AMOL CERAMICA PRIVATE LIMITED,POWAI MUMAI V. ASSESSING OFFICER , ASSESSMENT UNIT FACELESS

ITA 1889/MUM/2025

AI Insights

The case involves Amol Ceramica Private Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the reassessment of income for the Assessment Year 2017-18. The primary contention was the addition of Rs. 50,00,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The AO had treated this amount as an accommodation entry based on information from the Investigation Wing that the lender, M/s. Aneri Fincap Ltd., was involved in providing bogus loan entries. The CIT(A) upheld the AO's decision, leading to the present appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784743 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 20-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: RADHESHYAM SHARMA; FILLING RELEVANT
• Keywords: Reassessment proceedings; Unexplained cash credit; Onus to prove; TDS; Bogus loan; Bogus
• Section: 147; 148; 143(3); 132; 68; 69C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.1889/MUM/2025 ( नधा\u000fरणवष\u000f / Assessment Year :2017-18) Amol Ceramica Private Limited 355 Powai Plaza Hiranandani Garden Powai, Mumbai-400076. v/s. बनाम Income Tax Officer 9(1)(2) 205, Aayakar Bhawan, M. K. Road, Churchgate, 400020. \u0001थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACA4899G Appellant/अपीलाथ\u0016 .. Respondent/\u0017 तवाद\u001a Assessee by: Shri Radheshyam Sharma, CA Revenue by: Shri Surendra Mohan- Sr. DR Date of Hearing 28.10.2025 Date of Pronouncement 11.11.2025 आदेश /O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 05.02.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18. 2. The assessee has raised the following grounds of appeal: “1. The reopening of the assessment and the assessment so completed are illegal, invalid and deserves to be quashed as per law and in the interest of justice. Printed from counselvise.com P a g e | 2 ITA No. 1889/Mum/2025 2. The Ld. CIT(A) has erred both in law and in facts of the case in not allowing sufficient opportunity to the appellant to represent its case before himself to adjudicate on all ground of appeal. 3. On facts and circumstances of the case, the authorities below have erred in upholding the reassessment proceedings ignoring the fact that impugned assessment is invalid and without jurisdiction as the said assessment is completed without complying with legal requirements of the provisions of section 147/148 of the Income Tax Act therefore such assessment is void ab initio and liable to be quashed. 4. On facts and circumstances of the case, the authorities below have erred in upholding the reassessment proceedings ignoring the fact that reassessment proceedings-initiated u/s 147 of the IT Act ignoring the contention of appellant that the proceedings have been initiated by the AO without application of independent mind on the material, if any, provided by the Inv. Wing of the department. Therefore, such reassessment is void ab initio and liable to be quashed. 5. On the facts and circumstances of the case and in law the NATIONAL FACELESS APPEAL CENTRE NEW DELHI, C.I.T. (APPEAL) has erred in upholding the entire reassessment proceedings u/s 147/148 of the Act, as valid, without appreciating facts of the case. 6. On the facts and circumstances of the case and in law the NATIONAL FACELESS APPEAL CENTRE NEW DELHI, C.I.T. (APPEAL) has erred in confirming the addition of Rs. 50,00,000/-made to the returned income of the appellant, under section 68 of the Act, without appreciating the facts of the case and correct nature of transaction. 7. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in upholding the action of the Ld. Assessing Officer in making addition u/s. 68 of the 3 amounting to Rs. 50,00.000/ w.r.t. unsecured loan from certain parties considering the same as unexplained. Hence the Appellant prays that addition made by the Ld. Assessing Officer may kindly be deleted. 