ACIT, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA V. JAIDEEP HALWASIYA, KOLKATA

ITA 298/KOL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT (A) which had deleted the addition of \\u20b92,35,00,000/- made by the Assessing Officer (AO) under section 68 of the Income-tax Act, 1961, concerning unexplained cash credits. The AO had treated certain unsecured loans as unexplained cash credits, suspecting the identity and creditworthiness of the lenders. However, the CIT (A) found that the loans were legitimate, taken in the normal course of business, and repaid with interest through banking channels, thus not warranting the application of section 68. The Tribunal agreed with the CIT (A)'s findings, referencing several judicial precedents that supported the assessee's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772394 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2016-2017
• Other Referred Cases: CIT vs Orissa Corporation Pvt Ltd 159 ITR 78 (SC), PCIT vs. Ambe Tradecorp (P.) Ltd. (2022) 145 taxmann.com 27 (Gujarat), Poddar Realtors Vs. ITO in ITA No. 265/Kol/2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAPIL MONDAL
• Assessee Lawyers: S. K. TULSIYAN
• Keywords: Unexplained cash credit; TDS
• Section: 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.298/KOL/2025 (Assessment Year:2016-17) ACIT, Central Circle 4(3), Kolkata Aaykar Bhavan Poorva, 110, Shantiapply, Kolkata-700107, West Bengal Vs. Jaideep Halwasiya 3rd Floor, P-34, Exchange Place, Kolkata-70001, West Bengal (Appellant) (Respondent) PAN No. AAWPH1706L Assessee by : Shri S.K. Tulsiyan, AR Ms. Puja Somani, DR Revenue by : Shri Kapil Mondal, DR Date of hearing: 22.07.2025 Date of pronouncement: 26.08.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals) Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 27.11.2024 for the AY 2016-17. 02. The issue raised in ground no.1 is against the deletion of addition by the ld. CIT (A) of ₹2,35,00,000/- as made by the ld. AO in respect of unexplained cash credits u/s 68 of the Income-tax Act, 1961 (the Act). 03. The facts in brief are that the during the course of assessment proceedings, the ld. AO observed that during the year the assessee has taken unsecured loans besides noting that the assessee had opening balance of unsecured loan and the assessee had paid interest on these loans. The assessee was called upon to furnish the details Printed from counselvise.com Page | 2 ITA No.298/KOL/2025 Jaideep halwasiya; A.Y. 2016-17 and evidences to prove the identity and creditworthiness of the loan’s creditors and genuineness of the transactions which were duly filed before the ld. Assessing Officer. The ld. AO without verifying the transactions issued the summons u/s 131 of the Act to all the lenders. However, some of them appeared before the ld. AO and he noted that during the year the ld. assessee had taken ₹2,35,00,000/- by way of unsecured loans comprising of ₹50,00,000/- from Gagan Suppliers Pvt. Ltd., ₹60,00,000/- from Nitin Hire Purchase Pvt. Ltd., ₹1,25,00,000/- from Nusharwar Merchants Pvt. ltd. The first loan was not repaid, whereas the second and third loan were repaid during the impugned year itself. The ld. AO after discussing the modus operandi of the shell companies noted that the assessee has not proved the identity, creditworthiness of the lenders and genuineness of the transactions. The AO treated these unsecured loans as unexplained cash credit u/s 68 of the Act and added to the income of the assessee. Simultaneously, the ld. AO also disallowed the total interest paid during the year of ₹5,65,543/- out of which ₹1,08,195/- related to the unsecured loans which were borrowed in the preceding assessment year. 04. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by directing the ld. AO to delete the addition in respect of unsecured loans of ₹2,35,00,000/- and also in respect of interest paid of ₹5,65,543/- by recording a factual finding that the assessee has taken these unsecured loans in the normal course of business and these were repaid along with interest through banking channels after deduction of TDS at source. The ld. CIT (A) noted that the assessee is not beneficiary of the said money and therefore, the addition u/s 68 of the Act cannot be sustained. The ld. CIT (A) further observed that the Printed from counselvise.com Page | 3 ITA No.298/KOL/2025 Jaideep halwasiya; A.Y. 2016-17 loans were taken from three parties which were fully disclosed in the tax audited report and repaid in the subsequent years along with interest. The ld. CIT (A) also recorded a categorical finding that the assessee has furnished all the evidences qua these loans before the ld. AO and proved the genuineness and creditworthiness of the lenders. Moreover, the loans were repaid and therefore, section 68 of the Act was not applicable. 05. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has furnished all the evidences before the ld. AO qua the three unsecured loans raised from three parties as discussed hereinabove. The assessee provided and paid the interest on these loans after tax deducted at source. It is also undisputed that these were repaid in the current and subsequent years. The assessee furnished all the evidences before the ld. AO as well as before the ld. Commissioner of Income-tax (Appeals). However, the ld. AO has not done any enquiry or pointed out any defects or deficiency in the evidences filed. The ld. CIT (A) correctly appreciated the facts and deleted the addition by recording finding that these loans were taken in the normal course of business and repaid also in the current and subsequent years. We note that the ld. CIT (A) has passed a very detailed and speaking order which is recorded in Para No.5.2.1 to 5.2.11 from page no. 57 to 66 of the appellate order and also relied on the series of decisions and also in case of CIT vs Orissa Corporation Pvt Ltd 159 ITR 78 (SC). In our opinion, the order passed by the ld. CIT (A) does not contain any infirmity and therefore, we have no reason to interfere with the same. Further, in our opinion, if it is established that loans taken by the assessee were rapid then the provisions of Section 68 of the Act, is Printed from counselvise.com Page | 4 ITA No.298/KOL/2025 Jaideep halwasiya; A.Y. 2016-17 not applicable as has been held in the case of PCIT vs. Ambe Tradecorp (P.) Ltd. (2022) 145 taxmann.com 27 (Gujarat), in which the Hon'ble High Court has held that once the repayment of loan has been established based on the documentary evidences then the credit entries cannot be looked in isolation after ignoring the debit entries despite the fact that debit entries were carried out in the later years. Even the case of the assessee is squarely covered by the decision of the co-ordinate bench decision in the case of Poddar Realtors Vs. ITO in ITA No. 265/Kol/2023, vide order dated 22.06.2023. Under these circumstances, we do not find any infirmity or defect in the order of the ld. CIT (A) which warrant our interference. We therefore, respectfully following the above decisions, upholding the order of ld. CIT (A) by dismissing the appeal of the Revenue. 06. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 26.08.2025. Sd/- Sd/- PRADIP KUMAR CHOUBEY (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.08.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "