SOLLFEGE ELECTRONICS PRIVATE LIMITED (PRESENTLY KNOWN AS SOLLFEGE ELECTRONICS LIMITED),KOLKATA V. ITO, WARD 8(2), , KOLKATA

ITA 1012/KOL/2025

AI Insights

The case involves Sollfege Electronics Limited, which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi, confirming the addition of Rs.60.00 lakhs as unexplained cash credit by the Assessing Officer under section 68 of the Income Tax Act for the assessment year 2018-2019. The assessee had received loans from two entities, M/s Madhurashi Shoppers Pvt. Ltd. and M/s Manikala Vyaapar Pvt. Ltd., which were later repaid. The Tribunal examined the evidence provided by the assessee, including the repayment of loans and found it satisfactory, thus overturning the lower authorities' decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778853 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 09-05-2025
• 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.
• Laws Referred To: Income Tax Act
• 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; Accommodation entries
• Section: 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER आयकर अपील सं/ITA No.1012/KOL/2025 (निर्धारण वर्ा / Assessment Year : 2018-2019) Sollfege Electronics Private Limited (presently known as Sollfege Electronics Limited) 3, Pretoria Street, 2nd Floor, Chandrakunj Building, Kolkata-700071, West Bengal Vs ITO Ward 8(2), P-7, Chowringhee Square, Kolkata-700069, West Bengal PAN No. :AAECD4463B (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Soumitra Choudhury & Shri Pranabesh Sarkar, Advocates रधजस्व की ओर से /Revenue by : Shri S.B.Chakraborthy, Sr.DR सुनवाई की तारीख / Date of Hearing : 27/08/2025 घोषणा की तारीख/Date of Pronouncement : 16/10/2025 आदेश / O R D E R Per Rajesh Kumar, AM : This is an appeal filed by the assessee against the order dated 22.03.2025, passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-2019. 2. At the time of hearing, ld.counsel for the assessee pressed the grounds No.8, 9, 10 & 11, which are raised by the assessee to challenge the confirmation of addition by the ld. CIT(A) of Rs.60.00 lakhs made by the Assessing Officer u/s.68 of the Act as unexplained cash credit. 3. Facts in brief are that the assessee is engaged in the business of trading of electronics audio, video etc. The assessee filed its return of income u/s.139(1) of the Act on 06.10.2018 declaring total income at Rs.95,23,889/-. The notice u/s.148A(b) of the Act was issued by the Assessing Printed from counselvise.com ITA No.1012/KOL/2025 2 Officer on 10.03.2022 wherein it was stated that the assessee has received an amount of Rs.60.00 lakhs from two entities, namely, M/s Madhurashi Shoppers Pvt. Ltd. and M/s Manikala Vyaapar Pvt. Ltd. The order u/s.148A(d) of the Act was passed on 23.03.2022 and thereafter the notice u/s.148 of the Act was issued on 23.07.2022 which was responded by the assessee by filing return of income declaring at Rs.95,23,889/-. During the course of assessment proceedings, the Assessing Officer called for the various details/evidences from the assessee qua the issue raised which were duly furnished comprising names, addresses, PAN Numbers, audited balance sheets, bank statements, loan confirmations, sources of funds, ITRs, etc., however, the evidences filed by the assessee were rejected and the Assessing Officer added the unsecured loans received by the assessee at Rs.60.00 lakhs from the two companies namely M/s Madhurashi Shoppers Pvt. Ltd. and M/s Manikala Vyaapar Pvt. Ltd. without pointing out any defect in the evidences filed by the assessee during the course of assessment proceedings. Ld. CIT(A) in the appellate proceedings simply confirmed the order of the Assessing Officer. 4. After hearing the learned counsel for the parties and perusing the material on record, we find that undisputedly the assessee received money from the two entities namely, M/s Printed from counselvise.com ITA No.1012/KOL/2025 3 Madhurashi Shoppers Pvt. Ltd. of Rs.26.00 lakhs and M/s Manikala Vyaapar Pvt. Ltd of Rs.34.00 lakhs by account payee cheques. The assessee filed before the Assessing Officer all the evidences/details in response to the questionnaire issued by the Assessing Officer by filing the names, addresses, loan details, loan confirmations, ledger accounts, bank statements, ITRs, audited accounts before the Assessing Officer as well as before the ld. CIT(A). It was submitted that the loans received by the assessee stood repaid in the subsequent years, however, the contention of the assessee did not meet the satisfaction of the authorities below resulting into affirming the order of the Assessing Officer by the ld. CIT(A). 5. We have perused the statement of loans repayment along with bank statements, which were available before the Assessing Officer. We note that there was non-compliance before the ld.CIT(A) on the various date by the assessee and the ld.CIT(A) simply confirmed the order of the Assessing Officer. Now, considering the facts on record, we are not inclined to restore the issue to the file of ld. CIT(A) for the reasons that as the issue is squarely covered by the various decisions of the Hon’ble Jurisdictional High Court as well as other Hon’ble High Courts. We note that the loans received by the assessee were repaid as is clear from page 15 of the paper book filed by the assessee before us, which reads as follows :- Printed from counselvise.com ITA No.1012/KOL/2025 4 6. We have verified the repayment of loans with the statements furnished at paper book at page 152 and found that the repayments were made completely. Therefore, once the assessee has established that the repayment of loans has been made then the same cannot be added u/s.68 of the Act on the ground that the assessee has failed to meet the ingredients of Section 68 of the Act. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases 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 Printed from counselvise.com ITA No.1012/KOL/2025 5 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. Similarly, the of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :- \"3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, \"In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information.\" 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to Printed from counselvise.com ITA No.1012/KOL/2025 6 arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 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. \" Printed from counselvise.com ITA No.1012/KOL/2025 7 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 7. Accordingly, we respectfully following the ratio laid down by the Hon’ble Gujarat High Court, set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 16/10/2025. Sd/- (GEORGE MATHAN) Sd/- (RAJESH KUMAR) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 16/10/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "