Assistant Commissioner Of Income Tax, Central Circle-25, Delhi vs Anuj Packaging LLP

The appeal in ITA No.7583/Del/2026 for AY 2020-21, arises out of the order of the Id. Commissioner of Income Tax (Appeals)-29, New Delhi [hereinafter referred to as 'Id. CIT(A)', in short] dated 19.03.2026 against the order of assessment passed u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 22.03.2025 by the Assessing Officer, ACIT, Central Circle-25, New Delhi (hereinafter referred to as 'Id. AO').

The only effective issue to be decided in this appeal is as to whether the Id CIT(A) was justified in deleting the addition made u/s 69A of the Act on account of repayment of loan to an entity which is alleged to be a paper entity managed and controlled by Shri Himanshu Verma in the facts and circumstances of the instant case. The interconnected issue involved therein is as to whether the ld CIT(A) was justified in correspondingly deleting the alleged accommodation commission expenditure of Rs. 60,000/- by not treating it as accommodation entry.

I have heard the rival submissions and perused the material available on record. The return of income for AY 2020-21 was furnished by the assessee on 21-10-2020 declaring total income of Rs. 2,820. A search action u/s 132 of the Act was conducted on Galaxy Group, Shri Deepak Agarwal (entry provider), Shri Himanshu Verma (entry provider) on 17-11-2021. During the search, it was gathered that Shri Deepak Agarwal and Shri Himanshu Verma were involved in providing various types of accommodation entries to large number of beneficiaries through various companies, which were alleged to be paper companies, managed and controlled by them, in lieu of commission. The assessee herein was in receipt of unsecured loan of Rs. 20 lakhs from M/s. High Rise Securities and Trading Private Limited during the earlier year which was stated to be a paper company managed and controlled by Sri Himanshu Verma. During the year under consideration, the assessee repaid such unsecured loan to M/s High Rise Securities and Trading Private Limited. Since, the said entity was alleged to be paper entity, managed and controlled by Shri Himanshu Verma, the repayment of unsecured loan was added as unexplained money u/s 69A of the Act by the ld AO in the assessment. The ld CIT(A) noted that the said entity i.e. M/s High Rise Securities and Trading Private Limited is an active Non-Banking Finance Company (NBFC) having sufficient share capital and reserves and surplus. The ld CIT(A) noted that the ld AO had failed to bring anything in the assessment order about cheque for cash transaction in respect of this impugned transaction of repayment of loan. The ld CIT(A) had also noted that the ld AO had failed to bring on record any evidence to show that unexplained cash accrued to the assessee as a result of repayment of loan to the aforesaid NBFC. Hence, the ownership of alleged cash or any money in the possession of the assessee was not even proved by the ld AO by concrete evidence. Hence, the provisions of Section 69A of the Act per se cannot be made applicable. Further, it was submitted by the ld AR that in the year of receipt of loan from the aforesaid NBFC, no addition has been made by the revenue and the receipt of loan was accepted as genuine. When such loan has been repaid by the assessee, there cannot be any addition on account of unexplained money. I find considerable force in the said argument of the ld AR, which could not be rebutted by the revenue before me. In any event, as rightly noted by the ld CIT(A), there was absolutely no evidence brought on record with concrete material by the ld AO to show that assessee was in receipt of cash from the said NBFC after the repayment of loan. Further, it is not the case of the ld AO that the repayment of loan has been made out of undisclosed sources by the assessee. Hence, no part of such transaction could be treated as unexplained within the meaning of Section 69A of the Act. Hence, the provisions of Section 69A of the Act per se could not be made applicable. The ld DR before us placed reliance on the decision of Delhi Tribunal in the case of Bhavani Finvest Private Limited in ITA No. 6303/Del/2025 dated 25-3-2026, in support of the contentions of the revenue. I have gone through the said decision and I find that the same is factually distinguishable with that of the assessee’s case before me. In that case, the addition was made in the year of receipt of loan u/s 68 of the Act and a proposition was laid out that merely because such loan was repaid with interest in subsequent years, the same would not make the receipt of loan genuine. I have absolutely no quarrel with this proposition. But in the instant case, the revenue in the year of receipt of loan had not made any addition u/s 68 of the Act as noted supra. This goes to prove that in the year of receipt of loan, the same has been accepted as genuine. Hence, in the year of repayment, the revenue cannot take a divergent stand doubting the genuineness of the transaction.

In view of the aforesaid observations, I hold that this is not a fit case to interfere with the order of the ld CIT(A). Accordingly, the grounds raised by the revenue are dismissed.

In the result, the appeal of the revenue is dismissed.