SHRI RAMESH BABURAM CHAUHAN,PUNE V. ITO WARD-8(1), PUNE

ITA 3174/PUN/2025

AI Insights

The case involves Ramesh Baburam Chauhan, an individual engaged in conducting Yoga and Meditation classes and selling Gem stones, who appealed against the order of the National Faceless Appeal Centre, Delhi, which arose from an assessment order passed under section 143(3) of the Income Tax Act, 1961. The primary contention was regarding the additions made under section 68 of the Act, which pertained to unsecured loans received during the assessment year 2012-13. The Assessing Officer had doubted the genuineness of these loans due to discrepancies in the confirmations and the nature of the transactions. However, the Tribunal found that the assessee had adequately substantiated the transactions and that similar loans in previous and subsequent years had been accepted without additions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 848174 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Pune
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMOD SHAHAKAR
• Assessee Lawyers: ABHAY A. AVACHAT
• Keywords: Onus to prove; Principle of natural justice; Source of fund
• Section: 143(3); 142(1); 271(1)(c); 68; 234B; 2

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.3174/PUN/2025 Assessment Year : 2012-13 Ramesh Baburam Chauhan, Bracing Manufacturers, J-419, MIDC, Bhosari, Pune 411026, Maharashtra PaN : ACBPC9677C Vs. Income Tax Officer, Ward-8(1), Pune Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of assessee pertaining to A.Y. 2012-13 is directed against the order dated 10.11.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 20.03.2015 passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’). 2. Assessee has raised following grounds of appeal : “The following grounds are taken without prejudice to each other- On facts and circumstances and in law, 1. The Order passed under section 250 of the Income-tax Act, 1961 bearing order no.: ITBA/NFAC/S/250/2025- 26/1082420622(1), dated November 10. 2025, passed by the Commissioner of Income Tax (Appeals), and the order Appellant by : Shri Abhay A. Avachat Respondent by : Shri Pramod Shahakar Date of hearing : 10.02.2026 Date of pronouncement : 27.03.2026 Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 2 under section 143(3) of the Income-tax Act, 1961, dated March 20, 2015, passed by the learned Assessing Officer, Ward 8(1), Pune are bad in law and void ab initio. 2 Without prejudice to the above, the learned CIT(A) erred in law and on facts in confirming the addition of Rs. 86,13,147/- on account of unsecured loans/cash credits by treating the same as unexplained, despite the appellant having discharged the initial onus cast upon him. 3 The learned CIT(A) failed to appreciate that the identity and genuineness of the lenders were never in dispute and stood supported by confirmations/affidavits, ledger extracts and reconciliation, and therefore the impugned addition is unsustainable in law. 4 The learned CIT(A) erred in law and on facts in sustaining the addition of Rs. 26,74,115/- pertaining to Mrs. Usha Chander / V. Chander, without appreciating that the said amount represented duly explained opening balances, advances and reconciled entries, including amounts routed through related account heads, all of which were recorded in the regular books of account of the appellant. 5. The learned CIT(A) erred in sustaining the addition of Rs. 26,74,115/-related to Mrs. Usha Chander / V. Chander, without considering that Rs. 9,06,430/-of this amount represents an opening balance carried forward from the previous year, which was duly recorded in the appellant's books of account. As this opening balance pertains to a prior year, it should not be added to the income for AY 2012-13, and the addition of this amount is unwarranted and should be deleted. 6. The learned CIT(A) erred in law and on facts in sustaining the addition of Rs. 59,39,032/- pertaining to Shri Nagraj Palakkal (Nambiyar) by placing reliance on an approximate declaration referring to \"about 2 crore\", while ignoring the year-wise break-up of loans and specific confirmations clearly identifying the amounts pertaining to the relevant previous year. 7. The learned CIT(A) erred in law in confirming the addition solely on the alleged non-submission of bank statements, without appreciating that once primary Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 3 evidences were furnished by the appellant, the burden of proof stood discharged and shifted to the Revenue, which failed to rebut the same with any cogent or adverse material. 8 The order passed by the learned CIT(A) is non-speaking, cryptic and devoid of findings, and is therefore in violation of section 250(6) of the Act and principles of natural justice. 9. The levy of interest under sections 234A, 234B and 234C is consequential and is liable to be recomputed after granting relief on the quantum additions. 10 The initiation and continuation of penalty proceedings under section 271(1)(c) and section 271F of the Income-tax Act, 1961 are unjustified, premature and bad in law, the quantum addition itself being unsustainable. 11. The Assessee respectfully prays for grant of such further or other reliefs as may be deemed fit in the facts and circumstances of the case and in accordance with law. 12 The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal at the time of hearing or before disposal of the appeal, without prejudice to the existing grounds.” 3. Brief facts of the case are that the assessee is an individual and claimed to be a spiritual guru engaged in conducting of Yoga and Meditation classes and sale of Gem stones. Return of income for A.Y. 2012-13 furnished on 05.08.2013 declaring income of Rs.6,45,251/-. Case selected for scrutiny through CASS followed by validly serving statutory notices u/s.143(2) and 142(1) of the Act. During the course of assessment proceedings, ld. Assessing Officer observed that unsecured loans are appearing in the balance sheet. On due Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 4 examination of the details of unsecured loans, ld. Assessing Officer has made observations doubting the unsecured loans from Ms. Usha Chander and Mr. Nagraj Pallakkal (Nambiyar). Confirmations from the cash creditors were called for. However, there were certain discrepancies in the figures mentioned in the confirmations vis-à-vis the amount of loan taken during the year. Ld. Assessing Officer observed that the loans from the alleged two parties were taken in the preceding years also. However, for the year under consideration, due to mismatch in the figures given in the confirmation of Ms. Usha Chander and in the case of Mr. Nagraj Pallakkal (Nambiyar) the specific details of the loans given were not appearing but a general statement of having given the unsecured loans to the assessee were appearing. Further details could not be filed by the assessee. Ld. Assessing Officeer concluded the assessment proceedings by making addition u/s.68 of the Act for the alleged unsecured loans of Rs.26,74,11/- and Rs.59,39,032/- received from Ms. Usha Chander and Mr. Nagraj Pallakkal (Nambiyar) respectively. After making addition u/s.68 of the Act at Rs.86,13,147/- income assessed at Rs.92,58,398/-. 4. Aggrieved assessee approached before ld.CIT(A) and reiterated the submissions stating that firstly ld. Assessing Officer has made the addition for the opening cash balance appearing in the name of Ms. Usha Chander and has also not considered that the other loans which have been received from Ms. Usha Chander’s daughter and advance against Gem stones through banking channel were not included in the confirmation but the source of funds were duly explained Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 5 which have come from Ms. Usha Chander and her husband V. Chander. As regards the unsecured loan received from the cash creditor Mr. Nagraj Pallakkal (Nambiyar) is concerned, it is submitted that the opening balance stood at Rs.82,22,452/-. He is the CPR holder of Bahrain and is a non-resident carrying out the business in Bahrain for last many years and from the income earned as a non-resident, alleged sum has been given as loan to the assessee. It was also submitted that all payments have come through banking channel and therefore addition u/s.68 of the Act is uncalled for. However, ld.CIT(A) disregarded the submissions of the assessee and merely for non submission of bank statement by the alleged cash creditors, confirmed the addition made by the Assessing Officer. Aggrieved assessee in now in appeal before this Tribunal raising the aforementioned grounds. 5. Ld. Counsel for the assessee reiterated the submissions filed before ld.CIT(A) and stated that apart from the bank statements all details are available. He submitted that the alleged cash creditors have given loans to the assessee in the past and in subsequent years and no additions have been made. He also referred to the assessment order for the subsequent A.Y. 2023-14 during which also unsecured loans were received from the alleged two parties but no additions have been made in the assessment proceedings u/s.143(3) of the Act. He therefore submitted that since the parties have already been examined by the Assessing Officer for the previous and subsequent assessment year and has accepted the Identity, creditworthiness of the cash creditors and genuineness of the transactions the same should have been Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 6 followed by the Assessing Officer for the year under consideration also. He also made reference to the details furnished in the paper book running into 44 pages. He also submitted that copies of bank statements have been called for from the alleged creditors and assessee is pursuing but till date those details have not been received. He also submitted that the cash creditors have duly replied to the letters issued by the Assessing Officer and have confirmed the transactions of having given unsecured loans to the assessee. 6. On the other hand, ld. DR vehemently argued supported the order of ld.CIT(A). 7. We have heard the rival contentions and perused the record placed before us. Assessee is aggrieved with the finding of ld.CIT(A) confirming the addition for unsecured loan at Rs.86,13,147/- made by the Assessing Officer invoking section 68 of the Act in case of the following two parties : Sl.No. Name of the Cash creditor Amount 1 Ms. Usha Chander Rs.26,74,115/- 2 Mr. Nagraj Palakkal (Nambiyar) Rs.59,39,032/- 8. Section 68 of the Act has a direct bearing on the issue under consideration and the same is reproduced below : “68. Cash Credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and 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 Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 7 may be charged to income-tax as the income of the assessee of that previous year: Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless- (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that] where the assessee is a company, (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless-(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided also] that nothing contained in the \"[first proviso or second proviso | shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.]” 9. From perusal of the above provision, we notice that in case of any cash creditor appearing in the books of assessee, assessee is required to explain the nature and source of the alleged sum to the satisfaction of the Assessing Officer and even the source of source also needs to be examined by the Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 8 Assessing Officer. In order to explain the nature and source, assessee has to furnish relevant documents proving Identity and credit worthiness of cash creditor and genuineness of the transaction. Though it is provided in the provision that assessee needs to satisfy the Assessing Officer with the details to explain the nature and source but then the question comes what parameters needs to be followed by an Assessing Officer to get satisfied. There is no standard procedure provided under the Act as per which the Assessing Officer has to follow step by step and it always depends on the facts and circumstances of the case based on which a particular Assessing Officer or Revenue authority can get satisfied with the details. In this procedure, once the assessee furnishes some details, ld. Assessing Officer has to bring forth the discrepancy in such details or ask for certain more details which are necessary for explaining the nature and source of the alleged sum. 10. Now we examine the facts of the present case cash creditor and the details furnished by the assessee to explain the credits in order to satisfy the Assessing Officer. Ms. Usha Chander : It is borne out from the record that Ms. Usha Chander has not given unsecured loan to the assessee for the first time and in the past also unsecured loans have been given and the opening balance as on 01.04.2011 is Rs.9,61,985/-. During the year under consideration the unsecured loan of Rs.25.00 lakh received from Ms. Usha Chander has been accepted to be a genuine loan by the Assessing Officer as no addition has been for this amount. Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 9 Now the other two amounts which have been received from Ms. Usha Chander during the year in parts are Rs.5,02,380/- received from the bank account of Yashaswini Chander, daughter of Ms. Usha Chander and second amount of Rs.12,09,750/- received in parts through banking channel from Ms. Usha Chander as advance towards purchase of Gem stones. Now ld. Assessing Officer has firstly made the addition u/s.68 of the Act for the opening balance as on 01.04.2011 is Rs.9,61,985/- which is not required to be made since this amount has not been received during the year. Also Ld. Assessing Officer has accepted the Identity, credit worthiness of Ms. Usha Chander and genuineness of the transaction of Rs.25.00 lakh received during the year. Therefore, undisputedly, ld. Assessing Officer is fully satisfied with the genuineness of the loans received from Ms. Usha Chander. So far as remaining amounts of Rs.5,02,380/- and Rs.12,09,750/- are concerned, the same have also been received through the family members of Ms. Usha Chander as well as advance against purchase of Gem stones. The only discrepancy referred is that in the declaration given by Ms. Usha Chander on a stamp paper placed at pages 12 and 13, there is a reference of the unsecured loan of Rs.1.90 crore out of which Rs.25.00 lakhs pertains to the year under consideration and the remaining amount of Rs.1.65 crore is received in the subsequent year. Ld. Assessing Officer based on this declaration has accepted nature and source of Rs.25.00 lakhs but since the other transaction the opening balance is at Rs.9,61,985/- and the amount received from daughter of Ms. Usha Chander at Rs.5,02,380/- and the amount received from Ms. Usha Chander for advance against Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 10 Gem stones at Rs.12,09,750/- were not appearing in this declaration therefore ld. Assessing Officer made this addition. It has been pleaded before us that since the amount of Rs.5,02,380/- was received from Ms. Usha Chander daughter the same was not included in the declaration and as regards Rs.12,09,750/- since it was not in the nature of loan but as advance for purchase of Gem stones it was not included in the declaration. On consideration of these facts and circumstances, we are of the considered view that the assessee has successfully proved the Identity, creditworthiness of Ms. Usha Chander and genuineness of the transaction by placing all details including declaration on stamp paper given by Mr. Usha Chander and further the unsecured loans received during the subsequent year have also been accepted by the Revenue authorities and no additions have been made. We therefore reverse the finding of ld.CIT(A) and delete impugned addition u/s.68 of the Act at Rs.26,24,115/- for the alleged loan received from Ms. Usha Chander. Mr. Nagraj Palakkal (Nambiyar) : We note that Mr. Nagraj Palakkal is a non-resident Indian and has also filed a declaration placed in the paper book pages 14 and 15 and though he holds Indian Passport but he is a resident of Bahrain holding CPR Number 72014119 and resident of Zinj, Manama, Kingdom of Bahrain. The genuineness of the certificate issued by Mr. Nagraj Palakkal is not in dispute and going through the contents of the certificate it emerges that he is engaged in the Hotel Industry business for past many years. He has given unsecured loans to the assessee in the past as well as during the year. We observe that when the information Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 11 was called for by the Assessing Officer regarding the alleged unsecured loan received by the assessee from Mr. Nagraj Palakkal, letter dated 04.03.2016 has been given by Mr. Nagraj Palakkal addressing to the Income Tax Officer, Ward- 8(1), Pune providing the payment transfer details and also the copy of ownership details in the Kingdom of Bahrain in the name of Milestone Marketing International, W.L.L. which was established in the year 2005. He has also signed the confirmation which contains all the transactions of unsecured loans received through banking channel during the year. It is also observed that apart from opening balance as on 01.04.2011 at Rs.82,22,452/- indicating that unsecured loans have been received in the past, even during the year under consideration total amount received is at Rs.1,41,61,484/- and in the subsequent year at Rs.71,48,703/-. Interestingly, out of the unsecured loans received during the year at Rs.1,41,61,484/- ld. Assessing Officer made the addition for only Rs.59,39,032/- solely on the ground of certain incomplete details appearing in the declaration as per which Mr. Nagraj Palakkal has given a general statement that “in my capacity I had given Rs.2.00 crore plus loan to Guruji since 2004 as per my books of record”. This particular content in the certificate given by Mr. Nagraj Palakkal has been taken as basis by the Assessing Officer stating that Only Rs.2.00 crore loan has been given but he has not taken into consideration the complete facts of the case that the alleged cash creditor has stated that in his individual capacity and from his own funds from the business carried out in Bahrain he has given Rs.2.00 crore plus loan since 2004. Further now once the Assessing Officer has himself accepted the genuineness and Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 12 creditworthiness along with Identity of Mr. Nagraj Palakkal for the unsecured loans received in the preceding year as well as the unsecured loans received in the subsequent year, the basis of doubting the transaction of alleged amount received during the year is completely unfounded. We therefore are of the considered view that since the assessee has explained the nature and source of the alleged sum to our satisfaction, section 68 of the Act cannot be invoked in the given set of facts. Finding of ld.CIT(A) is reversed and impugned addition of unsecured loan of Rs.59,39,032/- received from Mr. Nagraj Palakkal (Nambiyar) is hereby deleted. 11. To conclude, the finding of ld.CIT(A) is reversed and the total addition made by the Assessing Officer at Rs.86,13,147/- stands deleted and effective grounds of appeal raised by the assessee are allowed. 12. In the result, the appeal of the assessee is allowed. Order pronounced on this 27th day of March, 2026. Sd/- Sd/- (ASTHA CHANDRA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; दिन ांक / Dated : 27th March, 2026. Satish Printed from counselvise.com ITA No.3174/PUN/2025 Ramesh Baburam Chauhan 13 आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, “B” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. आिेश नुस र / BY ORDER, // True Copy // Assistant Registrar, आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune. Printed from counselvise.com "