DCIT, CENTRAL CIRCLE-3(1), KOLKATA, KOLKATA V. GATEWAY FINANCIAL SERVICES LIMITED, KOLKATA

ITA 1146/KOL/2023

AI Insights

The case involves an appeal by the revenue against the order of the ld. CIT(A), which had allowed the appeal of Gateway Financial Services Ltd., the respondent, by deleting an addition of Rs.15.05 crores made by the AO under section 68 of the Income Tax Act. The AO had initially treated the amount received from M/s Juhi Advisory Pvt. Ltd. as unexplained cash credit. However, during the appellate proceedings, it was clarified that the actual amount was Rs.7.05 crores, and the loan had been repaid partly in the financial year 2015-2016 and partly in 2016-2017. The CIT(A) relied on documentary evidence including bank statements showing the source of the funds and the repayments made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712956 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2016-2017
• Other Referred Cases: Ambe Tradecorp (P.) Ltd. [2022] 145 taxmann.com 27 (Gujarat)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: AKKAL DUDHWEWALA
• Keywords: Unexplained cash credit; Unexplained expenditure

Judgement Text

" आयकर अपीलीय अधिकरण,“बी” न्यायपीठ,कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER आयकर अपील सं/ITA No.1146/KOL/2023 (नििाारण वर्ा / Assessment Year : 2016-2017) DCIT, Central Circle-3(1), Kolkata Vs Gateway Financial Services Ltd, 2nd Floor, Room No.209-210, Jasmine Tower, 31, Shakespeare Sarani, West Bengal-700017 PAN No. :AABCG 1634 L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) राजस्वकीओरसे /Revenue by : Shri P.N. Barnwal, CIT-DR नििााररतीकीओरसे /Assessee by : Shri Akkal Dudhwewala, FCA सुिवाई की तारीख / Date of Hearing : 09/07/2025 घोर्णा की तारीख/Date of Pronouncement : 30/07/2025 आदेश / O R D E R Per Rajesh Kumar, AM: This is an appeal filed by the revenue against the order dated 27.07.2023, passed by the ld. CIT(A), Kolkata-21, for the assessment year 2016-2017. 2. This appeal is barred by 25 days. Looking to the facts and circumstances of the case, the delay of 25 days in filing the appeal is condoned and the appeal is admitted and disposed off accordingly. 3. The only issue raised by the revenue is against the deleting the addition of Rs.15.05 crores by the ld. CIT(A) as made by the AO u/s.68 of the Act in respect of unsecured loan received by the assessee during the year. Printed from counselvise.com ITA No.1146/KOL/2023 2 4. The facts in brief are that the assessee filed its return of income on 10.10.2006 declaring total income at Rs.75,43,880/- The case of the assessee in the first round was completed u/s.147/143(3) of the Act assessing total income at Rs.75,63,780/- vide order dated 31.12.2019. Thereafter the AO reopened the assessment after an information received from DDIT(Inv.) Unit-1(2), Kolkata that the assessee had received Rs.15.05 crores from shell company M/s Juhi Advisory Pvt. Ltd.by issuing notice u/s.148 of the Act on 05.03.2021, which was duly served on the assessee, the assessee filed return of income on 25.03.2021 in response thereto. Thereafter the statutory notices were issued and served on the assessee. The assessee replied the questionnaires issued by the AO. The AO also issued notice u/s.133(6) of the Ac to ICICI Bank and Axis Bank for verification of these transactions. The AO observed that the lender has not purchases during the year and even there were no fixed assets in the balance sheet of the assessee and consequently the AO treated the said amount of unsecured loan as unexplained cash credit u/s.68 of the Act and added the same to the total income of the assessee. The AO also added Rs.37,62,000/- being 2.5% of the total amount of transaction towards commission charged treating the same as unexplained expenditure u/s.69C of the Act. 5. In the appellate proceedings, the ld. CIT(A) allowed the appeal of the assessee after taking into consideration the reply and the contentions of the assessee and also after calling for a remand report from the AO. Printed from counselvise.com ITA No.1146/KOL/2023 3 The ld. CIT(A) reproduced the remand report at page 16 of the order. The remand report states that it was found from the reply of the assessee that the assessee has received advance of Rs.7.5 crores from M/s Juhi Advisory Pvt. Ltd., however, in the absence of any evidences furnished by the assessee the entire amount of Rs.15.05 crores was added u/s.68 of the Act. The remand report further states that now the assessee has filed the confirmation along with bank account statement during the course of remand proceedings and it was found that the assessee has received only Rs.7.05 crores instead of Rs.15.05 crores. It was further mentioned in the remand report that Rs.1.05 crores was repaid during the current assessment year i.e. A.Y.2016-2017 and balance of Rs.6 crores was paid in the assessment year 2017-2018. The rejoinder of the assessee was extracted at page 17 of the appellate order. Ld.CIT(A) also discussed the observations of the AO and thereafter negated each and every observation of the AO to be wrong and against the facts on record. The ld. CIT(A) while allowing the appeal dealt with the confirmation furnished by the assessee and also the bank account of the lender which showed that the money was advanced out of the encashment of FDRs and not out of any circuit transfer of funds. The copy of the bank statement is extracted by the ld. CIT(A) from pages 13 to 35 in his order. Ld.CIT(A) also discussed that the money was repaid by the assessee partly during the year and partly in the next financial year and, therefore, allowed the appeal following the decision of the Hon’ble Gujarat High Court in the Printed from counselvise.com ITA No.1146/KOL/2023 4 case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held that once repayment of the loan has been established based on the documentary evidences, the credit entries cannot be looked into in isolation after ignoring the debit entries despite the fact that the debit entries were carried out in the later years. 6. We have heard rival contentions of the parties and perused the material available on record. We find that undisputedly the assessee raised an amount of Rs.7.05 crores during the financial year 2015-2016 from M/s Juhi Advisory Pvt. Ltd. which was wrongly taken by the AO as Rs.15.05 crores, may be for the want of evidences furnished by the assessee in the appellate proceedings. In the remand proceedings, the assessee filed the same before the AO and the AO recorded a finding that the correct amount was Rs.7.05 crores and not Rs.15.05 crores. We note that the said loan was repaid by the assessee partly in the financial year 2015-2016 and partly in the financial year 2016-2017. We also note that the said loan was advanced by the lender out of the maturity from the FDRs as apparent from the copy of the bank statements filed before us in the paper book, which is also extracted by the ld. CIT(A) in the appellate order. Therefore, we do not find any anomaly or infirmity in the order of the ld.CIT(A). 7. The argument presented by the ld. CIT-DR is devoid of merit that the loan was received from shell company which is not having any purchase and sales or the fixed assets. We have examined the audited Printed from counselvise.com ITA No.1146/KOL/2023 5 accounts filed before us of M/s Juhi Advisory Pvt. Ltd. and find that the assessee is an operational company and having fixed assets including land. The ld.CIT-DR relied on the certain decision which have been produced and found to be distinguishable on facts and found to be non- applicable in the instant case. The ld.CIT-DR has also relied on the following decisions :- i) Seema Jain, [2018] 96 taxmann.com 307 (Delhi) ii) J.K.Global, [2024] 167 taxmann.com 15 (Mumbai-Trib.) iii) Smt. Phoolwati Devi [2009] 122 TTJ 502 (Delhi) 8. The above decisions were filed to cement the argument that repayment of loan is notto be seen for making addition u/s.68 of the Act whereas the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), has held that where the loan was repaid in the current or subsequent years no addition could be made u/s.68 of the Act. The said decision has been relied upon by the ld. CIT(A). In these circumstances, we are inclined to uphold the order of the ld. CIT(A) by dismissing the appeal of the revenue. 9. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 30/07/2025. Sd/- (PRADIP KUMAR CHOUBEY) Sd/- (RAJESH KUMAR) न्यानयकसदस्य / JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER कोलकाताKolkata; ददिांक Dated 30/07/2025 Prakash Kumar Mishra, Sr.P.S. Printed from counselvise.com ITA No.1146/KOL/2023 6 आदेशकीप्रनतललपपअग्रेपर्त/Copy of the Order forwarded to : आदेशािुसार/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी/ The Appellant- 2. प्रत्यर्थी/ The Respondent- 3. आयकरआयुक्त(अपील) / The CIT(A), 4. आयकरआयुक्त/ CIT 5. विभागीयप्रविविवि, आयकरअपीलीयअविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ाफाईल / Guard file. सत्यापपतप्रनत //True Copy// Printed from counselvise.com "