Deputy Commissioner of Income Tax vs Kanoi Metrec LLP

PER SATBEER SINGH GODARA, JM

This Revenue’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1081773535(1), dated 15.10.2025 involving proceedings under section 143(2) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Heard both the parties. Case file perused.

It emerges during the course of hearing at the outset that the Revenue’s sole endeavor herein is to revive the Assessing Officer’s action making section 68 addition of unexplained cash credits amounting to Rs. 5,46,59,000/- in the assessee’s hands which stands deleted in the CIT(A) lower appellate discussion.

That being the case, a perusal of the records indicates that the impugned sum amounting to Rs. 5,46,59,000/- represents the assessee’s unsecured loans received from its partners Mr. Saket Kanoi and Mrs. Mandira Kanoi amounting to Rs. 3,46,59,000/-and Rs. 2,00,00,000/-; respectively. We are of the considered view in this factual backdrops in light of CIT vs Metal & Metals of India (2007) 208 CTR (P&H) and CIT vs CIT vs. Metachem Industries [2000] 245 ITR 160 (MP) that such amounts received by a firm from its partners does not attract section 68 addition as the same ought to be taxed in the concerned partners’ hands only. This is further coupled with the fact that the assessee has all along filed its detailed paperbook running into 83 pages having compiled the said twin partners income tax returns computation, balance sheets, bank statements as well as ledgers explaining identity, genuineness and creditworthiness of the unsecured loans herein. We thus find no reason in the Revenue’s solitary ground seeking to revive the section 68 unexplained cash credits addition which fails in very terms.

This Revenue’s appeal is dismissed.