DCIT-27(3), MUMBAI, NAVI MUMBAI V. VINTAGE ENTERPRISES, NAVI MUMBAI

ITA 858/PUN/2024

AI Insights

The case involves the Revenue's appeal against the CIT(A)'s decision to delete additions made under section 68 of the Income Tax Act concerning unsecured loans taken by Vintage Enterprises during the assessment year 2013-14. The loans in question were from Kantha H. Arethiya, M/s. Krishna Fashion World, and Radiance Finvest Ltd. The Tribunal examined the evidences and submissions related to each loan, focusing on the creditworthiness and genuineness of the transactions. The Tribunal found sufficient evidence to support the deletion of the addition for the loan from Kantha H. Arethiya but reversed the CIT(A)'s decision for the loan from M/s. Krishna Fashion World due to insufficient evidence of creditworthiness and genuineness. The issue concerning Radiance Finvest Ltd. was remanded back to the CIT(A) for further examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714228 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Assessment Year: 2013-2014
• Other Referred Cases: PCIT Vs. Bikram Singh, Siddharth Export Vs. ACIT, Blowell Auto (P) Ltd. Vs. ACIT, Seema Jain Vs. ACIT, ITO Vs. Sai Everest Building & Developers, M/s. U Toll Corporation Ltd. Vs. ACIT, PCIT Vs. BST Infratech Ltd., ACIT Vs. Prasanna Purple Mobility Solutions Private Limited, Sumati Dayal Vs. CIT, C.I.T. V. Haresh D. Mehta, Gaurav Triyugi Singh V. Income tax Officer, PCIT V. Bairagra Builders P. Ltd., CIT V. Orissa Corporation (P.) Ltd., IRIS Motel and Resorts P. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAKESH RANJAN
• Assessee Lawyers: M. SUBRAMANIAN
• Keywords: Set aside; Additional evidence; Unexplained cash credit; TDS; Bogus
• Section: 142(1); 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.858/PUN/2024 िनधा\u0005रण वष\u0005 / Assessment Year: 2013-14 DCIT-27(3), Mumbai, Navi Mumbai Vs Vintage Enterprises, C5524, Sector 3, CBD Belapur, Navi Mumbai- 400614 Maharashtra PAN-AAFFV5688J Appellant Respondent Assessee by : Shri M. Subramanian Revenue by : Shri Rakesh Ranjan-CIT DR Date of hearing : 04.06.2025 Date of pronouncement : 06.08.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This appeal at the instance of Revenue pertaining to A.Y. 2013-14 is directed against the order of Ld. CIT(A) NFAC, Delhi u/s 143(3)/144C of the Income Tax Act, 1961 dated 23.02.2024. 2. Revenue has raised following grounds of appeal : “1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from Kantha H. Arethiya without appreciating the fact that loan advance does not commensurate with the return of income filed by the loan creditor. 2. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Krishna Fashion World without Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 2 appreciating the fact that assessee could not prove the creditworthiness of the loan creditor. 3. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Radiance Finvest Ltd. without appreciating the fact that assessee could not prove the genuineness and creditworthiness of the loan creditor. 4. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Radiance Finvest Ltd. holding that the company is registered with the ROC, Maharashtra and data about its creditworthiness, identity and genuineness are publicly available on MCA 21 without appreciating the fact that loan creditor could not produce the financials to prove the genuineness and creditworthiness of the loan given. 5. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act ignoring the decision of the Hon'ble Supreme Court of India in the case of Pr.CIT(Central)-I Vs. NRA Iron & Steel Pvt. Ltd. wherein it was held that the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction, to the satisfaction of the Assessing Officer.” 3. Brief facts of the case are that the assessee is a partnership firm engaged in the business of Builder and Developer. Loss of (-)Rs.12,31,483/- declared in the return for A.Y. 2013-14 e-filed on 29.09.2013. Case selected for scrutiny under computer-assisted scrutiny selection (CASS) for verification of large increase of unsecured loans and large amounts of sundry creditors. Valid statutory notices u/s.143(2) and 142(1) of the Act duly served upon the assessee. During the course of assessment proceedings, ld. Assessing Officer (AO) observed that no sales took place during the year and the entire construction cost has been treated as work-in-progress. The only income shown in the profit and loss account is Rs.34,47,300/- from sale of plot and Rs.93,61,021/- as other income. Ld. AO also noticed that assessee has taken unsecured loans from various parties. The Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 3 addition in dispute relates to unsecured loan taken from three parties namely (i) Rs.10.00 lakh received from Kantha H. Arethiya; (ii) Rs.7.98 crore received from M/s. Krishna Fashion World; and (iii) Rs.2.90 crore received from Radiance Finvest Ltd. Before the ld. AO, assessee failed to discharge the primary onus casted upon it to explain the nature and source of alleged sum resulting into addition u/s.68 of the Act along with other additions. Income assessed at Rs.12,21,10,890/-. 4. Aggrieved assessee preferred appeal before ld.CIT(A) and various details called for by ld.CIT(A) were filed. Additional evidences also filed. Remand report called for to which necessary compliance rebuttal was made by the assessee. After considering the assessee’s submissions and the remand report, ld.CIT(A) held in favour of the assessee. 5. Now the Revenue is in appeal before this Tribunal assailing some of the additions deleted by ld.CIT(A). In the grounds of appeal, the main challenge is against the deletion of addition made u/s.68 of the Act for the unsecured loans taken from the following parties : Sl.No. Name of the creditor Amount 1 Kantha H. Arethiya Rs.10.00 lakh 2 M/s. Krishna Fashion World Rs.7.98 crore 3 Radiance Finvest Ltd. Rs.2.90 crore 6. Ld. Departmental Representative referring to the above unsecured loans submitted that the assessee has failed to prove the creditworthiness and the genuineness of the transactions. He submitted that in the case of creditor M/s. Krishna Fashion World, no return of income has been filed for A.Y. 2013-14 and even the balance sheets are not available for Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 4 the preceding financial year as well as the year under appeal. Purpose for giving the loan has also not been specifically mentioned by the assessee. So far as Radiance Finvest Ltd. is concerned, he submitted that the alleged sum was received towards share of capital contribution for a particular project and not unsecured loan and actually the assessee has forfeited the said amount and therefore the same deserves to be treated as income of the assessee. In support, reliance is placed on the following decisions : 1. PCIT Vs. Bikram Singh (2017) 85 taxmann.com 104 (Delhi) 2. Siddharth Export Vs. ACIT (2019) 112 taxmann.com 193 (Delhi) 3. Blowell Auto (P) Ltd. Vs. ACIT ( 2009) 177 Taxman 261 (Punjab & Haryana) 4. Seema Jain Vs. ACIT ( 2018) 96 taxmann.com 307 (Delhi) 5. ITO Vs. Sai Everest Building & Developers (2022) 142 taxmann.com 383 (Mumbai –Trib.) 6. M/s. U Toll Corporation Ltd. Vs. ACIT – ITA No.107/VNS/2018 order dated 07.06.2022 7. PCIT Vs. BST Infratech Ltd. (2024) 161 taxmann.com 668 (Calcutta) 8. ACIT Vs. Prasanna Purple Mobility Solutions Private Limited – ITA No.871/PUN/2023 order dated 05.08.2024 9. Sumati Dayal Vs. CIT ( 1995) 80 Taxman 89 (SC) 7. On the other hand, ld. Counsel for the assessee vehemently argued supporting the submissions filed before ld.CIT(A) along with the finding of ld.CIT(A), chart showing the details of loans and advances, paper book running into 278 pages. Ld. Counsel also referred to the following written submissions and the case laws relied on : “4. Loan from Kanta Arethiya Rs.10,00,000/- + Interest Rs.36,822/-. In this regard, the following details were submitted: i) Confirmation of loan ii) Income tax return of the creditor for A.Y. 2013-14 iii) Computation of income of the creditor for A.Y. 2013-14 Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 5 iv) Capital A/c & Balance Sheet of the creditor for the year ended on 31.03.2013. v) Bank pass book of the creditor vi) Ledger Account 5. All the above referred details/evidences are available at pages 33 to 39 of the paper book. Here it may not be out of place to mention that the creditor complied with the notice issued u/s 133(6) as well as the summons issued u/s 131 of the act and confirmed the loan. Thus the assessee discharged the onus cast on it of proving the identity, capacity and genuineness of the transaction However, the learned A.O. made the addition only on the ground that the creditor has been filing return only since last 3 years, the income declared was only Rs.2.5 lakhs and the credit balance was only miniscule. Needless to mention that this cannot be ground good enough to make the addition u/s 68 of the act. Without prejudice to the above, a perusal of the Bank Statement of the loan creditor would reveal that the loan creditor had received a sum of Rs.10,70,027/- as repayment of loan given earlier which explains the source of the present loan to the appellant. Ground No. 2 6. Loan from M/s. Krishna Fashion World Rs.7.98,00,000/- + Interest Rs.74,69,186/- In this regard, the following details/evidences were submitted: i) Confirmation of the loan ii) Ledger A/c of loan in the books of the appellant for the period 01.04.2011 to 31.03.2015. iii) Statement giving position of balance of funds available in the bank a/c of the loan creditor on the date loan was given. iv) Bank statements of the loan creditor; a) HDFC Bank b) ICICI Bank c) Indian Bank v) Balance Sheet & P & L a/c along with Audit Report of the creditor for A.Y. 2011-12. vi) Return of income along with computation of total income of the creditor for Α.Υ. 2011-12. vii) Acknowledgement of Return of income along with computation of total income of the creditor for A.Y. 2012-13. viii) Letter dated 14.10.2015 addressed by the creditor to its A.O. ix) Bank Statements of the appellant for the period 01.11.2014 to 31.03.2015 showing the re-payment of the loan. x) Bank Statement of the creditor showing the receipt of re- payment of the loan by cheque. xi) Details of interest paid to the creditor M/s. Krishna World Fashion. Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 6 xii) Affidavit dated 10.06.2016 of Mr. Ramesh M. Patel of M/s. Krishna Fashion World submitting the reason for non-filing of IT return for A.Y. 2013-14. xiii) Police complaint dated 03.12.2014 filed before Police Station at Khar, Mumbai. All the above evidences are available at pages 40 to 170 of the paper book. An analysis of the above evidences would clearly reveal that the appellant has discharged its onus of proving the identity, capacity of the lender and the genuineness of the transaction. However, the learned A.O. makes the addition only on the ground that the lender has not filed any return of income for the A.Y. 2013- 14. Needless to mention that this ground cannot be held against the appellant. In this connection, the Hon'ble Tribunal's attention is invited to the affidavit at page no.154 filed by Mr. Ramesh M. Patel partner of M/s. Krishna Fashion World wherein he has not only explained the reason for non-filing of IT Return for A.Y.213-14 but also the source of source of the loan advanced. Thus the appellant has proved the identity, capacity of the lender as also the genuineness of the transaction. Ground No. 3 & 4 7. Loan from M/s. Radiance Finvest Ltd. Rs.2.90.00.000/- + interest Rs.74.69,186/- In this regard, the following details have been submitted: i) Bank's certificate showing details of loan received. ii) Legal notice received from the creditor's lawyer. iii) Creditor's IT Return for A.Y. 2013-14. iv) Ledger A/c of the loan v) Details of Registration of the company with the Registrar of company vi) Form-23AC filed with the Registrar of Companies for the F.Y. 2012-13 vii) Affidavit of Mukesh Patel Partner of the appellant firm regarding the loan. viii) Letter of allotment of plot by CIDCO to the appellant. The above referred evidences are available at pages 171 to 241 of the paper book and a perusal of the same would clearly reveal that the appellant has discharged its onus of proving the identity, capacity of the creditor and the genuineness of the transaction. However, the learned A.O. has disbelieved the transaction only for the reason that there was no compliance of the summons and consequently could not verify the transaction. In this connection, it has to be submitted that non-attendance by the creditor alone cannot be reason for making addition u/s. 68 of the act, particularly when various evidences furnished establishes the identity and the capacity of the creditor and the financial data made available evidentiates the genuineness of the transaction.” Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 7 Case laws : “i) C.I.T. V. Haresh D. Mehta 251 Taxman 346 (Bom) In this case, it has been that where assessee proved loan transaction by producing details like copy of PAN, return of income, balance sheet, bank accounts etc. the addition made u/s 68 cannot be sustained. ii) Gaurav Triyugi Singh V. Income tax Officer. Mumbai. 423 ITR 531 (Bom) In this case, it has been held that where the assessee has received unsecured loan through cheque and there was no dispute as to identity of creditor and genuineness of transaction and the revenue could not bring any material to impeach the source of credit, no addition u/s 68 could be made. iii) PCIT V. Bairagra Builders P. Ltd. 164 taxmann.com 162 (Bom) In this case, it has been held that where the assessee has taken unsecured loans and has submitted all evidences to substantiate loan including confirmation from creditors and the loan was taken and repaid through banking channels, the loans cannot be treated as unexplained cash credits. iv) CIT V. Orissa Corporation (P.) Ltd. 159 ITR 78 (SC) In this case, it has been held that where the assessee has produced various details of the creditors such as name, address PAN numbers, confirmation letters etc. the addition made as cash credits cannot be sustained unless the revenue pursues the matter further or examines the source of income of the creditor. v) IRIS Motel and Resorts P. Ltd. ITA No. 533/Del/2018 & 1441/Del/2020 In this case, it has been held that merely because lenders have shown meager income in their IT returns that cannot be a reason to disbelieve the credit-worthiness as the bank statement audited financial statements of the lenders would prove otherwise. In view of the above, it is submitted the learned CIT(A)'s order be upheld and revenue's appeal be dismissed.” 8. We have heard the rival submissions and perused the record placed before us. Revenue is aggrieved with the deletion of addition made by the Assessing Officer for unexplained unsecured loan by invoking section 68 of the Act for the following three parties : Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 8 Sl.No. Name of the loan creditor Amount 1 Kantha H. Arethiya Rs.10.00 lakh 2 M/s. Krishna Fashion World Rs.7.98 crore 3 Radiance Finvest Ltd. Rs. 2.90 crore 9. Now for examining the applicability of section 68 of the Act under the given case, we note that the assessee has to explain the nature and source of the alleged unsecured loans received from the aforementioned three creditors. Section 68 has direct bearing in deciding the instant appeal. For better understanding, we reproduce below the provisions of section 68 of the Act which reads as under : “Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : [Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,— (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that] where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 9 (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: [Provided also] that nothing contained in the first proviso 86[or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.” 10. From going through the above provision, the initial burden is to be discharged by the assessee to explain the nature and source. We further observe that both the sides have referred to plethora of decisions. At this juncture, we would like to quote the judgment of Hon’ble Apex Court in the case(s) of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) wherein the Hon’ble Court laid down the proposition that the initial onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source. Hon’ble Supreme Court summed up the principles, which emerged after deliberating upon various case laws, as under: “i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 10 ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established.” 11. In light of the above judgment of Hon’ble Apex court and the principles laid down therein that a credit in the books of account is to be treated as explained if the assessee is able to prove the Identity, Creditworthiness of the loan creditors and genuineness of the transactions, we proceed to examine the alleged three unsecured loans. 12 (i). Unsecured loan of Rs.10.00 lakh received from Kantha H. Arethiya : a) We notice that the assessee in order to discharge its burden has furnished the following evidences and the summary of submissions made by ld. Counsel for the assessee reads as under : List of Evidences Summarised submissions a) Copy of confirmation of loan b) Copy of Income Tax Return for Asst. Year 2013-14 c) Copy of computation of total income for Asst. Year 2013-14 d) Copies of Capital Account and Balance Sheet e) Copy of Bank Pass Book (Cosmos Bank) f) Copy of ledger account of loan 1) Notice u/s. 133(6) and summons u/s.131 issued complied with. 2) Loans received through Banking Channels. 3) Interest payments made through Banking Channels after deducting TDS wherever required. 4) Re-payment of loans made through Banking Channels. 5) Creditor's details such as PAN, confirmation, Return of Income, capital A/c. P & L A/c., Balance Sheet, Bank Passbook, Ledger A/c. etc furnished. 6) Creditor's source explained. Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 11 b) From going through all the above details, all the evidences filed by the assessee, we are satisfied that Kantha H. Arethiya had sufficient creditworthiness to give unsecured loan, Identity and genuineness of the transaction is also proved because the assessee has received the interest through banking channel against the unsecured loan advanced by it from a person regularly filing income tax returns. We therefore fail to find any infirmity in the finding of ld.CIT(A) deleting the addition of Rs.10.00 lakh made by ld. Assessing Officer u/s.68 for the unsecured loan received from Kantha H. Arethiya. Ground No.1 raised by the Revenue is dismissed. 13. Unsecured loan of Rs.7.98 crore received from M/s. Krishna Fashion World : a) Before us, Ld. Departmental Representative has submitted that only the creditworthiness of the cash creditors and genuineness of transaction in question is not proved. To examine this aspect, we notice that M/s. Krishna Fashion World is found to be assessed to tax. Return of income for A.Y. 2011-12, 2012-13 has been filed but the audited balance sheet for A.Y. 2012-13 is not filed. Even, no return of income has been filed for A.Y. 2013-14 during which the assessee has received unsecured loan. b) It is claimed by the assessee that due to some problems at the business place of M/s. Krishna Fashion World, books of account could not be prepared. In order to discharge its burden, assessee firm has furnished the Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 12 following evidences and the summary of submissions which reads as follows : List of Evidences Summarised submissions a) Copy of confirmation of loan b) Copy of Ledger account of loan in the books of appellant for the period 01/04/2016 to 31/03/2015. c) The statement giving position of balance of funds available in the bank of the loan creditor on the date of loan given. d) Copies of bank statement of M/s. Krishna Fashion World (Loan Creditor) 1) HDFC BANK 2) ICICI BANK 3) INDIAN BANK e) Copies of Balance Sheet and Profit & Loss Account along with Audit Report of M/s. Krishna Fashion World for Asst. Year 2011-12 f) Copy of Income Tax Return and computation of total income of M/s. Krishna Fashion World for Asst. Year 2011-12 g) Copy of acknowledgement of Income Tax Return of M/s. Krishna Fashion World for Α.Υ. 2012-13 h) Copy of loan creditor's i.e. M/s. Krishna Fashion World letter dated 14/10/2015 addressed to its assessing officer. i) Repayment of loan by cheque: i. Copy of bank statement of Cosmos Co- Op. Bank of appellant for the period 01/11/2014 tο 31/03/2015 showing the repayment of loan by cheque ii. Copy of bank statement of M/s.Krishna Fashion World (State Bank Of Patiala) showing the receipt of repayment of loan by cheque from the appellant j) Details of interest paid to M/s. Krishna Fashion World 1) Summons u/s. 131 issued complied with. 2) Loans received through Banking Channels. 3) Interest payments made through Banking channels after deducting TDS wherever required. 4) Re-payment of loans made through Banking Channels. 5) Creditor's details such as PAN, confirmation, Return of Income, Capital A/c., Bank A/с., Ledger A/c. etc furnished. 6) Creditor's source explained. Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 13 k) Copy of affidavit dated 10/06/2016 of Mr. Ramesh Madan Patel as partner of M/s. Krishna Fashion World submitting the reason for non-filing of Income Tax Return for Asst. Year 2013-14 l) Copy of Police Complaint dated 03/12/2014 before Police Station Khar Mumbai c) However, certain facts create doubt in the contentions of Ld. Counsel for the assessee because the loan taken from M/s. Krishna Fashion World has been repaid during F.Y. 2014-15. It means that M/s. Krishna Fashion World was having all access to its books of account and banking. Even if M/s. Krishna Fashion World was not able to maintain its books of account during F.Y. 2012-13, then once the transactions have been initiated through banking channel, efforts should have been made by M/s. Krishna Fashion World to file its return of income. Though the due date of filing of return u/s.139(1) of the Act expired on 30.09.2013 but then there was sufficient time to file the belated return u/s.139(4) of the Act upto 31.03.2015. But here, neither the alleged loan creditor M/s. Krishna Fashion World has filed the return of income for A.Y. 2013-14 nor any copy of balance sheet and return for A.Y. 2014-15 has been furnished. The audited balance sheet for A.Y. 2012-13 has also not been filed. It is not at all clear what was the purpose of giving such a huge amount of unsecured loan to the assessee firm when M/s. Krishna Fashion World was having huge amount of unsecured loan of approx. Rs.7.15 crore and Rs.5.58 of secured loan as on 31.03.2011. Capital of the partners was approx Rs.4.66 Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 14 crore as on 31.03.2011. To examine the creditworthiness and genuineness, financial statements play a very important role. Merely filing of bank statement will not serve the purpose for satisfying the Revenue. Eventhough M/s. Krishna Fashion World has deducted the tax at source but then tax liability on the total interest income would have been much higher but no income-tax return is filed. d) All these series of facts are in itself sufficient to indicate that genuineness of the alleged transaction of unsecured loan given to the assessee as well as creditworthiness of M/s. Krishna Fashion World is not proved. Though the assessee has furnished copy of bank account showing the balance available, then having sufficient creditworthiness also needs to be verified as to whether there are funds available with the loan creditor for giving loan to some other concern. One of the main contention of Ld. Counsel for the assessee is that unsecured loan has been repaid but then the repayment has taken place after two years but the foundation of examining section 68 of the Act is the year in which the amount is received and because in the year in which the amount is received the assessee has failed to prove its creditworthiness and genuineness of the transaction, therefore section 68 of the Act has rightly been invoked by the AO. e) Therefore, in our considered view, the alleged loan creditor fails in the test laid down by the Hon’ble Apex Court in the case of Kale Khan Mohammed Hanif and Roshan Di Hatti (supra) as the assessee has miserably Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 15 failed to discharge the onus casted upon it. We thus reverse the finding of ld.CIT(A) and confirm the addition of Rs.7.98 crore made by the Assessing Officer u/s.68 of the Act. Ground No. 2 raised by the Revenue is allowed. 14. Unsecured loan of Rs.2.90 crore received from Radiance Finvest Ltd. : a) Revenue has raised Ground Nos. 3 and 4 against the deletion of said addition. During the course of assessment proceedings, ld. Assessing Officer based on the audited balance sheet of the assessee firm observed that unsecured loan of Rs.2.90 crore has been received from Radiance Finvest Ltd. Before the lower authorities, assessee has referred to following events to explain the nature and source of alleged sum. List of evidences and the submissions by the assessee read as follows : List of Evidences Summarised submissions a) Copy of Bank certificate dated 11/03/2016 submitted to the I.T.O. showing the details of loan received on the details of loan received on the different dates. b) Copy of legal notice dated 20th August, 2015 from the creditor's lawyer c) Copy of Income Tax Return for Asst. Year 2013-14 d) Copy of ledger account of loan e) Details of Registrations of Company with Register of Company f) Copy of Form - 23AC Filed with Register of Companies for the financial Year 2012- 13 g) Copy of affidavit of Mr. Mukesh Patel, partner of appellant firm h) Copy of letter of allotment of sale of plot by CIDCO to the appellant 1) Amount received through Banking Channels and later converted in to loan. 2) Loan received through Banking Channel. 3) Creditor's details such as PAN, Income tax return, Balance Sheet, Registration of the company, Form No.23AC filed with Registrar of companies. 4) Creditor's source explained. Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 16 b) In the above list of evidences, assessee has furnished the copy of affidavit of Mukesh Patel, partner of the assessee firm. Copy of the affidavit is placed at pages 218-220 of the paper book. This affidavit has been given specifically for the alleged unsecured loan taken from Radiance Finvest Ltd and the same is reproduced below : “I, Shri Mukeshkumar G. Mathukiya, in my capacity as one of the partners of M/s. Vintage Enterprises, at shop no.1, Patel Paradise, Plot No.1, 31 & 32, section-35 (E), Kharghar, do hereby solemnly affirm on oath as follows : 1. I say that M/s. Vintage Enterprises successfully won the tender from CIDCO, for purchase of an open plot on 13/01/2012 for a consideration of 30,50,60,595/-. In addition, a sum of Rs.85,82,000/- was to be paid towards stamp duty. 2. The assessee firm was required to pay a sum of Rs.15,68,21,298/- on or before 27/04/2012 against the total consideration of Rs.30,50,60,595/-. 3. Since, the assessee firm was running short of fund, one Mr. Ramesh Devji Patel, the Managing Director of M/s. RADIANCE FINVEST PVT. LTD offered to bring the finance to become the partner sharing 25% of profit in the said new project and accordingly, he agreed to bring the finance to the tune of about Rs. 7,84,10,648/- being the 25th of the total Investment (30,50,60,595 + stamp duty of Rs.85,82,000/-). However, he could bring only Rs. 2,90,00,000/- 4. I say that in Addition to the cost of land, he was also required to bring the finance towards the cost of construction in the ratio of 25%. 5. I say that unfortunately, the said Managing Director Mr. Ramesh Devji Patel expired on 03/04/2013 and the whole issue of the company becoming partner got stuck. 6. I say that on account of failure on the part of the company i.e. M/s. RADIANCE FINVEST PVT. LTD in bringing the balance amount of capital contribution through his director i.e. Mr. Ramesh Patel, the assessee firm had to face lot of hardships and to incur additional financial and other expenses in arranging finance to make the payments to the Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 17 CIDCO to get the possession of the plot of land and to start the project. 7. The assessee firm has, thereafter, discussed the issue of loss suffered by the assessee firm on account of failure to bring the promised amount of finance to the assessee firm with the remaining directors of the company who are the legal heirs of Late Mr. Ramesh Devji Patel, but the matter has not yet been settled. 8. Pending the settlement of issue of monetary loss suffered by the assessee firm, the amount of Rs. 2,90,00,000/- which was received was therefore, compulsorily shown in the books of the assessee firm as loan without bearing burden of payment of interest. 9. The assessee firm has been desperately trying to settle the matter with the legal heirs of Late shri Ramesh Devji Patel amicably until then, the amount of Rs.2,90,00,000/- received has been continued to be shown as loan without bearing interest.” c) From going through the above affidavit, we note that the purpose of the alleged sum was not unsecured loan but to bring capital to become a partner of 25% of the profits in a new project which was to start in respect of purchase of land from City Industrial Development Corporation of Maharashtra Ltd. (CIDCO). In other words, the assessee was to contribute capital along with Radiance Finvest Ltd. who had to contribute 25%. Once it is in the nature of capital contribution, then it is not clear why the assessee has mentioned the sum received from Radiance Finvest Ltd. as unsecured loan. Some legal disputes are also going on between the assessee and Radiance Finvest Ltd. In the statement filed before the lower authorities, assessee has itself stated that initial capital from Radiance Finvest Ltd has been forfeited by the assessee due to breach of agreement. The contents of the affidavit, legal action taken between both the parties and the evidences putforth before us indicates that the Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 18 alleged sum is not in the nature of unsecured loan but it is in the nature of capital contribution which has either been forfeited or the assessee is liable to return the said amount. But in the given situation, section 68 of the Act cannot be tested for the alleged unsecured loan but has to be examined for the capital contribution for a business venture between assessee and Radiance Finvest Ltd. d) Considering the facts and circumstances, we are of the considered view that the issue deserves to be set aside to the file of ld.CIT(A) for afresh adjudication of the alleged sum of Rs.2.90 crore received from Radiance Finvest Ltd. Assessee may furnish details before ld.CIT(A) and ld. CIT(A) shall call for a remand report from the ld. Jurisdictional Assessing Officer mentioning the fact about the nature of alleged sum being not unsecured loan but a capital contribution. Needless to mention that ld.CIT(A) in the set aside proceedings shall afford reasonable opportunity of hearing to the assessee. Ground Nos. 3 and 4 raised by the Revenue are allowed for statistical purposes. 15. Ground No. 5 being general in nature needs no adjudication. 16. In the result, appeal of the Revenue is partly allowed for statistical purposes. Order pronounced on this 06th day of August, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 06th August, 2025. Satish Printed from counselvise.com ITA No.858/PUN/2024 Vintage Enterprises 19 आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “B” ब\u0014च, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "