DCIT, CENTAL CIRCLE 2(3), KOLKATA V. LUMINO INDUSTRIES LIMITED, MERLIN ACROPOLIS, E.K.T.

ITA 1223/KOL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the addition made by the Assessing Officer (AO) on account of bogus unsecured loans. The AO had treated the loans as unexplained cash credits under section 68 of the Income Tax Act, 1961, suspecting the lenders to be shell entities controlled by accommodation entry operators. The CIT(A) reversed the AO's decision after considering the evidences and submissions of the assessee, which were supported by various judicial decisions. The Tribunal, after examining the detailed submissions and evidences, concurred with the CIT(A) and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776259 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2025
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 03-06-2025
• Other Referred Cases: PCIT Vs Sreeleathers, DCIT vs. Cabcon India (P.) Ltd, DCIT vs. Image Vinimay Ltd, ACIT vs. Machinery Agencies India, Poddar Realtors vs. ITO, Iris Clothings Limited Vs. DCIT, Crystal Networks (P) Limited vs. Commissioner of Income Tax, PCIT vs. Ambe Tradecorp (P.) Ltd
• Laws Referred To: Income Tax Act, 1961
• Court: TRIBUNAL
• Department Lawyers: RELYING
• Assessee Lawyers: ELABORATELY
• Keywords: Set aside; Corroborative evidences; Unexplained cash credit; TDS; Accommodation entries; Source of fund; Opportunity of cross examination; Bogus
• Section: 143(3); 142(1); 68; 131; 133(6)

Judgement Text

" आयकर अपीलीय अिधकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Duvvuru RL Reddy, Vice President and Shri Rajesh Kumar, Accountant Member I.T.A. No.1223/Kol/2025 Assessment Year: 2014-15 DCIT, Central Circle-2(3), Kolkata........................…...........................……….……Appellant vs. Lumino Industries Ltd……………………............…..….…..….......……...…..…..Respondent Unit No.12/4, Merlin Acropolis, E.K.T., Kol-700107. [PAN: AAACD9817H] C.O No.57/Kol/2025 (in I.T.A. No.1223/Kol/2025) Assessment Year: 2014-15 Lumino Industries Ltd.......................................................................……….…Cross-Objector Unit No.12/4, Merlin Acropolis, E.K.T., Kol-700107. [PAN: AAACD9817H] vs. DCIT, Central Circle-2(3), Kolkata ……………….…..….......……..…...…..…..Respondent Appearances by: Shri P. N. Barnwal, CIT-DR, appeared on behalf of the revenue. Shri Akkal Dudhwewala, FCA, appeared on behalf of the assessee. Date of concluding the hearing : August 06, 2025 Date of pronouncing the order : September 16, 2025 ORDER Per Rajesh Kumar, Accountant Member: This is an appeal by the Revenue and Cross Objections d by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals) – 26, Kolkata [hereinafter referred to as the ‘Ld. CIT(A)’] dated 27.03.2025 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) for AY 2014-15. 02. At the outset, we note that there is a delay in filing of the appeal by 7 days by the Revenue, for which, condonation petition has been filed. After hearing both the parties and perusing the contents of the condonation application filed by the Revenue, we are of the view that the Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 2 reasons are bonafide and genuine. Hence, we condone the delay and admit the appeal for adjudication. 03. First take up the Revenue’s appeal wherein the common issue raised in the grounds of appeal is against the deletion of addition of Rs.7,75,00,000/- by the Ld. CIT(A) as made by the ld. AO on account of bogus unsecured loans u/s 68 of the Act. 04. The facts in brief are that the assessee is a non-banking financial company involved in the business of money lending. The assessee filed the return of income on 22.11.2014 by declaring total income of Rs.27,48,085/-. The return was selected for scrutiny through CASS and notice u/s 143(2) and 142(1) along with questionnaire were issued and served upon the assessee. During the assessment proceedings, the ld.AO noted that the assessee had received unsecured loans of Rs.123,22,70,809/- from several lenders and the unsecured loans outstanding at the year end were Rs.26,74,33,688/-. The Ld. AO called for the details of unsecured loans which were taken from 31 parties during FY 2013-14. The ld. AO issued notices u/s 133(6) to all the lender parties and in response to which, all the parties filed their replies before the ld. AO. The ld. AO was of the view that the assessee had borrowed loans from 10 companies, which according to him, were identified as shell entities, who were controlled by known accommodation entry operators. The ld. AO has noted to have tabulated the details of the loans taken from these ten parties. Referring to the statements of the entry operators , the ld. AO noted that the loans taken by the assessee were from paper entities. The ld. AO thereafter issued summons u/s 131 of the Act to these entities, out of which, summons were received by 2 lender companies and he could not serve the summons in 5 cases. After perusing the replies filed in response to summons received by lender parties, the ld. AO noted that these companies lacked creditworthiness. The ld. AO thereafter extracted the financials and shareholding pattern of lender, M/s Vivek Tracom Pvt Ltd. and inferred that this company was Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 3 a shell entity. The ld. AO thereafter is noted to have deputed his inspector to make spot enquiries from these companies and according to the ld. AO, these companies were not found to be existing in their given addresses. The ld. AO thereafter made bank enquiries in the case of M/s Paritosh Electricals Pvt. Ltd. and was of the view that there was a deposit of cash in one proprietorship account, which was rotated through layering of companies which finally landed in the hands of the assessee. The ld. AO accordingly issued show cause to the assessee as to why these loans should not be treated as unexplained cash credits by rejecting the explanation by the assessee and after citing several decisions, treated the unsecured loans to the extent of Rs.7,75,00,000/- received from the 10 parties as unexplained cash credit u/s 68 of the Act. 05. In the appellate proceedings, the ld. CIT(A) allowed the appeal of the assessee after taking into consideration, the contentions and submissions of the assessee and the evidences filed by the assessee by observing and holding as under: “It is, therefore, held that since the appellant had discharged its onus of proving the identity of the loan creditor, which in the instant case, duly registered with Ministry of Corporate Affairs having PAN and filed the return of income as well. Further, the creditworthiness of the transaction is proved with the fact that they have been carried through banking channel and sufficient funds were available with loan creditors to explain the amount of loan given. The genuineness of the transaction is proved in the fact that the assessee company is carrying regular business and income tax return has been filed by the loan creditor. Further the loan taken had been repaid at a subsequent date. Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries being carried out in the later years. Therefore, there is no justification of the AO for invoking the provision of section 68 of the Act and the addition of Rs.7,75,00,000/- is deleted.” 06. The ld. DR strongly controverted and opposed the appellate order of the ld. CIT(A) by submitting that the lenders were lacking creditworthiness. He also pointed out the spot enquiries conducted by Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 4 the ld. AO u/s 131 of the Act in the course of which several of these lenders were not found at their addresses. He further submitted that these lenders were shell entities as was established by the ld. AO in light of the statements of entry operators and therefore claimed that the impugned addition be restored. 07. The ld. AR for the assessee vehemently submitted before the bench that the order passed by the ld. CIT(A) is very reasoned and cogent one passed after taking into account the submissions and evidences filed by the assessee and facts on record and after following various decisions of different judicial forums. The ld. AR, while referring to the evidences filed by the assessee as well as by the subscribers in response to notices issued u/s 133(6) of the Act, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The ld. AR also submitted that, when the lenders had complied with the notices u/s 133(6) which were issued and served through registered post, the impugned addition could not be made on the ground that there was no compliance to summon issued u/s. 131 of the Act upon the lenders. The ld. AR further pointed out fallacies and infirmities in the statement(s) of the entry operators which were relied upon by the ld. AO. He contended that none of these persons had stated that they had provided any accommodation entries to the assessee company and therefore the ld. AO’s reliance on these statements was misplaced. According to the ld. AR, even otherwise, the ld. AO could not have relied on these statements without affording opportunity to cross examine these persons when admittedly their statements were recorded at the back of the assessee. 08. We have heard the rival submissions and perused the material available on record. We note that according to the ld. AO, the assessee had borrowed loans aggregating to Rs.7,75,00,000/- from the following ten parties. We observe that ld. AO had initially made independent Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 5 enquiries u/s 133(6) of the Act from all the above lenders, by issuing notices and also noted that all these notices were served upon the lenders and they complied with the same. In the appellate proceedings, the ld. CIT(A) has allowed the appeal of the assessee by elaborately examining the documentary evidences furnished by the lenders by passing a well-reasoned and speaking order. We also note that each of these lenders had filed all the relevant documents which were required by the AO to substantiate their identity and creditworthiness and genuineness of the transactions. Besides we note that the assessee has filed detailed paper book comprising of the documents furnished by these 10 lenders in response to notices issued u/s 133(6) of the Act which are available from page 76 to 707 of the paper book. The lenders have filed all the documents including their MCA data, loan confirmations, source of funds, bank statements, ITR acknowledgement, audited accounts, extracts of bank statements, 26AS evidencing deduction of TDS on the interest amount, etc. taking into account all these documents, we are in full agreement with the ld. CIT(A) that the lenders / the assessee had filed the relevant evidences to discharge their onus of substantiating the identity and creditworthiness of the lenders and genuineness of the transactions. According to the AO though these lenders had complied with the notices u/s 133(6) and provided the documents in support of the loan transactions, but these transactions were not genuine because the ld. AO had established that these entities were shell entities managed by entry operators. To this, ld. AR has filed a summary statement outlining the details of these loan creditors and the corresponding entry operators who were purportedly managing them along with their remarks explaining why these statements were either factually distinguishable or of no relevance. It was brought to our notice that 4 lenders, viz. M/s Albino Investment Consultants Pvt Ltd, M/s Welkin Investment Pvt Ltd, M/s Atlantic Invest Advisory Pvt Ltd and M/s Basil Tracon Pvt Ltd was alleged to be controlled by Shri Pankaj Agarwal. Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 6 The ld. AR took us through his statements which were extensively extracted by the ld. AO in the impugned order and showed that none of these lenders feature in the list of the companies which were purportedly operated by Shri Agarwal. He further correlated the details of the directors of these four companies with the details of the persons who were named by Shri Agarwal to be his dummy directors and submitted that none of the dummy directors named by Shri Agarwal held directorships in these four companies at the material time when the assessee had obtained these loans. The ld. AR also invited our attention to the statement dated 11.06.2014 of Shri Agarwal wherein he had stated that he was involved in providing accommodation entries till 2011 and since thereafter, he was involved in the business of film production. According to the ld. AR therefore, the impugned loan transactions which took place in the relevant FY 2013-14 cannot by any stretch of imagination be alleged to be an accommodation entries. Having considered the same, we agree with the ld. AR that the statement of Shri Pankaj Agarwal is irrelevant so far as the assessee’s case is concerned. 09. The ld. AR also took us through the statement of Shri Ankit Bagri, who according to the ld. AO, was controlling and managing M/s Sikar Tradecom Pvt Ltd. The ld. AR pointed out that Shri Bagri had admitted that he along with one, Mr. Kejriwal who had since expired were involved in providing accommodation entries until 2012, and that they were no longer involved with these companies subsequent thereto. The ld. AR further submitted that Shri Ankit Bagri was never the director of this lender company and Shri Kejriwal had ceased to be director on 01.03.2011. After going through this statement, we find merit in the ld. AR’s submission that when admittedly, Shri Kejriwal had already expired on 07.04.2012, it was unjustified on the ld. AO’s part to allege that the impugned loan received from M/s Sikar Tradecom during FY 2013-14 was an accommodation entry facilitated by him. So far as the statement of Shri Jivendra Mishra dated 26.09.2014 is concerned, it is observed Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 7 that he had retracted his statement on 14.10.2014 and therefore such retracted statement was not reliable. The ld. AR also rightly relied upon the decisions rendered by the coordinate bench of this Tribunal in the cases of DCIT vs. Cabcon India (P.) Ltd (ITA Nos. 1129 & 1131/Kol/2019) and DCIT vs. Image Vinimay Ltd (IT(SS)A No. 84/Kol/2017), wherein similar additions made by the Revenue by relying on this retracted statement of Shri Jivendra Mishra were deleted. 10. In respect of the lenders M/s Vivek Tracom Pvt Ltd&M/s Paritosh Electricals Pvt. Ltd., the ld. AO is found to have relied on the statement of Shri Raj Kothari dated 02.03.2016 and also the spot enquiries made by the inspector wherein he was unable to locate these companies at their given addresses. We find that the assessee had placed on record the copies of the assessment orders passed u/s 143(3) of the dated 20.12.2016 and 14.12.2016 in the cases of M/s Vivek Tracom Pvt Ltd& M/s Paritosh Electricals Pvt. Ltd respectively for the relevant AY 2014- 15, which is available at Pages 107 to 112&138 to 144 of the Paper book. There is merit in the assessee’s contention that when the ld. AOs' of the respective lenders has had accepted their source of funds and the genuineness of the loans advanced during the years, it would be improper to dispute the genuineness of the loans availed from these two parties by the assessee. We also find that the coordinate benches of this Tribunal in the case of ACIT vs. Machinery Agencies India(ITA No. 2100/Kol/2018) on similar facts and circumstances held that the ld. AO’s reliance on the statement of Shri Raj Kothari to justify the addition u/s 68 of the Act was unsustainable. 11. The case of the assessee is squarely covered by the decision of Hon’ble jurisdictional Calcutta High Court in the case of PCIT Vs Sreeleathers (448 ITR 332) and the paras are extracted as under: “..The assessing officer has brushed aside these documents and in a very casual manner has stated that mere filing PAN details, balance sheet does not absolve the assessee from his Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 8 responsibility of proving the nature of transaction. There is no discussion by the assessing officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression \"money laundering.\" We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraphs 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assessing officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under section 68 of the Act. Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual findings that the net worth of those companies is in crores of rupees and they have declared income to the tune of Rs. 45,00,000/- and 75,00,000/-…” Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 9 12. For the foregoing reasons therefore, we are in full agreement with the assessee that all the statements extracted by the ld. AO in the assessment order to justify the impugned addition are not relevant at all to the assessee’s case. Moreover, there is also merit in the assessee’s submission that, the ld. AO should have given them an opportunity to cross-examine such persons on whose statements purported additions were sought to be made and his outright denial was untenable. In reference to the above context, the ld. AR of the assessee relied on the judgments of the Hon'ble Apex Court as in the case of Andaman Timber Industries, Sunita Dhadda and Eastern Commercial Enterprises where it was clearly stated that reasonable opportunity of cross examination should be afforded to the assessee. 13. So far as the genuineness of the transactions is concerned, the ld. AO sought to justify the impugned addition by citing example of M/s Vivek Tracom Pvt Ltd that it had reported meagre income which did not commensurate with the loan advanced by it. The ld. AO was of the view that the said lender had accommodated losses to reduce its taxable income. This observation of the ld. AO is also found to be of no relevance in as much as if the ld. AO had any suspicion on the expenses debited by the lender in their books, then action could be taken against the lender and not the assessee. As already noted by us above, each of the shareholders had sufficient own funds and reserves to justify the investments made by them in the assessee company. The fact that some of the lenders did not derive sufficient profits during the year cannot be the sole determinative factor to doubt their creditworthiness. From the audited financials of these lenders, it is observed that each of them had sufficient owned funds to justify the loans advanced by them. These lenders were taxed in their own right and they had also provided their source of funds / bank statements. According to us, nothing much turns on the fact that some of the shareholders had reported meagre income in the relevant year. Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 10 14. According to the ld. AO, some of these lenders had issued share capital at a premium in earlier years, which he suspected was not genuine. This observation of the ld. AO is also found to be of no relevance in as much as by ld. AO's own admission, these lenders had raised securities premium on issue of shares in their own right in earlier year/s. No fresh capital was issued during the year by these lenders during the year and therefore the securities premium balance appearing in their financial statements had been brought forward from earlier years. Clearly therefore, the securities premium of these shareholders did not constitute the immediate source of loans advanced by them to the assessee. 15. For the aforementioned reasons, we find ourselves in agreement with the ld. AR that, the entire line of reasoning given by the ld. AO to doubt the creditworthiness of the shareholders cannot be countenanced. 16. As already noted earlier, all the facts and details concerning these ten lenders are available on record. It is further observed that, the assessee being an NBFC had obtained several loans in the course and for the purposes of the business. From the statements of accounts of these lenders, it is seen that the loans taken from these parties were mostly repaid in the same year or at the most, in the subsequent year. We also observe that the assessee would provide and discharge the interest on these loans on quarterly basis after deduction of TDS u/s 194A of the Act. Hence, the details available on record substantiates the genuineness of these transactions. The case of the assessee is supported by series of decisions of Hon'ble Calcutta High Court namely, PCIT vs. Overtop Marketing (P.) Ltd (148 taxmann.com 94)&PCIT vs. Shree Leathers (supra). We also refer to the decision of the co-ordinate Bench in case of Iris Clothings Limited Vs. DCIT in ITA No.1015/KOL/2023 for A.Y. 2013- 14 vide order dated 02.01.2024, wherein similar issue has been decided in favour of the assessee by the Bench. The operative part of which reads as under:- Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 11 “8. After hearing the rival contentions and perusing the relevant material placed before us, we find that the assessee has raised loans from twelve entities, the details of which were given in the assessment order in para 3. We note that the assessee has also paid interest on these loans after deduction of tax at source and the details were also given in the same table. The tax deducted at source was also deposited in the Government Treasury. We would like to note that these loans were repaid through banking channel even prior to passing of the assessment order by the ld. Assessing Officer. The assessee has filed copies of ITR acknowledgments, master-data of the lenders, audited financial statements, Memorandum & Article of Associations, copies of bank statements, loan confirmations and ledgers showing receipt and refund of loans alongwith TDS details in respect of each of the lenders, which are filed in the paper book from pages no. 11 to 718. We also note that the AO issued notices under section 133(6) of the Act to twelve parties which could only be served to six parties and remaining six cases, the notices were returned back unserved. We note that the six parties, to whom notices were served, have duly responded and replied with all the requisite details. The ld. Assessing Officer has made the addition on the basis of the statements of three persons, namely Shri Shri Abhishek Chokhani, Shri Sanjay Kumar Drolia and Shri Praveen Kumar Agarwal and stated that Iris Clothings Limited they have arranged the loans from four parties. The ld. Assessing Officer has disbelieved the transactions on the basis of the statements of three persons, who were stated to have arrangedloans four parties mentioned at serial nos. 1, 2 &6 and 11 and reached a generalized conclusion even on the remaining parties. The ld. CIT(Appeals) has simply dismissed the appeal of the assessee by passing a very cryptic and non-speaking order. Now the issue before us is whether the assessee has duly discharged his burden by filing the aforesaid evidences before the authorities or not. We note that the assessee has filed all the evidences qua these lenders along with their ITRs, confirmation certificates, names, addresses, PANs banking statements showing the receipt and repayment of loans alongwith their Master Data. The ld. Assessing Officer has relied only on the statements of three parties as stated above, who according to the AO have arranged the loans from four parties mentioned at serial nos. 1, 2 & 6 and 11. In our opinion, the assessee has duly discharged its onus by Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 12 filing evidences before the ld. Assessing Officer and ld. Assessing Officer has acted on the basis of statements of three persons, which lacks evidentiary value in absence of any substantive and corroborative evidences being brought on records. The ld. AR stated that where the AO has any doubt about the lenders where the assessee has furnished all the evidences before the AO, then the matter should be looked into the hands of the creditors and not the assessee. The case of the assessee is supported by the decisions of the Hon'ble Calcutta High Court which are discussed as under: a) In the case of PCIT -vs.-Sreeleathers (supra), the Honble Court has held as under: …... b) In the case of Commissioner of Income Tax -vs.- M/s. Dataware Private Limited(supra):- …... c) In the case of Crystal Networks (P) Limited -vs.- Commissioner of Income Tax (supra) The Hon'ble Court :- …... d) ITAT, Kolkata in the case of Poddar Realtors -vs.- ITO has decided as under after following the decision of the Hon'ble Calcutta High Court in the case of Pr.CIT vs. Sreeleathers (supra) :- …... 9. In all the aforesaid decisions, it has been held by the Hon'ble Courts and also by the Coordinate Bench of this Tribunal, where the assessee has filed all the evidences concerning transactions to establish the identity and creditworthiness of the lenders and to prove the genuineness of the transactions and the ld. Assessing Officer has not carried out any further verification, the addition cannot be made in the hands of the assessee. The AO must examine the issue in the cases of creditors and make the addition there and not in the hands of the assessee. The assessee has discharged its initial burden and the burden shifted on the Assessing Officer to enquire further into the matter by filing the evidences, which he failed to do. Accordingly, we set Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 13 aside the order of ld. CIT(Appeals) and direct the ld. Assessing Officer to delete the addition.” 17. The case of the assessee is also squarely covered by the decision of Hon’ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. vs. CIT (35 taxmann.com 432) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the creditors, the fact that summon issued were returned unserved or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The relevant portion of the decision is extracted below: “10. We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows : Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 14 \"The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law.\" 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Commissioner of Income-tax (Appeals). The appeal is allowed.” 18. In our opinion, also once the loans were repaid then the provisions of Section 68 of the Act cannot be invoked in respect of the loan transactions as has been held by the Hon’ble High Court of Gujarat in the case of PCIT vs. Ambe Tradecorp (P.) Ltd. (2022) (145 taxmann.com 27), 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 passed in the case of Poddar Realtors Printed from counselvise.com I.T.A. No.1223/Kol/2025 & C.O No.57/Kol/2025 Lumino Industries Ltd 15 Vs. ITO in ITA No. 265/Kol/2023, vide order dated 22.06.2023. Both the decisions have been followed by the ld. CIT (A) while deleting the addition. Under these circumstances, we do not find any infirmity or defect in the order of the ld. CIT (A) which warrant our interference. Accordingly, we uphold the appellate order by dismissing the appeal of the Revenue 19. In view of our above decision, the cross objections filed by the assessee challenging the validity of the assessment for improper issue of notice u/s 143(2) of the Act has become academic in nature and is therefore dismissed as having become infructuous. 20. In the result, both the appeal of the Revenue and cross objections of the assessee are dismissed. Kolkata, the 16th September, 2025. Sd/- Sd/- [Duvvuru RL Reddy] [Rajesh Kumar] Vice-President Accountant Member Dated: 16.09.2025. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "