DCIT, CENTRAL CIRCLE-4(3), KOLKATA, KOLKATA V. DECORUM INFRASTRUCTURE PRIVATE LIMITED , HOWRAH

ITA 1762/KOL/2025

AI Insights

The case involves an appeal by the revenue against the CIT(A)'s decision to delete additions made by the Assessing Officer regarding unexplained cash credits and under-reported rental income. The assessee, Decorum Infrastructure Pvt. Ltd., had received unsecured loans which the revenue suspected to be accommodation entries to introduce unaccounted income into the books. The Tribunal examined the evidence, including bank statements and loan repayment records, and found that the loans were genuine and repaid, aligning with judicial precedents that supported the assessee's claims. Consequently, the Tribunal dismissed the revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785633 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 04-08-2025
• Other Referred Cases: PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited, PCIT Vs. M/s Narayan Tradecom Pvt. Ltd., PCIT Vs. Alom Extrusions Ltd., PCIT Vs. M/s Edmond Finvest Pvt. Ltd., PCIT Vs. Parwati Lakh Udyong, Ambe Tradecorp (P.) Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAS MONDAL
• Assessee Lawyers: MIRAZ D. SHAH
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Question of law; Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; TDS; Search and seizure; Accommodation entries; FORM 26AS; Bogus
• Section: 143(3); 142(1); 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER आयकर अपील सं/ITA No.1762/KOL/2025 (निर्धारण वर्ा / Assessment Year: 2022-2023) DCIT, Central Circle-4(3), Kolkata Vs Decorum Infrastructure Pvt. Ltd., 1, British Indian Street Dalhousie, Howrah-700069 PAN No.: AADCD 0307 M (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Miraz D. Shah, AR रधजस्व की ओर से /Revenue by : Shri Manas Mondal, Sr. DR सुनवाई की तारीख / Date of Hearing : 15/10/2025 घोषणा की तारीख/Date of Pronouncement : 27/10/2025 आदेश / O R D E R Per Rajesh Kumar, AM: This is an appeal filed by the revenue against the order dated 13.04.2025, passed by the ld. CIT(A), Kolkata-27, for the assessment year 2022-2023. 2. The appeal of the revenue has been filed belatedly by 04 days for which condonation petition seeking the condonation of delay in filing the appeal by the revenue. Looking to the facts of the case, we condone the delay of 04 days in filing the present appeal by the revenue before the Tribunal and appeal of the revenue is admitted for adjudication. 3. The revenue has raised the following grounds: - 1. That the revenue reserves its rights to substantiate, modify, DELETE, supplement and/OR alter the grounds at any time of the appeal proceedings. 2. That on the facts and in the circumstances of the case and in law, the Learned CIT(A)-27, Kolkata erred in adjudicating the matter in favour of the assessee without any verification. 3. That on the facts and in the circumstances of the case and in law, the Learned CIT(A)-27, Kolkata erred in deleting the Printed from counselvise.com ITA No.1762/KOL/2025 2 addition of Rs. 17,50,000/- made under section 68 of the Income-tax Act, 1961, treating the same as unexplained cash credit, which was received by the assessee in the guise of unsecured loans arranged through accommodation entries. The assessee failed to furnish credible evidence to establish the identity, creditworthiness of the loan creditors, and the genuineness of the transactions. The funds were routed through bank accounts of entities identified as shell companies.\" 4. \"That on the facts and in the circumstances of the case and in law, the Learned CIT(A)-27, Kolkata erred in deleting the addition of Rs. 4,83,000/- made on account of short credit of rental income, despite the fact that the assessee had under- reported rental income during the Financial Year 2021-22.\" 5. That on the facts and in the circumstances of the case, the Instant case falls under the exceptional clause (h) of para 3.1 of CBDT Circular No. 05/2024 dated 15.03.2024 vide F No.279/Misc. 5 142/2007-ITJ(Pt.) as the assesse company has taken accommodation entries to bring back their own unaccounted income in the regular books in the form of bogus unsecured loan. 4. Brief facts of the case are that the assessee filed its original return of income u/s 139(1) of the Act on 27.09.2022 declaring total loss of Rs. 2,56,221/-. The return was processed u/s 143(1) of the Act on 03.11.2022 at total loss of Rs.2,56,221/-. A search and seizure operation u/s 132(1) of the Act was conducted in respect of 'Golden Goenka group of assessee on 18.12.2021 by the directorate of Income Tax (Investigation), UP & Uttarakhand. The assessee was also covered in the said search & seizure operation. This being the year of the search, return of the instant assessment year was selected for compulsory scrutiny and notice u/s 143(2) of the Act was issued on 31.05.2023. Thereafter, notices u/s 142(1) of the Act along with detailed questionnaire were also issued on 29.08.2023 & 06.02.2024. The assessee complied these notices and submitted documents/details & explanation which were perused by the Printed from counselvise.com ITA No.1762/KOL/2025 3 AO and placed in record. The ld. AO after taking into account the assessee’s reply and available materials framed the assessment u/s 143(3) of the Act on 22.03.2024 at assessed total income of Rs. 19,76,780/- after making addition in respect of unexplained cash credit of Rs. 17,50,000/-. The assessee challenged the said assessment order u/s 143(3) of the Act dated 22.03.2024 before the Hon'ble Calcutta High Court vide Writ Petition No. 287/2024 on the ground of 'principle of natural justice'. The Hon'ble Court has pronounced the judgment on 08.04.2024 wherein the impugned assessment order was set aside and remanded back to the concerned assessing officer to pass the fresh assessment order after considering the reply of the petitioner. In pursuance to the order of the Hon'ble High Court Calcutta, fresh assessment proceeding was conducted and the assessee has filed a letter of objection on 08.05.2024. In the course of fresh assessment proceeding, the assessee was allowed with opportunity of being heard and objections raised by them are disposed thereof. After taking into account the submissions of the assessee , the AO passed the assessment order u/s 143(3) r.w.s 260 the Act dated 26.06.2024 assessing the total income to Rs.19,76,780/- by making two additions i) of Rs.17,50,000/- u/s.68 of the Act on account of unsecured loan from M/s Jajodia Finance Limited and ii) of Rs.4,83,000/- on account of short credit of rental income occurred due to deduction of TDS from the Gross Rent received by the assessee. Printed from counselvise.com ITA No.1762/KOL/2025 4 5. Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A), wherein the ld. CIT(A) has deleted both the additions made by the Assessing Officer. 6. Now, aggrieved by the order of the ld. CIT(A), the revenue is in appeal before the Tribunal. The ground no. 1 and 2 are general in nature and do not require any specific adjudication. In ground no. 3 the revenue has assailed the addition of Rs. 17,50,000/-. 7. We have heard the rival contentions and perused the records placed before us. We observe from the statement of loan along with bank statements, which were available before the Assessing Officer also that the unsecured loan raised by the assessee was repaid. We have also verified the said repayment of loan with the bank statement furnished in the paper book. Therefore, once the assessee has established that the repayment of loan has been made by furnishing all the evidences qua the loan, then the same cannot be added u/s.68 of the Act on the ground that the assessee has failed to meet the ingredients of Section 68 of the Act. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, Printed from counselvise.com ITA No.1762/KOL/2025 5 ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act. Similarly, the of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under: - \"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding their identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, \"In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information.\" 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Printed from counselvise.com ITA No.1762/KOL/2025 6 Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly, identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, \"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 were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld. CIT-A. \" 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 8. Accordingly, we, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court and Hon’ble Gujarat High Court, we hold that the ld. CIT(A) has rightly deleted the addition by passing a reasoned and speaking order which does not require any interference. Accordingly, Printed from counselvise.com ITA No.1762/KOL/2025 7 we upheld the same on this issue and dismiss the ground no. 3 of the appeal of the revenue 9. So far as the second issued of deletion of addition of Rs. 4,83,000/- by CIT(A) on account of lesser Gross Rent shown by the assessee as raised in ground no. 4. We find that the addition was wrongly made by the AO and the ld. CIT(A) has correctly deleted the addition by referring to form 26AS wherein the actual gross rent was Rs. 26,37,000/- and not Rs. 31,20,000/- as taken by the AO. Therefore, we do not find any infirmity in the order of ld. CIT(A) so far as this issue is concerned. Consequently, the ground no. 4 is dismissed. 10. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 27/10/2025. Sd/- (PRADIP KUMAR CHOUBEY) Sd/- (RAJESH KUMAR) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 27/10/2025 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "