INCOME TAX OFFICER-19(1)(1), MUMBAI V. BABULAL UMEDMAL MUNOT, MUMBAI

ITA 9511/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), which had deleted the addition made by the Assessing Officer under section 68 of the Income Tax Act concerning an unsecured loan of Rs. 90,00,000 from M/s Sanyam Gems Pvt. Ltd., and an additional Rs. 2,47,500 for alleged commission. The Tribunal found that the Ld. CIT(A) had not properly examined the creditworthiness of the lender and had accepted the assessee's claims primarily based on documents like confirmations and banking transactions without a thorough examination of the lender's financial capacity. The Tribunal emphasized the need to establish the identity, genuineness, and creditworthiness of the creditor as cumulative requirements under section 68.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847757 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2013-2014
• Appeal Filed On: 31-12-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARI
• Keywords: Set aside; Opportunity of being heard
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 9511/Mum/2025 Assessment Year: 2013-14 Income Tax Officer - 19(1)(1) 501, Piramal Chambers, Lalbaug, Mumbai- 400012 Vs. Babulal Umedmal Munot 403, A-Wing Shreepati Jewels Tower, T.G. Marg, Pimpalwadi, Girgaon, Mumbai-400004 PAN: AAEPV4350Q (Appellant) (Respondent) Assessee by None Department by Shri Swapnil Choudhari (SR. AR.) Date of Hearing 16.03.2026 Date of Pronouncement 23.03.2026 ORDER Per: SHRI JAGADISH, A.M.: 1. This appeal is filed by the Revenue against the order dated 15.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), NFAC for the assessment year 2013-14, wherein the Ld. CIT(A) has deleted the addition made by the Assessing Officer under section 68 of the Act along with consequential commission addition. 2. At the time of hearing, none appeared on behalf of the assessee despite notice. Accordingly, we proceed to dispose of the appeal ex- parte qua the assessee after hearing the Ld. Departmental Representative and perusing the material available on record. Printed from counselvise.com ITA No.9511/M/2025 Babulal Umedmal Munot 2 3. The brief facts are that the Assessing Officer made an addition of Rs. 90,00,000/- under section 68 of the Act in respect of unsecured loan received from M/s Sanyam Gems Pvt. Ltd. and further made an addition of Rs. 2,47,500/- on account of alleged commission. The Ld. CIT(A), however, deleted the addition holding that the assessee had discharged the onus cast upon him. 4. The grievance of the Revenue is that the Ld. CIT(A) erred in deleting the addition without properly examining the creditworthiness of the lender and without appreciating that the assessee failed to discharge the primary onus cast upon him under section 68 of the Act. 5. We have considered the submissions of the Ld. Departmental Representative and perused the material on record. It is well settled that for the purpose of section 68, the assessee is required to establish the identity of the creditor, the genuineness of the transaction and the creditworthiness of the creditor. These three ingredients are cumulative and failure to establish any one of them would justify the addition. 6. In the present case, we find that the Ld. CIT(A) has primarily accepted the claim of the assessee on the basis of certain documents such as confirmations and banking transactions. However, there is no proper examination or finding with regard to the creditworthiness of the lender company. The order of the Ld. CIT(A) does not demonstrate any verification of the financial capacity of M/s Sanyam Gems Pvt. Ltd. to advance such a substantial loan. 7. We further find that the assessee has taken a plea that he is not aware of the activities of the lender company or its director. In our considered view, such a submission cannot be accepted at face value. It is against normal human conduct and business prudence that a person would receive a huge loan without knowing the financial background or Printed from counselvise.com ITA No.9511/M/2025 Babulal Umedmal Munot 3 activities of the lender. This aspect casts serious doubt on the claim of the assessee and required deeper examination. 8. In our view, the primary onus to establish the creditworthiness of the creditor squarely lies on the assessee. The Ld. CIT(A), instead of examining this crucial aspect, has deleted the addition without proper verification. Such an approach is not in accordance with the settled principles governing section 68 of the Act. 9. Considering the totality of the facts and circumstances of the case, we are of the considered opinion that the issue requires fresh examination. Accordingly, we set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to his file with a direction to examine the creditworthiness of the creditor afresh, after giving adequate opportunity of being heard to the assessee. The assessee is also directed to furnish necessary evidences in support of his claim. 10. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 23/03/2026. Sd/- Sd/- (SANDEEP GOSAIN) Judicial Member (JAGADISH) Accountant Member Mumbai, Dated: 23/03/2026 Ashwani Rao Sr. Private Secretary Printed from counselvise.com ITA No.9511/M/2025 Babulal Umedmal Munot 4 Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T. By order (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "