KESHVI DEVELOPERS PVT LTD,GOREGAON EAST V. DCIT,CENTRAL CIRCLE 5(2), MUMBAI, BKC,BANDRA

ITA 640/MUM/2025

AI Insights

The case involves Keshvi Developers Pvt Ltd, which appealed against the order of the Learned Commissioner of Income-tax (Appeals)-53, Mumbai, concerning an addition of Rs. 40 lakhs under section 68 of the Income-tax Act, 1961. The addition was made by the National e-Assessment Centre, Delhi, treating the repayment of a loan to a sister concern as unexplained, due to the original loan creditor being struck off by the Ministry of Corporate Affairs. The Tribunal noted that the loan was initially taken from a registered company and was repaid through banking channels, thus requiring proper verification of the transaction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708780 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: SURJI CHHEDA
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.640/Mum/2025 (Assessment year: 2018-19) Keshvi Developers Pvt Ltd 7, Saket Shopping Centre Station Road, Goregaon, Mumbai-400 062 PAN: AACCK7090D vs DCIT, Central Circle 5(2), Mumbai Kautilya Bhavan, BKC, Mumbai-400 051 APPLICANT RESPONDENT Assessee by : Shri Surji Chheda Respondent by : Shri Hemanshu Joshi (SR.DR.) Date of hearing : 10/07/2025 Date of pronouncement : 15/07/2025 O R D E R Per Anikesh Banerjee (JM): The instant appeal of the assesse was filed against the order of the Learned Commissioner of Income-tax (Appeals)-53, Mumbai [hereinafter called, ‘Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2018-19, date of order 14/12/2024. The impugned order emanated from the order of the National e-Assessment Centre, Delhi (in short, ‘Ld.AO’) passed under section 143(3) read with section 144B of the Act, date of order 21/04/2021. 2 ITA 640/Mum /2025 Keshvi Developers Pvt Ltd 2. We have heard the rival submissions and perused the documents available on record. The Ld. AR submitted a paper book comprising pages 1 to 20, which has been taken on record. The Ld. AR submitted that the assessee had borrowed a sum of Rs. 40 lakhs from M/s Shree Oshiya Construction Pvt. Ltd. for business purposes, and the loan was received through the banking channel. However, during the relevant assessment year, the name of the said loan creditor was struck off by the Ministry of Corporate Affairs (MCA), due to which the assessee was unable to repay the loan directly to the original lender. Subsequently, the assessee repaid the said loan amount to a sister concern of the loan creditor, namely, Shree Oshiya Ferro Alloys Pvt. Ltd. The Ld. AR contended that appropriate journal entries were passed in the books of account to reflect the said repayment. On examination of the assessment record, it is observed that the Ld. AO noted that the assessee had informed about the repayment made to a third party, although the original loan creditor had been struck off by the MCA. Therefore, the Ld. AO did not accept the repayment made to the sister concern and treated the same as unexplained, thereby making an addition of Rs. 40 lakhs under section 68 of the Act on the ground of failure to establish the identity & creditworthiness of the loan creditor. 3. The Ld. DR supported the findings of the revenue authorities and relied upon their orders. The relevant part of the observation of the Ld. AO is reproduced as below:- “4.2 The reply of the assessee has been perused but not found tenable. Before issuing show cause notice the assessee did not accept any transaction with the company of which registration has 3 ITA 640/Mum /2025 Keshvi Developers Pvt Ltd been struck off by the MCA and accepted the transaction after issuing show cause notice. Further, the assessee company has failed to submit any documentary evidences which can prove the creditworthiness of the lender company. In view of above narrated facts it is evident that the assessee company has failed to prove genuineness of transaction which was done a company whose registration has been cancelled.” 4. Upon careful consideration, we observe that although the loan creditor was struck off by an order of the MCA, the assessee subsequently repaid the loan amount to its sister concern. It is not in dispute that the loan was initially taken from a company registered under the Companies Act, 2013, and the transaction was routed through the banking channel. The evidence of repayment was placed before the Ld. AO but was not accepted. Furthermore, the Ld. CIT(A) did not properly consider the assessee’s submissions and upheld the addition. We find that the reasonable opportunity of the assessee is denied, and the assessee has in fact repaid the loan and reduced its liability. It was also claimed that the repayment was made as per the direction of the original loan creditor to its sister concern. Since the entire transaction, including the repayment, was conducted through banking channels, we are of the considered opinion that the matter requires proper verification, and the assessee should be allowed one more opportunity to establish the transaction with loan creditor. Accordingly, the matter is remanded to the file of the Ld. Jurisdictional AO (JAO) for the limited purpose of verifying the repayment made to the sister concern of the loan creditor and verification of the loan transaction. Both the Ld. DR and the Ld. AR have fairly accepted the observations of the Bench. Needless to say, the assessee shall be granted a reasonable opportunity of being heard during the set- aside proceedings. 4 ITA 640/Mum /2025 Keshvi Developers Pvt Ltd 5. In the result, the appeal of the assessee bearing ITA No.640/Mum/2025 is allowed for statistical purpose. Order pronounced in the open court on 15th day of July 2025. Sd/- sd/- (SMT. RENU JAUHRI) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, िदनांक/Dated: 15/07/2025 Pavanan Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु\u0014 CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "