INCOME TAX OFFICER, MUMBAI V. NDW DEVELOPMENT CORPORATION LLP, MUMBAI

ITA 3817/MUM/2025

AI Insights

The case involves the Income Tax Officer-20(2)(1) as the appellant and NDW Development Corporation LLP as the respondent. The primary issue was the addition of Rs. 48,47,70,093 as unexplained money under Section 69A of the Income Tax Act, which the CIT(A) later deleted. The Revenue challenged the CIT(A)'s decision, arguing that the assessee failed to provide necessary documentation for some loans and repayments. The Tribunal examined the submissions, remand report, and additional evidence, ultimately agreeing with the CIT(A) that the additions were not justified based on the evidence provided.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 824732 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-05-2025
• Other Referred Cases: ONS Creations Pvt. Ltd. vs. ITO, Jute Corporation of India Ltd. v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDER SOLANKI
• Assessee Lawyers: MADHUR AGARWAL; WAY OF ADDITIONAL EVIDENCES; WAY OF
• Keywords: Set aside; Additional evidence; Corroborative evidences; Unexplained cash credit; Principle of natural justice; Initiation of penalty proceedings; Procedural lapse
• Section: 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “B” BENCH : MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 3817/Mum/2025 Assessment Year : 2022-23 Income Tax Officer-20(2)(1), 304, Piramal Chambers, Parel, Mumbai-400012. vs. NDW Development Corporation LLP, B 201-202, Doodh Wala Complex, CHSL, Belashis Road, Mumbai Central, Mumbai-400008. PAN : AAPFN4779C (Appellant) (Respondent) Assessee by : Shri Madhur Agarwal Revenue by : Shri Inder Solanki, CIT-DR Date of Hearing : 04-11-2025 Date of Pronouncement : 01-01-2026 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 25-03-2025, pertaining to Assessment Year (AY) 2022-23, wherein the Revenue has taken the following grounds of appeal: “1. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 47,94,55,093/- as unexplained money u/s. 69A made by the AO without appreciating the fact that in respect of Printed from counselvise.com 2 ITA No. 3817/Mum/2025 unsecured loans, the assessee has not furnished the PAN, address, supporting documentary evidence and loan confirmation of the relevant parties to whom the assessee has repaid the loans during the relevant assessment year under consideration. 2. On the facts and the circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.47,94,55,093/- as unexplained money u/s. 69A made by the AO without appreciating the fact that the assessee has failed to furnish complete details of regrouping made by the assessee in the ITR for A.Y. 2022-23 along with supporting documentary evidence and loan confirmation of the relevant parties with regard to the reclassification of unsecured loans as \"Other Payables\" in its books of accounts. 3. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 47,94,55,093/- as unexplained money u/s. 694, without appreciating the fact that the onus squarely lies on the assessee to prove the genuineness of the transaction undertaken during the relevant previous year. 4. The appellant craves leaves to amend or alter or add a new ground which may be necessary.” 2. Briefly the facts of the case are that the assessee is a limited liability partnership firm, engaged in the business of real estate development. It filed its return of income declaring its total income as NIL. The case of the assessee was selected for scrutiny to verify the matter relating to high liabilities in Balance Sheet as compared to low income/receipts declared in the ITR and secondly, to examine the substantial amount of loans/advances/investments in shares on the asset side of the Balance Sheet as compared to total income as per the ITR, which is significantly low and notices u/s. 143(2) and 142(1) of the Income Tax Act, 1961 („the Act‟) were thereafter issued from time to time. However, except for one of the notices, there was no compliance on the part of the assessee and, thereafter, a show cause was issued on 29-01-2024 and again on 07-02- 2024, there was however, no compliance on the part of the assessee. The AO thereafter, proceeded and passed the order u/s. 143(3) r.w.s. 144B of the Act dt. 29-02-2024. Printed from counselvise.com 3 ITA No. 3817/Mum/2025 3. In the assessment order so passed by the AO, he has referred to the opening balance of unsecured loans as on 31-03-2021 at Rs. 62,29,75,941/- and closing balance of unsecured loans as on 31-03-2022 at Rs. 13,82,05,848/- and has held that the difference amounting to Rs. 48,47,70,093/- is the amount which has been repaid by the assessee during the financial year 2021-22 relevant to the impugned assessment year 2022-23. The AO further referred to the increase in advances given by the assessee from Rs. 54,22,97,579/- in the immediately preceding year to Rs. 58,94,80,592/- in the year under consideration and basis the same, held that the assessee cannot take the plea that the advances given by him in the preceding years was received back which have been used for repayment of unsecured loans. The AO accordingly held that on the perusal of the Balance Sheet, it shows that the repayment of loan has been made out of the books of accounts and an addition of Rs. 48,47,70,093/- was made by the AO towards the repayment of loan from undisclosed sources u/s. 69A of the Act. 4. The assessee thereafter carried the matter in appeal before the Ld.CIT(A) and challenged the findings of the AO and in making the addition u/s. 69A of the Act. During the appellate proceedings, reference of the ld CIT(A) was drawn to the financial statements of the assessee as on 31-03-2021 and 31-03-2022, return of income filed by the assessee for the AY. 2022-23 and 2021-22 and reference was also drawn to the party- wise details of opening and closing balances of “unsecured loans” as well as the amount shown under the head “other payables”. It was submitted that the opening balance of unsecured loan as on 31-03-2021 was Rs. 62,29,75,941/-, the assessee received fresh loans during the year amounting to Rs. 9,91,15,000/-, that the assessee repaid the loan during the financial year amounting to Rs. 7,36,99,500/- and an amount of Printed from counselvise.com 4 ITA No. 3817/Mum/2025 Rs. 51,01,85,593/- was regrouped from “unsecured loans” to “other payables” and closing balance of unsecured loans as on 31-03-2022 was determined at Rs. 13,82,05,848/- and details of individual accounts being regrouped were submitted before the ld CIT(A) by way of additional evidence under Rule 46A and the assessee sought permission of the Ld.CIT(A) to admit the additional evidences so submitted. It was submitted that the total amount regrouped from “unsecured loans” to “other payables” was Rs. 51,01,85,593/- and the same therefore is a mere regrouping in the books of account of the assessee and there are no fresh transactions in terms of receipt or repayment of loans and, therefore, the said amount cannot be brought to tax in the hands of the assessee. 5. It was further submitted that once the effect of regrouping is removed, the amount of loan receiving during the year comes to Rs. 9,91,15,000/- and repayment comes to Rs. 7,36,99,500/- and in this regard, the assessee again sought permission of the Ld.CIT(A) to submit additional evidences in terms of loan account confirmations, copy of income tax returns, audited financial statements and supporting ledgers for subsequent repayment and an application under Rule 46A was moved before him. 6. The additional evidences so sought to be submitted by the assessee were sent by the ld CIT(A) to the AO and a remand report was called by the ld CIT(A) from the AO, the AO carried out the verification of additional evidences and submitted his remand report and a copy thereof was made available to the assessee in response to which the assessee furnished its rejoinder. Printed from counselvise.com 5 ITA No. 3817/Mum/2025 7. Thereafter, taking into consideration the order passed by the AO, the submissions so filed by the assessee along with additional evidences, remand report submitted by the AO and the rejoinder submitted by the assessee, the Ld.CIT(A) has returned his findings on admission of additional evidences as well as on merits of the additions so made by the AO and we deem it appropriate to refer to the same in verbatim as under: “6. I have carefully considered the submissions made by the appellant, the remand report furnished by the Assessing Officer, and the rejoinder filed by the appellant. The appellant has contended that it was prevented by sufficient cause from producing the relevant evidence before the Assessing Officer during the assessment proceedings due to non-receipt of subsequent notices, including the show cause notice. The appellant has also furnished a duly notarized affidavit confirming the same, Further, reliance has been placed on judicial precedents, including ONS Creations Pvt. Ltd. vs. ITO (ITAT Delhi) ITA No. 6250/Del/2013 and Jute Corporation of India Ltd. v. CIT (1991) AIR 241, which emphasize that additional evidence should be admitted if it is crucial to rendering justice. 6.1 While the Assessing Officer has opposed the admission of additional evidence citing Rule 46A, I find that the circumstances of the case justify its acceptance. The principles of natural justice demand that an assessee should not be prejudiced due to procedural lapses beyond its control, particularly when the evidence sought to be introduced is material to the case. Furthermore, Rule 46A empowers the CIT(A) to admit additional evidence in cases where the assessee was prevented by sufficient cause from producing it earlier or where adequate opportunity was not provided during assessment proceedings. 