TaxTMI 
TaxTMI 
2026 (5) TMI 1049
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.... was issued by ITO-2(1), Ujjain. Subsequent proceeding was conducted by ACIT-Circle-2(1), Ujjain ["AO"] who issued notices u/s. 142(1) from time to time, which the assessee complied. Ultimately, the AO passed assessment-order after making, inter alia, following additions/disallowances: 1 Addition on account of bogus cash credit (squared up loans) 6,33,13,140/- 2 Addition on account of bogus cash credit (non-squared up loans) 5,80,09,541/- 3 Disallowance of interest expenses relating to above loans 1,54,36,666/- (iii) Aggrieved, the assessee carried matter in first-appeal before CIT(A) wherein the assessee raised legal grounds and also challenged the additions/disallowances made by AO on merit. The CIT(A) did not grant any relief on legal grounds. However, for merits of additions/disallowances, the CIT(A) granted certain relief. (iv) Still aggrieved, the assessee has come in next appeal before us. 3. The assessee has filed Form No. 36 three times, changing the "Grounds of Appeal". The Form No. 36 filed Firstly and Secondly contain identical grounds (seven grounds in number); the only change is in the amounts mentioned in the column of ....
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....that if the bench grants adequate relief in Ground No. 3 to 6, the assessee would be satisfied if the Ground No. 1 & 2 are kept open/unadjudicated. The Ld. DR for revenue does not have any objection to this proposition. Accordingly, the Ground No. 1 & 2 are kept open/unadjudicated since, in the discussions that would follow, appropriate and due relief is being given to assessee qua Ground No. 3 to 6. Ground No. 3: 5. In this ground, the assessee claims that the CIT(A) was not justified in confirming addition of Rs. 6,33,13,140/- made by AO u/s. 68 in respect of squared up loans. 6. The assessee has taken loans of Rs. 6,33,13,140/- from sixteen (16) creditors. The AO has extracted details of these loans on Page 15 of assessment-order, we re-produce the same for ready reference: 7. The AO has treated these loans as unexplained cash credit u/s. 68 and made addition. The reasons for making this addition are mentioned by AO in Para 10 of assessment-order; the same are extracted below: "10. The reply of the assessee was perused and it was noted as under: 10.1. That the assessee could not conclusively prove the identity, creditworthiness and genuineness of tr....
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....ng the year and highlighted the bank payments thereof. However, the assessing officer for want of appellant proof to prove the identity credit worthiness and genuineness of the loan transactions treated the total squared up loans as unexplained cash credit under section 68 of the Act. The appellant relied on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs Pukhraj Telecom P Ltd (ITA 82/2015) argued that only credits in the books of accounts received during the previous year is subject to addition under section 68 of the Act and the previous year credits appearing as opening balances cannot be added under section 68 of the Act. XXX (Table of loan transactions - already reproduced in earlier para) In light of the established legal principle that any sum found credited in the books of accounts for a given year, for which the assessee either fails to provide an explanation regarding its nature and source or provides an explanation deemed unsatisfactory by the Assessing Officer, is liable to be taxed as income for that year-and considering the Hon'ble Jurisdictional High Court's decision in CIT vs. Pukhraj Telecom P Ltd (supra), I fin....
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....order has already reduced to Rs. 2,39,32,432/-. Now in so far as the surviving addition of Rs. 2,39,32,432/- is concerned, we find that the assessee had filed only bank statements of his own and no further evidences of five (5) creditors to establish three ingredients of section 68, namely (i) identity of creditors, (ii) creditworthiness of creditors, and (iii) genuineness of transactions, were filed and that is why the AO resorted to addition. However, the assessee has now placed A/c Confirmations of those five (5) creditors at Pages 49 to 70 of Paper-Book and is also ready to make an effective representation before AO. Therefore, in the interest of justice and fair play, we remand this issue to the file of AO for a fresh adjudication. Needless to mention that the AO shall give proper opportunities to assessee, consider assessee's submissions and pass an appropriate order without being influence by his previous order in any manner. The assessee shall also extend full co-operation to AO. Accordingly, this ground is allowed for statistical purpose. Ground No. 4: 14. In this ground, the assessee claims that the CIT(A) was not justified in partially confirming out of the additio....
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....erse observations 1 Helpful Vinrade Private Limited The envelope containing reply-letter to notice u/s. 133(6) is posted from Bda Bazar, Kolkata, Post Office at 12:42. This charactersitic of enovelope is similar to other creditors namely (i) Silver Commosale Pvt. Ltd., (ii) Positive View Commercial, (iii) Lifewood Vinimay Pvt. Ltd. and (iv) Swarnim Distributors Pvt. Ltd. Documents filed by assessee: • ITR of AY 2015-16 • Audit Report • Balance-Sheet • P&L Statement • A/c statement of Federal Bank • A/c Confirmation • Certificate of loan transaction through cheque Documents filed by creditor in response to notice u/s. 133(6): • PAN card • Details of loans given to assessee in F.Y. 2012-13, 2013-14 & 2014-15 • ITR of AY 2013-14, 2014-15 & 2015-16 • P&L A/c and Balance- Sheet of F.Y. 2012- 13, 2013-14 and 2014-15 • Bank Statement • Reply to notice u/s. 133(6) received from Bda Bazar, Kolkata, Post Office, posted on 19.12.2017 at 12:42. • Same envelope as others. • It proves that....
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.... Mukherjee Road, Kolkata, Post Office, posted on 19.12.2017 at 12:48. • Same envelope as Justify Vanijya Pvt. Ltd. • It proves that postage has been done by single individual. • Gross Total Income for AY 2015-16 is only Rs. 16,579/-. • All three parameters are not verifiable. 21. Thereafter, Ld. AR carried us to the relevant portion of order of first-appeal passed by CIT(A) upholding the addition made by AO, reading as under: "8.8. With respect to the amounts borrowed during the year from M/s Helpful Vinrade Private Limited, M/s Justify Vanijya Private Limited, and M/s Royal Pet Commodeal Private Limited, the Assessing Officer, in paragraph 11.2 of the assessment order, analysed the responses received from the parties pursuant to notices issued under Section 133(6) of the Act. The officer concluded that these companies appeared to be bogus shell or paper entities with negligible and questionable creditworthiness. Furthermore, it was observed that the responses from these companies were all submitted by a single individual at the same post office and at the same time, raising doubts about the genuineness of the unsecure....
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....ffice and around the same time. According to Ld. AR, such circumstance, by itself, cannot be a decisive factor to disregard otherwise valid documentary evidences. 24. With regard to the second observation relating to low income of creditor-companies, Ld. AR submitted that income alone cannot be the sole criterion to judge the creditworthiness, particularly when the financial statements and bank records of creditors demonstrating availability of funds have been furnished. 25. Further, Ld. AR made a very important and significant submission that similar observations were made by AO in respect of other creditors, however, the additions in those cases stand deleted by AO in OGE pursuant to direction by CIT(A). To illustrate, Ld. AR referred demonstrated that the additions made in respect of loans taken from (i) Silver Commosale Pvt. Ltd., (ii) Positive View Commercial, (iii) Lifewood Winimay Pvt. Ltd., (iv) Swarnim Distributors Pvt. Ltd, and (v) Cindrella Commodeal Pvt. Ltd. stand deleted. Therefore, according to Ld. AR, the adverse view taken in respect of these three creditors is a contradictory approach of department and such approach must be rejected. 26. Ld. DR for revenu....
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....The disallowance of interest is relatable to the underlying additions of unexplained cash credits of Rs. 6,33,13,140/- and Rs. 5,80,09,541/- made by AO. At first, we note that the AO has already deleted the disallowance of interest expenditure, partly to the extent of Rs. 1,52,17,278/- in OGE dated 29.08.2025. However, since we have granted further relief to assessee by way of remanding/deleting the underlying additions of loans while adjudicating Ground No. 4 & 5, we direct the AO make a systematic verification of interest disallowance and re-compute the same in accordance with the final outcome of the underlying loan additions. To make it clear, the Ld. AO shall delete the interest relatable to such loans which are finally deleted, and sustain the disallowance of interest only to the extent it pertains to loans that are ultimately upheld. Accordingly, this ground is allowed for statistical purpose. Ground No. 6: 32. In this ground, the assessee challenges the invocation of higher rate of tax u/s. 115BBE by AO to the additions/disallowances. Since we have already remanded/deleted the underlying additions/disallowances to AO while adjudicating Ground No. 3, 4 & 5, this ground....
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....Copy, Highlighting the Amounts paid off Bank Account Cpgv. Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Bank Account Copy, Highlighting the Amounts paid off Document 2 26 Government of India, Ministry of Finance (Department of Revenue), OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX -1(1) BHARATPURI, UJJAIN- 456010 Date- 29.08.2025 F. No. ACIT-1(1)/Ujn/A.E/2025-26 Name of Assessee & Address M/s Neminath Developers 105, mani trade Centre Shanku Marg, Freeganj. Ujjain, 456010 PAN AAGFN3566L 4.1 2015-16 Stanis Firm Date of Order 29.08.2025 ORDER U/S.250 OF THE I.T. ACT- GIVING EFFECT TO THE ORDER OF HON'BLE CIT (APPEALS), IN APPEAL, NO. NFAC/2025-26/10731/2017-18 The Hon'ble CIT (Appeals), NFAC vide order No. ITBA/NFAC/S/250/2025- 26/1078277270(1) dated 08.07.2025 has partly allowed the appeal of the assessce. Accordingly. the resultant total income is b....
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....stant Commissioner of Income Tax-1(1). Ujjain Document 4 OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE-2(1) AAYAKAR BHAWAN, BHARATPURI, UJJAIN (M.P.) 1. Name and Address of the assessee Neminath Trade Freeganj Pradesh Centre, Ujjain 456010, Madhya Developers, 105 Mani Shanku Marg 2. A.Y. : 2015-16 3. PAN : AAGFN3566L 4. Date of order : 09.10.2025 5. Status Firm 6. Section under which Order is made . . 154 Neminath Trade Freeganj Pradesh Centre, Ujjain 456010, Madhya Developers, 105 Mani Shanku Marg ORDER UNDER SECTION 154 OF THE I.TAX ACT. 1961 The assessee is a partnership firm engaged in the business of land development. For A.Y. 2015-16, it filed its return of income on 27/09/2015 declaring total income of Rs.19,59,450/ -. The case was selected for scrutiny under CASS, and the assessment was completed u/s 143(3) on 31/12/2017, determining total income at Rs.14,26,66,030/- . Various additions were made on account of unsecured loans, squared-up credits, interest expenses, and sundry creditors. Aggrieved with the assessment order, the assessee preferred an appeal before the CIT(A), raising multiple grounds. In....