Vishnoi Traders Pvt. Ltd. vs ITO, Ward -2(4)

PERANUBHAV SHARMA, JUDICIAL MEMBER:

This appeal preferred by the assessee is against the order dated 08.10.2025 of Ld. National Faceless Appeal Centre (NFAC) Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1081547882(1)arising out of the assessment order dated 24.05.2023 u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Kan-W-(14)(93),for AY: 2016-17.

Heard and perused the records. The appellant is a private limited company and filed its ITR for the relevant year on 14.10.2016, declaring an income for Rs. 1,39,261/-. The Ld. A.O. received information from the Investigation wing that the appellant company had allegedly received bogus unsecured loans of Rs. 1,39,38,575/-, from Sh. Dharmendra Gupta. On the basis of the said information notice u/s 148 of the Act, was issued on 29 July 2022.

In response to the said notice, the appellant has filed its ITR on 25.08.2022. During the course of the reassessment proceedings various notices were issued to the appellant which were responded to from time to time. It was also submitted that Sh. Dharmendra Gupta, in his statement as recorded by the office of ACIT, Central Circle Meerut, during the course of assessment proceedings of M/s RPG Nirman Pvt. Ltd., has denied giving any accommodation entry to anyone and confirmed that all the loans and advances given by the companies managed/operated by him were actual loans. Copy of the said statement is placed at page nos. 90 to 93 of the paper book.

The reassessment proceedings were completed vide order dated 24.05.2023 passed u/s 147 r.w.s. 143(3) of the Act, wherein addition of Rs.1,46,26,897l-, was made holding that the unsecured loans taken by the appellant from 2 companies namely, Cosmos Aviation Services Pvt. Ltd. (Rs.75,00,000/-), and Ideal Trade Exim Pvt. Ltd (Rs.60,00,000/-), totaling to Rs.1,35,00,000/- were not genuine hence addition u/s 68 of the Act was made and at the same time the interest paid/credited on the above unsecured loan accounts amounting to Rs. 10,24,451/-, on which TDS of Rs.1,02,446/- was deducted, has been disallowed and added to the income of the appellant at Rs.11,26,897/-.

Aggrieved by the above, the appellant filed an appeal before the Ld. CIT(A), and NFAC dismissed the appeal of the appellant vide impugned order dated 08.10.2025 for which the appellant is in appeal before this Tribunal.

We have considered the rival contentions and perused the material on record. The ground wise findings are as follows;

Ground No. 2 has been raised by the appellant challenging the action of the Ld. CIT (A) of confirming the addition of Rs. 1,35,00,000/- made u/s 68 of the Act, holding that the unsecured loans taken by the appellant were not genuine. In this context we find that assessee has filed primary documents like copies of confirmations, ITR filling proofs, bank statements and balance sheets of both the unsecured lenders under consideration as placed at page nos. 12 to 37 of the paper book. As for year under consideration, there was no onus on assessee to also establish during the course of assessment proceedings, the source of funds in the hands of the unsecured lenders, still in its submission dated 19.05.2023, made to the ld. AO, the assessee filed copies of the of the ledgers in the books of these lenders, where their respective sources are reflected and the copy of same is also made available to us at page nos. 38 to 43 of the paper book. Ld. AO, in its order has not at all examined and rebutted the same, to allege and show any circular movement of funds involving the assessee. The ld. AO had issued notice u/s 133(6) to both the unsecured lenders, who have duly responded to the same and confirmed granting of loan to the appellant.

What is coming up from the impugned orders is that both the ld. A.O. and Ld. CIT(A) have stated that Sh. Dharmendra Kumar Gupta, has accepted that he is working as an entry provider and but on the part of assessee it has been brought on record that in his statement, Sh. Dharmendra Kumar Gupta, recorded on 28.02.2022 by the office of ACIT, Central Circle, Meerut, during the course of the assessment proceedings of M/s RPG Nirman Pvt. Ltd., he categorically denied being an entry operator and confirmed that all his loans are actual and genuine. Copy of his statement is placed at page nos. 90 to 93 of the paper book. This fact has also been taken note of by co-ordinate bench in the case of RPG Nirman Pvt. Ltd. Vs. DCIT (ITA nos. 3023,3024, 3025 and 3026/Del/2022), copy of the said judgment is placed at page nos. 1 to 14 of the case law paper book and in this order dated 06.10.2023 in para 10, the co-ordinate bench has observed as follows:

Next, there is an allegation that there is trail of the transactions which prove that the appellant has brought its own undisclosed income as unsecured loan. However, neither in reasons of reopening where there is reproduction of investigation wing report or in the impugned assessment order, there is any documentary evidence what-so-ever of the same, to establish it conclusively. Making the additions left on conjunctions and surmises, which is not permissible in law.

In aforesaid circumstances the opportunity of cross examination of Sh. Dharmendra Kumar Gupta, was certainly necessary, and its denial by ld. AO has certainly prejudiced the assessee and the evidence thus relied, in form of statements, become non admissible, thereby making the conclusions drawn, liable to be set aside.

Ld. Counsel also brought on record that on the basis of the similar information based on search on Sh. Dharmendra Kumar Gupta, the reassessment proceedings of the appellant were also initiated for AY 2014-15, which was completed vide assessment order dated 10.04.2023, wherein the loan taken by the appellant from M/s Ideal Tradexim Pt. Ltd., was accepted as genuine. Copy of the said assessment order is placed at page nos. 94 to 107 of the paper book.

The addition so made deserves to be deleted and consequence disallowance of Rs.11,26,897-, holding that the interest paid on unsecured loans was not a genuine expense to needs to be set aside. Thus corresponding grounds are sustained. The appeal is allowed.