JAY KUNDAN BHATT,VIRAR V. DCIT, CENTRAL CIRCLE 1(1), MUMBAI, MUMBAI

ITA 5264/MUM/2025

AI Insights

The case involves Jay Kundan Bhatt, the Appellant, who contested the additions made to his income under Section 68 of the Income Tax Act, 1961, by the Deputy Commissioner of Income Tax, Central Circle 1(1), Mumbai, the Respondent. The additions were related to unsecured loans recorded in the books of the Assessee and his father, and loans taken from three parties. The Assessing Officer and the CIT(A) had upheld these additions, leading the Assessee to appeal to the Income Tax Appellate Tribunal. The Tribunal, after reviewing the evidence and submissions, found that the Assessee had adequately proven the legitimacy of the loan transactions and thus allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792350 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Appeal Filed On: 25-08-2025
• Other Referred Cases: Ivan Singh vs. ACIT [2020] 116 taxmann.com 499 (Bombay), CIT vs. Usha Stud Agricultural Farms Ltd.: 301 ITR 384, CIT vs. Orissa Corporation (P) Ltd., 159 ITR 78 (SC) (1986), PCIT vs. Ami Industries (India) Pvt. Ltd., 424 ITR 219 (Bom) (2020), DCIT vs. Rohini Builders, 256 ITR 360 (Guj) (2003)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE; MERELY STATING
• Keywords: Additional evidence; Unexplained cash credit; Search and seizure
• Section: 143(3); 132; 68; 131; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.5264/MUM/2025 (Assessment Year:2020-2021) Jay Kundan Bhatt Plot No.277, Kundan Mansion, Agashi Road, Virar (West), Dist. Thane – Thane – 401303 [PAN: AQTPB0473F] …………. Appellant Deputy Commissioner of Income Tax, Central Circle 1(1), Mumbai Room No.903, 9th Floor, Pratishtha Bhavan, Maharshi Karve Road, Mumbai – 400020 Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Subodh Ratnaparkhi Shri B. Arun Date Conclusion of hearing Pronouncement of order : : 16.10.2025 03.12.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the Order, dated 05/06/2025, passed by the Commissioner of Income Tax (Appeals) - 47 [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 28/09/2021, passed under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2020-2021. 2. The Assessee has raised following grounds of appeal : “1. The Hon CIT(A) erred in upholding the addition of Rs.6,45,300/- as unexplained cash credit u/s 68 of the I.T. Act, 1961, on account of the difference between the balance of unsecured loan as per books of accounts of the appellant and that of his father, Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 2 Shri Kundan Bhat, ignoring the fact that such difference was in the opening balance as at the start of the previous year and further the said difference had already been brought to tax in the earlier asst. years and therefore the addition of Rs.6,45,300/- was not factually and legally justified in the year under appeal and is required to be deleted. 2. The Hon CIT(A) erred in upholding the addition of Rs.16,00,000/- as unexplained cash credit u/s 68 of the I. T. Act, 1961, on account of unsecured loans borrowed from 3 parties, not appreciating that the appellant had fully discharged the burden placed by section 68 of the I.T. Act, 1961 by placing on record sufficient evidence and therefore the addition of Rs.16,00,000/- was not justified and is required to be deleted.” 3. The relevant facts in brief are that the Assessee is an individual who derived income from house property and business during the relevant previous year. The Assessee filed return of income for the Assessment Year 2020-2021 on 09/01/2021 declaring a total income of INR.6,41,420/- The case of the Assessee was selected for scrutiny. The Assessing Officer completed the assessment vide Assessment Order, dated 28/09/2021, passed under Section 143(3) of the Act at assessed income of INR.30,36,719/- after making the following additions/disallowances: (a) Addition of INR.22,45,300/- under Section 68 on account of unsecured loans taken from the following parties: Name of the Party Amount (INR.) Bhumika Gandhi 1,00,000/- M/s. Krisha Enterprises 5,00,000/- Yash Sharad Gandhi 10,00,000/- Kundan Bhatt 6,45,300/- (b) Disallowance of deduction of INR.1,50,000/- claimed under Chapter VI-A of the Act. 4. The Assessee challenged the above additions/disallowances in appeal before the CIT(A). Vide Order, dated 05/06/2025, the Learned CIT(A) disposed off the appeal as partly allowed. The Learned CIT(A) allowed Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 3 Assessee’s claim for deduction of INR.1,50,000/- under Chapter VI-A of the Act. However, the disallowance of INR.22,45,300/- (INR.6,45,300/- + INR.16,00,000/-) was confirmed by Learned CIT(A). 5. Not being satisfied by the relief granted by the Learned CIT(A), the Assessee has preferred the present appeal before this Tribunal on the grounds reproduced in paragraph 2 above. Ground No.1 6. Ground No.1 raised by the Assessee pertains to addition of INR.6,45,300/- made by the Assessing Officer under Section 68 of the Act on account of unsecured loans credited in the books of accounts of the Assessee. 7. The Assessing Officer had made an addition of INR.6,45,300/- on account of difference in the closing balance of unsecured loan taken by the Assessee from his father (i.e. Shri Kundan Bhatt) as reflected in the books of accounts of the Assessee and as recorded in the books of accounts of his father. As per the books of accounts of the Assessee the Closing Balance of the loan account stood at INR.2,20,88,000/-, whereas the said loan, as reflected in the books of accounts of father of the Assessee was INR.2,14,42,700/-. The Assessing Officer/CIT(A) held the differential sum of INR.6,45,300/- was unexplained cash credit taxable in the hands of the Assessee under Section 68 of the Act. 8. During the course of hearing the Learned Authorised Representative for the Assessee submitted that the differential amount could not have been taxed during the relevant previous year as the same had been carried forward from the preceding assessment years. 9. On perusal of the Ledger Accounts of both parties for the relevant Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 4 previous year (placed Page No. 74 & 75 of the Paper-Book), we find that the same support the above submissions advanced on behalf of the Assessee. There was no discrepancy/difference with respect to the transactions for the Assessment Year 2020-2021. The Learned Authorised Representative for the Assessee had placed on record the Assessment Orders for the Assessment Years 2017-2018 (at Page 67 to 73), 2018-2019 (at Page 60 to 66) and 2019-2020 (at Page 53 to 59). On perusal of the same we find that Assessing Officer had made identical addition of INR.6,45,300/- in each of the said assessment years. We note that in appeal for the said assessment years, the first appellate authority had deleted the additions on the ground that same were not arising out of any incriminating evidence found in the course of search action under Section 132 of the Act. 10. Thus, from the above it is clear that the credit of INR. 6,45,300/- did not pertain to the Assessment Year 2020-2021 and therefore, the addition of INR.6,45,300/- made by the Assessing Officer under Section 68 of the Act cannot be sustained. Accordingly, the addition of INR.6,45,300/- is deleted and Ground No.1 raised by the Assessee is allowed. 11. Our view draws support from the following decisions cited on behalf of the Assessee during the course of hearing: - Ivan Singh vs. ACIT [2020] 116 taxmann.com 499 (Bombay) - CIT vs. Usha Stud Agricultural Farms Ltd.: 301 ITR 384 Ground No. 2 12. Ground No. 2 raised by the Assessee pertains to addition of INR.16,00,000/- made by the Assessing Officer under Section 68 of the Act. 13. During the relevant previous year, the Assessee had borrowed Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 5 INR.16,00,000/- as unsecured loans from 3 parties. During the course of proceedings before Assessing Officer/Learned CIT(A), the Assessee had placed on record the loan confirmations, ITR acknowledgement and the bank statement of the Lender. We find that the aforesaid material has also been placed before us as part of the paper-book filed by the Assessee. Name of the Party Amount in INR. Loan Confirmation enclosed at page no. of the paper book ITR V enclosed at Page No. of the paper book Bank Statement at page no. of the paper book Bhumika Gandhi 1,00,000/- 24 & 25 26 27 to 38 M/s. Krisha Enterprises 5,00,000/- 39 & 40 41 42 to 48 Yash Sharad Gandhi 10,00,000/- 49 50 51 & 52 14. On the strength of the aforesaid documents, it was contended on behalf of the Assessee that the Assessee had placed on record sufficient evidence/additional evidence to discharge the onus cast upon the Assessee by Section 68 of the Act. It was submitted that neither during the assessment nor during the remand proceedings had the Assessing Officer brought on record any evidence to dispute the genuineness of the aforesaid unsecured loan transactions. It was submitted that the Assessing Officer as well as the Learned CIT(A) had, without making any enquiries either with the lenders by way of notice under Sections 133(6) or by issue of summons under Sections 131 to examine the parties/documents placed on record, rejected the corroborative material furnished by the Assessee by merely stating that further documents should have been furnished by the Assessee. It was further submitted by the Learned Authorised Representative for the Assessee that the documents sought by the Assessing Officer during assessment proceedings were - \"Proof of business carried out/source of income, proof of employees, books of accounts, complete ITR, GST return, Truck bills to prove the identity & creditworthiness of parties and genuineness of transactions..........”. However, such documents (like books of accounts, details of employees, Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 6 GST return, complete ITR set, Truck bills, etc.) pertained to lenders/third parties and could not have been furnished by the Assessee. It was also submitted that the loans taken from of Bhumikaben Mehta and M/s. Krisha Enterprises were repaid by the Assessee. Thus, the Assessee had sufficiently discharged the onus under Section 68 of the Act. In support reliance was placed by the Learned Authorised Representative for the Assessee on the following decisions (a) CIT vs. Orissa Corporation (P) Ltd., 159 ITR 78 (SC) (1986), (b) PCIT vs. Ami Industries (India) Pvt. Ltd., 424 ITR 219 (Bom) (2020, and (c) DCIT vs. Rohini Builders, 256 ITR 360 (Guj) (2003). 15. Per Contra, the Learned Departmental Representative refuted the submission made on behalf of the Assessee and placed reliance upon the order passed by the Learned CIT(A). It was submitted that a search and seizure action under Section 132(1) of the Act was conducted on 19/02/2020 in case of M/s. R.B. Tradelinks LLP alongwith its other group concerns and partners/ directors i.e. Ms. R.B. Lifespaces LLP, M/s. R.B. Fluids Pvt. Ltd. Mr. Kundan Bhatt, Ms. Riddhi Kundan Bhatt, Mr. Jay Kundan Bhatt & Mrs. Jigna Kundan Bhatt. The Assessee was also covered under search and seizure action. Consequent to the search action, the case of the assessee was centralized in the charge of Central Circle-1(1). Mumbai and assessment under Section 143(3) was completed. During the assessment proceedings, the Assessing Officer noted that the Assessee had taken unsecured loans from 03 parties. The Assessee was given opportunities to submit corroborative documents to prove the identity & creditworthiness of the above parties and genuineness of the above transactions vide notices dated 22/02/2021, 30/07/2021, 11/08/2021 & 03/09/2021. In Its reply, the Assessee merely submitted the names of the above mentioned parties and nothing else in this regard. In view of the failure by the Assessee to submit any corroborative evidence to prove the Identity & Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 7 creditworthiness of the parties and genuineness of the transactions, the Assessing Officer held the amount of unsecured loans amounting to INR.16,00,000/- received from the above three parties as Unexplained Cash Credit u/s 68 of the Act. The Assessee had failed to submit the requisitioned documents either before the Assessing Officer or the CIT(A). 16. We have considered the rival submission and have perused the material on record. 17. It is admitted position that the Assessee had filed additional evidence before the CIT(A) which was admitted after calling for a remand report from the Assessing Officer. We note that in paragraph of the remand report the Assessing Officer has recorded as under: “Unexplained Cash Credit u/s 68 of the Act 4 to 4.2. xx xx 4.3 The submission of the assessee was considered. It is seen that the assessee has submitted the same documents that he had submitted during the appellate proceedings viz. ITR acknowledgement, Loan confirmation and bank statement in respect of the 03 parties (mentioned in para-4.1 hereinabove) from whom he had taken unsecured loans amounting to Rs. 16,00,000/-These documents have been forwarded to this office by the Ld. CIT(A) vide letter dated 14/09/2023. The assessee falled to submit the documents called for vide this office notices dated 18/10/2023 & 27/10/2023 viz. the proof of business carried out /Source of income, proof of employees, Books of accounts, Complete GST Return, Truck bills etc. in respect of the above 03 parties.” 18. On perusal of the above it becomes clear that the Assessee had filed as additional evidence (a) Ledger Account – Loan Confirmation, (b) Income Tax Return Acknowledgement for the relevant assessment year, and (c) bank statement of the 3 parties from which unsecured loan was taken by the Assessee. Thus, in our view, the Assessee had discharged the primary onus cast upon the Assessee and Section 68 Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 8 of the Act to prove identity/creditworthiness of the lenders and the genuineness of the transactions. Perusal of the order passed by the Assessing Officer and CIT(A) as well as the remand report shows that neither any independent inquiry was done by the Assessing Officer nor was any discrepancy pointed out in the aforesaid documents furnished by the Assessee. We are of the view that the onus cast upon the Assessing Officer to bring on record material challenging the veracity of the corroborative documents furnished by the Assessee. On perusal of remand report, we find that the Assessing Officer has doubted the creditworthiness of the 3 lenders without bringing on record any material. We have no reason to doubt the veracity of the documentary evidence placed on record by the Assessee. Further, we note that the averment made of the Assessee that the unsecured loans taken from Bhumikaben Mehta and M/s. Krisha Enterprises were repaid by the Assessee has gone uncontroverted during the appellate proceedings. Thus, taking into totality of the facts and circumstances of the present case and the material on record, we hold that the Assessee was able to discharge the onus cast under Section 68 of the Act to prove identity/creditworthiness of the lenders and the genuineness of the loan transactions under consideration. Accordingly, we delete the addition of INR.16,00,000/- made under Section 68 of the Act. Ground No.2 raised by the Assessee, is therefore, allowed. 19. In result, the present appeal preferred by the Assessee is allowed. Order pronounced on 03.12.2025. Sd/- Sd/- (Renu Jauhri) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated : 03.12.2025 Milan, LDC Printed from counselvise.com ITA No.5264/Mum/2025 Assessment Year 2020-2021 9 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "