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Judgment
PER MANISH AGARWAL, A.M.:
The captioned appeal is filed by the Revenue against the order dated 25.11.2025 passed by Ld. Commissioner of Income Tax (A)-3, Noida [“Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 28.03.2024 passed u/s 147 r.w.s. 143(3) of the Act pertaining to Assessment Year 2020-21.
Brief facts of the case are that the assessee company has filed its return of income on 12.02.2021, declaring total income of INR 7,04,90,290/-. A search and seizure action u/s 132 of the Act was carried out at the premises of Ace & Kurle Group on 28.07.2021. Based on the information and material gathered during the course of search, case of the assessee was centralized to DCIT, Central Circle-1, Noida and notice u/s 148 of the Act was issued on 20.03.2023 for the year under appeal. In response assessee filed its return of income on 11.04.2023, declaring same income as was declared u/s 139(5) of the Act. Thereafter notice u/s 143(2) followed by notices u/s 142(1) alongwith questioners were issued from time to time which were duly replied by the assessee. The assessment was completed at an income of INR 4,64,22,857/- by making various additions / disallowances which are as under:-
Disallowance u/s 69C r.w.s. 115BBE of the Act of INR 58,265/- out of interest paid to M/s. Hallow Securities Pvt. Ltd. alleged as unexplained;
Disallowance u/s 69C of INR 1,16,462/- of interest paid on loan to M/s. Jorehaut India Ltd.;
Disallowance of INR 3,54,320/- u/s 69C of the Act on the interest paid to M/s. Sesun Marketing P. Ltd.;
Disallowance u/s 69C on account of interest paid to Sundaram Consultants Pvt. Ltd. of INR 4,10,753/-;
Addition u/s 68 of the Act of INR 1,50,00,000/- u/s 68 towards loan taken from M/s. Dolf Leasing Ltd. as unexplained credit;
Disallowance of INR 1,36,475/- u/s 69C towards interest paid to M/s. Dolf Leasing Ltd.;
Disallowance of INR 16,74,453/- of interest paid to M/s. Manikaran Mercantile Pvt. Ltd. u/s 68 of the Act;
Disallowance of INR 93,99,916/- u/s 69C on account of interest paid to M/s. Skybox Industries Ltd.
Addition u/s 68 of the Act of INR 2,25,00,000/- taken from M/s. Qausar India Ltd. as unexplained credit and
Disallowance u/s 69C of the interest of 2,72,213/- paid to M/s. Qausar India Ltd.
Against the said order, the assessee filed in appeal before Ld. CIT(A) who vide impugned order dated 25.11.2025 has partly allowed the appeal of the assessee wherein Ld. CIT(A) has deleted the addition made u/s 68 towards the loan taken of INR 1.15 crores from M/s. Dolf Leasing Ltd. and INR 2.25 crores from M/s. Qausar India Ltd. and interest paid to them of INR 1,36,475/- & 2,72,213/- respectively and confirmed the balance disallowance made out of the interest paid to various companies u/s 69C of the Act.
Aggrieved by the order of Ld. CIT(A), both the Assessee and Revenue preferred appeal before the Tribunal. The appeal of the assessee has already been decided in terms of the order passed by the coordinate bench in ITA No. 8438/Del/2025 vide order dt. 17.04.2026. The present appeal is fled by the revenue by taking following Grounds of appeal:-
1)“Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 3,40,00,000 made under section 68 of the Act on account of bogus unsecured loans taken from shell companies namely M s Quasar India Limited and M s Dolf Leasing Ltd. ignoring the fact that the assessee failed to establish the identity creditworthiness and genuineness of the creditors during the course of assessment proceedings.
2)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 98,66,869 on account of interest paid to shell companies namely M s Quasar India Limited M s Dolf Leasing Ltd. M s Hallow Securities Pvt. Ltd. and M s Skybox Industries Ltd. ignoring the fact that the assessee failed to establish the identity creditworthiness and genuineness of the creditors during the course of assessment proceedings.
3)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in ignoring the findings recorded in the assessment order based on statements recorded during search and seizure operations which revealed that the assessee received accommodation entries through the aforesaid shell companies in the garb of unsecured loans.
4)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in not considering the incriminating material seized during search operations on the ACE & Kurele Group and the Rudra Group which evidenced receipt of cash and routing of unaccounted income through the above mentioned shell entities.
5)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has failed to appreciate that contradictory statements of directors and key persons connected with the above mentioned shell entities cast serious doubt on the genuineness of the loan transactions and warrant addition under section 68 of the Income Tax Act.
6)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in holding that repayment of funds in subsequent years establishes the genuineness of the original receipt without examining the mode timing and bank trail of such repayments.
7)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in granting relief without properly appreciating the findings of the AO and the cumulative evidence gathered during the course of search and assessment thereby leading to a perverse and unsustainable conclusion.
8)Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has failed to appreciate that mere filing of confirmations and self serving documents does not discharge the statutory onus cast upon the assessee under section 68 of the Income Tax Act.
9)That the order passed by the Ld. CIT(A) 3 Noida being erroneous in law and on facts be set aside and the order of the AO be restored.
10)That the above grounds of appeal are without prejudice to each other and the appellant craves leave to add alter amend OR withdraw any ground of appeal.”
Ground of appeal No. 1 raised by the Revenue is general in nature, hence not adjudicated.
Ground of appeal No. 2 raised by the Revenue is with respect to the deletion of addition of INR 340.00 crores made u/s 68 of the Act towards the loans taken from M/s. Quasar India Ltd. and M/s. Dolf Leasing Ltd.
Ground of appeal No. 3 raised by the Revenue is with respect to the deletion of interest paid of INR 98,66,869/- from M/s. Quasar India Ltd.; M/s. Dolf Leasing Ltd.; M/s. Hallow Securities Pvt. Ltd. and M/s. Skybox Industries Ltd.
The remaining Grounds of appeal Nos. 4 to 9 are in support of the above two basic Grounds of appeal taken against the deletion of the additions made therefore, all the Grounds of appeal are taken together for consideration.
Before us, Ld. CIT DR for the Revenue vehemently supported the orders of the AO and submits that the assessee has failed to prove the genuineness of the loan transactions and creditworthiness of the respective lenders and therefore, the AO has rightly made the addition u/s 68 of the Act towards the loans taken from the two lenders. He further submits that Ld. CIT(A) has deleted the additions on the basis of the material supplied by the assessee and ignored the Remand Report submitted in this regard. Ld. CIT DR thus, submits that addition be sustained. Regarding the disallowance of interest u/s 69C of the Act, ld. CIT DR submits that the loans taken from these parties were held as unexplained in preceding assessment years and therefore, the AO has rightly disallowed the interest paid on such loan during the year. He requested that the order of the AO be restored.
On the other hand, Ld. AR for the assessee vehemently supported the order of Ld. CIT(A) and submits that the additions/disallowances of similar nature were made in preceding and subsequent Assessment Years in the case of assessee itself wherein the Co-ordinate Bench of Tribunal in terms of its order dated 17.04.2026, has dismissed the appeals of the Revenue in ITA Nos.8184 & 8438/Del/2025 for Assessment Years 2019-20 & 2020-21 respectively and allowed the appeals of the assessee in ITA Nos.6894, 8473 & 6967/Del/2025 for Assessment Years 2019-20 to 2021-22. Ld.AR submits that loans taken during the year under appeal from M/s. Quasar India Ltd. and M/s. Dolf Leasing Ltd. has already been held as genuine by the Co-ordinate Bench, therefore, requested that Ld. CIT(A) has rightly deleted the addition and said order deserves to be uphold.
Heard the contentions of both the parties at length and perused the material available on record. It is observed that the issues raised by the Revenue with respect to the deletion made by Ld. CIT(A) on account of loans taken from M/s. Dolf Leasing Ltd. of INR 1,15,00,000/- and M/s. Quasar India Ltd. of INR 2,25,00,000/- made u/s 68 of the Act and further deletion of disallowance of interest totaling to INR 98,66,869/- made u/s 69C of the Act, have already been considered and decided in favour of the assessee by the Co-ordinate Bench in its own case vide order dated 17.04.2026 in aforesaid appeals. The relevant observations as contained in para 9.1 to 11.4 of the order are reproduced as under:-
9.1.“The assessee had received a loan of Rs.3 crores from Dolf Leasing Ltd. for which interest of Rs.9,35,250/- was paid in AY 2019-20 and a loan of Rs.25 lakhs was received in AY 2021-22. In regard to this entity, admittedly, it is an NBFC assessed to tax and its functionality has not been suspected or doubted by any of the regulators.
9.2The relevant documents like PAN, ITR, audited financial statements, confirmations and bank statements were furnished to the AO. Nothing has been found from the same to doubt the transaction.
9.3Then, we find that ld. CIT(A) has heavily relied and an inquiry which was got conducted through investigation wing by invoking powers u/s 250(4) and based upon the evidence collected, identity of the lender was duly found established. The entire loan along with interest was repaid on 25.08.2020 before search. The NBFC is shown to have share capital and ITAs No.8184, 8438, 6894, 8437 & 6967/Del/2025 reserves of over 69 crores with investment in mutual fund of around 49.25 crores in AY: 2019-20. Thus, the findings of ld. CIT(A) to conclude that the transaction of loan in payment of interest cannot be doubted of making addition u/s 68 and 69C of the Act require no interference.
10.The assessee received Rs.17 crores in AY: 2019-20 from Sky Box Investment Ltd. with erstwhile name of Smart Capital Service Ltd. Interest of Rs.95,21,358/- was paid in AY: 2019-20. The assessing officer and the case of department is that mere filing of confirmation and self serving papers do not discharge the onus u/s 68 of the Act.
10.1Now, with regard to this transaction ld. CIT(A) has appreciated that advances were made by multiple transactions through over draft account of the lender and proceeds of mutual funds.
10.2Ld. CIT(A) has got examined the existence of the company through summons to investigation wing and relied its report.
10.3Ld. AR has established that audited financial reflect substantial business turnover of Rs.76.53 crores during AY: 2019-20. Thus, to doubt the transaction was not justified and ld. CIT(A) has rightly interfered to delete the additions.
11.Assessee had received unsecured loan of Rs.1,20,00,000/- in AY: 2021-22 and paid interest Rs.16,85,353/- to Quasar India Ltd. Ld. CIT(A) ITAs No.8184, 8438, 6894, 8437 & 6967/Del/2025 has found the transaction to be genuine and we find that the lender is listed entity in BSE and the relevant documents to establish identity and creditworthiness in the form of income tax returns, confirmation and bank account were furnished to ld. tax authorities.
11.1Ld. CIT(A) again has got the identity of this lender examined by issuance of summons and getting independent inquiry conducted u/s 250(4) of the Act.
11.2Ld. AR has pointed out that the entire loan was repaid in subsequent financial years.
11.3The company has share capital reserve of Rs.5.5 crores and during the year had total revenue of 6.5 crores.
11.4Thus, where the company is listed on stock exchange a loan are received from banking channels and paid in subsequent years, the transaction could not have been doubted and ld. CIT(A) has rightly deleted the addition.”
The facts being identical wherein the loans taken and interest paid from the same companies were alleged as unexplained credit/unexplained expenditure in preceding and subsequent AY are deleted by the Co-ordinate Bench. There being no change in the circumstances except figures and revenue has also failed to bring any fresh material before us, therefore, by respectfully following the order of the Co-ordinate Bench as stated above, we find no infirmity in the order of Ld. CIT(A) in deleting the additions made u/s 68 of the Act towards unsecured loans and disallowance made u/s 69C towards interest paid held as unexplained expenditure. All the Grounds of appeal raised by the Revenue are accordingly, dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 15.07.2026.