6.2 In light of the appellant's submissions, the affidavit provided, and the binding judicial precedents, I find it appropriate to admit the additional evidence in the interest of justice. The same shall be considered while adjudicating the appeal on merits. 6.3 Further, while admitting the additional evidence in the interest of justice, I also take on record the remand report submitted by the Assessing Officer, wherein comments on the merits of the case have been provided without prejudice to the admissibility of such evidence. This ensures that the Assessing Officer has been granted a fair opportunity to present his views on the additional evidence, thereby maintaining the principles of natural justice and due process. Accordingly, both the additional evidence furnished by the appellant and the corresponding remand report of the Assessing Officer shall be duly considered while adjudicating the appeal on merits. Printed from counselvise.com 6 ITA No. 3817/Mum/2025 6.4 The first and second grounds of appeal are general in nature and do not require specific adjudication. Grounds of appeal Nos. 3 and 4 pertain to the addition of 48,47,70,093/- made by the Assessing Officer (AO) under Section 69A of the Income Tax Act during the assessment proceedings. The basis of this addition was the reduction in unsecured loans from 62,29,75,941/- as of 31.03.2021 to 13,82,05,848/- as of 31.03.2022, which the AO considered as repayment of loans and consequently added to the appellant's income under Section 69A. In this regard, the appellant contended that there was no actual repayment but rather a reclassification of unsecured loans as \"Other Payables\" in its books of accounts. The appellant has furnished complete details of this regrouping along with supporting evidence, which was duly verified by the AO in the remand report. Consequently, the total addition of 48,47,70,093/- is not sustainable. However, it is noted that during the year under consideration, the appellant had availed unsecured loans amounting to 9,91,15,000/- and repaid loans totaling 7,36,99,500/-. 6.5 During the remand proceedings, the appellant submitted details and supporting documents regarding unsecured loans amounting to 9,91,15,000/-. However, it was observed that the appellant failed to provide crucial details such as PAN, bank account statements, income tax returns (ITR), and loan confirmations in respect of the following:  Akbar Khan -19,00,000/-  Immense Sales Pvt. Ltd. 11,00,000/-  Abdul Aziz Abdul 23,15,000/- (Only PAN and loan confirmation were submitted, while ITR and bank statement were not furnished). 6.6 Based on the above findings, it is evident that the appellant has successfully substantiated the identity, creditworthiness, and genuineness of transactions in respect of 9,38,00,000/- out of the total 9,91,15,000/- in unsecured loans. However, for the balance amount of 53,15,000/-, the appellant has failed to establish either the identity or creditworthiness of the creditors. Therefore, the unsecured loans amounting to 53,15,000/-, for which creditworthiness could not be substantiated, are hereby confirmed as unexplained cash credit and added back to the appellant's income. 6.7 With respect to the repayment of unsecured loans totaling 7,36,99,500/-, the appellant has furnished supporting documents. Specifically:  In the case of Abdul Rehman Acres LLP (056,34,750/-) and Khaleej Acres LLP (056,34,750/-), the appellant has claimed that the repayments were adjusted against sales.  For the entities Bharathi Textiles (1,10,25,000/-), JK Textiles (1,49,75,000/-), Kalpana Textiles (1,43,00,000/-), and S.P. Corporation (03,00,000/-), the appellant has provided confirmation letters along with bank statements. Printed from counselvise.com 7 ITA No. 3817/Mum/2025  Additionally, the appellant has submitted sales ledgers, confirmations, PAN details, addresses, and ITR acknowledgments to substantiate the claim. Given that these repayments have been adequately documented and verified, no addition is warranted in this regard. 6.8 In the remand report (last paragraph of point 6, page 5), the AO has highlighted two cash transactions recorded in the appellant's books:  A debit entry of 12,00,000/- on 26.11.2021 (receipt of cash).  A credit entry of 6,00,000/- on 31.12.2021 (repayment in cash). The appellant has not provided any comments or rebuttal on these transactions in its rejoinder. Therefore, in the absence of any explanation, the receipt of Rs.12,00,000/-remains unexplained and is accordingly treated as unexplained cash credit under Section 68, warranting an initiation of penalty proceedings under Section 271D for accepting cash in violation of prescribed limits. Similarly, the cash repayment of Rs.6,00,000/- is treated as unexplained money under Section 69A, and penalty proceedings under Section 271E are initiated for repayment of loans in cash. 6.9 In summary, of the total addition of Rs.48,47,70,093/-, an amount of Rs.53,15,000/- is confirmed as unexplained loans. Additionally, an amount of Rs.12,00,000/- is added under Section 68, and Rs.6,00,000/- is treated as unexplained money under Section 69A, with corresponding penalties under Sections 271D and 271E being initiated.” 8. Against the aforesaid order so passed by the ld CIT(A) and the findings of the ld CIT(A), the Revenue is in appeal before us. 9. During the course of hearing, the ld CIT/DR submitted that the ld. CIT(A) has erred in deleting the addition of Rs 48.47 crores made under Section 69A of the Income Tax Act, 1961, without properly appreciating the factual findings recorded by the Assessing Officer in the assessment order and the remand report. It was submitted that the assessee repeatedly failed to comply with notices issued under Sections 143(2), 142(1), and 144, thereby denying the AO any opportunity to examine the alleged unsecured loans and repayments. It was submitted that upon detailed scrutiny of the financial statements, the AO noted that the unsecured loans reflected in the balance sheet had drastically fallen from Printed from counselvise.com 8 ITA No. 3817/Mum/2025 Rs. 62.29 crore to Rs. 13.82 crore, and since the assessee maintained books on cash system of accounting with no corresponding declared inflows, the reduction was rightly treated as unexplained money under Section 69A. 10. It was further submitted by the ld CIT/DR that pursuant to additional evidence submitted by the assessee during the appellate proceedings before the ld CIT(A), the AO, during the remand proceedings, examined unsecured loan transactions aggregating to Rs 9.91 crore. As per the tabular data, out of these loans, loans amounting to Rs 9.38 crore were supported by PAN, ITR acknowledgments, confirmations, and bank statements, establishing their prima facie genuineness. However, for three lenders (i) Abdul Aziz Abdul (Rs. 23.15 lakh), (ii) Akbar Khan Rasul Khan (Rs. 19 lakh), and (iii) Immense Sales Pvt. Ltd. (Rs.11 lakh)-the assessee failed to furnish even basic documents such as PAN, ITR, or bank proof. Their creditworthiness and genuineness remained entirely unverifiable. Hence, the AO rightly treated the aggregate of Rs.53.15 lakh from these three parties as unexplained, a finding that was also accepted by the CIT(A) himself in the appellate order. It was submitted that this acknowledgement by the CIT(A) reinforces the correctness of the AO's broader conclusion that the entire loan transactions lacked complete evidentiary support. 11. It was further submitted that in relation to repayment of unsecured loan transactions totaling Rs 7.36 crore, the AO's findings in remand report shows that while some transactions were supported by confirmations and banking channels (e.g.. Castle Realtors Pvt. Ltd., Gopal Prajapat, and Vora Associates), several others were riddled with critical deficiencies. Many lenders such as Abdul Rehman Acres LLP, Bharathi Printed from counselvise.com 9 ITA No. 3817/Mum/2025 Textiles, Khaleej Acres LLP, and Anmol Land Developers either lacked PAN, confirmations, or complete identity details, and in some cases, the assessee merely claimed adjustment of loans against sales without proof of such sales transactions. In one instance, cash dealings of Rs. 12 lakh (receipt) and Rs. 6 lakh (repayment) were detected by the AO in the case of Anmol Land Developers, further undermining the credibility of the transactions. Thus, the AO rightly concluded that the genuineness of repayments was only partly proved, and therefore, the corresponding addition was fully justified and needs to be confirmed. 12. It was further submitted that the assessee's claim that a portion of the loans was \"regrouped\" under another head \"Other Payables\" was examined by the AO in the remand proceedings. However, as evident from the record, the assessee had merely furnished the names and amounts of certain parties without producing corroborative documents such as confirmations, PAN, addresses, or evidence substantiating any accounting reclassification. The AO specifically observed that this regrouping explanation was raised for the first time before the CIT(A) and not during assessment proceedings, thus amounting to fresh evidence submitted without compliance with the conditions prescribed under Rule 46A. The AO categorically opined that such regrouping remained unverified and unsubstantiated, rendering the assessee's explanation untenable. Hence, the CIT(A)'s reliance on these unverified submissions and acceptance of the regrouping plea is legally unsustainable and contrary to the mandate of Rule 46A(3). In the light of the same, it was submitted that the additions needs to be confirmed. 13. It was accordingly submitted that the CIT(A) erred in accepting unverified regrouping explanations, and granting relief inconsistent with Printed from counselvise.com 10 ITA No. 3817/Mum/2025 the AO's detailed findings. The addition made under Section 69A was founded on tangible discrepancies and absence of verifiable sources of repayment. Hence, the CIT(A)'s order warrants reversal, and the assessment order deserves to be restored in full, as the deletion of Rs 48.47 crore is contrary to both facts and law which may kindly be set aside to the extent of relief granted, and the assessment order passed under Section 143(3) r.w.s. 144 be restored. 14. In his submissions, the Ld. AR supported the order and findings of the Ld. CIT(A). It was submitted that the AO has simply taking the difference between the closing and opening balance of unsecured loans and has summarily made the addition holding that the difference represents the repayment of loans and which has been made out of books and has made the addition u/s 69A of the Act. It was submitted that the opening balance of unsecured loan as on the beginning of the year was Rs. 62,29,75,941/-, the assessee received fresh loans during the year amounting to Rs. 9,91,15,000/-, that the assessee repaid the loan during the financial year amounting to Rs. 7,36,99,500/- and an amount of Rs. 51,01,85,593/- was regrouped from “unsecured loans” to “other payables” and closing balance of unsecured loans as on 31-03-2022 was determined at Rs. 13,82,05,848/-. It was submitted that the detail break up of unsecured loan and regrouping thereof has been examined by the AO in the remand proceedings and are not in dispute. The ld AR objected to the ld CIT/DR submission that the assessee maintained its books on cash system of accounting and in this regard, our reference was drawn to the audited financial statements which have been maintained on accrual system of accounting and the assessment order where no such finding has been recorded by the AO as to assessee‟s maintaining books of accounts on cash basis of accounting. Printed from counselvise.com 11 ITA No. 3817/Mum/2025 15. As far as fresh loans taken by the assessee during the year under consideration amounting to Rs 9,91,15,000/- is concerned, it was submitted that the ld CIT(A) has rightly taken into consideration the documentation submitted by the assessee by way of additional evidences and after calling for the remand report from the AO, the ld CIT(A) has returned a clear finding that the assessee has substantiated the identity, creditworthiness and genuineness of the transactions in respect of transactions amounting to Rs 9,38,00,000/- out of Rs 9,91,15,000/-. It was submitted that in respect of remaining amount of Rs 53,15,000/- , the ld CIT(A) has confirmed the addition and the assessee is not in appeal against the said addition. The ld AR however objected to the ld CIT/DR submission that where the assessee couldn‟t submit the relevant documentation and the addition has been confirmed by the ld CIT(A) in respect of three loan transactions amounting to Rs 53,15,000/-, the same by default leads to raising a question mark on evidentiary value of documentation submitted and accepted by the ld CIT(A) in respect of rest all loan transactions amounting to Rs 9,38,00,000/-. It was submitted that the AO in the remand proceedings and thereafter, the ld CIT(A) has analysed the transaction documentation in respect of each of the loan transactions and thereafter, has accepted these transactions and therefore, the contention so advanced by the ld CIT/DR cannot be accepted. 16. As far as repayment of loan transactions during the year is concerned, it was submitted by the ld AR that unlike the findings of the AO in the assessment order where he has held an amount of Rs 48,47,70,093/- has been repaid during the year, only an amount of Rs. 7,36,99,500/- has actually been repaid during the year as duly demonstrated by the assessee during the remand proceedings which has been accepted by the Printed from counselvise.com 12 ITA No. 3817/Mum/2025 AO as well as by the ld CIT(A). In this regard, it was further submitted that the assessee has duly demonstrated that in respect of Abdul Aziz Abdul and Akbar Khan Rasul Khan, the assessee has repaid the amount by way of adjustment against sales. As regards other repayments, the assessee has filed the necessary confirmation letters along with bank statements, highlighting all the repayments of the loan through the banking channel. It was submitted that the fact of submission of bank statement is duly acknowledged by the AO in his remand report and accordingly it was submitted that there is no dispute that the repayment has happened through banking channels and the source of the repayment can also be identified from the receipt entry immediately above the repayment entry in the bank statements. It was accordingly submitted that as the repayment of loan is clearly reflected in the books of accounts and the source of the said repayment has been duly disclosed, no addition is warranted u/s. 69A of the Act and the Ld. CIT(A) has rightly returned a finding to this effect. It was submitted that the case of the AO was that the assessee had repaid the loans outside the books of accounts which the assessee has duly demonstrated as factually incorrect as all repayments have been made through the banking channel and through the bank account maintained by the assessee and recorded in the books of account which have been prepared on double entry system of accounting where the respective loan amount has been credited and bank account has been debited with corresponding repayment amounts. It was submitted that the ld CIT/DR has also not raised any objections during the hearing that such repayments have happened from the assessee‟s bank account and duly reflected in the books of accounts. It was further submitted that in respect of cash transactions with Anmol Land Developers, the ld CIT(A) basis the AO remand report has already brought to tax a sum of Rs 12,00,000/- u/s 68 of the Act and the assessee is not in appeal against the said addition. It Printed from counselvise.com 13 ITA No. 3817/Mum/2025 was submitted that the AO in the remand proceedings and thereafter, the ld CIT(A) has analysed the transaction documentation in respect of each of the loan transactions and thereafter, has accepted these transactions being repayment of loans during the year and therefore, the contention so advanced by the ld CIT/DR cannot be accepted. 17. As far as the reclassification of “unsecured loans” as “other payables” in the Books of Account, it was submitted that during the appellate proceedings, the assessee has submitted that the necessary details in terms of name of the parties, opening and closing balance of “unsecured loan”, and opening and closing balance of “other payables”. It was submitted that these are sufficient evidences to prove the regrouping of the liabilities as unsecured loans as on 31-03-2021 which were reclassified as “other payables” as on 31-03-2022 and in this regard, our reference was also drawn to the assessee‟s Paper Book wherein at Pgs. No. 155 – 156, party-wise details of opening and closing balance of unsecured loans and other payables for AY. 2021-22 and 2022-23 has been submitted and at Pgs. No. 157 -158, party-wise details of regrouping made in the financials in AY. 2022-23 has been submitted. It was submitted that the Ld. CIT(A) has rightly taken the same into consideration and has recorded a clear finding that the assessee has furnished complete details of the regrouping alongwith supporting evidences, which were duly verified by the AO in the remand report and it was accordingly submitted that there is no basis to challenge the said findings of the Ld.CIT(A), wherein the AO himself has verified the same in his remand report. 18. The ld AR accordingly supported the findings of the ld CIT(A) and submitted that the order so passed by the ld CIT(A) be sustained and the appeal of the Revenue be dismissed. Printed from counselvise.com 14 ITA No. 3817/Mum/2025 19. We have heard the rival contentions and perused the material available on record. During the course of assessment proceedings, the AO has referred to the opening balance of unsecured loans as on 31-03-2021 at Rs. 62,29,75,941/- and closing balance of unsecured loans as on 31- 03-2022 at Rs. 13,82,05,848/- and has held that the difference amounting to Rs. 48,47,70,093/- is the amount of repayment of loan which has been made out of the books of account and an addition of Rs. 48,47,70,093/- was made towards the repayment of loan from undisclosed sources u/s. 69A of the Act. Evidently, the AO has arrived at the aforesaid finding on mere perusal of the balance sheet as the assessee failed to respond to the notices and file necessary submissions/explanations. However, during the course of appellate proceedings, the assessee submitted a reconciliation statement whereby it was submitted that the opening balance of unsecured loan as on 31-03-2021 was Rs. 62,29,75,941/-, the assessee received fresh loans during the year amounting to Rs. 9,91,15,000/-, that the assessee repaid the loans during the financial year amounting to Rs. 7,36,99,500/- and an amount of Rs. 51,01,85,593/- was regrouped from “unsecured loans” to “other payables” and closing balance of unsecured loans as on 31-03-2022 was determined at Rs. 13,82,05,848/-. In other words, the difference between opening and closing balance of unsecured loans consisted of three broad set of transactions – the transactions in form of fresh loans taken by the assessee during the year, the existing loans which were repaid during the year and lastly, certain regrouping of existing loan transactions from “unsecured loans” to “other payables” in its books of accounts from purely an accounting standpoint without any movement of funds. 20. The broad nature of these transactions and corresponding figures are not disputed before us by the Revenue and these are as follows: Printed from counselvise.com 15 ITA No. 3817/Mum/2025 a) Fresh loans taken during the year – Rs 9,91,15,000/- b) Existing loans repaid during the year – Rs 7,36,99,500/- c) Regrouping of loan transactions in books of accounts – Rs 51,01,85,593/- 21. In respect of fresh loans transactions during the year amounting to Rs 9,91,15,000/-, the relevant transaction documents in respect of each of these loan transactions as so submitted by the assessee by way of additional evidences have been examined by the AO during the remand proceedings as well as by the ld CIT(A) during the appellate proceedings. In respect of loan transactions amounting to Rs 9,38,00,000/-, the ld CIT(A) has returned a finding that the assessee has submitted the necessary documentation and discharged its onus in terms of identity, creditworthiness and genuineness of the transactions. During the course of hearing, the ld CIT/DR also submitted that loan transactions amounting to Rs 9,38,00,000/- were supported by PAN, ITR acknowledgments, confirmations, and bank statements, establishing their prima facie genuineness. Therefore, as far as fresh loan transactions amounting to Rs 9,38,00,000/- are concerned, there is nothing on record to rebut the findings of the ld CIT(A) which are based on appreciation and examination of the documentation placed on record by the assessee in respect of each of these loan transactions. 22. As far as three other loan transactions amounting to Rs 53,15,000/- is concerned, we find that the ld CIT(A) has held that the assessee has failed to submit the requisite documentation in respect of these transactions and thus, failed to the discharge the onus cast on it and the addition has been confirmed by the ld CIT(A). The Revenue is not in appeal against the said addition confirmed by the ld CIT(A) and the ld AR Printed from counselvise.com 16 ITA No. 3817/Mum/2025 on behalf of the assessee has also stated that the assessee has not filed any cross-appeal against the addition so confirmed by the ld CIT(A). The fact that these three loan transactions have not been accepted by the ld CIT(A) and addition has been confirmed cannot by any stretch of imagination leads to challenging the evidentiary value of documentation submitted and accepted by the Ld.CIT(A) in respect of rest all loan transactions as it is an accepted principle that each transaction need to be tested on its own set of documentation. In the instant case, the Ld.CIT(A) has analysed the transaction documentation in respect of each of the loan transactions and thereafter, has arrived at his findings and therefore, the contention so advanced by the Ld.CIT-DR in this regard cannot be accepted. 23. Now, coming to repayment of outstanding loans during the year amounting to Rs 7,36,99,500/- and the source of such repayments during the year. In this regard, the documentation submitted by the assessee were again subject matter of examination by the AO during the remand proceedings and we find that the AO has stated in his remand report that the assessee has submitted the documentation in respect of each of the parties and also the fact that assessee has submitted copy of its bank statement highlighting the repayment through banking channel except in case of two parties where the repayments were by way of adjustment against the sales. No adverse finding has been recorded by the AO in terms of sales effected by the assessee and the credits in the assessee‟s bank account and availability of funds with the assessee at the relevant point in time which were used for repayment. Further, the Ld.CIT(A) has returned a finding that in the case of Abdul Rehman Acres LLP (Rs 56,34,750/-) and Khaleej Acres LLP (Rs 56,34,750/-), there was no actual outflow of funds but the amount outstanding was adjusted against sales Printed from counselvise.com 17 ITA No. 3817/Mum/2025 made to them by the assessee and the assessee has submitted copy of the sales ledger wherein the sales have been effected and which has been duly offered to tax. In respect of other repayments, the Ld.CIT(A) has returned a finding that the assessee has submitted their confirmations, PAN details, addresses, and ITR acknowledgments as well as copy of assessee‟s bank statements to substantiate that the payments have been made through banking channel and the repayments have been adequately documented and verified, no addition is warranted in this regard. We therefore find that where in respect of existing outstanding loans reflected in the assessee‟s books of accounts, the assessee has demonstrated the repayment either through adjustment against the sales or against the actual payment through its bank account and where the credits in the assessee‟s bank account and availability of funds with the assessee at the relevant point in time are not under challenge, it cannot be held that the payments are made out of books and therefore should suffer any adverse tax consequences. We therefore don‟t find any infirminity in the findings of the ld CIT(A) and the same are hereby confirmed. 24. Now, coming to regrouping of loan transactions amounting to Rs 51,01,85,593/-, the ld CIT(A) has returned a finding that the assessee has furnished complete details of the regrouping alongwith supporting evidences, which were duly verified by the AO in the remand report and no addition is warranted on this account. The Ld.CIT-DR has contested the said findings and has submitted that the assessee had merely furnished the names and amounts of certain parties without producing corroborative documents such as confirmations, PAN, addresses, or evidence substantiating any accounting reclassification. In his submissions, the ld AR submitted that during the remand and appellate proceedings, the assessee has submitted the necessary details in terms of name of the Printed from counselvise.com 18 ITA No. 3817/Mum/2025 parties, opening and closing balance of “unsecured loan”, and opening and closing balance of “other payables” and it was submitted that these are sufficient evidences to prove the regrouping of the liabilities as unsecured loans as on 31-03-2021 which were reclassified as “other payables” as on 31-03-2022 and in this regard, our reference was drawn to the assessee‟s Paper Book wherein at Pgs. No. 155 – 156, party-wise details of opening and closing balance of unsecured loans and other payables for AY. 2021- 22 and 2022-23 has been submitted and at Pgs. No. 157 -158, party-wise details of regrouping made in the financials in AY. 2022-23 has been submitted. 25. We have gone through the aforesaid material available on record and find that where the matter is limited to reclassification and regrouping of certain transactions from one head to another and in the instant case, from “unsecured loans” to “other payables”, what is essential is the identification of individual accounts which have been regrouped from one broad head to another head. Where the transactions are already reflected in the individual accounts as at the beginning of the year and there are no movement of funds either in terms of receipt or repayment during the year and where the assessee has duly provided the necessary particulars of these individual accounts which were outstanding at the beginning of the year and grouped under the head “unsecured loans” and which are later on regrouped under the head “other payables” at the end of the year, we find that the assessee has satisfactorily discharged its onus in terms of establishing the regrouping from purely an accounting and disclosure stand point. It is not even the case of the Revenue that these transactions were not reflected in audited financial statements for F.Y 2020-21 and these are cases where fresh loans transactions were undertaken during the year and therefore, insistence of producing any corroborative Printed from counselvise.com 19 ITA No. 3817/Mum/2025 documentation in support of these transactions is not called for. We accordingly find that the Ld.CIT(A) has rightly returned a finding that these are merely regrouping of loan transactions from one head to another in the assessee‟s books of accounts and has deleted the addition. We donot find any factual or legal infirmity in said findings of the Ld.CIT(A) and the same are hereby confirmed. 26. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 01-01-2026 Sd/- Sd/- [SANDEEP SINGH KARHAIL] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 01-01-2026 TNMM Printed from counselvise.com 20 ITA No. 3817/Mum/2025 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai Printed from counselvise.com "