8. The CIT Appeal Faceless has erred in law and on facts in upholding addition of Rs. 50,00,000 u/s. 68 and holding that assessee failed to discharge onus to prove cash credit in as much as that the full details explaining cash credit have been furnished but not considered and the assessee has discharged the onus cast on it. 9. On the facts and circumstances of the case and in law, the AO grossly erred in making and the CIT(A) grossly erred in confirming the addition of treating the Unsecured Loan taken from Listed NBFC as unexplained and making the addition under section 68 of the Act. As lender is a NBFC engaged in lending business controlled and Regulated by RBI and amount taken and repaid with interest all supporting documents were produced hence Credit worthiness, Identity of Lender and Genuity of Transactions are proved by us accordingly the addition so made is illegal and liable to be deleted in the interest of justice. Printed from counselvise.com P a g e | 3 ITA No. 1889/Mum/2025 10. On the facts and circumstances of the case, the authorities below have erred in upholding the addition of Rs.50,00,000/- allegedly treating the unsecured loans from the parties in question as unexplained credit within meaning of section 68 rws 115BBE of IT Act ignoring the fact that the above majority of the amount of unsecured loan have been either repaid or offered to tax by the appellant and also onus u/s 68 has been discharged by the appellant by filling relevant documents therefore, such addition is not tenable in law.\" The Appellant craves leave to add, amend, alter, vary and/or withdraw the above grounds of appeal with the kind permission of the Hon'ble Tribunal.” 3. Although the assessee has raised multiple grounds, sole substantive issue pertains to the addition of Rs. 50,00,000/- made u/s. 68 r.w.s 115BBE on account of unexplained cash credit. Relevant facts are as under: The assessee company filed original return for A.Y. 2017-18 declaring income of Rs. 20,72,470/- on 31.10.2017. Assessment was completed u/s. 143(3) at an income of Rs. 448,88,695/- after making various additions u/s. 68, 69A, 69C etc. Subsequently, a notice u/s. 148 was issued on the basis of information received from JCIT (Central) regarding bogus loan entry taken by the assessee company from M/s. Aneri Fincap Ltd. Earlier, a search u/s. 132 was carried out in the case of One World group on 06.11.2019 during which it was discovered that the group entities had taken bogus entries of sales and purchases from the entities controlled and managed by one Shri Rajesh G. Mehta, which include M/s. Aneri Fincap Ltd. Since the assessee was found to be a beneficiary of the accommodation entry of Rs. 50,00,000/-from M/s. Aneri Fincap Ltd., a notice u/s. 148 was issued on 22.07.2022, after following the prescribed Printed from counselvise.com P a g e | 4 ITA No. 1889/Mum/2025 procedure. The assessee filed a return in response to this notice, declaring total income of Rs. 20,72,470/-, same as in the original return. Ld. AO noted that no such loan of Rs. 50,00,000/- was reflected in the audited accounts of the assessee. On being questioned, the assessee submitted that the aforesaid loan was a business loan taken from M/s. Aneri Fincap Ltd., a NBFC, which was received in the assessee’s current account with Axis Bank Vs. RTGS and also filed a confirmation of the ledger account of M/s. Aneri Fincap Ltd. However, ld. AO noted that no explanation has been offered by the assessee regarding non disclosure of the business loan in the audited balance sheet. In the light of information received from the Investigation Wing that lender is a paper company which has no genuine business transactions, the loan received by the assessee was treated as unexplained and added u/s. 68 of the Act. Aggrieved, the assessee preferred an appeal before the ld. CIT(A). Vide order dated 05.02.2025, the appeal of the assessee was dismissed by ld. CIT(A) with the following observations: “I have perused the order of the AO along with the submissions of the appellant and the judgments of the Tribunals and the Courts relied upon by the appellant. In this case the appellant has taken loan of Rs. 50,00,000 from M/s Aneri Fincap Ltd for regular business purpose which was received in company's current account number 916020014798603. M/s Aneri Fincap Ltd is providing bogus loan entries and the appellant is one of the beneficiaries. Shri Rajesh G. Mehta in his statement provided the details of the entities controlled and managed by him, and M/s. Aneri Fincap Ltd. is one of the entities controlled and managed by him. It is pertinent to mention here that