Dy. Commissioner Of Income Tax vs M/s. Globe Broadcasting Pvt. Ltd.

“6.02 Ground No. 4

The Assessing Officer has made an addition of Rs.5,62,37,599/- under section 68 of the Act on account of unsecured loans received by the appellant from ten parties during the relevant previous year. The basis of the addition, as evident from the assessment order, is that notices issued under section 133(6) to the lenders were not responded to and that, according to the Assessing Officer, the appellant failed to establish the identity, genuineness and creditworthiness of the lenders. The Assessing Officer further observed that in respect of certain parties, bank extract details were not available and therefore concluded that the appellant had not discharged the onus cast upon it under section 68 of the Act.

During appellate proceedings, notices under section 250 were issued and theappellant once again filed detailed ground-wise submissions. Specific queries were raised by the undersigned appellate authority seeking clarification on the purpose and business expediency of unsecured loans, which query was communicated vide notice dated 18-11-2025. In response, the appellant filed a point-wise clarification dated 16-12-2025, supported by documentary evidence, explaining the utilisation, repayment and necessity of unsecured loans. Further, on the request of the appellant, an opportunity of personal hearing through video conferencing was granted by the appellate authority, during which the authorised representative appeared and elaborately explained the flow of funds, utilisation and commercial rationale. The clarifications so furnished were found to be coherent, consistent and supported by records.

The appellant explained that during the year under consideration it had taken unsecured loans aggregating to Rs.5,62,37,599/- from ten identifiable parties. It was clarified that out of these loans, a substantial portion amounting to Rs.2,97,09,141/-was utilised for repayment of existing unsecured loans and earlier borrowings, while the balance funds were deployed in the normal course of business. The appellant demonstrated, with reference to bank statements and ledger accounts, that certain loans were short-term in nature and were repaid within the same financial year through banking channels. This factual position is evident from the tabulated statement furnished in the clarification reply dated 16-12-2025, wherein opening balances, fresh loans, repayments and closing balances were clearly reconciled lender-wise.

The appellant further explained that the net utilisation of funds during the year was approximately 2.65 crore and that such funds were required owing to a significant expansion in business operations. The audited financial statements and tax audit report placed on record reveal that the appellant’s scale of operations had increased substantially compared to the preceding year. The appellant also demonstrated that part of the borrowed funds was utilised towards acquisition of capital assets amounting to Rs.86,67,805/- and for meeting working capital requirements, including content production, broadcasting expenses, employee costs and operational overheads. These explanations were substantiated by audited balance sheet schedules and extracts of the tax audit report, which were part of the assessment as well as appellate records.

On examination of the assessment order, it is observed that the Assessing Officer has not disputed the receipt of funds through banking channels, nor has he brought on record any evidence to suggest that the money originated from the appellant itself. The identities of the lenders are not in doubt, as confirmations, PAN details and bank statements were furnished. Even the bank account statement showing thetransactions of loan was produced during the assessment proceedings, which fact is evident from the record. However, the Assessing Officer has failed to appreciate these evidences and has proceeded to make the addition primarily on the basis of non-response to notices under section 133(6).

It is a settled legal position that once an assessee furnishes primary evidences establishing the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor, the onus under section 68 stands discharged. The assessee is not required to ensure compliance of third parties to notices issued by the Department. In the present case, the appellant has not only furnished confirmations and bank statements but has also demonstrated repayment of loans, which significantly strengthens the genuineness of the transactions.

The addition has been made in a mechanical manner without addressing the substance of the appellant’s explanations. The detailed clarification furnished before the appellate authority, including the utilisation of funds and business expediency, and reconciliation with the bank statement, further reinforces the bona fide nature of the transactions.

In view of the above discussion, and considering the fact that the appellant has satisfactorily explained the nature and source of unsecured loans with documentary evidence which was filed during assessment proceedings and reiterated during appellate proceedings, I am of the considered view that the addition of Rs.5,62,37,599/- made under section 68 is unsustainable in law. Accordingly, the said addition is deleted. The ground No. 4 is allowed.

6.03 Ground No. 5

The Assessing Officer has made an addition of Rs.1,23,40,000/- under section 68 of the Income-tax Act, 1961 by treating the amount received by the appellant from M/s Garvit Innovative Promoters Limited as unexplained cash credit. It was observed by the Assessing Officer that credit entries aggregating to Rs.1,23,40,000/- were found in the bank account of the appellant during the relevant previous year and that notices issued under section 133(6) to the said party remained unanswered. On this basis, the Assessing Officer concluded that the appellant had failed to establish the genuineness of the transaction and the nature and source of the credit. Consequently, the entire amount was added as unexplained cash credit under section 68.

During the course of assessment proceedings, the appellant, in response to the notices issued, filed detailed replies supported by documentary evidence. Theappellant furnished ledger accounts, bank statements, copies of tax invoices, telecast certificates, GST returns and audited financial statements.

In appellate proceedings, the appellant reiterated its submissions and filed elaborate written submissions. The appellate authority, upon perusal of the record, raised specific queries seeking clarification on the timing of invoicing vis-à-vis receipt of advances, particularly as to why tax invoices were raised in February and March 2019 when advances had been received between April 2018 and December 2018. This query was communicated vide notice under section 250. The appellant filed a detailed point-wise clarification dated 16-12-2025, supported by annexures, explaining its revenue model, industry practice and accounting methodology. Further, on the request of the appellant, an opportunity of personal hearing through video conferencing was granted by the appellate authority, during which the authorised representative appeared and explained the factual and accounting aspects in detail.

The appellant explained that it is a news broadcasting company running a 24×7 Hindi news channel and that sale or booking of advertisement time slots constitutes its primary source of revenue. The revenue model, as explained and substantiated by records, is based on charging advertisers on a per-second basis for actual telecast of advertisements. It was clarified that, as per established industry practice, advances are received at the time of booking of advertisement slots, while tax invoices are raised only upon actual broadcasting of advertisements, accompanied by telecast certificates specifying the duration and time slots utilised. The appellant follows the mercantile system of accounting and recognizes revenue only when services are rendered, i.e., when advertisements are actually telecast. The clarifications furnished were found to be comprehensive, consistent with the records and satisfactorily addressed the issues raised.

In the present case, the appellant received advances from M/s Garvit Innovative Promoters Limited through banking channels during April 2018 and between September 2018 and December 2018, aggregating to Rs.1,23,40,000/-. These advances were duly recorded in the books of account as “advances against sale of advertisement services”. The appellant demonstrated, with reference to ledger accounts and bank statements, that no part of these receipts was treated as income at the time of receipt. Subsequently, upon actual broadcasting of advertisements during January to March 2019 and April to May 2019, tax invoices were raised on 28- 02-2019, 31-03-2019 and 31-05-2019 for the exact amounts aggregating toRs. 1,23,40,000/-. The appellant furnished telecast certificates evidencing the actual broadcasting of advertisements during the relevant periods, which clearly correlated with the invoices raised. These invoices were duly reflected in GST returns (GSTR-1 and GSTR-3B) and the corresponding GST was paid to the Government. Copies ofGST returns and invoice-wise details were produced during assessment as well as appellate proceedings.

The appellant further demonstrated that revenue of Rs.1,05,06,885/- pertaining to invoices raised up to March 2019 was recognized and offered to tax in Assessment Year 2019-20, while the balance revenue of Rs.18,33,115/- pertaining to invoice dated 31-05-2019 was recognized and offered to tax in Assessment Year 2020-21. Extracts of income-tax returns and audited financial statements for both years were placed on record. Thus, the entire amount of 1,23,40,000/- has already been subjected to tax as business income in the appropriate assessment years.

On a careful consideration of the above facts, it is evident that the Assessing Officer has erred in treating the business advances as unexplained cash credit. Section 68 can be invoked only where the assessee fails to explain the nature and source of the credit or where the explanation offered is not satisfactory. In the present case, the explanation offered by the appellant is supported by contemporaneous documentary evidence and has been consistently maintained during assessment and appellate proceedings.

Further, once it is accepted that the receipt has been recognized as revenue and taxed as business income, the same amount cannot again be brought to tax as unexplained cash credit. Such double taxation is impermissible under the scheme of the Act. The Assessing Officer has also ignored the well-established principle that advances received in the course of business, which are later adjusted against sales and offered to tax as revenue, do not fall within the ambit of section 68. The provision is intended to bring to tax unexplained credits of unknown nature and source, and not to recharacterize disclosed business receipts merely on suspicion.

The detailed clarification furnished by the appellant in response to the appellate authority’s query dated 16-12-2025, explaining the timing of invoicing vis-à-vis receipt of advances, along with supporting annexures such as ledger accounts, bank statements, telecast certificates, GST invoices and returns, satisfactorily explains the entire transaction. The explanations are found to be consistent with the accounting method disclosed in the tax audit report and the audited financial statements.

In view of the foregoing discussion, it is clear that the Assessing Officer has not properly appreciated the evidence placed on record during assessment proceedings.

The appellant has successfully discharged the onus cast upon it under section 68 by explaining the nature and source of the receipt with documentary evidence. Accordingly, the addition of 1,23,40,000/- made under section 68 is unsustainable in law and is deleted. The ground No. 5 is allowed.”

“1.

That the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs. 6,85,77,599/- as unexplained credit u/s 68 of the Act without verification on his own or even without remanding the issues to AO for verification even thoughCIT(A) has powers under section 250(4) of the Income Tax Act, 1961 to do so.

2.

That the Ld. CIT(A) has erred in law and on facts in deleting the addition of RS. 6,85,77,599/- without appreciating the fact that the assessee has not discharged its onus of establishing the creditworthiness and genuineness of the transaction either before the Assessing Officer or before the CIT(A) itself.

3.

That the order of ld. CIT(A) being erroneous in alw and on facts deserves either to be set aside/cancelled, or to be remanded back to the file of CIT(A) or to the assessing Officer for fresh adjudication as the creditworthiness of transaction of Rs.6,85,77,599/- established.

Ground No.1

On the facts and circumstances of the case, the reassessment proceedings and consequent reassessment order both are bad in law as an assumption of power u/s 147/148/148A has been made by a non-jurisdictional authority in defiance of applicable CBDT instruction."

Ground No.2

Without prejudice to the objection in Ground No.1 of the present application, the validity of the underlying assessment order is not sustainable in law as the same is premised on the reassessment proceedings initiated based on incorrect facts, clearly showing non-application of mind and also without providing material, resulting in violation of mandatory provisions of sec 148A/148/151 of IT Act.

Ground No.3

The Ld AO and Ld CIT(A) both are not justified in persisting with the addition of Rs.1,23,40,000/- which is part of total addition of Rs.6,85,77,599/- because respondent assessee proved with help of evidences produced during respective proceedings before above authorities that the above income of Rs. 1,23,40,000/- has been already offered as income as per P&L account and if that be the case, there remains no reason to pursue other additions when the addition of Rs. 1,23,40,000/-which is the foundational reason for reopening is not justified for invocation of sec 68 of IT Act”