TaxTMI 
TaxTMI 
2026 (5) TMI 1128
X X X X Extracts X X X X
X X X X Extracts X X X X
....onvenience the same are disposed of by this common order. 2. Asst. Year 2018-19 is taken as the lead case. Brief facts of the case is that the assessee is an individual engaged in the business of real estate construction through group and associate entities of Robin Goenka's Sankalp Group of concerns. For the Asst. Year 2018-19, assessee filed her Return of Income on 17-10-2018 declaring income of Rs. 23,88,700/-. There was a search and seizure action u/s. 132 of the Act conducted on 30-10-2018 wherein the assessee's residential premises also covered. Pursuant to the search action, notice u/s. 153A of the Act was issued. In response, the assessee filed her Return of Income on 12-03-2019 admitting the original Return of Income filed of Rs. 23,88,700/-. The assessing officer made additions of (a) unsecured loans u/s. 68 of the Act of Rs. 3,44,70,713/- (b) disallowance of expenses u/s. 14A r.w. Rule 8D of Rs. 11,73,434/- (c) unsecured loan u/s. 68 of Rs. 90,00,000/- from Narayani Enterprise Thus, the assessing officer assessed the total income as Rs. 4,70,32,847/- and demanded tax thereon. 3. Aggrieved against the assessment order, assessee filed ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n for the period 01.04.2017 to 31.03.2018, it is seen that Aavkar Corporation had creditworthiness to give unsecured loan of Rs. 5,00,000/- to the appellant. Hence, it cannot be said that the creditworthiness of the party is in doubt. Therefore, the addition made by the AO of Rs. 5,00,000 u/s. 68 of the Act is hereby deleted. 2. Bhadresh R Reshwala (Rs. 48,00,000/-) On perusal of records, it is observed that the appellant received unsecured loan of Rs. 48,00,000/- from Bhadresh R Reshwala during the year under consideration. The AO in his remand report doubted the creditworthiness of Shri Bhadresh R Reshwala as the appellant did not provided copy of balance sheet, bank account of depositor etc. In rejoinder, the appellant submitted the letter of lender confirming the transactions and source of transactions along with computation of total income and bank statement of Shri Bhadresh R Reshwala. 2.1 In this regard, on perusal of the confirmation letter dated 20.08.2023 of Shri Bhadresh R Reshwala, it is observed that Shri Bhadresh R Reshwala had confirmed about unsecured loan of Rs. 48,00,000/- on various dates to the appellant through banking channel and sou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-. However, loan given to the appellant is only Rs. 4,40,082/- which shows Grace Appt. CHSL, had creditworthiness to give unsecured loan of Rs. 4,40,082/- to the appellant. Hence, it cannot be said that the creditworthiness of the party is in doubt. Therefore, the addition made by the AO of Rs. 4,40,082/-u/s. 68 of the Act is hereby deleted. 5. JIGNESH H SHAH (Rs. 38,64,713/-) On perusal of records, it is observed that the appellant received unsecured loan of Rs. 35,00,000/-from Jignesh H Shah during the year under consideration. However, the AO considered the unsecured loan amount of Rs. 38,64,713/- received from Shri Jignesh H Shah during the year under consideration which includes the amount of Rs. 2,83,976/-received from Shri Jignesh H Shah on 05.04.2017 (the same amount was opening balance debited in the name of Jignesh H Shah in the books of appellant as on 01.04.2017), amount of Rs. 35,00,000/- received on account of unsecured loan and interest expenses of Rs. 80,737/-. Further, the AO in his remand report also stated that the appellant received unsecured loan of Rs. 35,00,000/- from Shri Jignesh H Shah during the year under consideration. However, the AO d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al income for A.Y.2018-19. Further, it is also observed that Mayurika Reshawala had shown sale value of securities on account of STCG is Rs. 2,69,765/- and on account of LTCG of Rs. 76,72,990/-. Hence, it is evident that Mayurika Reshawala had creditworthiness to give unsecured loan of Rs. 81,50,000/- to the appellant during the year under consideration. Hence, it cannot be said that the creditworthiness of the party is in doubt. Therefore, the addition made by the AO of Rs. 81,50,000 u/s. 68 of the Act is hereby deleted. 