pvt. Ltd. 6. 4117/Del/2025 2022-23 -do- 7. 3493/Del/2025 2021-22 M/s. Ace Residency Pvt. Ltd. Order pronounced in the open Court on 26.11.2025. ============= Document 1 Allure Developers Private Limited, A.Y. 2020-21 CIT (Appeal), Noida-3/10020/2019-20 The detailed analysis of funds received from Hallow Securities Pvt. Ltd. by the appellant with respect to the ultimate source as furnished by the AR in his rejoinder is again reproduced below for clarity: Date Credits Immediate Sources Comments Given by Hallow Securities Remarks 14.06.2019 30000000 Dhankalash Distributors Private Limited Unsecured loan 1) No addition in the han....
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....Partly out of funds received of Rs 60 Lakh from Sundram Consultants Private Limited and Partly out of funds received of Rs 2 crores Manak Estate & Finance Pvt Ltd Out of Recovery of advances made in earlier years. Addition Made 16.09.2019 10000000 Dhankalash Distributors Private Limited Unsecured loan 1) No addition in the hands of appellant. 2) The addition was not made as the amount received from Hallow Securities Pvt. Ltd. was considered genuine, given that the funds were ultimately financed by "Teesta Retails Pvt. Ltd." 18.09.2019 10000000 Dhankalash Distributors Private Limited Unsecured loan 24.09.2019 10000000 Dhankalash Distributors Private Limited Unsecured loan 25.10.2019 10000000 Partly out of funds received of Rs 20 Lakh from AKJ Engineers Private Limited on 23.10.2010 and Partly out of funds received from Kanta Credits & Holdings Pvt Ltd on 24.10.19 Rs 50 Lakh and Rs 50 Lakhs on 23.10.19 Out of Recovery of advances made in earlier years to AKJ Engineers and out of Recovery of advances made in current year to Kanta Credits &Holding Pvt Ltd. Addition Made 30.10.2019 10000000 Manak Estate & Finance Pvt Ltd |Out of Recovery of advances made in earlier....
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....65 Lakh from Sundram Consultants Private Limited on 28.01.20 and Partly out of funds transferred of Rs 98 Lakh from ICICI bank to SBI on 16.01.2020 (internal transfer) Total Credits Total Credits 267400000 Document 2 Details of repayments made in respect of 10 cases of Ace Group are as follows :- AY Name of Entity ITA No from Hallow Securities (AO) Total loan raised as genuine by AO Amount accepted AO in respect of loon Addition made by Interest disallowed Proportionate Repayment made Repayment ledger Page No. of PB A B A-B 19-20 ALLURE DEVELOPER PVT LTD ITA 3558/DEL/2025 (D) 10,26,00,000 10,26,00,000 NIL 09.06.2022 165-170 20-21 AJAY REALCON INDIA PVT LTD. ITA 3560/DEL/2025 (D) 16,56,00,000 8,31,00,000 8,25,00,000 10,25,032 25.08.2021 171-174 20-21 ALLURE DEVELOPER PVT LTD ITA 3559/DEL/2025 (D) 26,74,00,000 9,00,00,000 17,74,00,000 NIL 09.06.2022 165-170 20-21 STAR LANDCRAFT PVT LTD (ACE Residency and other Co. were merged) ITA 4116/DEL/2025 102,75,00,000 38,75,00,000 64,00,00,000 2,83,12,326 17.02.2020 1 Star land), 30.06.2023 Ace Residency) 175-188 21-22 ACE RESIDENCY PVT LTD ITA 3493/DEL/2025 (D) 54,96,00,000 47,66,00,000 12,30,00,....