Income Tax Appellate Tribunal - Kolkata
Ito, Ward 11(1), Kolkata vs M/S. Rose Commosale Pvt. Ltd., Kolkata on 18 March, 2026
आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता
IN THE INCOMETAX APPELLATE TRIBUNAL "D"BENCH KOLKATA
Before Shri Rajesh Kumar, AccountantMember and
Shri Pradip Kumar Choubey, JudicialMember
ITA No.924/Kol/2025
Assessment Year: 2014-15
ITO, Ward-11(1), Kolkata..................................................................Appellant
vs.
M/s Rose CommosalePvt. Ltd..............................................................Respondent
6B, Bentick Street, 1st Floor,
Kol-1.
[PAN: AAECR2224G]
Appearances by:
Shri S B Chakraborthy, Addl. CIT,appeared on behalf of the appellant.
Shri Siddharth Agarwal, Advocate,appeared on behalf of the Respondent.
Date of concluding the hearing :February 03, 2026
Date of pronouncing the order :March 18 , 2026
ORDER
PerPradip Kumar Choubey, Judicial Member:
This appeal filed by the revenue is directed against the order dated 17.03.2025 of the NFAC, Delhi (hereinafter referred to as the "CIT(A)") passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the assessment year 2014-15.
2. Brief facts of the case are that the assessee had filed its return of income for the A.Y. 2014-2015 showing totalincome at NIL and thenature of business was mentioned as "Trading Others". The reassessmentproceedings were initiated by the Assessing Officer based on information received that during the course ofassessment proceedings in the case of M/s Avakar Realty, they had receivedunsecured loan amounting to Rs.1,40,00,000/- from the assessee. Accordingly, statutorynotices u/s148, 142(1) and 143(2) were issued and subsequently, the case of the assessee was assigned to theFaceless ITA No.924/Kol/2025 Assessment unit. In response to the notices, the assessee filed the return and raised itsobjections too. Finally, the reassessment proceedings were completed by making an addition ofRs.1,40,00,000/- by invoking the provisions of section 69A of the Act.
4. Aggrieved by the said order, the assessee filed an appeal before the CIT(A) wherein the assessee has been allowed by observing as under:
"5.4 a) During the assessment proceedings, the appellant filed ITR for the A.Y. 2014-15 on 24.09.214 declaring income at Rs. Nil/-. The case of the appellant wasreopened on the basis of the information received from O/o ITO Ward-3(3)(12)WardAhmadabad that during the course of assessment proceedings in the case of M/sAvakar Reality (PAN- AAPFA3128A) for the A.Υ. 2014-15 had received UnsecuredLoan amounting to Rs. 1,40,00,000/- from the appellant i.e. M/s Rose CommosalePvt Ltd. Subsequently, the case of the appellant was reopened u/s 147 of the Act andnotice u/s 148 of the Act was issued to the appellant dated 30.03.2021. In responseto the notice, the appellant filed ITR on 28.04.2021 declaring income at Rs. Nil.During the assessment proceedings, the appellant furnished its submission that thepayment or unsecured loan made by payment received from sale of share. Further,the appellant submitted the copy share sale made by it and share sale bill.Subsequently, the AO made the addition of Rs. 1,40,00,000/- on account ofunexplained money u/s 69A of the Act.
b) During the appellate proceedings, the appellant has filed submission on17.06.2024 submitting written submission on jurisdictional grounds and other relevantdetails. In written submission, the appellant has submitted that the appellant engaged in trading in shares and future option and earned interest income on theloan given. During the relevant year the appellant had advanced loan to M/s. AvakarRealty to the tune of Rs. 1,40,00,000/-. The Ld. AO added back the said amountalleging that the unsecured loan given to M/s. AavkarRealtity was nothing but theunexplained and unaccounted black money of the appellant. The appellant hassubmitted that the said loan had been given by the appellant to M/s Avakar Realtythrough proper banking channels. The amount of loan was also recorded in thebooks of accounts of the assessee company, which is evident from the final accountsfor the relevant year along with the loan confirmations and bank statement.
