PANCHAM MARKETIERS PVT. LTD.,KOLKATA V. DCIT, CIRCLE 5(1), KOLKATA

ITA 2450/KOL/2025

AI Insights

Pancham Marketings Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, which confirmed the addition of 2.00 crores as unexplained cash credit. The addition was initially made by the Assessing Officer, who doubted the creditworthiness of the lenders based on their transactions with a known entry provider. The Tribunal noted that the assessee had furnished all necessary details and that the lenders had confirmed the transactions. Citing precedents, the Tribunal held that the burden of proof had shifted to the Assessing Officer, who failed to provide adequate reasons for rejecting the assessee's evidence.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829060 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: misc
• Appeal Filed On: 30-10-2025
• Other Referred Cases: PCIT vs. Sreeleathers, Sreelekha Banerjee v. CIT, CIT v. P. Mohanakala, Lal Mohan Krishna Lal Paul v. CIT, Anil Kumar Singh v. CIT, A.S. Sivan Pillai v. CIT, CIT v. Daulat Ram Rawatmull
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: SOUMITRA CHOUDHURY
• Keywords: Set aside; Question of law; Unexplained cash credit; Onus to prove; Bogus
• Section: 147; 142(1); 68; 133(6); 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 2450/KOL/2025 (Assessment Year:2022-23) Pancham Marketings Pvt. Ltd. 3rd Floor, R.No. 314, City Centre, 19, Synagogue Street, Kolkata- 700001, West Bengal Vs. DCIT, Circle 5(1) Aaykar Bhawan, P-7, Chowringhee Square, Kolkata- 700069, West Bengal (Appellant) (Respondent) PAN No. AABCP5368G Assessee by : Shri Soumitra Choudhury, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 05.01.2026 Date of pronouncement: 13.01.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29.08.2025 for the AY 2022-23. 2. The only issue raised by the assessee in various grounds of appeal is against the confirmation of addition of ₹2.00 cores by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act by treating the unsecured loans received from three entities as unexplained cash credit. 3. The facts in brief are that the assessee filed the return of income on 30.09.2022, declaring total income at ₹21,96,23,000/- and book profit u/s 115JB of the Act of ₹21,68,02,511/-. The case of the assessee was selected for scrutiny and notices u/s 143(2), 142(1) of the Act and Printed from counselvise.com Page | 2 ITA No. 2450/KOL/2025 Pancham Marketings Pvt. Ltd.; A.Y. 2022-23 questionnaire were duly issued and served upon the assessee. The ld. AO during the course of assessment proceedings observed that the assessee has raised loans on three parties namely; Shristi Investments Pvt. Ltd., Alco Suppliers Private Limited, Scroll Merchants Pvt. ltd. The assessee complied with the queries of the ld. AO by furnishing all the details/ evidences qua these three lenders. The ld. AO in order to independently verify the loan transactions also issued notice u/s 133(6) of the Act which were duly replied by loan creditors, confirming the loan transactions. The ld. AO doubted these transactions on the ground that all these parties were having bank account in Punjab National Bank, Kolkata and confirmation statements submitted by them were from the same screener and controlled by the same person. The ld. AR further noted that these entities have transactions with Kailash Kumar Patwari, who is known entity provider. Finally, the loans were added as unexplained cash credit to the income of the assessee on the ground that creditworthiness of the lender could not be established. 4. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee on the ground that the assessee was non-compliant despite providing adequate number of opportunities and not submitted any evidences. Though, the ld. CIT (A) decided the issue on merit noting of the facts that the assessee has filed all the evidences/ reply before the ld. AO and the loan creditors have also complied the notices issued u/s 133(6) of the Income-tax Act, 1961 (the Act). 5. After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has filed before the ld. AO all the information/ details qua these loan creditors comprising names, addresses, PAN numbers, audited accounts, confirmations, bank statements, etc. We also note that the notice issued u/s 133(6) Printed from counselvise.com Page | 3 ITA No. 2450/KOL/2025 Pancham Marketings Pvt. Ltd.; A.Y. 2022-23 of the Act to these loan creditors were duly replied by them by furnishing all the details/ evidences as called for by the ld. AO and thus, confirmed the transactions. The ld. AO treated these loans as unexplained on the ground that the creditworthiness of the parties was not proved by referring to the fact that these loan creditors were having transactions with Kailash Kumar Patwari. 5.1. We note that the ld. AO has not pointed out any defects in the evidences filed by the assessee and merely reached to the conclusion that the loans taken by the assessee were bogus as loan creditors have no creditworthiness whereas as a matter of fact the assessee as well as the loan creditors have furnished all the details/ evidences before the authorities below. We further note that in the case of loan creditor M/s Alco Suppliers Private Limited, from whom ₹60 lacs were borrowed, the co-ordinate Bench in ITA No. 933/KOL/2025 for A.Y. 2022-23 vide order dated 04.011.2025, allowed the appeal in favour of the loan creditor by directing the AO to delete the addition made in respect of amount received from sale of shares which were source of loan to the assessee. We also note that in case of Scroll Merchants Pvt. Ltd., from whom ₹90 lacs were borrowed, the assessment was framed u/s 147 of the Act vide order dated 28.03.2025, by the ld. AO whereas in the case of third lender Shristi Investments Pvt. Ltd. from whom ₹50 lacs were borrowed, assessment was framed by the ld. AO u/s 147 of the Act vide order dated 28.03.2025, which is available at page no.472 to 475 of the Paper Book. Under these circumstances, we are not in a position to uphold the order of ld. CIT (A) especially, where the loan transactions were affirmed by the lenders in reply to section 133(6) of the Act issued by the ld. AO as well as these were all assessed by the department as stated hereinabove. The case of the assessee is squarely covered by the decision of PCIT vs. Sreeleathers Printed from counselvise.com Page | 4 ITA No. 2450/KOL/2025 Pancham Marketings Pvt. Ltd.; A.Y. 2022-23 [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta)[14-07-2022], wherein the Hon'ble Court had held as under:- “3. We have heard Mr. Vipul Kundalia, learned Senior Standing Counsel along with Mr. Anurag Roy, learned Advocate for the appellant and Mr. Avratosh Mazumder, learned Senior Advocate assisted by Mr. Avra Mazumder and Mr. Md. Bilwal Hossain, learned Advocates for the respondents. 4. Before we examine the correctness of the order passed by the Tribunal and consider whether a substantial question of law arises for consideration in this appeal we need to take note of section 68 of the Act. This provision deals with cash credits. It states that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. The crucial words in the said provision are \"assessee offers no explanation\". This would mean where the assessee offers no proper, reasonable and acceptable explanation as regard the amount credited in the books maintained by the assessee. No doubt the Income-tax Act places the burden of proof on the tax payer. However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their conformations, it has been held that the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit so as to be justified in referring to section 68 of the Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation with regard to the cash credit, the Assessing Officer should consider the same objectively before he takes a decision to accept or reject it. In Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC), it was held that if the explanation given by the assessee shows that the receipt is not of income nature, the department cannot convert good proof into no proof or otherwise unreasonably reject it. On the other hand, if the explanation is unconvincing, the same can be rejected and an inference shows that the amount represents undisclosed income either from a disclosed or an undisclosed source CIT v. P. Mohanakala [2007] 161 Taxman 169/291 ITR 278/210 CTR 20 (SC). The explanation given by the assessee cannot be rejected arbitrarily or capriciously, without sufficient ground on suspicion or on imaginary or irrelevant grounds Lal Mohan Krishna Lal Paul v. CIT [1944] 12 ITR 441 (Cal.) and Anil Kumar Singh v. CIT [1972] 84 ITR 307 (Cal.). 5. Further to be noted that where the assessee furnishes full details regarding the creditors, it is up to the department to pursue the matter further to locate those creditors and examine their creditworthiness. It has been further held in A.S. Sivan Pillai v. CIT [1958] 34 ITR 328 (Mad.) that while drawing the inference, it cannot be assumed in the absence of any material that there has been some illegalities in the assessee's transaction. Thus, more importantly, as held by the Hon'ble Supreme Court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), the onus of proving that the appellant was not the real was on the party who claims it to be so. Bearing the above legal principles in mind, if we examine the case on hand, it is clear that the assessing officer Printed from counselvise.com Page | 5 ITA No. 2450/KOL/2025 Pancham Marketings Pvt. Ltd.; A.Y. 2022-23 issued show cause notice only in respect of one of the lender M/s. Fast Glow Distributors. The assessee responded to the show cause notice and submitted the reply dated 22-12- 2017.The documents annexed to the reply were classified under 3 categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The assessing officer has brushed aside these documents and in a very casual manner has stated that mere filing PAN details, balance sheet does not absolve the assessee from his responsibility of proving the nature of transaction. There is no discussion by the assessing officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression \"money laundering.\" We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraphs 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assessing officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under section 68 of the Act. Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual findings that the net worth of those companies is in crores of rupees and they have declared income to the tune of Rs. 45,00,000/- and 75,00,000/-. Therefore, the assessing officer if in his opinion found the explanation offered by the assessee to be not satisfactory, he should have recorded so with reasons. We find that there is no discussion on the explanation offered by the assessee qua, one of the lenders. Admittedly, the assessee was not issued any show cause notice in respect of other lenders. However, they are able to produce the details before the CIT(A) who had in our view rightly appreciated the facts and circumstances of the case. As pointed out earlier, the assessing officer brushed aside the explanation offered by the assessee by stating that merely filing PAN details, balance sheet does not absolve the assessee from his responsibilities of proving the nature of transactions. It is not enough for the assessing officer to say so but he should record reasons in writing as to why the documents which were filed by the assessee along with the reply dated 22- 12-2017 does not go to establish the identity of the lender or prove the genuineness of the transaction or establish the creditworthiness of the lender. In the absence of any such finding, we have to hold that the order passed by the assessing officer was utterly perverse and rightly interfered by the CIT(A). The Tribunal re-appreciated the factual Printed from counselvise.com Page | 6 ITA No. 2450/KOL/2025 Pancham Marketings Pvt. Ltd.; A.Y. 2022-23 position and agreed with the CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under section 133(6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue.” 5.2. We therefore respectfully following the ratio laid down by the Hon'ble Jurisdictional High Court, set aside the order of ld. CIT (A) directing the ld. AO to delete the addition. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13.01.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 13.01.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "