R. K. CITY DEVELOPERS PRIVATE LIMITED,MUKTSAR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, LUDHIANA, LUDHIANA

ITA 1107/CHANDI/2025

AI Insights

The case involves M/s R.K. City Developers Pvt. Ltd., which appealed against the addition of Rs. 60 Lacs to its income for the Assessment Year 2012-13. This addition was initially made by the Assessing Officer (AO) under sections 144 and 147 of the Income Tax Act, following a reassessment triggered by information from a related group under investigation for financial irregularities. The Tribunal examined whether the AO conducted an independent inquiry and whether the loans received by the assessee were indeed accommodation entries. The Tribunal concluded that the AO did not conduct a proper inquiry and that the loans were substantiated by adequate documentation, thus ruling in favor of the assessee.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847310 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Chandigarh
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: . RANJIT KAUR LD.
• Assessee Lawyers: ASHWANI KUMAR LD. VIRTUAL
• Keywords: Unexplained cash credit; Borrowed satisfaction
• Section: 147; 148; 144; 143(3); 142(1); 132

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH HYBRID HEARING BEFORE HON’BLE SHRI RAJPAL YADAV, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.1107/CHANDI/2025 (िनधाŊरण वषŊ / Assessment Year: 2012-13) M/s R.K. City Developers Pvt. Ltd. Bhatinda Road, Opp. Canal Colony Muktsar, Punjab – 152026 बनाम/ Vs. DCIT Central Circle-3 Opp. BVM School, Kitchlu Nagar Ludhiana, Punjab - 141001 ˕ायीलेखासं./जीआइआरसं./PAN/GIR No. AADCR-9807-N (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Sh. Ashwani Kumar (CA) – Ld. AR (Virtual) ŮȑथŎकीओरसे/Respondent by : Sh. Dr. Ranjit Kaur (Addl. CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 19-03-2026 घोषणाकीतारीख /Date of Pronouncement : 23-03-2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of an order of learned Commissioner of Income Tax (Appeals)-5, Ludhiana [CIT(A)] dated 31-07-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 144 r.w.s 147 of the Act on 09-12-2019. The sole grievance of the assessee is confirmation of addition of Rs.60 Lacs. 2. The Ld. AR advanced arguments on legal grounds as well as on merits. The Ld. Sr. DR also advanced arguments. Having heard rival Printed from counselvise.com 2 submissions and upon perusal of case records, our adjudication would be as under. 3. The assessee’s case for this year was scrutinized u/s 143(3) on 25-03-2015. However, the case was reopened and a notice u/s 148 was issued on 27-03-2019. The same stem from receipt of information from DDIT (Inv.)-6. Delhi wherein pursuant to search action u/s 132 in the case of M/s Himanshu Verma Group of Companies, it was seen that the group used to take cash from various beneficiaries and deposit the same in their bank accounts and thereafter, route the same to various beneficiaries. The assessee is also stated to have received accomodation entry of Rs.60 Lacs from M/s White Collar Management Pvt. Ltd. which was an entity belonging to that group. During reassesment proceedings, the assessee remained non- compliant and accordingly, the amount of Rs.60 Lacs was added to assessee’s income u/s 68. 3. The assessee raised legal issues during first appeal and assailed the action of Ld. AO. The assessee stated that Ld. AO did not conduct any independent eqnuiry and merely acted on borrowed satisfaction. Another argument was that there was no failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. However, the legal grounds as well as grounds on merits stood dismissed by Ld. CIT(A). Aggrieved, the assessee is in further appeal before us. 4. From the facts, it emerges that the assessee’s case stood scrutinized in regular assessment u/s 143(3) on 25-03-2015. During Printed from counselvise.com 3 the course of assessment proceedings, notice u/s 142(1) was issued by Ld. AO on 11-08-2014 wherein the assessee was required to furnish various submissions. The assessee, in its reply, furnished confirmed copies of accounts for the unsecured loans along with ITR of the lender. Considering the same, regular assessment has been framed by Ld. AO on 25-03-2015. During the course of assessment proceedings, the assessee had furnished books of accounts along with bills and vouchers which were test checked. Finally, Ld. AO did not make any addition for unsecured loans and accepted the claim of the assessee, in this regard. 5. Thereafter, the case has been reopened which stem from search action in the case of M/s Himanshu Group of Companies. It has been alleged that the said group provided accomodation entries against cash and since the assessee received unsecured loan from one of the entity of that group, the said loans were to be treated as unexplained cash credit. However, it could be seen that the assessee had furnished the confirmation of the lender along with its ITR during the course of regular assessment proceedings itself. The same was duly perused by Ld. AO and Ld. AO chose not to make any addition in that respect. In such a case, a general finding in the case of tainted group could not lead to a conclusion that the loans so advanced to the assessee were also in the nature of accomodation entry. During the course of re-assessment proceedings, Ld. AO has not conducted any independent enquiry and did not bring on record any evidnce to demonstrate exchange of cash between the assessee and the tainted Printed from counselvise.com 4 group. This being so, the very foundation of reopening would be nothing but reopening on borrowed satisfaction which could not be sustained in law. The unsecured loans stood examined during the course of regular assessment proceedings itself. Secondly, there is no concrete evidence to demonstrate that the impugned loan was in nature of accomodation entry. No failure could be attributed on the part of the assessee. This being so, the impugned addition could not be sustained on legal grounds as well as on mertis. We order so. Therefore, we delete the same. The assessee succeeds in its corresponding grounds of appeal. 6. The appeal stand allowed. Order pronounced on 23rd March, 2026. -Sd- -Sd- (RAJPAL YADAV) (MANOJ KUMAR AGGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER AS Dated: 23-03-2026 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "