Falguni Nevatia Vs ITO (ITAT Kolkata)
Section 69A Not Applicable to Duly Recorded Unsecured Loans Supported by Confirmations- ITAT Kolkata Deletes ₹1.86 Cr Addition —
Assessee filed appeal against the order of CIT(A), NFAC, upholding the addition of ₹1.86 crore made by AO as unexplained money u/s 69A in respect of unsecured loans received from 14 private limited companies.
Assessee had furnished complete details before the AO, including PAN, addresses, ITR acknowledgments, audited financials, confirmations, & bank statements of all lenders. AO had also issued notices u/s 133(6) & 131, which were duly complied with by the creditors, confirming the loan transactions. However, the AO treated the entire amount as unexplained money u/s 69A, alleging lack of satisfactory explanation.
Tribunal observed that section 69A applies only to unexplained money, bullion, or valuable articles, not to unsecured loans recorded in books of account. Since the loans were duly accounted for & supported by confirmations & verifiable evidence, invocation of section 69A was wholly misplaced. The Bench criticized both the AO & CIT(A) for ignoring the compliance by loan creditors & held that once the Assessee discharged the primary onus, the burden shifted to the Department. No adverse material was found against any lender.
Relying on Pr. CIT v. Sreeleathers (448 ITR 332 Cal HC), the ITAT held that when loan confirmations, bank statements, & replies to summons exist on record, addition cannot be sustained merely on presumptions. Accordingly, the Tribunal set aside the order of the CIT(A) & directed deletion of the addition.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.03.2024 for the AY 2012-13.
2. At the time of hearing, the ld. Counsel for the assessee pressed ground no.6, which is against the order of ld. CIT (A) upholding the order of ld. AO wherein the ld. AO made an addition of ₹1,86,50,058/-on account of unsecured loans by invoking the Provisions of Section 69A of the Income-tax Act, 1961 (the Act)
3. The facts in brief are that the assessee filed the return of income on 21.07.2012, showing total income of ₹1,67,529/-. The case of the assessee thereafter reopened u/s 147 of the Act after the ld. AO received information from the DIT (Inv), Kolkata regarding credit of ₹1,68,67,145/- in the Saving bank account held by the assessee in the Yes Bank. The Director of Income Tax also issued summons u/s 131 of the Income-tax Act, 1961 (the Act) to the assessee to submit the details of source and nature of transactions. The notice u/s 148 of the Act was issued on 29.03.2019, which was complied with by the assessee by filing the return of income on 02.05.2019, declaring income of ₹1,67,529/-. Thereafter, the statutory notices were issued along with questionnaires and assessee furnished all the information/details before the ld. AO including the details of unsecured loans raised from 14 Private Limited Companies. The ld. AO in order to independently verify the transactions issued notice u/s 133(6) of the Act and also summon u/s 131 of the Act which were duly complied with by the loan creditors. However the contentions and submissions of the assessee did not find favour with the ld. AO and he treated the amount of ₹1,86,50,058 as unexplained money u/s 69A of the Act and added the same to the income of the assessee.
4. The ld. CIT (A) also dismissed the appeal of the assessee by upholding the order of the ld. AO by rejecting the submissions of the assessee.
5. We have heard the rival submissions and perused the materials available on record. We note that the assessee has filed the details of loan creditors along with names and addresses, copies of ITR acknowledgements, final accounts, bank statements and conformations etc in respect of loan creditors. We also note that the ld. AO issued notices u/s 133(6) of the Act which were duly complied with by the loan creditors. Similarly, the summons issued u/s 131 of the Act were also complied by furnishing all the details and documents. We note that in couple of cases the notice issued u/s 133(6) of the Act were returned and served which had happended because of wrong mentioning of addresses of the loan creditors which were later on rectified and thereafter all the details / information were filed before the ld. Assessing Officer. The ld. AO treated the loan amounts as unexplained money u/s 69A of the Act with is totally wrong and against the provisions of the Act. Section 69A deals with the unexplained money and does not apply to the unsecured loans raised by the assessee. For the sake of ready reference, we extract the section 69A as under:-
“69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable 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 deemed to be the income of the assessee for such financial year.”
6. A perusal of Section 69A of the Income-tax Act, 1961 (the Act) makes it adequately clear that the section is applicable if any money, bullion, jewellery or valuation article of which the assessee is found to be owner and the said money is not recorded in the books of account of the assessee if any maintained and the assessee offer no explanation about the nature and source thereof. Therefore, even on this count the order of the ld. AO is wrong and cannot be sustained. We note that the ld. CIT (A) upheld the order of the ld. AO by ignoring the facts on record. In our opinion, the assessee has discharged its onus by filing all the details qua the loan creditors before the ld. AO as well as before the ld. CIT (A) and the onus has shifted to the department.
We even note that that the notice u/s 133(6)/ 131 of the Act were complied with. All these evidences are part of the assessment records and authorities have not done any enquiry on those evidences nor pointed out any defect. Therefore the addition made by the ld. AO and sustained by the ld. CIT (A) are against the provisions of the Act. The case of the assessee finds support from the decision of the Hon’ble Calcutta High Court in the case Pr. CIT-9, Kolkata vs. Sreeleathers [448 ITR P-332] dated 14.07.2022 wherein Hon’ble Court has held :
‘In the absence of any such finding, it is held that the order passed by the Assessing Officer was utterly perverse and rightly interfered by the Commissioner (Appeals). The Tribunal re-appreciated the factual position and agreed with the Commissioner (Appeals). The Tribunal apart from taking into consideration, the legal effect of the statement of AKA also took note of the fact that the notices which were issued by the Assessing Officer under section 133(6) to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the Assessing Officer and there is no discussion on this aspect. Thus, the tribunal rightly dismissed the appeal filed by the revenue. [Para 5]’
7. We respectfully following the decision of the Hon’ble High Court set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition.
8. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 04.11.2025.
