DCIT CC 8(4), MUMBAI, MUMBAI V. SHREE RATAN MANGAL JEWELS PRIVATE LIMITED, MUMBAI

ITA 3893/MUM/2025

AI Insights

The case involves appeals by the revenue against the order of the CIT(A) which had set aside the penalty levied by the AO under section 250 of the Income Tax Act, 1961 for the assessment years 2015-16 and 2016-17. The main issue was the treatment of a loan taken by Shree Ratan Mangal Jewels Pvt Ltd from M/s. Zeus Housing and Construction Ltd, which was deemed to be an accommodation entry. The CIT(A) had deleted the penalty on the grounds that no additions were made regarding the loan under section 68, but only on the consequential interest. The Tribunal found that the CIT(A) had not properly appreciated the facts, as the loan was indeed an accommodation entry and the interest paid on it was rightly disallowed under section 69C.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783663 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 30-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANNAVARAN KOSURI
• Keywords: Set aside; Accommodation entries; Bogus loan; Bogus
• Section: 68; 69C

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER I.T.A. No. 3893 & 3894/Mum/2025 A.Y: 2015-16 & 2016-17 DCIT, CC – 8(4) Room No. 659, Aaykar Bhavan, MK Road, Mumbai – 400020. Vs Shree Ratan Mangal Jewels Pvt Ltd., 302, 3rd Floor, Chintamani Arcade, Dhanji Street, Opp Bombay Bullion, Mumbai – 400002. PAN – AAPCS6589J (Appellant) (Respondent) Assessee by None Revenue by Shri Annavaran Kosuri, Sr. AR Date of Hearing 13.08.2025 Date of Pronouncement 03.11.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeals have been filed by the revenue challenging the impugned order dt. 24.03.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16 & 2016-17. 2. Since all the issues involved in these two appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for Printed from counselvise.com 2 ITA No. 3893 & 3894/Mum/2025 Shree Ratan Mangal Jewels Pvt Ltd, Mumbai. the sake of convenience and brevity. We shall take ITA No. 3893/Mum/2025, A.Y 2015-16 as lead case and facts narrated therein. ITA No. 3893/Mum/2025, A.Y 2015-16 3. None appeared on behalf of the assessee either physically or virtually when the case was called repeatedly. On the contrary, Ld. DR present in the court is ready with the arguments, therefore I have decided to proceed with the hearing of the case ex-parte. 4. We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities . 5. From the records we noticed that Ld. CIT(A) set aside the penalty levied by AO on the ground that as per the facts of the case no additions were made on account of bogus loan u/s 68 of the Act and thus when AO has not doubted the loans and has not made any addition on account of loan under any section. On the other hand made addition on consequential interest on account of such loans. Thus concluded that the penalty on such interest income is incorrect. 6. Where is in our view the Ld. CIT(A) has not properly appreciated the facts of the case, because in the present case, the assessee had taken loan of Rs.2,00,00,000/- from M/s. Zeus Housing and Construction Ltd, which was Printed from counselvise.com 3 ITA No. 3893 & 3894/Mum/2025 Shree Ratan Mangal Jewels Pvt Ltd, Mumbai. managed and controlled by Akhil B Doshi as managing director, and who was an accommodation entries provider and had accepted to have provided such entry as loan to Mangal Royal Jewels Private Limited. The loan taken in F.Y 2014–15 was returned back on 29.03.2017 and 30.03.2017. Since the accommodation entries had been accepted, therefore, the interest paid of Rs. 14,73,288/- on the bogus loan was disallowed u/s 69C of the Act. Apart the transaction cost borne by the assessee was worked out at 2% and the same was also added to the total income. 7. Therefore Ld. CIT(A) in the impugned order wrongly deleted the penalty by concluding that no addition on account of loan was ever made by the AO 8. Be that as it may, without going into the merits of the case, we set aside the order passed by Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) to decide the same on merits after considering the complete facts of the case as narrated by us above and after providing opportunity of hearing to the parties. 9. Before parting we make it clear that our decision to restore the matter back to the file of the Ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the Ld. CIT(A) independently in accordance with law. 10. In the result, the appeal filed by the revenue stands allowed for statistical purposes. Printed from counselvise.com 4 ITA No. 3893 & 3894/Mum/2025 Shree Ratan Mangal Jewels Pvt Ltd, Mumbai. ITA No. 3894/Mum/2025, A.Y 2016-17 11. As the facts and circumstances in these appeals are identical to ITA No 3893/Mum/2025 for the A.Y 2015-16 (except variance in figures) and the decision rendered in above paragraph would apply mutatis mutandis for this appeal also. Accordingly, the grounds of appeal of the present appeal also stands allowed for statistical purposes. 12. In the result, both the appeals filed by the revenue are allowed for statistical purposes. Order pronounced in the open court on 03/11/2025 Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai: Dated: 03/11/2025 KRK, Sr. PS. Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. Printed from counselvise.com "