2 ITA No.924/Kol/2025c) From the perusal of Assessment order, it is apparent that the Assessing Officerhave examined the loan extended to M/s Avakar Reality in detail. There is no debatethat the loan has been extended through proper banking channel and is recorded inthe books of account of the Appellant. The Assessing officer has added theunsecured loan amount of Rs. 1,40,00,000/- which has actually been given by theappellant to the AvakarRealityin the hands of Appellant as unexplained andunaccounted money under section 69A of the Act. The Assessing officer without anycogent finding have concluded that the amount is nothing but unexplained andunaccounted black money of the Appellant. The AO in the Assessment order hasobserved that :-
"Both statements found contradictory as the assessee had received money against sold of share on 07, 08 &10.03.2014 and transferred to M/s Avakar Reality on the same date. It means assessee had no surplus fundswith his custody as mentioned above in his submission. Further, assessee had not submitted copy of loanagreement, there were no any collateral provisions found against unsecured loan. After perusal of submissionof the assessee, It clearly shows that all these transaction made for making white to its black money throughits group of company and try to give colour of transaction by these way.Hence, the unsecured loan amounting to Rs. 1,40,00,000/- given to M/s Avakar Reality was nothing but theunexplained and unaccounted black money of the assessee. Further, the submission of the assessee foundcontradictory and not satisfactory as well as not acceptable, hence these unsecured loan needs to be addedto the hands of the assessee for the tax purpose for the year under consideration. Therefore, the unsecuredloan given by the assessee to M/s Avakar Reality amounting to Rs. 1,40,00,000/- treated as unexplained andunaccounted money of the assessee for the A. Y. 2014-15 and added to the total income of the assessee u/s69A of the Income Tax Act, 1961. Initiated Penalty proceeding u/s 271(1)(c) for concealment of income of Rs.1,40,00,000/- for the A. Y. 2014-
15."
d) The Appellant have furnished the loan confirmation, related bank statements,sources of funds along with the copy of loan agreement. In the submission dated17.06.2024, the appellant has argued that the company had huge funds in the form ofshare capital and reserve and surplus. The appellant company even have almost nilborrowed capital. The relevant part of the Appellant submission is as under,-
"The Ld. A.O. further alleged that the assessee had given contradictory statement as regard thesource of loan given to M/s. Avakar Reality is concerned. In this regard, it is humbly submitted that theassessee company had not given any contradictory statements as alleged by the A.O. It wassubmitted that the statement that the assessee had parked its funds with the private parties on interest on surplus funds did not in any way contradict the version / fact that the loans were advancedon the same date of receipt of money out of sale of shares. The entire affairs has to be viewed fromthe perspective that the assessee company had huge funds in the form of share capital and Reservesand Surplus (to the tune of 9.05 crores) and there was no borrowed fund but a petty amount of Rs.15.99 lakhs were appearing as current liabilities in the balance sheet as on 31.03.2014. It means that the entire fund over and above Rs. 15.99 lakhs out of the total available fund of Rs.9.21 crore as perthe balance sheet as on 31.03.2014 was the surplus fund available with the assessee company whichcould be deployed as per the choice of the company's 3 ITA No.924/Kol/2025 management. It was submitted that a prudentbusinessman will not keep its money idle in the current account even for a single day. Thus, in thefacts and circumstances, it could not be said that deployment of funds into loans released by sale ofshares on the date of sale of shares did not tantamount to investment out of surplus fund. "
e) On the applicability of invocation of provision of Sec. 69A of the Act, in thesubmission the Appellant have observed that,-
"Smt. Teena Bethala, Bengaluru vs ITO, ITA Nos.1383 and 1384/Bang/2019, dated 28 August, 2019 "7.3.2 In the facts and circumstances of the case, as narrated above, it is essential that the provisionsof section 69A of the Act be extracted hereunder:-
"Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery orother valuable article and such money, bullion, jewellery or valuable article is not recorded in thebooks of account, if any, maintained by him for any source of income, and the assessee offers noexplanation about the nature and source of acquisition of the money, bullion, jewellery or othervaluable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer,satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemedto be the income of the assessee for such financial year.".
7.3.3 On a reading of section 69A (supra), it is clear that the onus is upon the AO to find the assesseeto be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewelleryor valuable article was not recorded in the books of account, if any, maintained by the assessee forany source of income. In these circumstances, the AO can resort to making an addition under section69A of the Act only in respect of such monies /assets/articles or things which are not recorded in theassessee's books of account. In the case on hand, the cash deposits are recorded in the books ofaccount and are reportedly made on the receipt from a creditor. Further, the PAN and address of thecreditor as well as ledger account copies of the creditor in the assessee's books of account have alsobeen field before the AO. In these circumstances, it is evident that the AO has not made out a casecalling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Actcould have been considered; but then that is not the case of the AO. The assessee, apart from raisingseveral other grounds, has challenged the legality of theaddition being made under section 69A of theAct. In support of the assessee's contentions, the learned AR placed reliance on the decision of theITAT -Mumbai Bench in the case of DCIT Vs. Karthik Construction Co. in ITA No.2292/Mum/2016dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of theAct cannot be made in respect of those assets/monies/entries which are recorded in the assessee'sbooks of account. In my considered view, the aforesaid decision of the ITAT - Mumbai Bench (supra)is squarely applicable to the facts of the case on hand, where the entries are recorded in theassessee's books of account. In this view of the matter, I am of the opinion that the addition ofRs.6,30,000/- made under section 69A of the Act is bad in law in the facts and circumstances of thecase on hand and therefore delete the addition of Rs.6,30,000/- made thereunder. The AO isaccordingly directed."
f) On the basis of above discussion as mentioned in sub paras c to e of para 5.4,and keeping in view the submissions made by the Appellant I find merits in thearguments of the appellant that the said loan has been extended through properbanking channels and has been recorded in the books of account of the Appellant.The necessary documentation in the 4 ITA No.924/Kol/2025 form of loan confirmation and copy of the loanagreement has also been furnished by the appellant. There is no doubt that appellanthas sufficient funds to extent such loan. On the other hands the Assessing officer hasnot brought any cogent arguments, documents or evidence to establish that theamount of Rs. 1,40,00,000/- is unexplained unaccounted and black money of theappellant. Thus, the addition made by the Assessing officer under section 69A of theAct is liable to be deleted.
g) In light of the above, the appeal of the appellant is Allowed."
5. Being dissatisfied, the revenue is in appeal before us raising the following grounds of appeal:
5 ITA No.924/Kol/2025 6 ITA No.924/Kol/20256. Contrary to that, the ld. AR supports the impugned order thereby submitting that the assessee is engaged in trading in shares and future option and earned interest incomeon the loan given. The ld. AR also submits that during the relevant year, the assessee had advanced loan to M/s. Avakar Realty tothe tune of Rs. 1,40,00,000/-. The Ld. AO added back the said amount alleging that the unsecuredloan given to M/s. AavkarRealtity was nothing but the unexplained money ofthe assessee. His submission is that the said loan had been given by the assesseeto M/s Aavkar Realty through proper banking channels and the amount of loan was also recorded in thebooks of accounts of the assessee-company, which is evident from the final accounts for the relevantyear along with the loan confirmations and bank statement was also provided. During the assessment proceedings, the assessee has also submitted the following details:
7 ITA No.924/Kol/2025i) Source of Fund
ii) ITR Acknowledgement,
iii) Computation of Income and Final Accounts alongwith bank statement ofthe loan creditor
iv) Copy of loan agreement
7. Upon hearing submission of the counsels of the respective parties and perused the material available on record, we find thatthe assessee is engaged in trading in shares and future option and earned interest incomeon the loan given and during the relevant assessment year, the assessee had given loan to M/s. Avakar Realty of Rs. 1,40,00,000/-. We also find that the said loan had been given by the assesseeto M/s Aavkar Realty through proper banking channels and the amount of loan was also recorded in thebooks of accounts of the assessee-company. We note that the assessee duly submitted the loan confirmations and bank statement along with the following details:
i) Source of Fund
ii) ITR Acknowledgement,
iii) Computation of Income and Final Accounts alongwith bank statement ofthe loan creditor
iv) Copy of loan agreement 7.1 We further note that the assessee had submitted the details of payment made against the loan of Rs.1,40,00,000/- which is asunder:-
Date of providing Mode of providing Amount of Unsecured Unsecured loan unsecured Loan loan 07.03.2014 By RTGS 15,00,000 07.03.2014 By RTGS 25,00,000 07.03.2014 By RTGS 25,00,000 08.03.2014 By RTGS 25,00,000 10.03.2014 By RTGS 20,00,000 8 ITA No.924/Kol/2025 10.03.2014 By RTGS 20,00,000 11.03.2014 By RTGS 15,00,000 7.2 We further find that the assessee-company had huge funds in the form of share capital and Reservesand Surplus to the tune of 9.05 crores and there was no borrowed fund but a nominal amount of Rs.15.99 lakhs were appearing as current liabilities in the balance sheet as on 31.03.2014. It means thatthe entire fund over and above Rs. 15.99 lakhs out of the total available fund of Rs.9.21 crore as perthe balance sheet as on 31.03.2014 was the surplus fund available with the assessee company. We find merit in the submission of the ld. AR that the said loan has been extended through proper banking channels and has been recorded in the books of account of the assessee and there is no doubt that assessee company has sufficient funds to provide such loan. We also note that all the details were submitted to establish the loan transaction of Rs.1,40,00,000/- and the Assessing officer has not found any discrepancy in the documents submitted by the assessee. Going over the discussion made above, we find that the ld. CIT(A) has elaborately discussed everything and thereafter, passed the impugned order in favour of the assessee considering various judicial precedents. We, therefore, do not find any infirmity in the order of the ld. CIT(A) and the same is upheld. Accordingly, the appeal of the revenue is dismissed.
8. In the result, the appeal of the revenue is dismissed.
Kolkata, the 18th March, 2026.
Sd/- Sd/-
[Rajesh Kumar] [Pradip Kumar Choubey]
Accountant Member Judicial Member
DC
Dated: 18 .03.2026.
9
ITA No.924/Kol/2025
Copy of the order forwarded to:
1. Appellant -
2. Respondent -
3. CIT(A)-
4. CIT- ,
5. CIT(DR),
//True copy//
By order
Assistant Registrar, Kolkata Benches
10