DCIT Central Circle 32 vs Segmental Consulting & Infrastructure Advisory Pvt. Ltd.

“8.

Ground nos.13 to 15 (addition u/s 69A/69C: The AO's approach is premised on a hypothesis that the loans / credits were accommodation or bogus entries and therefore should be treated as income in the hands of the assessee. Where, the assessee shows on record that the loans were repaid before the date of the section 148 notice.

8.1

In this case, the loan of Rs.37,18,663/- was originally taken through banking channels from M/s. Arti Securities and Services Limited and M/s Mysore Finlease Pvt. Ltd., and the entire repayment was also effected through proper banking channels. The ledger account, as reproduced in the assessment order, clearly shows an opening balance, reflecting the continuity of the transaction from prior years. Appellant strongly argued that it repaid the loan before the reassessment notice dated 31.03.2023 whereas AO has held that though appellant has repaid the loan along with interest but it was repaid to non-descript company. The relevant part of the assessment order is scanned here for the sake of completeness as under:

“13.1

From above discussion, it is found that the assessee has repaid unsecured loan of Rs 37.18.663 (i.e. Rs 10.61.546 + Rs 26.57,117) to a non-descript companies which has no genuine business and has no creditworthiness. Reply of the assessee was considered and was not found acceptable as mere repayment would not make an otherwise not genuine transaction as genuine.

8.2

The recent judgment of the jurisdictional ITAT in Real Innerspring Technologies Pvt. Ltd. vs. ACIT (dated 27.03.2025). Hon'ble ITAT considered the same question on substantially similar facts (HimanshuVerma / Deepak Agarwal group) and held in favour of the assessee: because the loans had been repaid before the date of issue of notice under section 148. The ratio of same case is directly relevant and binding in the present appeal. A copy of the ITAT order is on file and has been examined. For sake of completeness, operating part of the said order is reproduced here as under:

"11.

In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee's own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid thru the banking channel as under:-

12.

From the above, it is clear that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all thetransactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Therefore, we are inclined to allow the grounds raised by the assessee.

13.

In the result, appeal filed by the assessee is allowed."

8.3

Applying the above principle to the facts before me and on a careful scrutiny of the ledger entries, confirmations and the bank transaction evidence placed on record by the appellant which show repayment along with interest by April, 2018 through banking channels prior to the issuance of notice u/s 148 on 31.03.2023, I find that the addition cannot survive and is hereby deleted. Consequent to deletion of addition under section 69A the consequential addition made under section 69C must also be deleted.”