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Judgment
PER S. RIFAUR RAHMAN, AM :
This appeal is filed by the assessee against the order of Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 20.09.2024 for the Assessment Year 2018-19.
At the time of hearing, ld.AR of the assessee brought to our attention the facts of the case and submitted his submissions that assessee is a trader of medical supplies. The Assessing Officer picked up four loan credits totaling Rs.2.33 Cr (from Mayank Goel, Anandi Devi, Naresh Kumar Goel HUF, and Pinki Goel) and treated them as unexplained cash credits under section 68 of the Income-tax Act, 1961 (for short ‘the Act’) vide Assessment Order dated 25.05.2021. He submitted that ld. CIT(A) vide Order dated 20.09.2024 partly allowed the appeal and deleted the addition of Rs.2.23 Cr pertaining to Loan Credits for Mayank Goel, Anandi Devi and Naresh Kumar Goel HUF and the Revenue filed an appeal pursuant to ld. CIT(A) Order which was dismissed by ITAT in ITA No.5315/Del/2024 vide Order dated 21.08.2025.
Further he submitted that addition of Rs.10,00,000 relating to Ms. Pinki Goel was sustained by CIT(A) in the order given the difference in facts submitted before Assessing Officer and the assessee filed the present appeal before ITAT challenging the addition. He submitted the sequence of events which are reproduced below :
| Date | Events |
| 01.04.2017 | Opening Balance Rs.49,34,383 of Unsecured Loan from Ms. Pinki Goel. |
| 29.09.2017 | Amount Rs.10,00,000 repaid to Ms. Pinki Goel vide Cheque No. 070623. |
| 03.10.2017 | Amount Rs.10,00,000 received from Pinki Goel vide Cheque No.105691. |
| 25.05.2021 | Assessment Order passed under Section 143(3) of the Income Tax Act, 1961 ("the Act") - Ld. AO made addition of Rs. 10,00,000 on account of facts unclear due to non- availability of Bank Statement of Ms. Pinki Goel. |
| 20.09.2024 | Ld. CIT(A) passed Order under section 250 of the Act and sustain the addition of Rs. 10,00,000 for Ms. Pinki Gael. Extract of the Order is as follows: |
“6.2.Unsecured loan of RS.10,OO,OOO from Ms. Pinki Goel: The appellant in its submissions stated that "During the year under appeal, the appellant had opening loan payable to Pinki Gael of Rs.49,34,383 and out of the above Rs.10,00,000 was repaid on 29.09.17. On 03.10.2017, Appellant has received back Rs. 10,00,000 as loan from Pinki Gael". The assessee submitted bank statement of Pinki Gael in page 137 of the paper book dated 02.07.2022. It is seen from this bank statement that a sum of Rs.10,00,000 was paid by the assessee, M/s. Shrish Industries to Ms. Pinki Gael on 29.09.2017 and immediately after 3 days i.e., on 03.10.2017, the same amount of Rs.10,00,000 was received back by M/s. Shrish Industries from Ms. Pinki Goel".
6.2.1. However, on perusal of the assessment order in para 3.2.1, the AO mentioned that the cheque number 070623 was not cleared on 29.09.2017, which means that though the credit entry in the bank statement appears it actually is not a credit entry because by mere cheque presentation bank account would be credited but on actual settlement there would be reversal of the previous wrong entry. The assessee did not give any explanation on this aspect with proofs. The appellant's submission made before the Ld.AO is also perused whereby it is noticed the explanation lacked clarity. On one hand the assessee says cheque transaction is not reflected in the bank account of Pinki Goel but reflected in the bank account of M/s. Shrish Industries. How come a cheque gets reflected in issuer's (recipient's) bank statement but does not get reflected in recipient's (issuer's) bank statement? Moreover, the appellant/assessee did not submit the ledger account of Ms. Pinki Goel in the books of the appellant-assessee, M/s. Shrish Industries so as to know if there was any opening loan liability of Rs.49,34,383/-."
Further the assessee, during the appellate proceedings before Ld. CIT(A), submitted the copy of Bank Statement and Ledger Account of Ms. Pinki Goel reflecting the transactions of Rs.10,00,000 received from the assessee on 29.09.2017 and Rs.10,00,000 paid back to the assessee on 03.10.2017. The same was also acknowledged by Ld. CIT(A) in Para 6.2 of the Order. Further he submitted that the transactions were also reported in Form 3CA-3CD - Tax Audit Report of the assessee by the Chartered Accountant under Clause 31(a) - Acceptance of Loan and Clause 31(c) - Repayment of Loan of Rs. 10,00,000 to Ms. Pinki Goel. He submitted that ld. CIT(A) sustained the addition on the basis of incomplete findings of AO without considering the details and documents submitted by the assessee before them.
Further he submitted that all three criteria u/s 68 of the Act are satisfied. He submitted that even if one were to invoke Section 68, the assessee has prove Identity, Creditworthiness, Genuineness for each credit. In this regard he submitted as under :-
Identity: Lender is well-identified related party (family member of director). PAN, IT return, confirmation given. No doubt about who is she.
Creditworthiness: The Bank statement and IT Return show capability. The source of Rs.10 L was the assessee's repayment itself - circular through bank.
Genuineness: The transaction was real and. accounted. Importantly, assessee paid interest on loan and deducted TDS, which AO accepted as legitimate expense. It would be contradictory to allow interest on a "Bogus" loan - fact is, the loan was genuine.
In the conclusion, he submitted that the AO made the addition of Rs.10,00,000 due to Bank Statement of Ms. Pinki Goel was not submitted during assessment proceedings and ld. CIT(A) sustained the addition without considering the document submitted before his Office and accordingly prayed to allow the appeal.
On the other hand, ld. DR of the Revenue heavily relied on the findings of the lower authorities.
Considered the rival submissions and material placed on record. We observed that assessee has received unsecured loan from Pinky Goel and relevant bank statements submitted before us are as under :-
From the above, it is noticed that assessee has also paid interest for the period 25.06.2017 to 30.09.2017 and assessee has repaid unsecured loan of Rs.10,00,000/- on 03.10.2017. It clearly shows that assessee has taken the loan and utilized the same for a period of three months and repaid the same along with interest. Since assessee has already disclosed all the transactions in its books of account, we are of the considered opinion that after considering the facts on record, the assessee has proved the identity and genuineness of the transaction by repaying the amount taken within the same year. Therefore, we are inclined to allow the appeal preferred by the assessee.
In the result, the appeal of the assessee is allowed.