RAJENDRA KUMAR KAPOOR,KOLKATA V. D.C.I.T., CIRCLE - 29, KOLKATA

ITA 2060/KOL/2025

AI Insights

The case revolves around an appeal by Rajendra Kumar Kapoor against the order of the National Faceless Appeal Centre, Delhi, which confirmed the addition of 50,00,000 to the assessee's income as unexplained cash credit. The addition was initially made by the AO under section 68 of the Income-tax Act, 1961, concerning a loan taken from M/s Madhudhan Barter Pvt. Ltd. The Tribunal examined the evidences provided by the assessee, including the repayment of the loan through banking channels, and compared the case with several precedents where similar additions were not upheld when the loans were repaid and substantiated with proper documentation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 842217 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 08-09-2025
• Other Referred Cases: PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited, PCIT Vs. M/s Narayan Tradecom Pvt. Ltd., PCIT Vs. Alom Extrusions Ltd., PCIT Vs. M/s Edmond Finvest Pvt. Ltd., PCIT Vs. Parwati Lakh Udyong, Ambe Tradecorp (P) Ltd. Vs. PCIT, ACIT Vs H.K. Pujara Builders, DCIT Vs. Rohini Builders
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B. CHAKRABORTHY
• Assessee Lawyers: ANIL KOCHAR; ACCOUNT
• Keywords: Set aside; Revised return; Question of law; Unexplained cash credit; TDS; Earning of tax free income
• Section: 147; 148; 68; 139(5); 260A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.2060/KOL/2025 (Assessment Year: 2018-19) Rajendra Kumar Kapoor DC House, 86, B/1, Topsia Road South, Kolkata-700046, West Bengal Vs. DCIT, Circle-29 Aaykar Bhawan Dakshin, 2, Gariahat Road (South), Kolkata-700031, West Bengal (Appellant) (Respondent) PAN No. AFXPK4222J Assessee by : Shri Anil Kochar, AR Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 20.01.2026 Date of pronouncement: 26.02.2026 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 20.08.2025 for the AY 2018-19. 2. The only issue raised in the various grounds of appeal is against the confirmation of addition of ₹50,00,000/- by the ld. CIT (A) as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) in respect of loan taken from M/s Madhudhan Barter Pvt. Ltd. 3. The facts in brief are that the assessee filed the revised return of income u/s 139(5) of the Act on 07.02.2019, declaring total income at ₹2,50,05,800/-. The assessee also showed exempt income of Printed from counselvise.com Page | 2 ITA No. 2060/KOL/2025 Rajendra Kumar Kapoor; A.Y. 2018-19 ₹41,59,691/- from Long-Term Capital Gain from the transactions in securities on which STT was paid. The ld. AO received information that assessee has taken a credit of ₹50,00,000/- from entry operator M/s Manohar Lal Nangalia through his companies. Accordingly, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2022. The assessee filed the return of income on 16.04.2022, declaring total income of ₹2,50,05,800/-. Thereafter, the statutory notices along with questionnaire were issued and duly complied with by the assessee vide reply dated 07.01.2023. The assessee submitted before the ld. AO that it is engaged in the business of manufacturing and export of fabrics of garments and apparels under its proprietary concern M/s DC exports. The assessee also submitted that assessee was doing trading in shares, having profits from LLPs, interest on investments, etc. The assessee submitted that it had availed a loan of ₹50 lacs from Madhudhan Barter Pvt. Ltd. at 9% rate of interest which was duly paid after deduction of tax at source. The assessee also filed the copy of confirmation, audited balance sheet and bank statement before the ld. Assessing Officer. Finally, the ld. AO made the addition of the said amount as unexplained cash credit on the ground that loan was received from a shell company which remain unexplained. The ld. AO made the addition on the ground that the show cause notice was not replied by the assessee. 4. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO. 5. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has raised loan from M/s Madhudhan Barter Pvt. Ltd. during the year and filed before the Printed from counselvise.com Page | 3 ITA No. 2060/KOL/2025 Rajendra Kumar Kapoor; A.Y. 2018-19 ld. AO the loan confirmation, PAN details, address and audited balance sheet etc. According to the ld. AO the loan was received from a shell company and the same was added to the income of the assessee. We also note that the ld. CIT (A) recorded a finding in the appellate order that the assessee has filed the loan confirmation, bank statement of the lender, audited financial of the lender and these documents alone could not prove the genuineness of the loan transactions. We also note that the loan was repaid in the subsequent financial years through banking channel. Therefore, once the assessee has filed all the evidences before the ld. AO and the ld. AO has not pointed out any mistake or infirmity in the same and the loan was repaid then no addition u/s 68 of the Act is called for. The case of the assessee is squarely covered by a series of decisions of Jurisdictional High court namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act. The case of the assessee find support from the decision Hon’ble Gujrat High Court in the case of Ambe Tradecorp (P) Ltd. Vs. PCIT [2022] 145 taxmann.com 27 (Gujarat)’, wherein it has been held as under: Printed from counselvise.com Page | 4 ITA No. 2060/KOL/2025 Rajendra Kumar Kapoor; A.Y. 2018-19 “6. The Tribunal rightly recorded in para 29 of the judgment, \"Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld. CIT-A.\" a) In the case of ‘ACIT Vs H.K. Pujara Builders (2019) 178 DTR 97.’, The Hon’ble ITAT, Mumbai had held as follows: “The assessee had been making frequent repayment of loans to said party and had also availed loans from time to time said party and entire loan account together with interest there on [duly subjected to TDS] had been completely squared up on 20.03.2015-entire transaction i.e. , received of loans, repayment of loans and repayment of interest there on had been made through regular banking channel from account payee cheques/there was no case of any cash deposit made either at the time of receipt of loan in account of M/s Grafton Merchants Pvt Ltd, or in account of assessee while making repayment of loan or repayment of interest–Hence, there was no need to suspect entire gamut of transaction .” b) The Hon’ble High Court of Gujarat, in the case of ‘DCIT Vs. Rohini Builders (2002) 256 ITR 360 (Guj)’ had held as under: “That the tribunal having deleted the addition under s. 68 accepting the genuineness of loans which were received and repaid by assessee by account payee cheques, assessee having established the identity of the creditors by giving their complete addresses, GIR numbers/PAN as well as confirmations along with the copies of their assessment orders wherever readily available, no substantial question of law arises; appeal under s. 260A dismissed.” 6. In view of the above, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26.02.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.02.2026 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 5 ITA No. 2060/KOL/2025 Rajendra Kumar Kapoor; A.Y. 2018-19 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 "