AI Insights
The case revolves around the Revenue's appeal against the CIT(A)'s decision to delete the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, concerning various unsecured loans received by the assessee, K K Ventura, during the assessment year 2018-19. The CIT(A) found that the loans were genuine, supported by adequate documentation, and the lenders had the creditworthiness to advance such loans. The Tribunal's decision affirmed the CIT(A)'s findings, rejecting the Revenue's arguments which were primarily based on suspicion without substantial evidence.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 793275 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
11 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-09-2025
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Assessment Year
2018-2019
Appeal Filed On
10-10-2024
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.5331/Mum/2024 (Assessment Year :2018-19) Income Tax Officer, Mumbai Vs. K K Ventura, Mumbai 204, Platinum Mall Jawahar Road Ghatkopar East Mumbai – 400 077 PAN/GIR No.AAQFK4558H (Appellant) .. (Respondent) Assessee by Shri Vinod Kumar Bindal (Virtually) Revenue by Shri Hemanshu Joshi, SR DR Date of Hearing 20/08/2025 Date of Pronouncement 25/09/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The present appeal by the Revenue is directed against the order dated 12/08/2024 passed by the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, in relation to the assessment framed under section 143(3) read with section 260 of the Income-tax Act, 1961, for the assessment year 2018–19. 2. In substance, the Revenue has assailed the action of the ld. CIT(A) in deleting the addition of ₹8,43,50,000/– made Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 2 towards unexplained unsecured loans, and the corresponding disallowance of interest of ₹29,95,111/–. It has been urged that the ld. CIT(A) not only erred in entertaining additional evidence, but also failed to appreciate that the lenders in question lacked the financial capacity to advance the impugned sums, and that the genuineness of the transactions stood unproven. 3. In support of the appeal, the ld. Departmental Representative drew our attention to the detailed remand report submitted by the Assessing Officer. That report, as pointed out, comprehensively sets forth the grounds on which the additions were made, and reiterates the adverse factual inferences drawn by the Assessing Officer in the course of assessment proceedings. 4. The brief factual matrix may be noted. The assessee, a Limited Liability Partnership engaged in the business of financing and trading, originally filed its return of income on 30/09/2018, which was subsequently revised on 25/01/2019 declaring total income of ₹18,91,800/–. The case was selected for limited scrutiny on the issues of (i) sharp increase in unsecured loans during the year, (ii) substantial squared-up loan transactions, and (iii) borrowings from persons who had not filed returns of income. The original assessment was completed under section 143(3) read with section 144B on 06/08/2021, wherein the Assessing Officer brought to tax unexplained loans aggregating to ₹8,43,50,000/– under section 68, together with disallowance of interest expenditure of ₹29,95,911/–. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 3 5. The assessee thereafter preferred a writ petition before the Hon’ble Bombay High Court, inter alia contending that the Assessing Officer had failed to provide a meaningful opportunity of hearing, despite its express request for video- conferencing. The Hon’ble High Court, by judgment dated 26/10/2023, quashed the assessment order and directed the Assessing Officer to pass a fresh order after affording adequate opportunity of being heard. 6. In the remand proceedings, the Assessing Officer observed that the assessee’s balance sheet reflected unsecured loans of ₹21,03,86,161/– as on 31/03/2018, as against ₹6,25,64,646/– in the immediately preceding year, thereby revealing an increase of ₹14,78,28,515/–. On being called upon to explain, the assessee furnished details of the lenders, ledger extracts, confirmations, income-tax returns, and bank statements. Notices under section 133(6) were issued to the lenders, and though some responded, their replies were, in the view of the Assessing Officer, inadequate to establish either creditworthiness or genuineness. He accordingly identified twenty-one lenders, aggregating to ₹8,43,50,000/–, whose loans were treated as unexplained and brought to tax under section 68 of the Act. Name of the Loan Lender Amount of loan (i) Arch Herbals P. Ltd. 25,00,000 (ii) Arch Impex P. Ltd. 1,20,00,000/- (iii) Manish Damji Shah 70,50,000/- (iv) Bhanumati Kalyan Shah 80,00,000/- (v) Canopous Consultancy Services P. Ltd. 10,00,000/- Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 4 (VI) Shantilal Gala (HUF) Classic Enterprises 20,00,000/- (VII) Dipesh Kannubhai Khatadia 40,00,000/- (VIII) EKTA GROUP (Girish Ramnik Lal 26,00,000/- (IX) HILL Crest Resorts AND SPA P. Ltd. 25,00,000/- (X) H. Manubhai & Co. (Hitesh Manhar Lal Bilakhia 20,00,000/- (XI) Jayshri Ben Thakkar 8,00,000/- (XII) Jewel Developers 25,00,000/- (XIII) Kalyanji UmaRshi Shah (represented by Ashwin Kalyanji shah) 95,00,000/- (XIV) Lilavati Damji Patel 20,00,000/- (XV) Parask Botadara 17,50,000/- (XVI) Rajani D Agarwal 5,00,000/- (XVII) Shailesh Surender jasani 40,00,000/- [XVIII) Seema Shailesh Jasani 36,50,000/- (XIX) Rakesh Ramesh Chandra 10,00,000/- (XX) PHB Relcon 60,00,000/- (XXI) Pramod Kumar Jain Securities P. Ltd. 90,00,000/- 8,43,50,000/- 6.1. The Assessing Officer has thereafter discussed each of these lenders in detail, setting out why the explanation of the assessee could not be accepted. The report filed by him, which was placed before the ld. CIT(A) and has also been relied upon by the ld. DR before us, is in fact nothing but a reiteration of the findings contained in the impugned assessment order. For the sake of ready reference, and since Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 5 it forms the very foundation of the Department’s case, the same is incorporated hereinbelow as part of the record. (1) M/s. Arch Herbals Pvt Ltd - Addition of Rs.25,00,000/- Facts: During the course of assessment proceeding the ledger account provided by assessee show that during the FY 2017- 18 assessee has taken loan of Rs 60,00,000/-from Arch Herbal Private Limited. The amount of Rs. 35,00,000/- was repaid during the F.Y 2017 18 and balance amount of Rs. 25,00,000/- is outstanding as on 31/03/2018 Further, interest of Rs. 1,94,918/- is accrued on this loan during the FY 2017-18. The TDS of Rs. 19,492/-has been deducted and balance amount of interest of Rs. 1,75,426/-is carried forward to the next year along with principal amount. During the course of assessment proceedings assessee firm was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. The assessee had not furnished the details and stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries but no explanation was furnished regarding source of funds received in the bank account of the lender Assessee has stated that the lender was having enough bank balance before at the time of granting of loan to assessee. It is pertinent to mentioned here that the lender was having bank account no.039102000005005 in IDBI Bank. The lender imparted loan of Rs.40,00,000/- on 18/08/2017 and Rs. 20,00,000/- on 23/08/2017. The lender received Rs. 40,00,000/-on the same day. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and bank statement of assessee. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 6 The examination of the ITR of the lender reveals following mentioned facts during the course of assessment proceedings: 1. The return of income has been filed at current year loss of Rs. 25,762/-only. 2. The share capital of the company is only Rs. 1,00,000/-. 3. The reserve and surplus as on 31/03/2017 is Rs. 66,62,174/-only. The company is not doing any business activity. The gross revenue of the company is only Rs. 1,94,918/ which is interest income accrued on the unsecured loan given to assessee firm. 4. On 18/08/2017 opening balance of bank account was Rs.4,53,072/-. On the same day, lender received RS, 40,00,000/- and same day loan given to assessee for which no explanation was furnished by the assessee regarding source of funds. This shows unaccounted money of assessee brought into legal channel through banking channel. 5. The assessee has taken plea that repayment of loan was considered as genuine but it is not true because repayment of loan was not considered for addition as it was not stood as balance at the end of year and assessee was not in possession of money at the end of year in books of accounts. 6 The A.O. concluded that the above facts clearly prove that the assessee brought its own unaccounted money into banking channel by way of unsecured loans. 7 The above facts show that lender does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee had completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and credit worthiness of the fresh unsecured loan introduced during the year. These circumstantial evidences and facts prove that the assessee brought its own unaccounted money into banking Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 7 channel by way of unsecured loans. The A.O during the course of the assessment proceedings stated that lender does not have creditworthiness of advancing such a huge loan to assessee firm and the assessee had completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and credit worthiness of the fresh unsecured loan introduced during the year and source of funds utilized by lender for advancing such a huge loan accordingly addition of Rs 25,00,000/- had been made by the A.O. The assessee preferred appeal on the addition made. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (i.e. share capital of the company is only Rs. 1 lakh) are not such that it can provide the loan to the assessee. Also the gross revenue of the company is only Rs. 1,94,918/- which consist of interest income accrued on the unsecured loan given to assessee firm. This clearly shows that the company had been formulated just to provide the loans to the assessee. Thus, there are sufficient circumstantial evidences that the assessee had used the said company to get the entry from the said company. Therefore, the genuineness and the creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee during the course of the assessment proceeding Hence, the A.O. rightly made the addition in the total income of the assessee. (ii) Arch Impex Pvt Ltd -Rs.1,20,00,000/- Facts: It is seen that during the course of the assessment proceeding the ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Re. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 8 1,60,00,000/- from Arch Impex Private Limited. The amount of Rs. 40,00,000/- was repaid during the FY 2017-18 and balance amount of Rs 1,20,00,000/- is outstanding an on 31/03/2018. Further, interest of Rs.3,28,438/ is accrued on this loan during the FY 2017-18 The TDS of Rs. 32,844/- has been deducted and balance amount of interest of Rs. 2,95,594/- is carried forward to the next year along with principal. During the course of the assessment proceeding, the assessee firm was issued notices by the A.O. under section 142(1) of the Income Tax Act 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of lean. It is seen that assessee provided copy of confirmation, copy of acknowledgement of ITR, copy of bank statements on 22/12/2023. The examination of copy of acknowledgement of ITR shows that lender has filed its return of income at current year loss of Rs.72,31,753/-. The assessee during the course of the assessment proceeding stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. During the course of assessment proceedings, it is seen from the bank statement from the lender that it imparted loan of Rs 50,00,000/- on 13/11/2017, Rs.20,00,000/- on 16/11/2017. Rs 20,00,000/- on 04/12/2017, Rs. 20,00,000/ on 05/12/2017 and Rs.50,00,000/- on 15/02/2018. The lender was having opening balance on 13/11/2017 - Rs. 1,96,688/- and received Rs. 1,00,00,000/- on the same day from others before imparting loans for which no explanation regarding source of funds was given by the assessee. Thus, the creditworthiness of the lenders could not be said to be proved. The A.O. during the course of the assessment proceeding examined the financial statements which showed that M/s Arch Impex Private Limited (Lender Company) is not doing Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 9 any business activity. It filed its return of income of A.Y. 2018-19 at current year loss of Rs. 72,31,753/- The examination of profit and loss account of lender show that its only income credited to the profit and loss account is interest income of Rs. 3,74,720/-only. This interest income includes interest of Rs. 3,28,438/- accrued on the loan said to be given to the assessee firm. The lender company does not have fixed asset, office premises, employees and other office equipment to run normal office, which is evident from the fact that no salary expenses, no rent and depreciation has been debited to profit and loss account. Further, examination of balance sheet of Arch Impex Private Limited (lender) as on 31/03/2018 show increase in long term borrowings of Rs.44,81,24,565/-under head current liabilities and increase in long term loans and advances of Rs. 23,22,781/- only, increase in non-current investment by an amount of Rs. 50,00,00,000/- (50.00 crore) under the head non-current assets and decrease in short term loan and advances by an amount of Rs.5,34,50,357/-under the head current assets. The above data clearly shows that increase in long term borrowings and decrease in short loans and advances have been utilized for making current investment of Rs.50.00 crore. The increase in long term loan and advances is only for an amount of Rs 23,22,781/- However, the loan outstanding as on 31/03/2018 with respect to assessee firm alone is Rs. 1,20,00,000/- plus interest. This show that this loan transaction has not been recorded in books of accounts of lender. Therefore, the balance sheet of the lender does not prove that loans were given to assessee firm. Further examination of profit and loss reveals that M/s Arch Impex Private Limited has not reported any revenue either in form of interest or otherwise from the long term loans and advances given except the interest accrued on the loan given to assessee firm. It has also not reported any expenditure either in form of interest paid or otherwise on the long-term borrowings. Further the ledger account of assessee firm shows that interest is accrued but not paid, therefore, it Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 10 should be appearing in balance sheet of lender as interest receivable, but it is not appearing in the balance sheet of lender. Further, the examination of schedule off fixed asset of lender company shows that it was not having any fixed asset as on 31/03/2017 and during the F.Y 2017-18 it has purchased a computer software only which is the only asset appearing in balance sheet. The lender does not have any office as not rent expenses has been claimed in profit and loss account and no building is appearing in balance sheet. This shows that it is only a non-existent paper company (shell company). Further lender claimed that the loan was given and shown in short terms loans and advances. It was only an after-thought. The A.O. during the course of the assessment proceeding held that the lender did not have creditworthiness of advancing such a huge loan to assessee firm, accordingly, an amount of Rs. 1,20,00,000/-outstanding as on 31/03/2018 as unsecured loan was brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. The assessee preferred appeal before the Ld. CIT(A). Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (i.e. ITR shows that lender has filed its return of income at current year loss of Rs. 72,31,753/-) are not such that it can provide the loan to the assessee. The lender company does not have fixed asset, office premises, employees and other office equipment to run normal office which is evident from the fact that no salary expenses, no rent and depreciation has been debited to profit and loss account. Also the gross revenue of the company is only Rs. 3,74,720/-which consist of interest income accrued on the unsecured loan given to assessee firm. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 11 This clearly shows that the company had been formulated just to provide the loans to the assessee. Thus, there are sufficient circumstantial evidences that the assessee had used the said company to get the loan entry from the said company. Therefore, the genuineness and creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee. Hence, the A.O. rightly made the addition in the total income of the assessee. (iii) Manish Damji Shah- Rs.70,50,000 Facts: It is seen that during the course of the assessment proceeding, the ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.81,00,000/- from Manish Damji Shah. The amount of Rs. 10,50,000/- was repaid during the F.Y 2017-18 and balance amount of RS. 70,50,000/- is outstanding as on 31/03/2018. Further, interest of Rs. 4,82,770/- is accrued on this loan during the FY 2017-18. The TDS of Rs. 48,277/- has been deducted and balance interest amount of Rs. 4,34,493/- is carried forward to the next year along with principal amount. During the course of the assessment proceeding, assessee firm was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of lean. The assessee furnished copy of ack. of ITR and confirmation and stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely by submitting copy of acknowledgement ITR and ledger account of the lenders in the books of account of the assessee. Accordingly Notice under section 133(6) of the Income Tax Act, 1961 was issued Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 12 to lender to provide the copy of ITR, confirmation statement and copy of bank statement. The lender has provided the above requisite details. The examination of the e-filed ITR of the lender reveals following mentioned facts: (i) The return of income has been filed at current year loss of Rs. 7,81,550/-only. (ii) The capital of the company is only Rs. 38,769/- only. (iii) The loan given to assessee firm is not reported in e-filed return of income of lender The Loans and advances given as on 31/03/2017 is Rs. 78,760/-only. iv) The manual balance sheet provided by the assessee is not authenticated by auditor. The data appearing in the manual balance sheet does not match with the data reported in e-filed return of income. In fact the data of manual balance sheet is not reported in thee-filed return of income. Therefore, manual balance sheet cannot be accepted. v) The lender did not confirm about repayment of loan by assessee in response to notice issued u/s 133(6) of IT Act. vi) Bank accounts were credited just before the imparting of loan to assessee. First credit and then debit to assess but no explanation is given by the assessee regarding source of funds. The abovementioned facts show that lender does not have creditworthiness of advancing such a huge loan to assessee firm The lender has not explained the sources of funds utilized for advancing such a huge loan to assessee firm. The onus is on assessee to provide the documentary evidences to prove the identity, creditworthiness of lender and genuineness of loan. Accordingly, as amount of Rs. 70,50,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 of the Income Tax Act, 1961. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 13 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the funds immediately in the said account just before providing the loan entry to the assessee and also the company's financial are not such that it can provide the huge loans to the assessee. However, the Ld. CIT(A) observed that the lender person has earned around 31 lakhs of income and due to losses in derivative, the total income adjusted and reported. Therefore, on the facts and circumstances, the genuineness and creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee during the course of the assessment Therefore, the A.O. had rightly made the addition in the total income of the assessee. (iv) Bhanumati Kalyan Shah Rs.80,00,000/- Facts: 1) The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs. 80,00,000/- from Bhanumati Kalyan Shah. Further, interest of Rs. 5,09,315/- is accrued on this loan during the FY 2017- 18. The TDS of Rs 50,932/-has been deducted, Rs.2,42,383/- paid during the FY and balance amount of interest of Rs. 2,16,000/- is carried forward to the next year along with principal. 2) Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation and copy of acknowledgement of ITR. However, assessee had not provided the copy of bank statement of the lender. Assessee stated that loan were taken and repaid through Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 14 banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 3) Accordingly, a show cause notice along with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 80,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.ws 115BBE of the Income Tax Act, 1961. The details provided by assessee in response to show cause notice issued earlier and reply furnished during this proceeding and by lender in response to notice under section 133/6) of the Income Tax Act, 1961 has been examined. The examination of the copy of ITR of the lender shows that return of income has been filed at total income of Rs. 5,60,480/- only. The lender stated in reply that source of funds utilized for advancing loan is from accumulated fund. However, lender has not provided any documentary evidence to prove that she was having accumulated funds and loan was given from accumulated funds. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine Unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. This show that the lender does not have creditworthiness to advance such a huge loan of Rs.80,00,000/- The creditworthiness of the lender and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lender in the books of account of the assessee and that the transactions have been made through banking channel. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Further, assessee declared Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 15 lender as uncontrolled party. As the time of imparting loan, party was in controlled later become uncontrolled. The assessee has not furnished any documentary evidence that how lender became uncontrolled. It is only an afterthought of assessee. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year Therefore, amount of Rs. 80,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 of the Income Tax Act, 1961 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ie. The examination of the copy of ITR of the lender shows that return of income has been filed at total income of Rs.5,68,480/-only) are not such that it can provide the loan to the assessee. Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received from some Jayantilal B. Gangar before providing the loan entry to the assessee and the lender was not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry. Therefore, the creditworthiness and genuineness of the lender cannot be proved as per the documents submitted by the assessee. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 16 Hence, the A.O. rightly made the addition in the total income of the assessee. (v) Canopous Consultancy Services P. Ltd- Rs. 10,00,000/- Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs. 10,00,000/- from Canopous Consultancy Service Private Limited. Further, interest of Rs 3,59,260/- is accrued on this loan during the FY 2017-18. The TDS of Rs 35,926/- and balance amount of interest of Rs.3,23,334/-is carried forward to the next year along with principal. 2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation and copy of acknowledgement of ITR. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. Accordingly, as show cause notice with Draft Assessment order was issued to assessee to show cause why the amount of RS. 10,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r. w s115BBE of the Income Tax Act, 1961 3. The examination of copy of IT'R acknowledgement of the ledger provided by assessee shows that return of income has been filed at current year loss of Rs. 81,71,474/ This show that lender does not have creditworthiness to advance such a huge loan of Rs. 10,00,000/- Accordingly, notice under section 133(6) of the Income Tax Act, 1961 was issued to Canopus Consultancy Services Private Limited (lender) to provide the copy of ITR Form, confirmation statement, copy of bank statement and financial statement to prove the source of Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 17 funds utilized to advance loan and recording of the loan transactions in books of accounts. It is pertinent to mention here prudent business person will not give loan to any one if business is in loss. He will use his capital/money available with him to recover business. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. 4. The credit worthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on assessee to prove the credit worthiness of lender and genuineness of loan. It is crystal clear from the facts mentioned above that lender does not have credit worthiness of advancing such a huge loan to assessee. Therefore, amount of Rs. 10,00,000/- outstanding as on 31/03/2018 unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lending entity is not creditworthy to advance such loan as the entity reported its income in loss of Rs.81,71,474/- and no prudent entity will be advancing the loan who is in loss. The Ld. CIT(A) stated that during the Financial Year 2016-17 the Lender Company did earn the Profit of Rs. 40,28,397/- and just because in the Financial Year 2017-18, the Lender Company has incurred a loss, it does not mean that the company does not have creditworthiness to grant loan of Rs. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 18 10,00,000/- Further, considering the new worth of the company prima facie the creditworthiness of the lender entity appears to be genuine. (vi) Shantilal Gala (HUF) -Classic Enterprises-Rs.20,00,000 Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.20,00,000/- from Classic Enterprises. Further, interest of Rs.7,397/ is accrued on this loan during the FY 2017-18 The TDS of Rs.740/-and balance amount of interest of Rs.6,657/- is carried forward to the next year along with principal 2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. A show cause notice along with Draft Assessment Order was issued to assessee to show cause why the amount of Rs.20,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Reliance is placed on CIT v. N.R. Portfolio (P.) Ltd. 2014 42 taxmann.com 339/22. taxman 157 held that the concept of \"shifting onus\" does not mean that once certain facts are provided, the assessee's duties are over. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act. 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year 3. It is crystal clear from the facts mentioned above that lender do not have creditworthiness of advancing such a huge loan and the same is not recorded in the books of accounts. Therefore, the creditworthiness of lender and genuineness of Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 19 loan could not be proved. Therefore, amount of Rs. 20,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the credit worthiness of the lender is in question as the lender party showing only Rs. 5,39,760/-as the return of income during the year which show that the lender doesn't have the creditworthiness to provide the loan to the assessee. Further, as the assessee had not furnished the copy of the bank statement therefore it is not possible to see whether the money was received just before providing the loan entry to the assessee Therefore, in the absence of the bank statement the creditworthiness of the lender cannot be proved merely by providing return of income and the A.O. rightly made the addition in the total income of the assessee. (vii) Dinesh Kannubhai Khatadia Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.52,00,000/- from Dipesh Kannubhai Khatadia. The amount of Rs. 12,00,000/-was repaid during the FY 2017-18 and balance amount of Rs. 40,00,000/- is outstanding as on 31/03/2018. Further, interest of Rs 2,16,000/-is accrued on this loan during the FY 2017-18 The TDS of Rs 21,600/- is deducted and balance amount of interest of Rs. 1,94,000/-is carried forward to the next year along with principal 2 Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 20 only Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 3. Accordingly, a show cause notice with Draft Assessment Order was issued to assessee to show cause why the amount of Rs. 40,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 rw.s 115BBE of the Income Tax Act, 1961. 4. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, copy of bank Statement and financial statements. However, no response has been received till date to the notice u/s 133(6) of the I.T. Act, 1961. 5. The detail provided by assessee in response to show cause notice has been examined. The examination of copy of Acknowledgement of ITR of lender provided by the assessee show that lender has filed his return of income declaring total income of . 5,45,370/-only. The total income declared by lender show that he does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee has not provided the copies of financial statements of lender or any other documentary evidence to prove the source of funds utilised by lender for advancing such a huge loan and also to prove that the loan transaction was recorded in books of account of the lender. Therefore, the genuineness of loan transaction is also not proved. The onus is on the assessee to prove creditworthiness of lender and genuineness of loan, but failed to do so and assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine unsecured loans can be routed through banking channel also which are prevalent now days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 21 same days or just before the imparting of loan. The same is true here also. In draft assessment order, it is not mentioned that repayment of loan is genuine. Only balance amount was taken for addition. In the earlier order dated 06/08/2021, the AO took those amounts for addition which was stand at the end of financial year does not imply to treat paid loan as genuine but it was not present in books of accounts. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year 6. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of Rs. 40,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ITR of lender provided by the assessee show that lender has filed his return of income declaring total income of Rs.5,45,370/-only) are not such that it can provide the loan to the assessee. Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received just before providing the loan entry to the assessee and the assessee were not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 22 in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry. Therefore, the genuineness and the creditworthiness of the lender cannot be proved as per the documents submitted by the assessee. Hence, the A.O. rightly made the addition in the total income of the assessee. (viii) Ekta Group (Girish Ramnik Lal)- Rs.26,00,000/- Facts: The ledger account provided by assessee show that during the F.Y. 2017-18 assessee has taken loan of Rs.36,00,000/-from Ekta Group (Girish Ramnik Lal). The amount of Rs. 10,00,000/-was repaid during the FY 2017-18 and balance amount of Rs.26,00,000/- is outstanding as on 31/03/2018. 2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR of the lender. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 3. Accordingly, a show cause notice with Draft Assessment Order was issued to assess to show cause why the amount of Rs. 26,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961 4. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 23 statement, copy of bank statement and financial statements. However, no response has been received till date to the notice u/s 133(6) of the 1.T. Act, 1961. The lender has not furnished any confirmation of repayment of loan in subsequent years. The Hon'ble Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP (CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type and nature of enquiry is purely dependent on Assessing officer and differ from case to case 5. Assessee has not provided the documentary evidences to prove the identity and creditworthiness of the lender and genuineness of loan. The identity, creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. 6. It is crystal clear from the facts mentioned above that assessee failed to Prove the credit worthiness of the lender and genuineness of loan and identity of the lender. Therefore, amount of Rs. 26,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the assessed had merely submitted the ledger Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 24 account and the confirmation but failed to furnish the copy of the bank statement therefore the identity, creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. Therefore, the credit worthiness of the lender is in question. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry. Therefore, the genuineness and the creditworthiness of the lender cannot be proved as per the documents submitted. Hence, the A.O. rightly made the addition in the total income of the assessee. (ix) Hill Crest Resorts and SPA P. Ltd Facts: 1. The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs. 25,00,000/- from Hill Crest Resort and Spa Pvt. Ltd. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation only Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 2. Accordingly, a show cause notice with Draft Assessment Order was issued to assessee to show cause why the amount of Rs. 25,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115 BBE of the Income Tax Act, 1961. 3. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, copy of bank Statement and financial statement Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 25 recording the loan transactions. The details provided by the assessee and lender have been examined. 4. Assessee in response to show cause notice stated that loan has been repaid in full in F.Y 2018-19 and that the balance sheet of company show total borrowings of Rs. 123,24,63,107/-out of which amount of Rs. 25,00,000/-is advanced to us. The examination of ack of ITR of lender company show that that return of income has been fled current year loss of Rs. 4,73,98,327/- This show that lender company don't have creditworthiness of advancing such a huge loan to assessee firm, Further, the loan transactions must appear in the balance sheet of the lender as on 31/03/2018 on Asset side. However, examination of balance sheet of lender shows that this loan transaction is not appearing in balance sheet of company. This shows that Lender Company has not given any loan to assessee firm. The name of assessee firm is not appearing in balance sheet of Lender Company In fact, Lender Company has not given loan to any person. The Auditor has not reported such lean transactions in audit report of lender. The above-mentioned facts and documents show that no loan was given by lender to assessee firm. The lender has not furnished any confirmation of repayment of loan in subsequent years. Assessee claimed that no cash was deposited before imparting the loan The cash deposit is not precondition for non-genuineness of unsecured loans. Non-genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. It is pertinent to mention here prudent business person will not give loan to any one if business is in loss. He will use his capital/money available with him to recover business. The assessee has brought its Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 26 own unaccounted money through banking channel. It is circulation of money. 5. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transactions are made through banking channel. The onus is on the assessee to prove the genuineness and the creditworthiness of lender and genuineness of loan, in which assessee is failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ITR of lender provided by the assessee show that lender has filed his return of income declaring current year loss of Rs. 4,73,98,327/-) are not such that it can provide the loan to the assessee. Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received just before providing the loan entry to the assessee and the assessee was not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the lean entry. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness on the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessed and hence, the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 27 A.O. rightly made the addition in the total income of the assessee. (x) H. Manubhal & Co. (Hitesh Manhar Lal Bilakhia) - Rs.20,00,000/- Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs. 20,00,000/- from H. Manubhai & Co. An assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR and confirmation of the lender. 2. Accordingly, a show cause notice with Draft Assessment Order was issued to assess to show-cause why the amount of Rs 20,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 rws115BBE of the Income Tax Act, 1961 3. Notice under section. 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, copy of bank statement and financial statement. However, no response has been received till date to the notice u/s 133(6) of the I.T. Act, 1961. 4. Assessee stated in response to show cause notice that lender has passed away due to COVID-19 and family members are not aware of the transactions. However, assessee provided the copy of ack. of ITR of lender. The examination of ITR ack show that return of income has been filed at total income of Rs. NIL. The assessee did not furnished complete copy of ITR of lender. This show that lender does not have credit worthiness of advancing such a Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 28 huge loan to assessee firm. Assessee has not provided any other documentary evidence to prove the source of funds of lender utilized to advance such a huge amount of loan and has also not provided financial statement of lender recording the loan transactions to prove the genuineness of loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the credit worthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and credit worthiness of the unsecured loan introduced during the year 5. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan and identity of the lender Therefore, amount of Rs 20,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 of the Income Tax Act, 1961 Comments: The Ld CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 29 termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding the ledger confirmation and the bank statements of the lender. Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. Nil. As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. The assessee had submitted before the Ld CIT(A) that the at the time of granting loan to assessee lender had Bank Balance of Rs.50,27,945/-. However, the same was not verifiable as the bank statement had not provided by the assessee. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee (xi) Jayshri Ben Thakkar- Rs.8,00,000/- Facts: The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs.8,00,000/- from Jayshriben Thakkar. Assessee was issued notices undersection142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. However, assessee has not provided confirmation statement, copy of bank statement and copy of ITR of the lender. Assessee stated that loan were taken and repaid through Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 30 banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 2. Accordingly, a show cause notice with Draft Assessment Order was issued to assessee to show cause why the amount of Rs. 8,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115 BBE of the Income Tax Act, 1961. 3. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statement recording the loan transactions and copy of bank statement. Assessee, in response to show cause notice provided the copy of computation of income, copy of ack of ITR and ledger account of lender. The examination of these documents shows that lender has filed her return of income at total income of Rs. 2,29,600/- only for AY 2018-19, Rs. 2,51,200/- for AY 2017- 18 and Rs. 1,80,400/- for AY 2016-17 Fund infused in bank accounts just one day before of imparting of loans. It shows that lender does not have creditworthiness of advancing such a huge loan to assessee firm. Assessee has not provided any other documentary evidence to prove the source of funds of lender utilized to advance such a huge amount of loan and has also not provided the financial statement of lender recording the loan transactions to prove the genuineness loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 31 established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON & Steel P. Ltd. Arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type and nature of enquiry purely depends upon Assessing officer. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. 4. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of 8,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax an income of the assessee from undisclosed sources as per the provisions of section 68 Comments: The Ld. CIT(A) had deleted the and addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding the ledger confirmation, financial of the company and the bank statements of the lender Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. of Rs. 2,29,600/-only for AY 2018-19, Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 32 Rs.2,51,200/- for AY 2017-18 and Rs. 180400 for AY 2016-17 As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee. (xii) Jewel Developers Rs.25,00,000/- Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs. 25,00,000/- from Jewel Developers. Assessee was issued notices under section142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation and ITR. However, assessee has not provided the copy of bank statement of the lender. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. 1. Accordingly, a show cause notice with Draft Assessment Order was issued to assessee to show cause why the amount of Rs. 25,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 33 2. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statements recording the loan transaction and copy of bank statement. 3. The details provided by assessee in response to show cause notice and by lender in response to notice under section 133(6) have been examined. The examination of ack. of ITR show that lender filed return of income at total income of Rs. 3,06,310/- only. This show that lender does not have creditworthiness to advance such huge amount of loan. The lender stated that loan given to assessee firm has been reported in schedule B10 of balance sheet under the schedule Loans and Advances (Assets). However, examination of profit and loss account and balance sheet provided by lender show that books of account of lender are auditable. But, profit and loss account and balance sheet provided by lender are not audited and signed by auditor. Therefore, these financial statements cannot be relied upon. The assessee and lender had not provided the complete copy of ITR to show whether the data in unaudited profit and loss account and balance sheet provided by assessee has been reported in e-filed return of income. Therefore, cognizance of balance sheet provided by lender cannot be taken. The assessee and the lender had not provided any other documentary evidence of source of funds utilized by lender to advance such a huge loan to assessee firm to prove the creditworthiness and also has not provided any other documentary evidence regarding reporting of loan transactions in books of account to prove the genuineness of loan transaction The credit worthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transactions were made through banking channel. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 34 deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP (CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type of enquiry purely depends upon Assessing officer. The lender did not furnish any confirmation regarding receiving of repayment of loans. The assessee had brought its own unaccounted money through banking channel. It is circulation of money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. 6. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender, genuineness of loan and source of funds utilized by lender for advancing loan. Therefore, amount of RS.25,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 35 failed to furnish the details regarding the ledger confirmation, financial of the company and the bank statements of the lender. Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. 3,06,310/-only. As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee (xiii) Kalyanji Umarshi Shah Rs.95,00,000/- Facts: The ledger account provided by assesses how that during the F.Y 2017-18 assessee has taken loan of Rs. 95,00,000/- from Kalyanji Umarslu Shah (Represented by Ashwin Kalyanji Shah. Further, interest of Rs.6,04,810/-is accrued on this loan during the FY 2017-18. The TDS of Rs.60,481/ was deducted. Interest of Rs. 2,87,829/- is paid and balance interest of Rs.2,56,500/-along with principal amount is carried forward to the next year 2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. Assessee provided copy of confirmation Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 36 and ITR. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries but failed to explain the source of funds in the bank account of lender. Thereafter, a show cause notice along with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 95,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.ws 115 BBE of the Income Tax Act, 1961. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statements recording the lean transaction and copy of bank statement. The reply received from assessee firm in response to show cause notice and reply received from lender in response to notice under section 133(6) was examined. The examination of ITR shows that ITR has been filed at total income of Rs.5,76,270/-and gross total income of Rs. 7,41,268/ which includes interest of Rs. 6,04,810/- received from the assessee firm on loan under consideration. This show that lender does not have any other source of income except this interest income Therefore, lender does not have creditworthiness to advance such a huge loan. The lender further stated in reply that he is senior citizen (D.O. B 15.03. 1936) and loan has been paid out of accumulated funds over the years. However, documentary evidence in support of accumulated funds has not been provided by the lender and assessee both The ITR has been verified by the representative Ashwani Kalyanji Shah Further assessee firm and lender have not provided any other documentary evidence recording the loan transactions in books of accounts to prove the genuineness of loan creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transaction have been made Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 37 through banking channel. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type of enquiry purely depends upon Assessing officer. The lender did not furnished any confirmation regarding receiving of repayment of loans. The assessee has brought its own unaccounted money through banking channel. It is circulation money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender, genuineness of loan and source of funds utilized by lender for advancing loan. Therefore, amount of Rs.95,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the complete details. Further, the A.O. during the course of the assessment proceeding stated that ITR has been filed at total income of Rs 5,76,270/-and grass total income of Rs. 7,41,268/-which Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 38 includes interest of Rs. 6,04,810/-received from the assessee firm on loan under consideration. This show that lender does not have any other source of income except this interest income. As the assessee had only provided the copy of the relevant transactions for the month of Sept, 2019 and thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence. the A.O. rightly made the addition in the total income of the assessee (xiv) Lilavti Damji Patel - Rs. 20,00,000/- Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs. 20,00,000/- from LILAVATI DAMJI PATEL Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation only However, assessee has not provided the copy of bank statement and ITR of the lender. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. Thereafter, a show cause notice with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 20,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961 Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statement recording the loan transaction and copy of bank statement. However, no response has been received till date to the notice u/s133(6) of the IT. Act, 1961. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 39 The lender has filed her return of income at total income of Rs. 4,03,490/-only. This quantum of total income show that lender does not have creditworthiness of advancing such a huge loan The assessee firm and lender has not provided any documentary evidence to prove the source of funds utilized for advancing loan to prove creditworthiness of the lender. The creditworthiness and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The lender did not furnish any confirmation regarding receiving of repayment of loans. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. 1. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of Rs. 20,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the complete details. Further, the A.O during the course of the assessment proceeding stated that the lender has filed her return of income at total income of Rs.4,03,490/-only This quantum of total income show that lender does not have creditworthiness of advancing such a huge loan. It is seen from the bank statement of the lender that the cash has been deposited in the said account and no major activity in the said bank account. However, it is seen that the just before giving the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 40 loan to the assessee on 06/02/2018 the lender had received the amount one day before ie. 05/02/2018 an amount of Rs. 1,03,70,970/-had been credited in the said bank account and the same was utilized for providing the loans to the assessee and other entities. As the genuineness and the creditworthiness of the lender cannot be proved by the assessee and hence, the A.Ο. rightly made the addition in the total income of the assessee. (xv) Parask Botadara - Rs. 17,50,000/- Facts: The assessee has taken loan of Rs 22,50,000/- from Paras K. Botarda. The amount of Rs.5,00,000, was repaid during the F.Y 2017-18 and balance amount of Rs. 17,50,000/- is outstanding as on 31/03/2018. No interest paid/accrued on the loan. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR of the lender. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. Thereafter, a show cause notice with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 17,50,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statements and copy of bank statement. However, no response has been received till date to the notice u/s Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 41 133(6) of the IT. Act, 1961. The assessee firm has also not provided any documentary evidence to prove the source of funds utilized by the lender to advance loan to prove creditworthiness and documentary evidence of recording the loan transaction in book of accounts to prove genuineness of loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act and entrusted to assessing officer to decide type of enquiry The lender did not furnished any confirmation regarding receiving of repayment of loans. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961 Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding source of funds utilized by the lender to advance loan to prove creditworthiness and documentary evidence of recording the loan transaction in book of accounts to prove Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 42 genuineness of loan as no details regarding the ITR, Confirmation and other details. The assessee had furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. xvi) Rajani D Agarwal - Rs.5,00,000/- Facts: As per the ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs. 5,00,000/- from Rajani D Agarwal. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. The assessee firm could not provide any documentary evidence regarding the source of funds utilized by the lender to prove the credit worthiness of the lender, PAN, copy of ITR form and financial statement to prove the identity of the lender and genuineness of loan. The lender does not have any PAN. The assessee brought its own unaccounted money into banking channel. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and credit Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 43 worthiness of the fresh unsecured loan introduced during the year It is crystal clear from the facts mentioned above that assessee failed to prove the identity, credit worthiness of the lender and genuineness of loan. Therefore, amount of Rs. 5,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee The A.O during the course of the assessment proceedings had been stated the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. Comments: The Ld CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the assessee had not furnished the source of funds utilized by the lender to prove the credit worthiness of the lender, PAN, copy of ITR form and financial statement to prove the identity of the lender and genuineness of loan. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. (xvii) Shailesh Surender Jasani - Rs.40,00,000/- Facts: The ledger account provided show that during the FY2017-18, assessee has taken loan of Ra 1,27,00,000/- from Shailesh Surendra Jasani. The amount of Rs. 87,00,000/- was repaid during the FY2017-18 and balance amount of Rs. 40,00,000/-is outstanding as on 31/03/2018 Further, Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 44 interest of Rs.3,12,953/-is accrued on this loan during the FY 2017-18. The TDS of Rs.31,295/-was deducted and balance amount of interest of Rs.2,81,658/ is carried forward to the next year along with principal amount of Rs.40,00,000/- The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 6.91.810/-only, which proves that lender does not have creditworthiness of advancing such a huge loan The examination of e-filed ITR show that loan transaction has not been reported in the balance sheet schedule of e-filed ITR This proves that loan transaction is not genuine. Assessee firm and lender could not provide any documentary evidence regarding the source of funds utilized by lender to advance such a huge loan to assessee firm to prove creditworthiness of lender and documentary evidence regarding reporting of loan transactions in books of accounts of lender to prove the genuineness of loan. Therefore, the assessee failed to prove credit worthiness of the lender and genuineness of loan. Thus, amount of Rs. 40,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income for A.Y 2018-19 at total income of Rs. 6,91,810/-only, which proves that lender does not have creditworthiness of advancing such a huge loan and the assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 45 and hence, the A.O. rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the part loan had been repaid during the year. However, if the amount had been repaid that doesn't make the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. (xviii) Seema Shailesh Jasani - Rs.36,50,000/- Facts: The ledger account provided show that during the F.Y2017-18, assessee has taken loan of Rs.46,50,000/-from Seema Shailesh Jasani. The amount of Rs. 10,00,000/-was repaid during the FY2017- and balance amount of RS. 36,50,000/-is outstanding as on 31/03/2018. Further, interest of Rs. 2,03,930/- is accrued on this loan during the FY 2017-18. The TDS of Rs.20,393/- was deducted and balance amount of interest of Rs. 1,83,537/- is carried forward to the next year along with principal amount of Rs.36,50,000/- The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 7,17,510/- only, which proves that lender does not have creditworthiness of advancing such a huge loan. Therefore, amount of Rs. 36,50,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115 BBE of the Income Tax Act, 1961 Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income of Rs.7,17,510/-only, which proven that lender does not have Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 46 creditworthiness of advancing such a huge loan and even the lender did not furnished any confirmation regarding receiving of repayment of loans. The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. Further, as the Ld. CIT(A) had stated that the part of the loan had been repaid during the year. However, if the amount had been repaid that doesn't make the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. (xix) Rakesh Ramesh Chandra Rs.60,00,000/- Facts: The ledger account provided show that during the FY 2017-18, assessee has taken loan of Rs. 1,40,00,000/- from Rakesh Ramesh Chandra. The amount of Rs. 80,00,000/-was repaid during the FY 2017-18 and balance amount of Rs. 60,00,000/-is outstanding as on 31/03/2018. Further, interest of Rs 88,273/-is accrued on this loan during the FY 2017-18. The TDS of Rs 8,827/-was deducted and balance amount of interest of Rs. 79,446/- is carried forward to the next year along with principal amount of Rs.60,00,000/-. The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 14,21,020/-only. The onus is on assessee to prove creditworthiness of lender and genuineness of loan, but assessee failed to do. It is crystal clear from the facts Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 47 mentioned above that assessee failed to prove the identity, creditworthiness of the lender and genuineness of loan. Therefore, amount of Rs.60,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115BBE of the Income Tax Act, 1961. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income of Rs. 14,21,020/- only, which proves that lender does not have creditworthiness of advancing such a huge loan and even the lender did not furnished any confirmation regarding receiving of repayment of loans. The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee Further, as the Ld. CIT(A) had stated that the part of the loan had been repaid during the year. However, if the amount had been repaid that doesn't made the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. (xx) PHB Relcon Rs. 10,00,000/- Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 48 Facts: The ledger account provided by assessee show that during the F.Y 2017-18, assessee has taken loan of Rs. 10,00,000/-from PHB Relcon The examination of ack of ITR of lender provided by assessee firm show that lender has filed its return of income at current year loss of Rs. 1,92,353/ This show that lender does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee firm and the lender has not provided any documentary evidence regarding the source of funds utilized to advance such a huge loan to prove credit worthiness and documentary evidence regarding the recording of transaction of loan in books of accounts to prove the genuineness of loan. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his current year loss of Rs.1,92,353/-, which proves that lender does not have creditworthiness of advancing such a huge loan. The assessee firm had not provided any documentary evidence regarding the source of funds utilized to advance such a huge loan to prove credit worthiness of the lender As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. As the assessee had not even submitted the bank statement to verify the creditworthiness of the lender to advance loan to the assessee, hence, the A.O. rightly made the addition in the total income of the assessee. (xxi) Pramod Kumar Jain Securities P Ltd - Rs.90,00,000/- Facts: The ledger account provided show that during the FY 2017-18, assessee has taken loan of Rs. 1,60,00,00,000/- from Pramod Kumar Jain Securities Private Limited The amount of Rs 70,00,000/-was repaid during the F. Y 2017-18 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 49 and balance amount Rs. 90,00,000/-is outstanding as on 31/03/2018. No interest accrued on this loan during the FY 2017-18. The Balance amount of Rs. 90,00,000/- is carried forward to the next year. The examination of ITR of lender show that it has filed its return of income at total income of Rs. 1,55,930/ Further, the examination of manual audited balance sheet of lender as on 31/03/2018 and e-filed ITR of assessment year 2018-19 show that above mentioned loan transactions has not been recorded in balance sheet and e- filed ITR. Therefore, amount of Rs.90,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115BBE of the income Tax Act, 1961. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income at total income of Rs. 1,55,930/-, Further the examination of manual audited balance sheet of lender as on 31/03/2018 and e-filed ITR of assessment year 2018-19 show that above mentioned loan transactions has not been recorded in balance sheet and e-filed ITR. Therefore, the creditworthiness and the genuineness of the loan cannot be established. The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. It is seen that the assessee has not provided the documentary evidences to prove all the above lenders, its identity and creditworthiness of the lender and genuineness of loan. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Therefore, the genuineness and the creditworthiness of the lender Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 50 cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. 8. It is seen that the party-wise comments were submitted on the order passed by the Ld. CIT(A) as above, however to sum up as under: a. It was seen that the genuineness and the creditworthiness of the lender could not be proved as per the bank statements and the ITR of the lender submitted by the assessee during the course of the assessment proceedings. b. Even if the identity had been proved of the lender but the credit worthiness and the genuineness of the transactions of the lender was not proved in all the case wherein the lender had given the ledger confirmation, the ITR showing meagre income. C Further, in most of the cases on perusal of the bank statement, it was seen that the funds were coming in the bank account of the lender just before the money was given to the assessee, therefore the credit worthiness of the lender is not proved. d Therefore, based on the above facts it was clear that either or both the identity, genuineness and the credit worthiness of the lender had not been proved and the AO concluded the assessment by making addition of Rs. 8,43,50,000/- on account of unsecured loan along with interest amounting to Rs. 29,95,911/- received during the year by pointing out that the transaction of loan did not pass the criteria to be considered as genuine. 7. The ld. AR had strongly relied upon the aforesaid report of the ld. AO. The same reasons which has been given by the ld. AO in the assessment order. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 51 8. Before us ld. Counsel for the assessee submitted that even in the grounds, the Revenue has not disputed the identity or genuineness of the transaction, albeit have questioned that these parties confirmed in the statement that the loans have been advanced to the assessee and ld. CIT(A) has erred in adding the additional evidence which was not produced during the course of the hearing before the ld. AO. Nowhere, the Revenue has challenged or stated about the genuineness and creditworthiness of the lenders. He submitted that during the course of the appellate proceedings on credit from the banks, the department filed a report as an email dated 08/04/2025 from the AO to the Sr. DR where he admitted that the entire information submitted by the assessee before the CIT(A) were the copies of the information obtained by the AO directly from the lenders u/s 133(6) of the Act, except in the case of M/s Canopous Consultancy Service (P) Ltd where annual accounts filed by the assessee before the CIT(A) was not on the record of the AO. Thus, the contention of the AO that additional evidence was submitted before the CIT(A) without confronting u/r 46A is rejected as merely filing a copy of annual accounts only in one case, does not make filing of any additional evidence requiring rejection of the claim. 9. A copy of the annual accounts is not a primary evidence u/s.68 where the bank account, confirmation, PAN, nature of transaction needs to be proved in the light of those documents. Annual accounts are corroborative evidence particularly when on perusal of the bank account of the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 52 lender, it is clear that no corresponding amount in cash was deposited by the lender in his bank account to advance loan to the assessee. In case of any doubt, the AO was very much entitled to make more enquiries from the bank to ascertain the source of amount lent to the assessee as loan. The assessee is not supposed to prove source of source in respect of loans borrowed, particularly when from the bank accounts of all the lenders, it did not transpire that any cash was deposit therein to advance loan to the assessee and where the lender is an income-tax assessee. 10. The audited annual accounts of a company are in public domain as are mandatorily filed by every company with the Registrar of Companies from where the AO could also access the same. Interestingly, the assessment order making the additions has 69 pages whereas the CIT(A) has passed an appellate order containing 180 pages detailing and verifying in terms of the section 68 each and every loan and the nature of documents on his record which were admittedly also on the record of the AO. 11. He submitted that nowhere the ld. AO in his report or in the grounds have pointed out any deficiencies on such documents which were furnished. He drew our attention to the voluminous paper book wherein various documents were filed before the ld. AO and ld. CIT(A) and also all the lenders have confirmed directly to the ld. AO in response to the notice u/s.133(6). List of these documents are as under:- Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 53 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 54 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 55 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 56 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 57 Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 58 12. We have heard the rival submissions at length and carefully examined the assessment order, the remand report of the Assessing Officer, the findings of the ld. CIT(A), and the documents placed on record. The central issue in the present appeal revolves around the additions made under section 68 of the Act in respect of twenty-one lenders, aggregating to ₹8,43,50,000/–, which the Assessing Officer held to be unexplained unsecured loans. Since the controversy is Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 59 common in respect of all such parties, though with varying factual shades, we propose to deal with each lender separately and record our findings thereon in seriatim. (i) M/s. Arch Herbals Pvt. Ltd-Addition of Rs.25,00,000/- 13. In so far as the loan from M/s. Arch Herbals Pvt. Ltd. is concerned, the ld. CIT(A) noted that the assessee had taken a loan of ₹60,00,000/– during the year, of which a sum of ₹35,00,000/– was repaid by the assessee within the same year. The Assessing Officer, however, in a rather incongruous manner, treated the repaid portion as genuine, but chose to disbelieve the balance of ₹25,00,000/– as not genuine. From the submissions of the assessee, it also emerged that the lending party itself had received a sum of ₹40,00,000/– from another entity on the very same day, and out of such receipts advanced the loan to the assessee. The lender explained before the Assessing Officer that this sum of ₹40,00,000/– had been received from its associate concern, M/s. Arch Pharalab. 13.1. The ld. CIT(A), after considering the material, found that there was no dispute about the receipt of ₹40,00,000/– by the lender from its associate concern, and that the very same funds were advanced to the assessee as unsecured loan. The lending entity further confirmed the transaction through its ledger account and bank statements, thus clearly establishing the source and trail of money. The Assessing Officer’s conclusion that the unsecured loan from Arch Herbals was nothing but the assessee’s own money routed Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 60 back into its accounts was, therefore, without any sustainable basis. From the financials of Arch Herbals, it was evident that the company had borrowings from its associate concern and had in turn advanced them onwards. In such circumstances, the mere fact that the funds were immediately passed on to the assessee could not render the transaction non-genuine. The relevant extracts of the financial statements further demonstrated that the lender was financially sound and possessed adequate creditworthiness to advance the loan. 13.2. The ld. CIT(A) also referred to the notes in the financial statements of the lender, which disclosed substantial availability of funds. The lender had borrowings of more than ₹38.14 crores in the form of unsecured loans and a further ₹6.5 crores from its corporate shareholders. Having perused the bank statement of the lender, the CIT(A) observed that the loan had been advanced to the assessee through the banking channel and there was nothing to suggest that it represented the assessee’s own funds. The contention of the Assessing Officer, therefore, could not be accepted as a sound basis to treat the loan as bogus. In addition, the ld. CIT(A) also found merit in the assessee’s argument that a part of the loan, which was repaid, had been accepted as genuine by the Assessing Officer himself, thus revealing an inconsistent and ambiguous approach towards the transaction. It was further noticed that the assessee had been making payment of interest to the lender after deducting applicable TDS. In support of his conclusion, the CIT(A) relied on the judgment of the Hon’ble Bombay High Court in PCIT v. Bairagra Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 61 Builders Pvt. Ltd. [(2024) 164 taxmann.com 162 (Bom)], wherein on an identical issue the Court held that unsecured loans taken through banking channels, duly supported by confirmations and subjected to repayment with interest and TDS, could not be treated as unexplained cash credits. He also referred to the judgment of the Hon’ble Gujarat High Court in PCIT v. Ojas Tarmake (P) Ltd. [(2023) 158 taxmann.com 75 (Guj)], which reiterated the same principle. 13.3. Here, it is significant to underline that the ld. CIT(A) has not merely gone by formal confirmations, but has traced the financial wherewithal of the lender through its audited statements and notes thereto, and has reinforced his conclusion with binding precedents. Such a multi-pronged reasoning demonstrates that the order of the first appellate authority was not perfunctory but was grounded in both facts and law. 14. After considering the facts placed on record and the submissions of the assessee before the Assessing Officer as well as before the CIT(A), we find that the assessee had taken a loan of ₹60,00,000/– from M/s. Arch Herbals Pvt. Ltd., of which ₹35,00,000/– was repaid a fact not disputed by the Assessing Officer. The source of funds was also duly explained by the lender, which had received ₹40,00,000/– from another entity and further ₹40,00,000/– from its associate concern M/s. Arch Pharalab. Thus, there was a direct and identifiable source of funds available with the lender, out of which the loan was advanced to the assessee. In such circumstances, there is no basis to doubt the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 62 creditworthiness of the lender or to brand the transaction as non-genuine. We, therefore, find no infirmity in the well- reasoned order of the ld. CIT(A) deleting the addition. The same is accordingly upheld. 15. In our view, once the assessee had furnished confirmations, bank statements, and financial statements of the lender, and the transaction itself was routed entirely through verifiable banking channels, the burden shifted squarely upon the Assessing Officer to dislodge such evidence by credible material. Instead of discharging this burden, the AO merely resorted to suspicion and surmise. The approach of partly accepting and partly rejecting the same loan transaction, without cogent justification, only exposes the arbitrariness of the addition. (ii) Arch Impex Pvt. Ltd., - Rs.1,20,00,000/- 16. As recorded in the impugned orders, the assessee had taken a loan of ₹1,60,00,000/– from this party during the year, out of which ₹40,00,000/– was repaid. Thus, the balance of ₹1,20,00,000/– remained outstanding as on 31/03/2018. The assessee had also paid interest of ₹3,28,438/– on this loan, on which TDS was duly deducted. It was pointed out that the assessee had placed on record all relevant documents including confirmation, acknowledgement of ITR, bank statements, and other evidences. In addition, the lender itself responded to the notice issued under section 133(6) and furnished all necessary documents. An important Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 63 aspect highlighted was that at the time of advancing the loan, the lender company had substantial bank balances. 16.1. The ld. CIT(A), after taking stock of these evidences, observed that the factual substratum clearly established the receipt of a loan of ₹1.60 crores during the year, of which ₹40 lakhs had been repaid and ₹1.20 crores continued to remain outstanding. He also underscored that the Assessing Officer’s action of accepting the repaid portion as genuine while rejecting the balance was intrinsically inconsistent. Furthermore, it was noted that the lender itself had received funds from different entities, which were then advanced to the assessee, and that the assessee belonged to a larger group of concerns that included entities which had similarly extended loans. 16.2. The ld. CIT(A) further recorded that there was no dispute about the fact that the lending entity had indeed received various sums from other entities, and that out of such receipts it had advanced an unsecured loan to the assessee. The lender confirmed the transaction through its ledger account and bank statements. The Assessing Officer’s contention that the funds represented the assessee’s own money routed back through the lender was, in the absence of any supporting material, nothing but a bare conjecture. From the audited financial statements of Arch Impex, it was apparent that the company had substantial loans from associate concerns, and that these had been further advanced in the ordinary course. Such funds, having an identifiable Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 64 and legitimate source, cannot be lightly brushed aside as non-genuine. 16.3. The ld. CIT(A) thereafter extracted the confirmation of account along with the balance sheet, which disclosed that the lender had funds aggregating to nearly ₹44.64 crores, sourced partly from unsecured loans and partly from shareholder contributions. Analysing these financials, the ld. CIT(A) noted that the lending company had substantial resources available, which were duly reflected in its audited accounts. It was also observed that in all such cases the Assessing Officer had confined himself to a sweeping allegation that the monies represented the assessee’s own funds recycled through the lender’s bank accounts. However, the AO conspicuously failed to bring any rebuttal material on record to disprove the categorical evidences in the form of confirmations, audited accounts, and banking records. 16.4. The ld. CIT(A) further emphasised that all these loans were in fact repaid by the assessee in subsequent years, which was corroborated by the ledger accounts spanning from 01/04/2017 to 30/11/2023. Such repayment, coupled with the payment of interest after deduction of TDS, was wholly inconsistent with the allegation of a sham transaction. Relying upon well-settled principles enunciated by various High Courts, the ld. CIT(A) came to the reasoned conclusion that the addition made by the Assessing Officer was unsustainable in law. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 65 17. We have carefully considered the above findings, and on the strength of the documents placed on record, we find ourselves in full agreement with the reasoning of the ld. CIT(A). His analysis is not only factually well-grounded but also legally unimpeachable. The deletion of the addition of ₹1,20,00,000/–, therefore, warrants affirmation. (iii) Manish Damji Shah – Rs.70,50,000 18. Turning now to the loan from Shri Manish Damji Shah, the assessee had obtained a sum of ₹81,00,000/– during the year. Out of this, an amount of ₹10,50,000/– was repaid within the year, leaving an outstanding balance of ₹70,50,000/– as on the year-end. The assessee had also paid interest of ₹3,28,438/– on this loan after deduction of TDS, which evidences the subsistence of the borrowing on commercial terms. The assessee produced confirmations, income-tax returns of the lender, bank statements, and ledger extracts, thereby discharging the initial burden placed upon him under section 68 of the Act. 18.1. The ld. CIT(A), after a meticulous appraisal of these records, has observed that the identity of the lender was fully established, as he was a regular assessee under the Act and had disclosed his financials and return of income. The genuineness of the transaction stood fortified by the fact that the loan was advanced and repaid through regular banking channels, with interest being paid after TDS. The only residual issue raised by the AO was one of creditworthiness, but even this objection was found to be unsustainable in light of the lender’s bank balances, his returned income, and the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 66 consistency of the entries in the assessee’s and lender’s books. The ld. CIT(A) also noted that the AO, while doubting creditworthiness, did not bring any contrary evidence on record, nor did he controvert the specific evidences filed. 19. Having considered the material on record, we find ourselves in agreement with the ld. CIT(A). The assessee had demonstrated the flow of funds, repayment of part of the loan, and payment of interest after deduction of TDS. The lender’s assessment status, his declared income, and his bank statements established his capacity. The AO’s approach of casting suspicion without disproving the documentary record cannot be upheld. In these circumstances, we uphold the findings of the ld. CIT(A) and confirm the deletion of the addition of ₹70,50,000/–. (iv) Bhanumati Kalyan Shah Rs.80,00,000/- 20. We next take up the loan from Smt. Bhanumati Kalyan Shah amounting to ₹80,00,000/–. The assessee placed on record confirmation of the lender, her income-tax return, bank statements, and financial details. The AO doubted the transaction on the ground that the lender lacked creditworthiness and that her bank statement was not filed. The CIT(A), however, examined the documents furnished and observed that the lender was a regular taxpayer who had disclosed adequate income, including interest income and other sources, and had sufficient accumulated funds to advance the loan. The CIT(A) also noted that the entire Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 67 transaction was routed through normal banking channels, thereby establishing its genuineness. 20.1. It may be emphasised here that the ld. CIT(A) did not stop at the bare confirmations but weighed the lender’s financial disclosures and her regularity as an income-tax assessee. The fact that she possessed sufficient accumulated resources, and that the entire loan was advanced through verifiable banking channels, rendered the AO’s objections wholly speculative. 20.2. The ld. CIT(A) further noted that the AO failed to bring any adverse material to dislodge the evidences furnished by the assessee. On the contrary, the repayment pattern and the lender’s disclosures supported the assessee’s explanation. Judicial pronouncements relied upon by the assessee were also found applicable, emphasising that once the identity, genuineness, and repayment through banking channels are proved, the addition under section 68 cannot be sustained merely on conjecture as to creditworthiness. 20.3. What weighed with the ld. CIT(A) was not only the formal compliance by the assessee but also the substantive proof that the lender was a regular assessee declaring interest income in her returns, and that the advance was made out of accumulated funds. In such a backdrop, the AO’s reasoning that mere absence of a particular bank statement would negate the transaction was found to be hyper-technical and devoid of legal foundation. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 68 21. On our own appraisal, we find that the assessee has satisfactorily demonstrated the three vital ingredients — identity, genuineness, and creditworthiness. The AO’s conclusions rest only on suspicion and not on any cogent evidence. In these circumstances, the deletion of the addition of ₹80,00,000/– by the CIT(A) calls for no interference, and we confirm the same. 21.1. It is trite law that once the assessee discharges the initial burden under section 68, the onus shifts upon the Department. In the present case, the Department has done precious little to rebut the documentary record. On the contrary, the AO’s order reveals an approach of assumption and presumption, which cannot be sustained in judicial scrutiny. (v) Canopous Consultancy Services P. Ltd – Rs.10,00,000/- 22. Coming then to the loan of ₹10,00,000/– from Canopus Consultancy Services Pvt. Ltd., it is noted that the assessee received the loan during the year through banking channels, and the same was repaid on 5th April 2019. The assessee filed confirmations, ITR, bank statements, and audited accounts of the lender. The AO doubted the transaction on the sole ground that the lender company had reported a loss in that year, thereby questioning its ability to advance the loan. 22.1. Here again, the objection of the AO was founded more on surmise than on analysis. The ld. CIT(A) scrutinised the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 69 audited accounts of the lender and observed that notwithstanding a loss in one year, the company’s balance sheet revealed a positive net worth of over ₹4.8 crores, besides profits in the preceding years. The very fact that the assessee repaid the loan in full within a short span of time further reinforced the genuineness of the borrowing. 22.2. The ld. CIT(A), therefore, correctly held that the availability of reserves, positive net worth, and demonstrated repayment by the assessee together established that the loan was not only genuine but also supported by adequate credit capacity. The Assessing Officer, in ignoring these crucial facts and treating the loan as unexplained, had adopted a narrow and unsustainable approach. 23. We find ourselves in agreement with this conclusion. A single year’s loss does not efface a company’s financial strength built up over time, nor does it preclude it from extending loans if supported by reserves and banking trail. The deletion of the addition of ₹10,00,000/– thus deserves to be upheld. 23.1. We concur with the reasoning of the ld. CIT(A). The loss of one year cannot by itself obliterate the creditworthiness of a company with substantial net worth, reserves, and history of profits. Once the loan is routed through banking channels, supported by confirmations and financials, and has been repaid in full, there remains no warrant for treating it as unexplained. The deletion of the addition of ₹10,00,000/– is, therefore, affirmed. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 70 23.2. In our view, the AO’s reliance on the temporary loss was a myopic approach, disregarding the overall financial health of the company. Judicial pronouncements have time and again emphasised that the test of creditworthiness is not confined to the profitability of a single year, but to the lender’s overall financial position, including reserves, capital, and banking evidence. On these parameters, the loan from Canopus Consultancy stands fully explained. (vi) Shantilal Gala (HUF) – Classic Enterprises – ₹20,00,000 24. In respect of the loan from Shantilal Gala (HUF), Classic Enterprises, amounting to ₹20,00,000/–, the learned CIT(A) noted that the assessee had furnished confirmations, ledger accounts, bank statements, and ITR acknowledgments of both the assessee and the lender. The entire transaction was routed through regular banking channels and was duly reflected in the books of account. The Assessing Officer, despite being in possession of these documents, did not bring any adverse material on record and brushed aside the explanation on mere suspicion. 24.1. The learned CIT(A), in para 6.7 of his order, specifically observed that the AO had not produced any specific evidence to disprove the claim of the assessee. He underscored that ―simply denying the claim of the appellant mere on suspicion is not a good and fair practice in the eye of the law,‖ particularly when the transaction was supported by documentary evidence such as ledger accounts, bank Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 71 statements, and ITRs of the lender. The CIT(A) further held that there was no infirmity in the explanation of the assessee and, fortified by judicial pronouncements of the Hon’ble Bombay and Gujarat High Courts on identical issues, concluded that the transaction was genuine. Accordingly, the addition of ₹20,00,000/– was deleted. 25. On our appraisal of the record, we are inclined to agree with the well-reasoned findings of the learned CIT(A). The assessee had discharged the primary onus by producing confirmations, financial records, and banking trail of the creditor. Once such evidences are on record, the burden shifts to the Revenue to bring forth material to the contrary. The Assessing Officer, however, made no effort to conduct any meaningful enquiry or to contradict the evidences with independent verification. His conclusion rested entirely on suspicion, which in law cannot substitute proof. 25.1. In these circumstances, the identity of the lender stood established, the genuineness of the transaction was beyond doubt, and the creditworthiness was sufficiently demonstrated. We accordingly uphold the order of the learned CIT(A) deleting the addition of ₹20,00,000/–. (vii) Dinesh Kannubhai Khatadia – ₹40,00,000 26. We now advert to the loan of ₹52,00,000/– obtained from Shri Dinesh Kannubhai Khatadia, out of which ₹12,00,000/– was repaid during the very same year, leaving a balance of ₹40,00,000/–. The assessee furnished confirmations, bank statements, ITRs, and other Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 72 documentary evidence to substantiate the transaction. The Assessing Officer accepted the repaid portion as genuine, yet doubted the balance of ₹40,00,000/– on the ground that the lender lacked creditworthiness. 26.1. The learned CIT(A), in paras 6.8.1 to 6.8.8 of his order, carefully considered the assessee’s submissions. He noted that the assessee had furnished all requisite evidences, including bank statements showing adequate balances with the lender. The AO, however, without verifying these details, summarily concluded that the lender was not creditworthy and even alleged, without evidence, that the assessee had introduced its own unaccounted money in the guise of an unsecured loan. The ld. CIT(A) found these allegations to be without any foundation, holding that creditworthiness cannot be assessed merely on the basis of a single year’s return. He also posed two critical questions: (i) whether the AO had proved that the loan was actually the assessee’s own money; and (ii) whether any evidence had been brought to establish that the lender lacked capacity. Both questions, he answered in the negative. 26.2. The ld. CIT(A) further observed that the assessee had submitted confirmations, bank statements, and returns of the lender, all of which corroborated the transaction. He also relied upon judicial precedents of the Hon’ble Bombay and Gujarat High Courts, which have consistently held that once the assessee demonstrates identity, genuineness, and prima facie creditworthiness, the onus shifts to the Revenue to rebut the evidences with cogent material. In the absence of such Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 73 rebuttal, the AO’s action in treating the loan as unexplained could not be sustained. Accordingly, the addition of ₹40,00,000/– was deleted. 27. Having given our anxious consideration, we find no infirmity in the findings of the ld. CIT(A). The lender was an identifiable person, assessed to tax, and his bank account reflected sufficient balances to extend the loan. The transaction was routed through banking channels, and part of the loan was repaid within the year itself. These facts together strongly reinforce the genuineness of the transaction. The Assessing Officer, on the other hand, has not placed a shred of evidence to suggest that the loan represented the assessee’s own unaccounted income. His conclusions, therefore, rest only on conjecture. 27.1. In view of the foregoing, we find ourselves in complete agreement with the CIT(A) that the addition of ₹40,00,000/– was unjustified. The deletion thereof is accordingly upheld. (viii) Ekta Group (Girish Ramnik Lal)-Rs.26,00,000/- 28. We now turn to the addition of ₹26,00,000/– in respect of the loan from Ekta Group (Girish Ramnik Lal). The material on record shows that the assessee had received a total of ₹36,00,000/– from the said concern during the relevant year, out of which a sum of ₹10,00,000/– stood repaid within the very same year. The assessee furnished confirmations, income-tax returns of the lender, ledger accounts, and bank statements to demonstrate the flow of funds. The ld. CIT(A) has pertinently observed that while the Assessing Officer Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 74 accepted the genuineness of the repaid portion of ₹10,00,000/–, he nevertheless proceeded to treat the balance of ₹26,00,000/– as unexplained. Such a dichotomous approach, accepting part of the transaction while rejecting the rest, is inherently self-contradictory. 28.1. The ld. CIT(A) carefully analysed the banking trail and the repayment record and noted that the loan was received through regular banking channels, and repayments had been made progressively in subsequent years. The ld. CIT(A) also recorded that the assessee had been paying interest to the lender after deducting tax at source, thereby giving the transaction the colour of commercial reality. 28.2. The ld. CIT(A), after a close scrutiny, found that the loans were routed entirely through banking channels, that the assessee had continued to service the liability by way of repayments, and that even interest was paid after due deduction of tax at source. The bank records further revealed that the assessee had repaid ₹9,50,000/– up to March 2019 and discharged the balance liability by July 2020. Thus, not only was the inflow established, but its outflow by way of liquidation also stood conclusively proved. The AO, however, brushed aside this documentary evidence and relied instead on vague suppositions about creditworthiness, unsupported by any contrary material. 28.3. This approach of the Assessing Officer is nothing short of contradictory: on the one hand accepting part of the very same loan transaction, and on the other, doubting the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 75 balance without adducing any cogent reason. Such a fragmented treatment of a single financial transaction militates against both logic and law. 29. On a considered evaluation, we are persuaded by the reasoning of the ld. CIT(A). The identity of the lender stood established, the genuineness of the transaction was evident from the banking trail, and the creditworthiness was borne out by the financials and confirmations on record. The AO neither controverted these documents nor adduced any evidence to suggest that the funds represented the assessee’s unaccounted income. In such circumstances, the settled jurisprudence of the Hon’ble Bombay and Gujarat High Courts squarely applies additions cannot be made merely on suspicion when documentary evidences stand unrebutted. We therefore find no infirmity in the deletion of the addition of ₹26,00,000/–, which is accordingly upheld. (ix) Hill Crest Resorts and SPA Pvt. Ltd., - 25,00,000/- 30. We next address the loan of ₹25,00,000/– received from Hill Crest Resorts and Spa Pvt. Ltd. The assessee produced confirmations, bank statements, and financial statements of the lender. The ld. CIT(A), upon examination, noted that the lender was a creditworthy entity whose financials and audit report amply supported its ability to advance the loan. The transaction was carried out through recognised banking channels, and the assessee had repaid the loan within the stipulated time. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 76 30.1. The ld. CIT(A) laid particular emphasis on the fact that the lender’s audited statements disclosed sufficient reserves and liquidity, which demonstrated its capacity to extend the advance. The fact of repayment, duly substantiated by bank entries, was also considered to be a strong pointer towards genuineness. 30.2. Despite this cogent evidence, the Assessing Officer chose to disregard the material and proceeded to treat the loan as unexplained. The ld. CIT(A) rightly pointed out that such an approach, which involves ignoring confirmations, audited financial statements, and repayment records while clinging to mere suspicion, cannot be sustained in law. Once the transaction is reflected in the books of both the assessee and the lender, duly supported by banking evidence, there is no occasion to brand it as a mere accommodation entry. 31. We are in full agreement with these findings. The law is well settled that once the assessee has discharged the initial onus by producing confirmations, bank records, and financials of the lender, the burden shifts upon the AO to dislodge such evidence by cogent material. In the present case, no such rebuttal has been offered. Accordingly, the order of the ld. CIT(A) deleting the addition of ₹25,00,000/– merits confirmation, and we so hold. (x) H. Manubhai & Co. (Hitesh Manhar Lal Bilakhia) – Rs.20,00,000/- Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 77 32. The next issue in this cluster pertains to the loan of ₹20,00,000/– from H. Manubhai & Co. (Hitesh Manhar Lal Bilakhia). The assessee placed on record confirmations, ledger accounts, and bank statements evidencing the loan. The ld. CIT(A) found that the transaction was conducted entirely through banking channels, that the lender was an income-tax assessee, and that the financial strength to advance the loan was established. Notwithstanding these evidences, the AO dismissed the explanation and treated the loan as unexplained, relying on conjecture. 32.1. Here too, the CIT(A) highlighted that the assessee had met all three statutory tests under section 68, identity, genuineness, and creditworthiness. The lender’s tax records and bank statements spoke for themselves. The AO’s dismissal of the claim, bereft of any counter-evidence, was unsustainable. 32.2. The ld. CIT(A), on a judicious appreciation of the record, held that the assessee had fulfilled all three statutory ingredients, namely, identity of the lender, genuineness of the transaction, and creditworthiness. The Assessing Officer had failed to bring any material on record to the contrary. The finding was thus firmly anchored in evidence rather than inference. 32.3. By holding that the addition could not be justified in the absence of any rebuttal material, the ld.CIT(A) underscored an important principle: suspicion, however strong, cannot substitute for proof. The AO’s rejection of the loan was not Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 78 predicated on any tangible inquiry but only on assumptions, which cannot override verified records such as bank statements and confirmations. 33. On our own evaluation, we endorse these findings. The evidences placed before the authorities unmistakably establish the genuineness of the loan and the capacity of the lender. It is trite that additions under section 68 cannot rest upon conjectures or surmises; they must be founded on positive evidence. In the absence of such evidence, the deletion of the addition of ₹20,00,000/– by the ld. CIT(A) was entirely justified. We accordingly confirm the same. (xi) Jayshri Ben Thakkar – Rs.8,00,000/- 34. We now turn to the loan of ₹8,00,000/– from Smt. Jayshri Ben Thakkar. The Assessing Officer doubted the creditworthiness of the lender on the ground that the amount advanced was credited into her account on the same day or a day earlier, implying that it was in fact the assessee’s own funds routed back. The assessee, however, produced confirmations, ledger accounts, and bank statements establishing that the loan had been advanced through recognised banking channels and was repaid in due course. The ld. CIT(A), after analysing the material, found that the identity of the lender was undisputed, the transaction was genuine, and the lender had sufficient capacity, as evidenced by her income-tax returns and bank account. 34.1. The ld. CIT(A) particularly noted that such short-gap credits in the lender’s account did not ipso facto render the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 79 transaction ingenuine. What mattered was the fact that the lender was a regular assessee of income tax, disclosed her interest income, and possessed a documented banking trail for both inflow and outflow of funds. 34.2. The ld. CIT(A) further noted that the assessee had repaid the loan in full by 21st January 2020, and that interest income of the lender was duly reflected in her return of income. The AO, despite these facts, proceeded to treat the sum as unexplained, without dislodging the documentary evidence. On these findings, the ld. CIT(A) held that the addition was based on mere suspicion and deleted it. 35. This conclusion, in our considered opinion, is fortified by the settled law that repayment and acknowledgment of interest income in the lender’s tax return strongly corroborate the existence and genuineness of a loan. Once such evidence is unrebutted, the AO’s inference collapses into conjecture. 35.1. Having considered the record, we agree with the ld. CIT(A). The lender was a regular taxpayer, the loan was routed through banking channels, and repayment stood evidenced. Once the assessee discharged the onus, the AO was required to bring on record some contrary material, which he has failed to do. In these circumstances, the deletion of the addition of ₹8,00,000/– was fully justified and is hereby confirmed. 35.2. We may also observe that the jurisprudence in this area has consistently held that when a loan transaction is Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 80 backed by confirmations, repayment through account payee cheques, and declaration of interest income by the creditor, the AO cannot discredit it merely because the creditor had deposited funds shortly before advancing the loan. Such a coincidence of timing cannot by itself vitiate the genuineness of the transaction unless there is evidence of cash circulation or bogus accommodation entries none of which is forthcoming here. (xii) Jewel Developers Rs.25,00,000/- 36. The next issue pertains to the addition of ₹25,00,000/– relating to Jewel Developers. The assessee had obtained the loan through banking channels and repaid the same by 21st March 2021. Confirmations, ledger extracts, and bank statements were filed. The AO nevertheless treated the amount as unexplained, citing doubts over creditworthiness. 36.1. The ld. CIT(A), however, after considering the evidences, found that the loan had not only been received through verifiable banking channels but was also duly repaid within the specified period. The bank statements and confirmation of the lender corroborated the assessee’s explanation. Importantly, the AO did not dispute the existence of repayment. The ld. CIT(A) also drew strength from judicial pronouncements holding that once the identity of the lender is established, the transaction is genuine, and the loan is repaid, there is no justification to invoke section 68 on bare suspicion. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 81 36.2. The ld. CIT(A), therefore, emphasised that the AO’s reasoning was contrary to both fact and law. When repayment is on record, along with confirmation and banking trail, the presumption of accommodation entry falls to the ground. Moreover, the AO had failed to carry out any independent verification or to bring even a shred of contrary material to demonstrate that the loan was bogus. His order thus rested entirely upon conjectural doubts. 37. On our appraisal, we endorse these findings. The AO’s allegation that the loan represented the assessee’s unaccounted funds is unsupported by evidence. The record shows receipt, repayment, and confirmation, all through proper channels. Accordingly, the order of the ld.CIT(A) deleting the addition of ₹25,00,000/– is upheld. 37.1. In our considered view, this case typifies the larger pattern visible in the assessment order, where part of the same transaction or similar transactions have been accepted, but the balance has been doubted without a rational basis. Such self-contradictory reasoning erodes the very foundation of the assessment. (xiii) Kalyanji Umarshi Shah Rs.95,00,000/- 38. We next take up the substantial loan of ₹95,00,000/– from Shri Kalyanji Umarshi Shah. The AO treated this sum as unexplained, doubting the lender’s creditworthiness. The assessee, however, produced confirmations, ledger extracts, bank statements, and the lender’s return of income. The ld. CIT(A) observed that the loan was advanced from Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 82 accumulated funds and duly routed through banking channels. The lender was an 85-year-old senior citizen, regularly assessed to tax, deriving income from interest and other sources, and therefore not required to maintain books of account under section 44AA of the Act. His inability to produce formal financial statements could not, therefore, be held against him. 38.1. The ld. CIT(A) further noted that the lender had responded to notices issued under section 133(6) and had confirmed the transaction. He explained that the loan was extended out of his accumulated savings. The bank statements evidenced adequate balances to support the advance. The AO, however, ignored these confirmations and proceeded, without any supportive material, to conclude that the lender lacked capacity. Such a conclusion, resting only on conjecture, was rightly rejected by the ld. CIT(A). 39. On careful consideration, we find the reasoning of the ld. CIT(A) to be cogent and well-founded. The lender’s identity was never in dispute, the genuineness of the transaction stood fortified by the banking trail, and the capacity was borne out by his bank balances and his disclosed sources of income. That he was an elderly individual living on accumulated savings and interest income only reinforces the naturalness of the explanation. Judicial precedents of the Hon’ble Bombay and Gujarat High Courts, relied upon by the ld. CIT(A), fortify the position that when confirmations, returns of income, and bank records are produced, the Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 83 burden shifts upon the AO to bring cogent evidence in rebuttal a burden not discharged here. 39.1. Accordingly, we hold that the addition of ₹95,00,000/– made by the AO was wholly unjustified, and the deletion thereof by the ld.CIT(A) calls for no interference. (xiv) Lilavati Damji Patel – ₹20,00,000 40. In respect of the loan of ₹20,00,000/– from Smt. Lilavati Damji Patel, the assessee placed on record confirmation of the lender, her ledger account, copies of bank statements, and ITR acknowledgments. The Assessing Officer nonetheless doubted the creditworthiness of the lender and made an addition under section 68. 40.1. The learned CIT(A), however, after examining the documentary material, found that the loan was received through proper banking channels, duly reflected in the ledger account, and supported by the lender’s tax returns. He observed that there was no dispute as to the identity of the lender, nor to the genuineness of the transaction, as both were borne out by verifiable records. The only issue raised by the AO was one of creditworthiness. On this aspect, the ld.CIT(A) noted that the lender had submitted her financials and return of income, which revealed sufficient balances to advance the loan. He also observed that the entire loan was repaid by the assessee on 22nd June 2022, which fact was evident from the ledger account and bank statement. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 84 40.2. The ld. CIT(A) further emphasised that it is neither fair nor legally permissible to assess the creditworthiness of a lender by analysing the return of income for a single year in isolation. A lender’s capacity must be considered in the light of accumulated resources and contemporaneous bank balances. He also found force in the assessee’s contention that letters of confirmation, acknowledgments of income, and copies of bank statements were available on record to substantiate the advance. The Assessing Officer, on the other hand, failed to bring any adverse material to controvert these evidences. 40.3. On these findings, the ld. CIT(A) concluded that the addition of ₹20,00,000/– was not justified, and he accordingly deleted it. He also drew support from binding precedents of the Hon’ble Bombay High Court and Hon’ble Gujarat High Court, which have consistently held that once identity, genuineness, and creditworthiness are established, an addition under section 68 cannot rest upon suspicion. 41. We have carefully considered the matter and find ourselves in complete agreement with the ld. CIT(A). The lender’s identity stood established, the genuineness of the loan was corroborated by the banking trail and subsequent repayment, and the creditworthiness was supported by her bank balances and financial disclosures. The AO’s order, bereft of any contrary material, rests entirely on conjecture. Accordingly, the deletion of the addition of ₹20,00,000/– is upheld. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 85 (xv) Parask Botadara – ₹17,50,000 42. We next consider the addition of ₹17,50,000/– in respect of the loan from Shri Parask Botadara. The record reveals that the assessee had obtained an unsecured loan of ₹22,50,000/– during the year, out of which ₹5,00,000/– was repaid before the year-end. Thus, the balance outstanding as on 31.03.2018 was ₹17,50,000/–. The assessee placed on record confirmations, bank statements, ledger extracts, and ITR acknowledgments of the lender. The AO, however, doubted the creditworthiness of the lender and treated the outstanding balance as unexplained. 42.1. The ld. CIT(A), after examining the material, found that there was no dispute regarding the fact that the transaction was routed through recognised banking channels. The lender’s identity was established and he was regularly assessed to tax. The assessee also demonstrated that the loan was subsequently repaid in full on 12th April 2021, which was corroborated by the ledger account and the lender’s bank statement. These facts, in the opinion of the CIT(A), clearly established the genuineness of the transaction. 42.2. The CIT(A) also noted that from the lender’s return of income and bank account, it was evident that he had sufficient balance to extend the loan. He rightly observed that it would be incorrect to assess the creditworthiness of a lender merely by looking at the return of income for a single year, without considering bank balances and accumulated Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 86 funds. The assessee, moreover, had furnished confirmations, acknowledgments of income, and bank statements, all of which were consistent and verifiable. The AO, however, did not bring any documentary evidence to rebut these materials. 42.3. The CIT(A), fortified by judicial pronouncements of the Hon’ble Bombay and Gujarat High Courts, concluded that the AO was not justified in invoking section 68 in the face of such cogent evidences. He therefore, deleted the addition of ₹17,50,000/–. 43. We find the reasoning of the ld. CIT(A) entirely persuasive. The assessee has demonstrated all three essential ingredients of section 68: the identity of the creditor was established; the genuineness of the transaction was evidenced by the banking trail and subsequent repayment; and the creditworthiness was corroborated by bank statements and financial disclosures. The Assessing Officer, instead of disproving these materials, rested his conclusion on suspicion alone. Such an approach cannot be upheld. Accordingly, we confirm the order of the CIT(A) deleting the addition of ₹17,50,000/–. (xvi) Rajani D Agarwal – Rs.5,00,000/- 44. We then turn to the loan of ₹5,00,000/– from Smt. Rajani D. Agarwal. The Assessing Officer questioned the creditworthiness of the lender and treated the sum as unexplained. The assessee, however, placed on record confirmations, bank statements, ITRs, and ledger extracts to demonstrate the transaction. The ld. CIT(A), after considering Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 87 the evidence, found that the loan was routed through regular banking channels, that the lender was an income-tax assessee, and that the repayment was made by the assessee on 25th March 2021. 45. On perusal of the material, we find that the three essential conditions of section 68 identity, genuineness, and creditworthiness stand satisfied. The identity of the lender was not in dispute, the genuineness of the transaction was evidenced by the banking trail, and the creditworthiness was substantiated by the lender’s returns and bank balance. The Assessing Officer, instead of disproving the evidence, merely harboured suspicion, which in law cannot take the place of proof. The CIT(A), therefore, rightly held that the addition was unsustainable. We see no infirmity in this conclusion and affirm the deletion of ₹5,00,000/–. (xvii) Shailesh Surender Jasani – Rs.40,00,000/- 46. The next issue pertains to an addition of ₹40,00,000/– in respect of a loan from Shri Shailesh Surender Jasani. The assessee had availed an unsecured loan of ₹1,27,00,000/– during the year, out of which ₹87,00,000/– was repaid, leaving a balance of ₹40,00,000/– outstanding as on 31st March 2018. The Assessing Officer, while accepting the repaid portion as genuine, inexplicably treated the outstanding balance as unexplained, without advancing any cogent reasoning. 46.1. The ld. CIT(A), after a detailed examination of the bank statements, ledger accounts, and confirmations, observed Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 88 that the transaction was carried out entirely through verifiable banking channels, the lender was identifiable and assessed to tax, and even interest payments had been made by the assessee after deduction of tax at source. He also pointed out the inherent contradiction in the AO’s approach: once the repayment of ₹87,00,000/– was accepted as genuine, there was no rational basis to doubt the balance portion of the same composite transaction. 47. We find merit in the reasoning of the ld. CIT(A). Once the genuineness of the transaction and the identity of the lender are accepted, the burden shifts to the Revenue to show, with cogent evidence, that the remaining portion is not genuine. No such evidence was brought on record. On the contrary, the banking trail and repayment pattern unmistakably establish the authenticity of the transaction. Judicial precedents have consistently emphasised that suspicion, however strong, cannot substitute legal proof. In light of these settled principles, we uphold the order of the ld. CIT(A) deleting the addition of ₹40,00,000/–. (xviii) Seema Shailesh Jasani – Rs.36,50,000/- 48. The next addition under challenge relates to an unsecured loan from Smt. Seema Shailesh Jasani. The assessee had obtained a loan of ₹46,50,000/– during the relevant year, out of which a sum of ₹10,00,000/– stood duly repaid within the same year. The Assessing Officer, while accepting the genuineness of the repaid portion, curiously Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 89 treated the balance of ₹36,50,000/– as unexplained, thereby adopting a self-contradictory approach. 48.1. The ld. CIT(A), after a meticulous examination of the records, observed that the lender had confirmed the transaction through her ledger account and bank statements. The factum of loan and its partial repayment was duly evidenced. Once the Assessing Officer himself accepted the genuineness of the repayment of ₹10,00,000/–, there was no rationale to doubt the balance amount. Indeed, as the CIT(A) noted, the AO’s order was conspicuously silent on how he could bifurcate a single loan transaction into ―genuine‖ and ―non-genuine‖ parts. 48.2. The ld. CIT(A) further took note of the bank statements which clearly reflected that the lender had advanced monies on several occasions during the year under consideration, and the assessee had made substantial repayments within the year itself. The repayment trail left no manner of doubt about the genuineness of the transaction. The assessee had also paid interest to the lender, after due deduction of tax at source, which further fortified the bona fides of the loan. 48.3. In the face of such overwhelming evidence, the AO’s reasoning appears arbitrary and unsustainable. We, therefore, see no infirmity in the conclusion of the ld. CIT(A) and uphold his order deleting the addition of ₹36,50,000/–. 49. In light of these findings, we see no infirmity in the conclusion of the ld. CIT(A). The lender’s identity and Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 90 assessment particulars were on record, the transaction was routed through banking channels, the repayments and interest payments were evidenced, and the Assessing Officer had not brought any cogent material to controvert these facts. The suspicion entertained by the AO was wholly unfounded. We therefore affirm the order of the CIT(A) deleting the addition of ₹36,50,000/–. 49.1. It needs to be emphasised that where the repayment of loan and deduction of TDS on interest are duly evidenced, the presumption of genuineness stands fortified. The AO’s attempt to bifurcate the same transaction into genuine and non-genuine parts is not only legally untenable but also contrary to common sense. (xix) Rakesh Ramesh Chandra Rs.60,00,000/- 50. We now turn to the loan transaction with Shri Rakesh Ramesh Chandra, where the Assessing Officer made an addition of ₹60,00,000/–. The factual matrix is that the assessee had borrowed ₹1,40,00,000/– during the year from this party. Out of this, a substantial sum of ₹80,00,000/– was repaid during the same year, leaving a balance of ₹60,00,000/– outstanding as on 31.03.2018. Strangely, while the Assessing Officer accepted the genuineness of the repaid portion, he sought to treat the balance as unexplained. 50.1. The ld. CIT(A), while deleting the addition, highlighted that the lending entity had duly confirmed the loan through its ledger account and bank statements. The Assessing Officer’s action of accepting ₹80,00,000/– as genuine but Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 91 doubting the balance was inherently inconsistent and legally unsustainable. The CIT(A) rightly observed that once the existence of the loan and the lender’s identity are accepted, the transaction cannot be bifurcated into genuine and non- genuine segments on the mere ipse dixit of the AO. 50.2. It was further noted that the bank records established the availability of sufficient funds with the lender, and the assessee had also made payments of interest to the lender after deduction of TDS. Such payment of interest is wholly inconsistent with the allegation of sham or bogus accommodation entry. The CIT(A) emphasised that the Assessing Officer had brought no material to demonstrate that the funds actually belonged to the assessee or were routed through the lender as a colourable device. 50.3. The reasoning of the ld. CIT(A), in our considered view, accords squarely with both factual reality and judicial principle. The bank trail, repayment of the majority portion of the loan, and the servicing of interest liability all point unmistakably to the genuineness of the borrowing. 54. We find ourselves in complete agreement with the reasoning of the ld. CIT(A). The lender’s identity stood established, the genuineness of the transaction was supported by unimpeachable banking records, and the capacity of the lender to advance the loan was not in doubt. The AO’s approach, in our view, was whimsical accepting the major part of the loan while disbelieving the balance, without Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 92 adducing any contrary evidence. Such an approach cannot withstand judicial scrutiny. Accordingly, the deletion of the addition of ₹60,00,000/– is upheld. 54.1. It is important to highlight that the Assessing Officer’s reasoning represents a pattern of selective acceptance and rejection within the same transaction, an approach consistently deprecated by courts. Once the foundational facts identity of creditor, banking trail, and repayment pattern are established, the AO is not permitted to arbitrarily segment the transaction and brand a portion of it as bogus without cogent proof. (xx) PHB Relcon Rs.10,00,000/- 55. Turning now to the loan of ₹10,00,000/– from PHB Relcon, the Assessing Officer had treated the same as unexplained cash credit. The assessee, on the other hand, had furnished confirmations, ledger accounts, bank statements, and ITRs of the lender to establish the identity of the creditor, genuineness of the transaction, and the financial capacity. The ld. CIT(A), after duly considering the evidences, noted that the loan was received through proper banking channels, that the lender was an income-tax assessee, and that supporting documents such as acknowledgment of income, bank statements, and ledger extracts were furnished. On this factual foundation, the ld. CIT(A) concluded that the loan stood fully explained. 56. We find that the reasoning of the ld. CIT(A) is firmly rooted in the record. The Assessing Officer had not disputed Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 93 that the money came through banking channels. He also did not controvert the identity of the lender. His sole objection was a vague suspicion as to creditworthiness. However, the perusal of the ITR and bank statement of the lender clearly reveals that there were sufficient funds to advance the loan. The AO did not carry out any independent enquiry nor did he bring any cogent material to disprove the assessee’s claim. As rightly observed by the CIT(A), the addition was based on conjecture and surmise. We accordingly uphold the deletion of the addition of ₹10,00,000/–. (xxi) Pramod Kumar Jain Securities Pvt. Ltd.- Rs.90,00,000/- 57. The next dispute relates to the loan of ₹90,00,000/– from Pramod Kumar Jain Securities Pvt. Ltd. The facts reveal that the assessee had availed an unsecured loan of ₹1,60,00,000/– during the year. Out of this, a sum of ₹70,00,000/– was repaid within the year itself, leaving a balance of ₹90,00,000/– outstanding as on 31.03.2018. The Assessing Officer, curiously, accepted the repaid amount as genuine but disbelieved the balance of ₹90,00,000/– without any rational basis. The assessee had produced confirmations, ITRs, ledger accounts, and bank statements of the lender, which were examined by the ld. CIT(A). The financials of the company revealed adequate capacity to lend, and the transaction was entirely routed through verifiable banking channels. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 94 57.1. The ld. CIT(A), after analysing these facts, found that the Assessing Officer’s approach was wholly untenable. It is contradictory and illogical to accept a part of a transaction as genuine and reject the balance as non-genuine when both parts emanate from the same lender, through the same channel, and are supported by the same set of evidences. He further noticed that the assessee had been paying interest to the lender after deduction of TDS, which is further corroborative of the genuineness of the transaction. 57.2. On these facts, the CIT(A) found that the Assessing Officer’s approach was wholly untenable. It is contradictory and illogical to accept a part of a transaction as genuine and reject the balance as non-genuine when both parts emanate from the same lender, through the same channel, and are supported by the same set of evidences. The CIT(A) further noticed that the assessee had been paying interest to the lender after deduction of TDS, which is further corroborative of the genuineness of the transaction. 58. This finding, in our view, is fortified by settled jurisprudence that recognises banking records, confirmations, and repayment as the most reliable indicia of a genuine loan transaction. Once these indicia are present, the AO cannot, on a mere hunch, bifurcate a transaction and brand a portion of it as bogus. Such an exercise not only offends judicial discipline but also introduces arbitrariness in the application of section 68. Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 95 58.1. Having independently appraised the material, we find ourselves in full agreement with the ld. CIT(A). The lender’s identity was beyond doubt, the genuineness of the loan was established through banking records, and the creditworthiness was supported by financial statements. The Assessing Officer has brought nothing on record to contradict these documents. Mere suspicion cannot substitute evidence. Accordingly, we affirm the order of the CIT(A) deleting the addition of ₹90,00,000/–. 58.2. In fact, the ld. CIT(A), while dealing with all the loan creditors in this case, has consistently adopted a reasoned approach scrutinising bank statements, confirmations, and ITRs of lenders, verifying repayments wherever made, and ensuring that the three classic tests under section 68 stood satisfied. Where repayments were substantiated, the same were duly verified. He has also rightly observed that once the assessee deducts tax at source on interest payments, it further fortifies the genuineness of the transaction. The AO, on the other hand, has relied largely on suspicion, conjecture, and surmise, without disproving the direct evidence placed before him. 58.3. Such a balanced and meticulous approach of the CIT(A) is entirely in consonance with the duty cast upon the first appellate authority to weigh all evidences and apply judicially settled tests. His order cannot be described as perfunctory; rather, it reflects a systematic appraisal of each creditor’s Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 96 capacity, the genuineness of the lending, and the manner of repayment. 58.4. The grievance of the Revenue regarding alleged admission of additional evidences is also unfounded. The record demonstrates that confirmations, bank statements, and ledgers were largely before the Assessing Officer, and in a few cases, additional documents were filed only for corroboration. The CIT(A), in considering them, has followed the due process. We thus see no violation of Rule 46A. 58.5. In this context, it is also relevant to note that corroborative documents, such as updated ledgers or repayment schedules, when placed before the appellate authority, do not amount to fresh evidence but only reinforce what was already available on record. The CIT(A) was, therefore, fully justified in admitting and relying upon such documents. 59. On a comprehensive review, we hold that the assessee had discharged its burden under section 68 by establishing the identity of the creditors, proving the genuineness of the transactions through banking channels, and demonstrating creditworthiness through financial statements. The Assessing Officer failed to bring on record any contrary evidence. The consequential disallowance of interest of ₹29,95,111/–, being merely incidental to the disbelieved loans, was also rightly deleted. 60. The approach of the CIT(A) is thus found to be meticulous and consistent with law. By contrast, the AO’s Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 97 conclusions rest on suspicion and partial acceptance of transactions, which is an approach that cannot stand judicial scrutiny. 61. We have carefully analysed the detailed findings of the ld. CIT(A), which are founded upon a meticulous scrutiny of the documents placed on record. The assessee has, in every case, furnished confirmations, bank statements, ledger accounts, and income-tax particulars of the respective creditors. The ld. CIT(A), after weighing this material, has applied the classic tests of section 68 namely, the identity of the lender, the genuineness of the transaction, and the creditworthiness of the creditor and has recorded categorical findings in favour of the assessee. 62. On the contrary, the Assessing Officer has proceeded largely on suspicion, conjecture, and surmise, without bringing any tangible evidence to controvert the evidences filed. The approach of accepting a part of a transaction as genuine and rejecting the balance, without any cogent reason, is self-contradictory and legally untenable. Once the Revenue accepts the banking trail, the confirmations, and the financials of the lenders, the burden shifts upon the Assessing Officer to demonstrate, with positive material, that the loans were in reality the assessee’s own unaccounted money. This burden has not been discharged. 63. We also find no merit in the allegation that there has been a violation of Rule 46A. The bulk of the evidences were already before the Assessing Officer, and whatever was Printed from counselvise.com ITA No.5331/Mum/2024 K K Ventura 98 additionally placed before the ld. CIT(A) was only of a corroborative nature. The CIT(A) has acted within the framework of law in admitting and appreciating the same. 64. In view of the foregoing discussion, we find ourselves in complete agreement with the well-reasoned order of the ld. CIT(A). The deletion of the impugned additions, as well as the consequential deletion of disallowance of interest of ₹29,95,111/–, calls for no interference. The appeal of the Revenue, being devoid of merit, stands dismissed. 65. In the result, the appeal of the Revenue stands dismissed. Order pronounced on 25th September, 2025. Sd/- (ARUN KHODPIA) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 25/09/2025 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Printed from counselvise.com "
Other Referred Cases
PCIT v. Bairagra Builders Pvt. Ltd., PCIT v. Ojas Tarmake (P) Ltd., CIT v. N.R. Portfolio (P.) Ltd.
Laws Referred To
Income-tax Act, 1961
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