no such business loan from Aneri Fincap limited (PAN: AAACF4897R) was declared before the AO by the appellant. The appellant has not submitted anything regarding why in the Form-3CA-3CD for A.Y. Printed from counselvise.com P a g e | 5 ITA No. 1889/Mum/2025 2017-18, no such loan from Aneri Fincap limited (PAN: AAACF4897R) has been declared. Appellant has been silent on this issue. Further just because the company is registered with ROC, having active status, filing return of income, having PANs do not establish their credit worthiness. The source of transaction is non genuine though the funds have moved through banking channel. The appellant has not provided any documents to substantiate his claim. Hence the genuineness of transaction in respect of unsecured loans given to the appellant company is not established. I do not find any merit in the appeal of the appellant to substantiate his contentions adduced in the ground of appeal. In view of the factual matrix of the case at hand and the discussion above, these grounds of appeal are, accordingly, dismissed and the addition made by the AO on this account is, hereby, confirmed.” Aggrieved further, the assessee has filed present appeal before the Tribunal. 4. Before us, ld. AR has submitted that the onus to prove the identity of the lender, its creditworthiness and genuineness of the transaction has been duly discharged by the assessee. Inadvertently, the impugned loan was not reflected in the audited Balance sheet under the ‘long term’ and ‘short term’ borrowings. 4.2 On the other hand, ld. DR relied on the orders of lower authorities and submitted that the lender company was found to be a paper entity and the assessee had taken an accommodation entry of Rs. 50,00,000/- during the year from it. The same was also not reflected in the short term and long term borrowings in the balance sheet. Hence, after considering the factual matrix, ld. AO rightly treated it as an unexplained credit u/s. 68 of the Act. 5. We have heard the rival submissions and perused the material on record. Admittedly, the transaction was not correctly recorded or reflected in the Printed from counselvise.com P a g e | 6 ITA No. 1889/Mum/2025 audited accounts of the assessee. As such, even during the course of original assessment proceedings, it remained undetected and unverified. Subsequently, on receipt of information after the search action on the lender company, the impugned transaction came to the notice of the ld. AO. After giving due opportunity to the assessee, ld. AO held that no explanation regarding non-disclosure of the loan in the audited balance sheet has been furnished. This fact, coupled with the finding of the department that the lender is a paper entity, led the ld. AO to treat the same as an accommodation entry on the ground that the transaction is not genuine. It is seen that the while the identity of the lender is established, it creditworthiness and genuineness of the transaction have not been substantiated to the satisfaction of ld. AO by the assessee. It is also not clear as to on what terms and conditions, the said business loan has been given by the lender and whether any TDS has been deducted on the interest paid. Since balance at the close of F.Y. is stated to be 55,29,641/- it has also not been brought on record as to when and how the loan has been repaid. In view of above facts and circumstances, we deem it appropriate to remand the issue to ld. AO for verification of the genuineness of the transaction. The assessee is also directed to make requisite compliance before the ld. AO. Printed from counselvise.com P a g e | 7 ITA No. 1889/Mum/2025 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 11.11.2025. Sd/- Sd/- PAWAN SINGH RENU JAUHRI (\u001bया यक सद य/JUDICIAL MEMBER) (लेखाकार सद य/ACCOUNTANT MEMBER) Place: मुंबई/Mumbai \u0006दनांक /Date 11.11.2025 Anandi.Nambi/Stenographer आदेश की \u0015ितिलिप अ\u001aेिषत/Copy of the Order forwarded to : 1. अपीलाथ\b / The Appellant 2. थ\b / The Respondent. 3. आयकर आयु\u0011 / CIT 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण DR, ITAT, Mumbai 5. गाड\u001b फाईल / Guard file. स ािपत \u0015ित//True Copy// आदेशानुसार/ BY ORDER, सहायक पंजीकार(Asstt. Registrar) आयकर अपीलीय अिधकरण/ ITAT, Bench, Mumbai. Printed from counselvise.com "