7. PRADIP C PATEL (Rs. 70,65,917/-) On perusal of records, it is observed that the appellant received unsecured loan of Rs. 70,65,917/- from Pradip C Patel on various dates during the year under consideration. The AO in his remand report doubted the creditworthiness of Pradip C Patel, In rejoinder, the appellant submitted the computation of income and audit report along with financial statements of Pradip C Patel. 7.1 In this regard, on perusal of the capital account of Pradip C Patel for the period 01.04.2017 to 31.03.2018, it is seen that Pradip C Patel had capital balance of Rs. 1,03.39.635/- as on 31.03.2017 and of Rs. 1,08,42,081/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. 8.2.2 The appellant also submitted that it is a natural corollary of law that the source of income as well its application cannot be brought to tax, as the same is against the principle of taxation laws i.e, no income or amount should be brought to be taxed twice unless and otherwise specifically mentioned under the law. Since the source of cash/unexplained cash credit can be attributed to cash receipts from Sankalp Venture LLP and the cash so introduced can be also attributed to have reached back to the very same source on repayment of loans, the same stands explained and hence the addition of Rs 90 lacs be kindly deleted accordingly. The appellant relied upon various judicial pronouncements in support of her contentions. 8.3 On perusal of records, it is observed that it is an undisputed fact that the appellant received unsecured loan of Rs. 90,00,000/- from M/s. Narayani Enterprise, Prop. Nipul Hasmukh Soni during the year under consideration. Further, it is observed that as per investigation carried out DDIT (Inv.), Unit-1(3), Ahmedabad, Axis Bank account No. 914020048526281 was maintained in the name of Nipul Hasmukh Soni who was a deceased person and said ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such bogus loan from Narayani Enterprise. Accordingly, the addition of Rs. 90,00,000/- made u/s.68 of the Act is hereby deleted. Thus, the ground no.4 of appeal is allowed." 3.2. However, the Ld. CIT(A) confirmed the addition of disallowance made u/s. 14A of the Act by observing as follows: "....7.2 During the course of appellate proceedings, the appellant submitted that the AO made an error in assuming that since the appellant had incurred interest expenses of Rs. 11,73,434/-, the appellant ought to have made disallowance u/s. 14A of the Act. The AO had ignored to the fact that the said interest expenses of Rs. 11,73,434/- incurred by the appellant was under its proprietorship concern Sankalp Developers which was primarily engaged in raising funds and deploying the same for interest income and the said proprietorship concern had not made any investment in any assets which yields any exempt income. The appellant further submitted that the nexus of Interest Income and Interest Expense is directly correlated to each other and provisions of section 14A of the Act are squarely not applicable to the said interest expenses as incurred by the appellant. Hence, the addition mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in disallowing consequential interest expenditure of Rs. 13,41,910/-incurred on loan received from M/s. Narayani Enterprise. 6. The Ld. CIT(A) has erred in law and on facts of the case in enhancing the assessment by making addition of Rs. 13,41,910/- incurred on loan received from M/s. Narayani Enterprise without issuing mandatory notice as contemplated u/s. 251(2) of the Act. 7. The Ld. CIT(A) has erred in law and on facts of the case in initiating penalty proceedings u/s. 270A(9) of the Act in respect of disallowance of interest expenditure of Rs. 13,41,910/- incurred on loan received from M/s. Narayani Enterprise. 8. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 9. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the gr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Identity Creditworthiness Genuineness 1 Aavkar Corporation 5,00,000 Established through PAN, ITR, Financials Sufficient capital reflected in financials & bank statement Transaction routed through banking channels; ledger & confirmation on record 2 Bhadresh R. Reshamwala 48,00,000 Identity proved via PAN, ITR Bank statement evidences availability of funds Loan received through banking channel; confirmation filed 3 Devendra Vaghela 10,00,000 PAN & ITR acknowledgement on record Bank statement shows fund availability Transaction through bank; duly confirmed 4 Grace Appt. CHSL 4,40,082 Registered entity; PAN & registration certificate filed Financial statements support capacity Banking transactions corroborated; reflected in both accounts 5 Jigen H. Shah 38,64,713 PAN, ITR and source details furnished Source of funds explained; bank statements support Routed through banking channel; duly recorded and confirmed 6 Mayurika Reshamwala 81,50,000 Identity established via PAN & ITR Bank statements indicate adequate funds Loan transaction genuine; through banking channels 7 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns] - Assessment year 2006-07 - Assessing Officer framed assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one 'IA' was not explained satisfactorily - On appeal, Commissioner (Appeals) was satisfied with respect to genuineness of transaction and creditworthiness of 'IA' and, therefore, deleted addition - It was found that total loan of Rs. 1.60 crore was advanced to assessee, out of which Rs. 15 lakh was repaid - Therefore, an amount of Rs. 1.45 crore remained outstanding to be paid to 'IA' - Balance loan amount was repaid by assessee in immediately next financial year - Whether when Department had accepted same, addition made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee]" 5.5. The Hon'ble Gujarat High Court in the case of PCIT vs Ambe Tradecorp (P.) Ltd. reported in [2022] 145 taxmann.com 27 wherein it was held as follows: "Section 68 of the Income-tax Act, 1961 - Cash credit (Bogus loan) - Assessment year 2012-13 - Assessee received loans from two parties - Assessing officer treated same to be sham for reason that creditworthiness of l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any interference in the absence of any contra material filed before us by the Revenue, therefore Ground Nos. 2 & 3 raised by the Revenue are devoid of merits and liable to be dismissed. 7. In the result, the appeal filed by the Revenue in IT(SS)A No. 37/Ahd/2025 is hereby dismissed. Assessee's appeal in IT(SS)A No. 19/Ahd/2025 8. Ld. Senior Counsel submitted that the assessee is not pressing Ground Nos. 1 & 2 challenging jurisdiction of assessment made under section 153A of the Act. Recording the same, Ground No. 1 & 2 are hereby dismissed. 9. Ground No. 3 namely disallowance u/s. 14A r.w. Rule 8D, Ld. Senior Counsel fairly stated that the assessee is not pressing Ground No. 3 also. Recording the same, Ground No. 3 is dismissed. 10. Regarding Ground Nos. 4, 5 & 6, Ld. Counsel submitted that the assessee be given the benefit of telescoping the income. Thus the ground raised by the assessee is partly allowed. 11. Ground No.7 penalty u/s. 270A(9) of the Act which is consequential in nature which is premature and does not require separate adjudication and the same is dismissed. 12. In the result, the appeal filed by the assessee in IT(SS)A No. 19/ Ahd/2025 is part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ials Bank Ledger, Confirmation, 3 Infinium Natural Resources 10,00,00,000 PAN Audited Financials Bank Ledger, Confirmation, 4 Jadav Ramaben 30,00,000 ITR - Bank Ledger, Confirmation, 5 Jagruti A Rathi 11,00,000 PAN, ITR Bank statement Bank Ledger, Confirmation, 6 Mayurika Reshamwala 20,00,000 ITR Computation Bank Ledger, Confirmation, 7 Nirav R Patel 1,50,00,000 ITR Source explained Bank Ledger, Confirmation, 8 Sankalp Ind Co-Op 20,00,000 PAN Financials Bank Ledger, Confirmation, 9 Sankalp International Pvt Ltd 10,000 - - Bank Ledger, Confirmation, 10 Sweta Gupta 1,20,13,000 ITR Capital Account Bank Ledger, Confirmation, 11 Taraben H Thakkar 50,00,000 ITR Source explained Bank Ledger, Confirmation, 12 Aavkar Corporation 5,54,074 ITR Audit + Financials Bank Ledger, Confirmation, 13 Pradip C Patel 1,53,15,692 ITR Financials + Audit Bank Ledger, Confirmation, 14 Narayani Enterprise 4,00,53,183 ITR - Bank Ledger, Confirmation, 15 RK Enterprise 2,82,18,724 ITR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....change with the M/s. Narayani Enterprise is attributable to the on-money received from M/s. Sankalp Venture LLP. The detailed chart explained the source of cash and modus operandi is discussed in Para 8.3.2 of the CIT(A)'s order (which is also reproduced in Page No. 9 of this order). Since such on-money being source of cash is already taxed in the hands of M/s. Sankalp Venture LLP, Ld. CIT(A) allowed telescoping to assessee and deleted the addition of Rs. 4,00,53,186/-, however confirmed the interest component amounting to Rs. 9,53,186/=. 15.1. With regard to unsecured loan received from RK Enterprises, Prop. Rashmin K Vakta HUF. Ld. CIT(A) held that perusal of ledger account and confirmation submitted by the assessee, the said loan have been squared up by the assessee in the very same financial year 2018-19 itself. Further the Ld A.O. has not found any infirmity in the said repayment of loan by the assessee, therefore following the judgement of jurisdictional High Court in the case of Ayachi Chandrashekhar Narsangji, deleted the addition of Rs. 2,82,18,724/-. This factual finding arrived by Ld. CIT(A) does not require any interference in the absence of any contra material filed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enue could not pin point any mistake in the interest disallowance working made by Ld. CIT(A). In the absence of the same, we do not find any infirmity in the order passed by Ld. CIT(A). Thus Ground No. 4 raised by the Revenue is devoid of merits and the same is hereby dismissed. 18. In the result, the appeal filed by the Revenue in ITA No. 876/Ahd/2025 is hereby dismissed. ITA No. 495/Ahd/2025 for A.Y. 2019-20 19. Assessee is in appeal before us in ITA No. 495/Ahd/2025 relating to the Asst. Year 2019-20 raising the following Grounds of Appeal: 1. The Ld. CIT(A) has erred in law and on facts of the case in confirming the assessment order which is passed in violations of provisions of the Act and against the scheme of assessment related to search cases. 2. The Ld. CIT(A) has erred in law and on facts of the case in confirming addition of Rs. 18,11,000/- as unexplained receipts of the appellant. 3. The Ld. CIT(A) has erred in law and on facts of the case in confirming addition of Rs. 2,70,000/- as unexplained cash expenditure u/s. 69C of the Act. 4. The Ld. CIT(A) has erred in law and on facts of the case in partly confirming the addition o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 24. Regarding Ground No. 7 namely addition of interest expenditure of Rs. 9,53,186/- on alleged bogus loan received from Narayani Enterprise which is already decided in Paragraph 6 of this order, consequently Ground No.7 is allowed. 25. In the result, the appeal filed by the Assessee in ITA No. 495/Ahd/2025 is partly allowed. Order pronounced in the open court on 24-04-2026. ============= Document 1 Name of the Lender Loon ANKUR CORPORATION 2018-19 600000 BHAORESH & REGHMIVALA #800000 DEVENDRA VAGHELA 1000000 GRACE APPT. CHOL 2019-19 40002 3004715 MAYURIKA RESHAMWALA 2018-19 8150000 NAMAN BHADRECH RESHAMWALA 2018-19 50000 8 NILESH MAHENDRA PATEL 2018-19 2500000 PUNJAB AUTOMOBILE LTD. 2018-19 1500000 TO SHREE IDIOS UNLIMITED 2018-19 4500000 1 1 SONAL VIPUL PATEL 2018-19 100001 Total 2.74.04.796 Confirmation Amount Unsecur Loan Difference . A.Y. S. No. 7065917 1 1700000 2016-19 0765917 PRADIP C. PATEL . 7066917 Document 2 As per Remand Report: Amount of Addition as DOE Assessment Accepted by the. AO In Ramand Report SI.NO. Name 7 NamanBhadreshReshawala 50,000 50,0....