ACIT 4(3)(1), MUMBAI V. NARAYAN DALPATRAM THAKKAR, MUMBAI

ITA 3619/MUM/2017

AI Insights

The case involves an appeal by the Assistant Commissioner of Income-tax against Narayan Dalpatram Thakkar concerning the assessment year 2008-09. The primary issue was the addition of Rs. 65,00,000 as unexplained cash credit under section 68 and Rs. 87,547 as unexplained expenditure on account of interest on unsecured loans under section 69C of the Income-tax Act, 1961. These additions were based on information suggesting that the loans were accommodation entries. The CIT(A) deleted these additions, a decision which the Revenue challenged in the Tribunal. The Tribunal found that the assessee had adequately substantiated the transactions, leading to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785503 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2017
• Other Referred Cases: NRA Iron and Steel Pvt. Ltd. 412 ITR 161 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; Onus to prove; Accommodation entries; Source of fund
• Section: 148; 68; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 3619/MUM/2017 Assessment Year: 2008-09 Assistant Commissioner of Income-tax - 4(3)(1), Mumbai vs Narayan Dalpatram Thakkar Abhay Bldg, 5th Floor, NS 9th RDM JVPD Scheme, Juhu Vile Parle (W), Mumbai - 400032 [PAN: AAIPT0713F] Appellant Respondent Present for: Assessee : Shri Parag Shah, CA Revenue : Shri Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 05.08.2025 Date of Pronouncement : 29.10.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of CIT(A) – 9, Mumbai, vide order no. CIT(A)-9/Cir.4/529/2015-16, dated 17.03.2016 passed against the assessment order by Deputy Commissioner of Income-tax-4(3)(1), u/s.143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 29.01.2016 for AY 2008-09. 2. Grounds taken by the Revenue are reproduced as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition made towards unexplained unsecured loan of Rs.65,00,000/- u/s.68 of the I.T. Act. Printed from counselvise.com 2 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to delete the addition made towards interest claimed to be paid on unexplained unsecured loan of Rs.87,547/-u/s.69C of the I.T. Act.” 2. Brief facts of the case are that assessee filed his return of income on 31.07.2008 reporting total income at Rs. 76,20,820/-. Assessing Officer completed the assessment u/s.143(3) r.w.s.147 by assessing the total income at Rs. 1,42,08,370/- after making an addition of Rs.65 lakhs as unexplained cash credit u/s. 68 and of Rs. 87,547/- as unexplained expenditure on account of interest on unsecured loans by applying provisions of section 69C. These additions were based on information from the Directorate General of Income Tax Investigation, Mumbai indicating that the loans taken by the assessee from Olive Overseas Pvt. Ltd. (erstwhile Real Gold Trading Company Pvt. Ltd.) of Rs.30 lakhs and from Triangular Infocom Ltd. (erstwhile Lexis Infotech Ltd.) of Rs.35 lakhs were accommodation entries orchestrated by Shri Praveen Kumar Jain's group. 2.1. Ld. CIT(A) in the first appellate order deleted the additions so made by holding that assessee had discharged the onus u/s. 68 by proving the identity and creditworthiness of the lender companies and genuineness of the transactions. Revenue is in appeal before the Tribunal on the relief so granted by the ld. CIT(A) by putting its contention that ld. CIT(A) overlooked the evidence of non-genuine transactions. 3. We have heard both the parties and perused the material placed on record containing written submissions by both the parties and a paper book filed by the assessee having 143 pages. We have also perused the orders of the authorities below to take note of the facts and Printed from counselvise.com 3 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 observations for arriving at their respective findings. Fact of the matter is that ld. AO has primarily placed reliance on the search conducted by the DDIT(Inv)-III, Mumbai in the case of Shri Praveen Kumar Jain group which led to reopening of the case of the assessee by resorting to provisions of section 148 r.w.s. 147. Addition has been made u/s. 68 towards loan taken by the assessee from the parties of Rs. 65 lakhs on the basis of this information. Details of unsecured loans taken by the assessee which has been alleged to be accommodation entries from companies being entities operated by Shri Praveen Kumar Jain group is tabulated below: S. No. Name of the Lender Amount (Rs.) 1 Olive Overseas P. Ltd. (Realgold Trading Co. P. Ltd.) 30,00,000/- 2 Traingular Infocom Pvt. Ltd. (Lexus Infotech Limited) 30,00,000/- 3 Traingular Infocom Pvt. Ltd. (Lexus Infotech Limited) 5,00,000/- 3.1. Case of the assessee is that he had obtained unsecured loans from the two companies through proper banking channel and paid interest regularly thereon. Further, the said loan has been repaid in the subsequent financial years through proper banking channel for which ledger accounts reflecting the repayment were placed on record. Both the lender companies are assessed to income tax regularly, who had filed their income tax returns, copies of which are placed on record. The loan transactions have been duly reflected in the books of accounts of the assessee as well as of the lender companies without any qualification by the auditors. Assessee has furnished following documents in respect of the two lender companies to establish the requirements as contained in section 68:- Printed from counselvise.com 4 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 i. loan confirmation. ii. bank statement of the two lender companies reflecting payment made through account payee cheques. iii. copy of acknowledgement of return of income along with financial statements duly audited by the auditor. iv. proof of repayment of loans. v. copies of ledger accounts in the respective books of accounts maintained by the assessee as well as by the lender companies. vi. affidavit confirming genuineness of the transaction by directors of both the lender companies. 3.2. Also, ld. AO issued notice u/s. 133(6) to the lender companies. Ld. AO records in the assessment order that he had received reply from Triangular Infocom Limited along with necessary and relevant documentary evidences confirming the transaction undertaken by it with the assessee. In respect of the other company, namely, Olive Overseas Limited, ld. AO mentions that no reply was received from the said party. However, contention of the assessee is that no notice u/s. 133(6) was served to the said party for which a confirmation of non- receipt of notice u/s. 133(6) was placed on record as received from the said lender company. Despite this, the said lender company complied with requirements contemplated by the ld. AO by furnishing all the relevant documentary evidences through the assessee. 4. We note that ld. AO has been unable to refute the cogent evidences placed on record by the assessee and those furnished by the lender companies. Various facts and figures and details furnished by the assessee in complying with the requirements of section 68 is tabulated below: Printed from counselvise.com 5 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 Sl.No. Details of Loan Bank Details Cheque/ DD Date Amount (Rs.) Remarks, if any 1 Olive Overseas P. Ltd. (Realgold Trading Co. P. Ltd.) CANARA BANK 820668 07.01. 2008 30,00,000 NO CASH DEPOSIT IN BANK A/C. BEFORE OR AFTER ISSUING OF CHEQUE - 2 TRIANGULAR INFOCOM PVT. LTD. CANARA BANK 824566 09.01. 2008 30,00,000 NO CASH DEPOSIT IN BANK A/C. BEFORE OR AFTER ISSUING OF CHEQUE 3 TRIANGULAR INFOCOM PVT. LTD. CANARA BANK 824569 09.01. 2008 5,00,000. NO CASH DEPOSIT IN BANK A/C. BEFORE OR AFTER ISSUING OF CHEQUE Sl.No Details of Loan Bank Details Cheque /DD Date Amount Remarks, if any 1 Olive Overseas P. Ltd. (Realgold Trading Co. P. Ltd.) INDIAN OVESEAS BANK 701486 01.09. 2010 20,00,000 NO CASH DEPOSIT IN BANK A/C. BEFORE & AFTER REPAYMENT OF LOAN 2 Olive Overseas P. Ltd.(Realgold Trading Co. P. Ltd.) INDIAN OVESEA SBANK 575259 30. 09. 2009 10,00,000 NO CASH DEPOSIT IN BANK A/C BEFORE & AFTER REPAYMENT OF LOAN 3 TRIANGULAR INFOCOM PVT. LTD. INDIAN OVESEA SBANK 586386 02- 11- 2009 35,00,000 NO CASH DEPOSIT IN BANK A/C. BEFORE & AFTER REPAYMENT OF LOAN Genuity of lenders: SI. No Name Of Parties PAN details CINNO (Company Incorporation No.) Whether existing Company with ROC/Latest Annual Return Filed Printed from counselvise.com 6 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 1 Olive Overseas P. Ltd. (Realgold Trading Co. P. Ltd. AACCR4512K U51909MH2003PTC139464 ACTIVE 2 Triangular Infcom Ltd. (Lexus Infotech Ltd.) AAACL4646G U74999MH1998PLC116845 LAST BALANCESHEET FILED ON 31/03/2014 SI. No. Details of Share applicant/ Loan Creditors Contributo r's Capital as on 31.03.200 7 of the previous Year- (preceding FY prior to the FY in Which contributio n made) Nature and amount of Fund in the Balance Sheet of the creditors Amount Loan/Capital contributed by this Party to Appellant Remarks if any 1 Olive Overseas P. Ltd. (Realgold Trading Co, P. Ltd. Own Fund- Rs.2,25,24,642 i. Share Capital/ applications- Rs.1,96,37,000 ii. Reserve and Surplus- Rs.29,85,502 iii Loan Fund-Rs.63,41,790 iv. Deferred Tax Liability - Rs.6,025 v. Fixed Assets -Rs.77,391. vi. Investments- Rs.7,22,69,660 vii Net Current Assets - Rs. (4,34,74,595) viii. Misc Expenses - Rs. 97,860 Rs.30,00,000 Own Fund of Party being Rs.2,25, 24,642 is higher than the amount received 2 Triangular Infocom Ltd. (Lexus Infotech Ltd.) Own Fund- Rs.3,02,86,014 i.Share Capital/applications- Rs.2,48,22,000 ii. Reserve and Surplus- Rs.55,63,264 iii. Loan Fund - Rs.3,35,69,089 iv. Deferred Tax Liability - Rs.88,767 v.Fixed Assets -Rs.2,39,747. vi. Investments- Rs.8,82,51,550 vii. Net Current Assets:- (2,45,47,427) yiii. Misc Expenditure - 99,250 Rs.30,00,000 Own Fund of Party being Rs.3,02, 86,03 4 is higher than the amount received Printed from counselvise.com 7 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 4.1. From the above details, it is evidently noted that assessee has discharged his onus to prove the identity and creditworthiness of the loan transactions as well as their genuineness. All the documentary evidences are placed on record for which nothing cogent is brought to disprove them or point out any deficiency or inconsistency to dislodge the claim of the assessee. It is seen that ld. AO has merely relied on the statements by alleged Shri Praveen Kumar Jain as recorded by Investigation Wing. It is also noted that ld. AO could not establish and demonstrate with cogent documentary evidence of any relationship between the assessee and the Praveen Kumar Jain group as well as the lender companies by evidencing any nexus of the transaction of the assessee with the Praveen Kumar Jain group. From the statements recorded of Shri Praveen Kumar Jain on which ld. AO has placed his sole reliance, there is nothing brought on record to suggest and establish that assessee's name was taken and recorded in the statement for the alleged transactions being undertaken by the assessee for the purpose of accommodation. Assessee has claimed for providing copies of material relied upon by the ld. AO and for a cross examination in respect of the statement relied upon by the ld. AO. However, no such opportunity was made available to the assessee, nor any such material was provided. Claim of the assessee is that statement made by Shri Praveen Kumar Jain and relied upon by the ld. AO is a general statement with regard to providing entry through his concerns and nowhere in his statement made any specific allegation that he had provided any entry to the assessee in the form of unsecured loans. It is also worth noting that ld. AO has not made any further enquiry to probe into the matter and has rested on the findings of the investigation wing and the statement recorded of Shri Praveen Kumar Jain in the course Printed from counselvise.com 8 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 of his search to taint the transactions of unsecured loans as accommodation entries to make the addition. 4.1. Reliance placed by the ld. Sr. DR. on the judgement of Hon’ble Supreme Court in the case of NRA Iron and Steel Pvt. Ltd. 412 ITR 161 (SC) is found to be distinguishable on the facts in as much as in the said decision, ld. AO had made extensive enquiries and some of the investors were found to be non-existent. On going through the facts involved in that judgement, it is noted that in the decided case, the AO had made extensive enquiries and from that he had found that some of the investor companies were non-existent, which is certainly not the case before us. In the decided case, certain investor companies also failed to produce their bank statements proving the source for making investments in assessee Company. In the facts of the present case, however, not only have the lender companies furnished their bank statements and audited financial statements to establish the source of funds but have also furnished their respective sources of funds in response to notices issued by the ld. AO. 5. Keeping the entire discussion made above in juxtaposition, with the documentary evidences placed on record, we find that assessee has discharged his onus to prove the identity and creditworthiness of the lender companies and the genuineness of transactions. We do not find any reason to interfere with the findings arrived at by ld. CIT(A) in deleting the addition made by ld. AO u/s.68 amounting to Rs. 65 lakhs from the two lender companies. Accordingly, ground no.1 raised by the Revenue is dismissed. Printed from counselvise.com 9 ITA No. 3619/Mum/2017 Narayan Dalpatram Thakkar AY 2008-09 6. Ground no. 2 relates to addition made on account of interest expenditure on the said two loans. Since the said two loans have been held to be genuine, the consequential effect is that the claim of interest on the said loan is an allowable expenditure and therefore, the disallowance made is deleted. We find no reason to interfere with the findings arrived at by ld. CIT(A) on this aspect by deleting the disallowance so made by ld. AO. Accordingly, ground no.2 raised by the Revenue is dismissed. 7. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 29.10.2025. Sd/- Sd/- SdSS [Amit Shukla] [Girish Agrawal] Judicial Member Accountant Member Dated: 29 October, 2025 MP, Sr.P.S. Copy to: 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "