DCIT vs GPA Foods Private Limited

“Ground No.1

“6.3

I have perused the assessment order and submission of appellant. It is noted that appellant filed documents in order to prove genuineness of purchases including copy of ledger, copy of bill of supply, etc. The date of transaction, amount, name of buyer and sellers, their addresses and contact details, PAN, Bank details, vehicle details, etc. is clearly mentioned on the documents. All the payments are made through banking channels and transaction have been recorded into books. This means that appellant duly discharged its onus to prove genuineness of purchases made with M/s Mahavir Prasad Suresh Kumar (Naya Bazar).”

“Ground No.2

7.3

I have perused the assessment order and submission of appellant. It is noted that appellant filed documents in order to prove genuineness of sales including copy of ledger, copy of bill of supply, etc. The date of transaction, amount, name of buyer and sellers, their addresses and contact details, PAN, Bank details, vehicle details, etc. is clearly mentioned on the documents. All the payments are received through banking channels and transaction have been recorded into books. This means that appellant duly discharged its onus to prove genuineness of sales undertaken with M/s Madhan Lal Madho Prasad (Delhi).

7.4

On the other hand, the AO neither objected to these documents nor discussed these evidences in the assessment order. Further, no independent enquiries have seen to be done by AO in the assessment, which means that AO has completed the assessment solely relying the information received and without verifying the facts or incorporating his individual findings in the order to substantiate his conclusion of treating these sales as accommodation entry. Under these circumstances, I find that addition of Rs. 2,25,600/- made by AO on this issue is not sustainable on merits in this case and is hereby deleted.”

“Ground No.3

8.2

I have carefully considered assessment order and relevant submissions filed by appellant along with paper book. The repayment of loan of Rs.84,58,000/- to M/s Lenient Consultants Pvt. Ltd. by appellant, was treated as unexplained money U/S/WTJKW Act. The findings made by AO, submissions made by appellant, counter argument of appellant on evidences relied upon by AO while making addition, other relevant facts and relevant decisions are discussed herein above while adjudicating above addition made in case of appellant.

8.3

The AO has held that during the year appellant has repaid loan to shell company i.e. M/s Lenient Consultants Pvt. Ltd., as per the details available with department.

8.4

The appellant submitted detailed submission. Summary of written submissions filed by the appellant and the documents placed on record is as under: -¬

i.

The amount of Rs. 84,58,000/- paid to above mentioned entity was on account of repayment of loan of Rs. 80,00,000/- and interest of Rs. 4,58,000/- after deduction of TDS, through account payee cheque/NEFT/RTGS.

ii.

Confirmations, PAN, ITRs, bank statements highlighting the transaction of repayment as well as receipt of loan and copy of audited financials.

iii.

Copy of relevant loan agreement, bank statement, when the loan was originally taken on 05.08.2017 by RTGS.

iv.

The AO has not demonstrated any specific cash deposit linked to the appellant or lenders to support the allegation of accommodation entry.

v.

Reliance was placed by AO on information gathered on the basis of statements of third parties which were either vague, obtained under duress, or unrelated to the appellant. No opportunity for cross-examination was afforded, violating principles of natural justice.

8.5

I have carefully considered the facts of the case, the contentions of the appellant, the findings recorded by the AO, and the judicial precedents relied upon. The central issue is whether the loan repayment and interest in total at Rs. 84,58,000/- repaid during the year by the appellant can be treated as unexplained money u/s 69 A of the Act, despite the fact that the repayment was done through banking channels and was supported by confirmations, ITRs, financials, bank statements and. other documentary evidences.

8.6

Reliance is placed on the judgment of Hon’ble ITAT Ahmedabad in ACIT v. Bhavya Construction [2012] 139 ITD 90 (Ahd), where it was held that once the loan is repaid and all necessary documents are filed, the transaction is deemed genuine and cannot be rejected based on mere suspicion or absence of fixed repayment terms.

8.7

In the case of DCIT Circle-32(2), Mumbai Vs. Karthik Construction Co., it was held by Hon’ble ITAT, “F” Bench, Mumbai that the only thing which requires to be examined in the present appeal is whether the addition made under section 69A of the Act can be sustained. A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money, bullion, jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilized in repaying the loan is doubtful. That being the case, the addition under section 69A of the Act cannot be made.

8.8

The Hon’ble Delhi ITAT in its recent pronouncement dated 26.03.2025 in the case of Dazzling Construction Pvt. Ltd. Vs ITO Ward-7(2), New Delhi bearing ITA No. 3771 /Del/2023 and it is held that the factum of repayment quells the apprehension entertained by the Revenue. The over-riding factum of repayment of loan itself repels any form of disguise on the part of the assessee and dispels the perception of any sordid or extraneous affairs. The clinching evidences towards loan procurement discharge the primary onus which lay upon the assessee under s. 68 of the Act. Besides, the loan itself having been repaid, the assessee does not ultimately stand to gain any spurious benefit from such alleged unexplained cash credit. Such fact justifies the plea of the assessee towards existence of bonafides in the transactions. In the totality of facts, where the trail for obtaining of loan and repayment thereof is proved and the lender has duly filed its return of income encompassing the transaction carried with the assessee, the action of the Revenue cannot be countenanced in law•

8.9

Further the Honhle Delhi ITAT in case of Real Innerspring Technologies (P.) Ltd. v. ACIT (ITAT Delhi) vide its order dated 27-03-2025 held that 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 utilized the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs, all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. In the instant case, the assessee has submitted all the documents in support of the transaction before the Assessing Officer and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion.

8.10

In the present case, the appellant has gone beyond the ordinary threshold. Not only has the identity and creditworthiness of the lenders been substantiated through financials, tax returns and confirmations, but also the transactions have been conclusively proved by way of repayment of loans with interest through banking channels. This fact has not been denied or disputed by the AO in the assessment order.

8.11

To conclude, I find that the loan repayment with interest, treated as an unexplained income by AO, is recorded by the appellant in to its books of accounts and appellant has also provided ample documentary evidences explaining the repayments and source of funds used for repayment is also justified. The AO is not correct in treating the loan repayment amount as an income of appellant u/s 69 A of the Act. The appellant has conclusively proved all ingredients required u/s 69A. The appellant had originally taken Rs. 80 Lacs loan on 05.08.2017 from the said entity through RTGS. The identity and tax status of the lender are not in doubt. The loan along with interest was repaid through proper banking channels during the year. The AO has not brought any credible evidence to establish that the said loan was accommodation entry. The addition is based on general observations without any direct linkage to the appellant’s transaction. In view of these facts, evidences on record, and judicial precedent cited, I am of the considered.”

“1.

That the Ld. CIT(A) erred in deleting the addition of Rs.7,78,042/-u/s 69C towards bogus purchases from M/s Mahavir Prasad Suresh Kumar, ignoring Investigation Wing findings and statements of operators confirming that the concern was only an accommodation entry provider.

2.

That the Ld. CIT(A) erred in deleting the addition of Rs. 2,25,600/-u/s 69A on account of bogus sales to M/s Madhan Lal Madho Prasad, without appreciating that no corroborative evidence of actual movement of goods was furnished and mere book entries and bank receipts cannot establish genuineness.

3.

That the Ld. CIT(A) erred in deleting the addition of Rs. 84,58,000/-u/s 69A relating to repayment of loan to MIs Lenient Consultants P'v1. Ltd., a known shell entity, ignoring that banking channel repayments do not validate sham transactions or circular fund movements.

4.

That the order of the CIT (A) is erroneous and is not tenable on facts and in law.”