ACIT, Central Cirlce-25 vs BTC Traders Pvt Ltd

PER:SUNIL KUMAR SINGH, JUDICIAL MEMBER

The facts and issues involved in the revenue appeal and assessee’s cross objections are identical, hence, for the sake of convenience and brevity, both the matters are being decided by this common order. The facts of revenue’s appeal ITA No. 2398/Del/2026 are only being narrated as under. The delay, if any stands condoned.

This appeal is directed against the impugned order dated 19.11.2025 passed in appeal No CIT(A), Delhi- 29/10806/2019-20by the ld. Commissioner of Income Tax(Appeals),Delhi (hereinafter referred to as the “CIT(A) u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2020-21, wherein ld CIT(A) has allowed assessee’s first appeal and deleted all three additions made by the assessing officer.

3.(i) The brief facts of the case are that the assessee e-filed its return of income for A.Y. 2020-21 on 07.11.2020, declaring total income at Rs. 1,08,24,040/-. A search action u/s 132 of the Act was conducted at Galaxy Group, Shri Deepak Agrawaland Shri Himanshu Verma (both entry providers). Theywere found involved in providing various types of accommodation entries to large number of beneficiaries through various paper companies managed and controlled by them in lieu of commission. The accommodation entries were being provided by them in the form of unsecured loans, share capital, share premium, purchase and sales etc. Documents seized during the search contained information that the assessee was one of the beneficiaries of obtaining accommodation entry of Rs. 30,00,000/- from the non-descript entity/ M/s Sirsa Deposits and Advances Ltd. controlled and managed by Shri Himanshu Verma.

(ii). After obtaining approval from the competent authority, notice u/s 148 of the Act was issued on 26.03.2024. The assessee filed its return in compliance thereof on 16.04.2024, declaring the same income of Rs. 1,08,24,040/-. Statutory notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee, seeking details of aforesaid transaction. Assessee submitted that he had taken unsecured loan of Rs. 30,00,000/- from Sirsa Deposits and Advances Ltd.

(iii). On the basis of the report of the investigation wing, assessing officer found that 158 non descript companies were managed and controlled by Shri Deepak Agarwal and 162 non descript companies (inclusive of above entity) were found to be controlled and managed by Shri Himanshu Verma and thus added Rs. 30,00,000/- as unexplained credit u/s 68 of the Act r.w.s 115BBE in the total income of the assessee. The amount of Rs. 90,000/- (3% of 30,00,000/-) was added as commission on the above said sum u/s 69C r.w.s 115BBE of the Act. Further, the interest expenses of Rs. 1,75,315/- was added on the above said sum by treating the same as bogus loan u/s 69C r.w.s 115BBE of the Act, vide assessment order dated 21.03.2025 passed u/s 147 of the Act.

Aggrieved, assessee preferred an appeal before ld CIT(A) against the additions made by the assessing officer. Ld CIT(A), after appreciating the entire documentary evidence on record, deleted all the three additions made by the assessing officer.

Aggrieved, revenue has preferred this second appeal on the following grounds:

Perused the records. Heard ld CIT (DR) for the appellant revenue and ld authorized representatives for the respondent assessee.

On the basis of the grounds raised hereinabove, the main point for determination under appeal is as to whether ld CIT(Appeals) has erred in deleting the amount of Rs. 30,00,000/- as unexplained loan added u./s 68 r.w.s. 115BBE of the Act, Rs. 90,000/- as 3% commission of Rs. 30,00,000/-, added u/s 69Cr.w.s. 115BBE of the Act and Rs. 1,75,315/- as interest expenses added u/s 69C r.w.s. 115BBE of the Act, determining the total income of the assessee at Rs. 1,40,89,350/-?

Ld CIT (DR) for the appellant revenue has submitted that Mr. Himanshu Verma is a habitual accommodation entry provider and heavily involved in the syndicate for organized accommodation entries through various entities including M/s Sirsa Deposits and Advances Ltd. since long from whom, the said bogus loan was transacted. The genuineness and credit worthiness of this entity was not established. Ld DR, thus, supports the assessment order, praying to set aside the impugned order and allow revenue’s appeal.

Ld representative for the respondent assessee has submitted that all the transactions in dispute were supported with the cogent documentary evidence. Ld assessing officer has based the entire findings merely on the observation of the investigation report that assessee’s lender entity was controlled by the said accommodation entry provider Mr. Himanshu Verma. The report of investigation wing could only be used to trigger the reassessment u/s 147 of the Act, however, ld assessing officer has made the entire additions merely on the basis of the investigation report, which was merely indicative, thus, ignored the entire evidence produced by the assessee, which proved the impugned transaction in dispute. Ld AR submits that ld CIT(A) has rightly appreciated the cogent evidence submitted on behalf of the assessee and prays to confirm the impugned order and dismiss revenue’s appeal.

After having gone through the entire record at our disposal, we find that the assessing officer has made three additions in the total income of the assessee on different counts. At first, we shall deal with the deletion of Rs. 30,00,000/- added by the assessing officer as unexplained loan u/s 68 r.w.s 115BBE of the Act. This sum was said to have been received from M/s Sirsa Deposits and Advances Ltd. It is pertinent to mention that assessee has filed paper book in two volumes containing entire documentary evidences, which were produced before the assessing officer and ld CIT(A) as well. Volume-1 of assessee’s paper book contains 186 pages and Volume-2 contains 317 pages, all in support of identity, genuineness and credit worthiness of entire transactions during the year under consideration.

It is true that according to the department’s investigation report, Shri Himanshu Verma and Shri Deepak Agarwal were found to be providing accommodation entries to various entities in lieu of commission. However, in the case in hand, the assessee submitted, loan agreement, loan sanction letter issued by lender, bank statements showing loan transaction and repayment of loans, the audited balance sheet of lending company, copy of ITRs, confirmation of accounts and copy of ledger accounts, registration of lender with MCA, promisory note executed by the appellant at the time of loan sanction, closure application submitted on full repayment of loan and NBFC certificate issued by RBI for lending company. The assessing officer does not seem to have taken any pain to discuss any of these documents on merit independently.

After appreciating the financials and final accounts of the lending company, ld CIT(A) has found that the lending company is active and was filing its statutory forms to MCA, which is regulator of all the companies.It was further found that the fund used for advancing loan to the appellant company by lender company was sourced from capital and reserve of lender company, which is in lending business. The lending company is NBFC regulated by RBI and has declared sufficient profit of Rs. 57.67 lakhs before taxing the relevant assessment year. The lending company is a regular tax payer. The lending company has also shown sufficient interest income in its profit and loss account. The impugned loan was interest bearing and was duly repaid subsequently through recognised banking channels. Ld CIT(A) has rightly observed that the assessee has satisfied the test of identity, credit worthiness and genuineness of the impugned loan of Rs. 30,00,000/- availed from the aforesaid entity/ M/s Sirsa Deposits and Advances Ltd. Ld CIT(A) has, thus, rightly deleted the aforesaid addition of Rs. 30,00,000/-.

The second addition of Rs. 90,000/- made on account of 3%commission on the said sum of Rs. 30,00,000/- and the third addition of interest of Rs. 1,75,315/- paid to the lender on account of aforesaid loan, was merely consequential to the addition of aforesaid sum. Ld CIT(A) has, thus, rightly deleted these consequential additions.

The aforesaid discussion goes to show that ld CIT(A) has left no stone unturned in arriving at its conclusion after evaluating the evidence on record independently without being affected by the investigation wing’s generalized report. The impugned order is further supported with the well established principles of law. The impugned order is thus sustained. The aforesaid point is accordingly determined in negative against the appellant revenue and in favour of the respondent assessee. The appeal is liable to be dismissed.

The cross objections relate to aforesaid ITA No. 2398/Del/2026 pertaining to A.Y. 2020-21. The respondent assessee has raised as many as 23 various grounds, mainly with respect to the jurisdictional/ legal defects vitiating the impugned assessment order. As we have upheld the impugned order passed by ld CIT(A), deleting all the additions made by the assessing officer, the jurisdictional/ legal grounds raised by the assessee remain academic in nature, thus, not being adjudicated and are left open. The assessee’s cross objections are, thus, liable to be dismissed as infructuous.

In the result, the revenue’s appeal ITA No. 2398/Del/2026 is dismissed. Assessee’s cross objections CO No. 219/Del/2026 are also dismissed as infructuous.