ITAT Deletes Section 68 Additions After Assessee Discharges Primary Onus on Share Capital & Loans

Pahwa Buildtech Pvt. Ltd. Vs CIT (ITAT Delhi)

Additions for Share Application Money and Unsecured Loans Deleted as Assessee Discharged Primary Onus

The Delhi ITAT decided cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2011-12 arising from an assessment completed under Sections 147 read with 143(3) of the Income-tax Act, 1961. The assessee, engaged in real estate development and purchase and sale of land, had originally filed its return declaring an income of Rs.3,76,220. Following reopening of assessment, the Assessing Officer examined share application money of Rs.1 crore and unsecured loans of Rs.3,65,70,000 received during the year. Holding that the assessee had failed to establish the identity, creditworthiness and genuineness of the transactions, the Assessing Officer made additions under Section 68. The CIT(A) deleted the addition relating to unsecured loans but sustained the addition of Rs.1 crore towards share application money, leading to cross appeals before the Tribunal.

Assessee’s Appeal – Share Application Money

The assessee challenged the confirmation of the addition of Rs.1 crore received as share application money from ten applicants contributing Rs.10 lakh each. It submitted that confirmations, income tax returns, financial statements, share application forms, ROC Form No. 2, and bank statements in several cases had been furnished. It contended that the applicants belonged to the same group, were directors or relatives of directors, and that the amounts had been received through banking channels. It further produced a chart showing the net owned funds of the individual shareholders to establish their financial capacity.

The Revenue argued that the assessee had failed to establish the creditworthiness of the share applicants. It relied on the assessment order, contending that notices issued under Section 133(6) either remained unserved or were not complied with and that the applicants’ bank accounts reflected credits immediately preceding the investments.

The Tribunal found that for seven share applicants, the assessee had furnished confirmations, income tax returns, financial statements and bank statements. On examining the bank statements, it observed that all seven applicants had sufficient funds when the investments were made. The Tribunal also noted that the requirement to establish the “source of source” in respect of share application money was introduced by the Finance Act, 2012 with effect from 01.04.2013 and therefore did not apply to Assessment Year 2011-12. It held that the assessee had discharged the burden under Section 68 by establishing the identity, creditworthiness and genuineness of these seven investors and deleted the addition of Rs.70 lakh relating to them.

With respect to the remaining three applicants—Shri Devendra Kumar Vasudeva, Shri Kailash Vasudeva and Smt. Deepa Vasudeva—the Tribunal noted that before the CIT(A), the assessee had produced their income tax acknowledgements and balance sheets in addition to confirmations. The financial statements showed net owned funds of Rs.60,40,735, Rs.85,14,263 and Rs.58,87,139 respectively. The Tribunal held that once these materials had been furnished, the burden shifted to the Assessing Officer to conduct necessary enquiries, which was not done. Relying on the decisions of the Supreme Court and the Delhi High Court concerning Section 68, the Tribunal held that the assessee had discharged the statutory burden of proving the identity, creditworthiness and genuineness of all ten share applicants. It therefore deleted the balance addition of Rs.30 lakh, resulting in deletion of the entire addition of Rs.1 crore.

Revenue’s Appeal – Unsecured Loans

The Revenue challenged the deletion of the addition of Rs.3,65,70,000 made under Section 68 in respect of unsecured loans received from eight lenders. It contended that adequate evidence had not been produced before the Assessing Officer and that the CIT(A) had wrongly admitted additional evidence.

The assessee submitted that although complete documentation could not be furnished during assessment proceedings, it subsequently collected confirmations, bank statements, income tax returns and other records from the lenders and filed them before the CIT(A). It also pointed out that the loans had been repaid before initiation of the reassessment proceedings and that the lenders were either group concerns or relatives of the directors.

The Tribunal observed that before the CIT(A), the assessee had produced confirmations, bank statements, acknowledgements of income tax returns and, in certain cases, audited financial statements or MCA records. It further noted that Ambika Tradexpo Pvt. Ltd. and Ambika Buildtrade Ltd., from whom substantial unsecured loans had been received, had also subscribed to the share capital, and their creditworthiness had already been accepted while adjudicating the assessee’s appeal. The Tribunal also found that the remaining lenders possessed sufficient bank balances at the time the loans were advanced and that the Assessing Officer had not conducted any independent enquiry except issuing notices under Section 133(6) to two parties.

The Tribunal agreed with the CIT(A)’s findings that substantial repayments had been made through banking channels, in several cases even before issuance of the notice under Section 148. It referred to the decision of the Coordinate Bench in Real Innerspring Technologies Pvt. Ltd. vs. ACIT, wherein repayment of loans through banking channels prior to reopening of assessment was treated as supporting the genuineness of the transactions. It also noted the Gujarat High Court’s decision in PCIT vs. Piyush Subodhbhai Javeri, which held that where repayment of loans was undisputed, no substantial question of law arose against the Tribunal’s acceptance of the transactions as genuine.

The Tribunal held that the assessee had established the identity and creditworthiness of the lenders and the genuineness of the unsecured loan transactions. Since the Revenue had not produced any material to dislodge the findings recorded by the CIT(A), it found no error in the deletion of the addition of Rs.3,65,70,000 under Section 68 and dismissed the Revenue’s appeal.

Accordingly, the Tribunal allowed the assessee’s appeal by deleting the addition of Rs.1 crore relating to share application money and dismissed the Revenue’s appeal challenging the deletion of the addition relating to unsecured loans.

Cases Discussed

• PCIT vs Piyush Subodhbhai Javeri (Gujarat High Court), Tax Appeal No. 759/2025
• Real Innerspring Technologies Pvt. Ltd. vs. ACIT (ITAT Delhi), Order dated 27.03.2025
• PCIT Vs Ojas Tarmake Pvt Ltd, 156 taxmann.com 75
• PCIT vs Ganesh Plantation, [2022] 134 taxmann.com 149
• PCIT vs Ambe Trade, [2023] 290 taxmann.com 471
• CIT vs. Kamdhenu Steel & Alloys Ltd. (Supreme Court), SLP (CC) No. 15640 of 2012
• CIT v. Nova Promoters & Finlease (P.) Ltd. (Delhi High Court), [2012] 342 ITR 169 (Delhi)
• CIT vs. Vrindavan Farms Pvt. Ltd. (Delhi High Court), ITA No. 71 of 2015 dated 12th August, 2015
• CIT v. Lovely Exports Ltd., 319 ITR 5 (St.)
• CIT vs Lovely Exports Pvt. Ltd. (Supreme Court)
• CIT v. Sophia Finance Ltd. (Delhi High Court), [1994] 205 ITR 98 (Delhi)
• CIT v. Steller Investment Ltd. (Delhi High Court), [1991] 192 ITR 287 (Delhi)
• CIT vs Orissa Corporation P. Ltd. (Supreme Court), 159 ITR 78 (SC)

FULL TEXT OF THE ORDER OF ITAT DELHI

The captioned cross-appeals are filed by the assessee and the Revenue against the order dated 25.09.2025 by Ld. Commissioner of Income Tax (A)-30, New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-7/10518/2018-19 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 30.12.2018 passed u/s 147 r.w.s. 143(3) of the Act pertaining to Assessment Year 2011-12.

2. The issues involved in both the cross-appeals are common, therefore, they have been heard together and accordingly, adjudicated by a common order.

3. Brief facts of the case are that the assessee is a company, engaged in the business of real estate development, purchase and sales of land. The return of income was filed on 28.09.2011, declaring total income of INR 3,76,220/-. The case of the assessee was re-opened after recording the reasons and notice was issued u/s 148 of the Act on 26.03.2018. In response to which the assessee has filed the return of income on 18.10.2018, declaring the same income as was declared in the return of income filed u/s 139(1) of the Act. Thereafter, the AO has asked the assessee to furnish the details with respect to the share application money of INR 1.00 crores and unsecured loans of INR 3,65,70,000/- received during the year. In reply, the assessee has filed the confirmation in some cases, copy of the bank statements of the share applicants and lenders and also filed their ITR and financial statements. The AO after examining these details concluded that the assessee has failed to establish the identity and creditworthiness of the lenders/ share applicants and further genuineness of transactions was also remained unverified and made the addition of INR 1.00 crores received as share application money u/s 68 of the Act and further added the unsecured loans of INR 3,65,70,000/- u/s 68 of the Act. Accordingly, the total income of the assessee was assessed at INR 4,69,46,220/-.

4. Against the said order, the assessee filed appeal before Ld.CIT(A) who vide impugned order dated 25.09.2025 has partly allowed the appeal of the assessee wherein additions made on account of unsecured loans were deleted however, the addition made u/s 68 of the Act towards the share application stood confirmed.

5. Aggrieved by the said order, both the assessee and the Revenue are in appeal before the Tribunal wherein the assessee has challenged the appellate order on the issue of confirmation of addition of INR 1.00 crores made u/s 68 of the Act and the Revenue has challenged the action of Ld.CIT(A) in deleting the addition made u/s 68 of the Act of INR 3,65,70,000/- towards unsecured loans received during the year.

6. First we take appeal of the assessee in ITA No.7414/De1/2025 for Assessment Year 2011-12.

ITA No.7414/De1/2025 [Assessment Year 2011-121

7. All the Grounds of appeal raised by the assessee are with respect to the confirmation of the addition of INR 1.00 crores made u/s 68 of the Act therefore, they are taken together for consideration.

8. Before us, Ld.AR for the assessee submits that the assessee has filed all the relevant details with respect to the share application money received during the year from Ten parties of INR 10.00 Lakh each. Ld. AR submits that all the funds were received through banking channel and assessee has filed their confirmations, ITR, acknowledgement of share applications, bank statements in some cases and the copies of share applications. The assessee also filed Form No. 2 filed with ROC containing the complete details of all the share applicants. Ld.AR submits that all the share applicants are either of the same group or Director or their relatives and all are existing assesses. Ld.AR drew our attention to page 39 to 168 of the Paper Book containing the details of all the share applicants and requested that the assessee has discharged the burden casted upon it as provided in section 68 of the Act to establish the identity and creditworthiness of the share applicants and since the transactions were carried out through banking channels therefore, the genuineness of the transactions cannot be doubted. Ld. AR filed a chart containing the details of funds owned by the Individual share applicants based on their financial statements to support the contention that they were having sufficient creditworthiness when the funds were invested int eh assessee company. Ld.AR thus, submits that additions made be deleted. Besides this ld. AR further placed reliance on various judicial pronouncements which are placed on records.

9. Per contra, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has failed to discharge the burden casted upon it of proving the genuineness of the share application money received during the year. As per ld. Sr. DR before the lower authorities despite of repeated opportunities provided, assessee has filed to establish the creditworthiness of share applicants. For this, Ld. Sr. DR drew our attention to para 4.1 of the assessment order wherein AO has tabulated details of each and every share applicant and pointed out the shortcomings in their financial statements/creditworthiness. Ld. Sr. DR submits that the AO has issued notices u/s 133(6) to the share applicants however, in some of the cases, they were returned unserved or wherever the same were served, no compliances were made. Accordingly, Ld. Sr. DR for the Revenue requested for the confirmation of the order of the lower authorities.

10. Having considered both the parties and perused the material available on record. It is observed that during the year under appeal, assessee has received share application money of INR 10.00 Lakhs each from 10 different individuals/companies which were stated to have been related to the same group/relatives of the Directors. It is observed that assessee has filed the confirmations and ITRs of all the applicants however, in some cases, their bank statements were not filed. The AO has accepted the identity of the share applicants as well as genuineness of the transactions is proved since the amounts were received through banking channel. The solitary issue remained is creditworthiness of the applicants for which the AO alleged that in the bank accounts of the share applicants there were credit entries appearing just before the amounts transferred to assessee company. Based on this observation, the AO concluded that these entities have no creditworthiness and made the additions for the entire amount of share applications received during the year.

11. On careful consideration of the facts and the details filed, it is observed that except in the case of three applicants namely, Shri Devendra Kumar Vasudeva, Shri Kailash Vasudeva & Smt. Deepa Vasudeva where bank statements were not filed, all the other details were filed including their confirmations, ITR, financial statement and their bank statements and during the course of hearing, an exercise was done to examine their bank statements and it is found that all these Seven applicants have sufficient funds as and when the amounts were transferred to the assessee company. The relevant copies of the bank statements in respect of Seven applicants namely are placed in Paper Book as tabulated below:-

12. As observed in the case of Seven share applicants, the assessee has been able to establish their creditworthiness by filing their bank statements wherein all these Seven applicants have sufficient funds when the funds were transferred to the assessee company. Regarding source of source, amendment was made in section 68 vide Finance Act, 2012 as per which the “source of source” is to be established in the case of share application money received applicable w.e.f. 01.04.2013. However, in the case, the assessment year involved is AY 2011-12 therefore, the assessee is not required to establish “source of source” in the case of share applicants and once the immediate source of funds given as share application money is established, the assessee had discharged the burden casted upon it u/s 68 of the Act. As observed above, in all the cases assessee has established their identity by filing their ITRs and their Audited Financial statements. Further, the bank statements were filed therefore, the assessee has discharged the burden to establish the identity and creditworthiness of the transaction and no addition could be made u/s 68 of the Act with respect to above seven share applicants. Accordingly, addition made to the extent of INR 70 Lakhs received from these applicants is hereby, deleted.

13. Now coming to the share application received from remaining three applicants, it is observed that AO while making addition, has observed that the assessee has filed confirmations and no ITR or bank statements were filed. Before Ld.CIT(A), additional evidences were filed wherein the assessee in addition to the confirmations, has filed their ITRs acknowledgement and complete Balance Sheets in order to establish their creditworthiness. Based on their financial statements, a chart is filed before us, as per which all the three applicants have sufficient net worth for making investments of Rs. 10.00 lacs each in the assessee company. The relevant extract of the chart is reproduced as under:

Computation of Net Owned Funds of Share Subscribers fibers (Individuals)

14. From the above, it could be seen that Shri Devendra Kumar Vasudeva has net owned funds of Rs. 60,40,735/-, Shri Kailash Vasudeva has net owned funds of Rs. 85,14,263/- and Smt. Deepa Vasudeva has owned funds of Rs. 58,87,139/-. It is further observed that once the assessee has filed all the relevant details, the burden shifted on the AO to conduct necessary enquires at his end, which has not been dome by the AO for which assessee could not be punished. The Hon’ble Supreme Court in the case of CIT vs Orissa Corporation P. Ltd. reported in 159 ITR 78 (SC). has held as under:-

“The power to levy assessment on the basis of best judgment is not an arbitrary power; it is an assessment on the basis of best judgment. In other words, that assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of the concerned authorities. The scope of that power has been explained over and over again by this Court.

The Agricultural Income-tax Tribunal gave no reasons in its order for affirming the decision of the Asstt. Collector. It appears to have been of the view that once the assessing authorities reject the material placed before them as being unreliable those authorities can proceed to levy whatever tax they may levy. It failed to bear in mind the scope of the power of the assessing authorities to levy assessment on the basis of best judgment. Therefore, the Tribunal was clearly in error in confirming the decision of the Asstt. Collector. Hence, the High Court was justified in interfering with the order of the Tribunal.”

15. The Hon’ble Delhi High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd. in ITA. No.71 of 2015 dated 12th August, 2015 held as under :

“The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. It was observed by the ITAT that the Assessing Officer had not undertaken any investigation of the veracity of the documents submitted by the assessee, the departmental appeal was dismissed by the Hon ‘ble High court.”

16. In the case of CIT v. Sophia Finance Ltd. reported in [19941205 ITR 98 (Delhi), the Hon’ble jurisdictional High Court held that in the context of Section 68 of the Act that:

i. “The Assessee has to prima facie prove “(1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber.

ii. If the relevant details of the address of PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc., it would constitute acceptable proof or acceptable explanation by the Assessee.

iii. The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices.

iv. The onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the Assessee nor should the AO take such repudiation at face value and construe it, without more, against the Assessee.

v. The AO is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and veracity of the repudiation.”

17. In the case of CIT v. Steller Investment Ltd reported in [19911 192 ITR 287 (Delhi), the Hon’ble Delhi High Court has observed as under:

“Even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons.”

18. Both the aforementioned decisions of the Hon’ble Delhi High Court were again considered by the Division Bench of Hon’ble Delhi High Court in CIT v. Lovely Exports Ltd. reported in 319 ITR 5 (St.) and thereafter, in the case of CIT v. Nova Promoters & Finlease (P.) Ltd. reported in [20121 342 ITR 169 (Delhi). The Hon’ble Supreme Court in the case of CIT vs Lovely Exports Pvt. Ltd. (supra) has further held as under:-

“2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961. We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment.”

19. The Hon’ble Supreme Court of India in the case of CIT vs. Kamdhenu Steel & Alloys Ltd., SLP (CC) No. 15640 of 2012 (SLP) dismissed against decision of Delhi High Court has observed as under:

“… assessee discharged the burden in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter, in case such evidence is to be discarded or it is proved that the assessee has “created” evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act…”

20. In view of above discussion and by respectfully following the judgements of the Hon’ble Apex Court and of the Hon’ble Jurisdictional High Court, we are of the considered opinion that the assessee has discharged the burden casted upon it of proving the identity and creditworthiness of the share applicants and the AO has not made any independent enquiries to support the allegation that the applicants has no creditworthiness, therefore the addition of INR 1.00 crores including INR 30.00 Lakhs received from three applicants is hereby, deleted. Accordingly, all the Grounds of appeal raised by the assessee are allowed.

21. In the result, appeal of the assessee is allowed.

22. Now we take appeal of the Revenue in ITA No.138/De1/2026 for Assessment Year 2011-12.

ITA No.138/De1/2026 [Assessment Year 2011-121

23. In all the Grounds of appeal taken, the Revenue challenged the action of the AO in deleting the addition of INR 3,65,70,000/- made u/s 68 of the Act on account of unsecured loans received during the year.

24. Since all the Grounds of appeal are related to the one issue of deletion of addition of unsecured loans, therefore, they have been taken together for consideration.

25. Before us, Ld. Sr. DR for the Revenue vehemently supported the order of AO and submits that AO in para 5 of the assessment order, has tabulated the details filed and observations made in respect of all the Eight lenders from whom total funds of INR 3,65,770,000/- were received as unsecured loans during the year. Ld. Sr. DR submits that in some of the cases, the assessee has filed only confirmations and no other supporting documents were filed to establish their creditworthiness. Ld. Sr. DR submits that before the ld. CIT(A), the assessee has filed additional evidences like confirmations, bank statements and ITRs of the lenders in order to establish their identity, creditworthiness and genuineness however, in the remand report, AO requested not to admit these details on the premise that sufficient opportunities were provided during the assessment proceedings. However, Ld.CIT(A) has deleted the same by admitting the additional evidences and decided the issue in favour of the assessee. Ld. Sr. DR requested for the confirmation of the order of AO.

26. On the other hand, Ld.AR for the assessee vehemently supported the order of Ld. CIT(A) and submits that it is an admitted fact that during the course of assessment proceedings, the assessee has not filed all the details of the lenders and it is settled propositions that the borrower have subdued position and cannot compel the lender to provide all the details such as confirmations, bank statements, ITRs and most of the times when funds were returned back, the lenders tried to avoid the proceedings. However, the assessee after making rigorous efforts have been able to collect all the relevant details which are field before Ld. CIT(A) as additional evidence, who after appreciating the facts and further appreciating that all the loans were repaid much prior to the initiation of the reassessment proceedings u/s 147 of the Act and there was no amount outstanding thus, had deleted the additions. Accordingly, Ld. AR submits that once the assessee has discharged the burden casted upon it of proving the identity and creditworthiness of the lenders and further established the genuineness of the transactions which fact has been accepted by Ld. CIT(A) after making proper verification of the details filed. Thus, it cannot be said that the assessee has not discharged the burden casted upon it, u/s 68 of the Act and therefore, prayed that Ld. CIT(A) has rightly deleted the addition which order deserves to be uphold.

27. Heard the contentions of both the parties at length and perused the material on record. From the perusal of para 5 of the assessment order, it is observed that before the AO, assessee has failed to file even confirmations of the lenders and neither their bank statements nor their financial statements were submitted therefore the AO has treated the unsecured loans received from 08 parties totaling to INR 3,65,70,000/- as unexplained credit u/s 68 of the Act. It is further observed that before Ld. CIT(A), the assessee has filed following documents:-

(i) Confirmations of accounts

(ii) Relevant extract of the bank statements

(iii) Copy of acknowledgement of ITR

(iv) In some cases their audited financial statements/MCA data were filed

28. It is further observed that all the entities are either the group entities or the relatives of the Directors. A sum of INR 1.58 crores was received from Ambika Tradexpo Pvt. Ltd. from whom share application money of INR 10 Lakhs was also received. Likewise a sum of INR 1.26 crores was received from Ambika Buildtrade Pvt. Ltd. from whom share application money of INR 10 Lakhs was received. In both the cases, we have already observed that these parties have sufficient creditworthiness and had balance when the funds were transferred to the assessee company. In the case of the remaining 06 lenders, it is observed that all these lenders were having sufficient funds in their bank accounts when the loans were extended to the assessee company. Moreover, they have accepted the transactions and no effort was made by the AO of making independent inquiry except in the case of Ambika Build and Ambika Trade where notice u/s 133(6) were issued which remained uncompiled. With respect to the remaining 06 creditors even the AO has not issued any notice and merely made the addition. Ld. CIT(A) considering the details filed, has deleted the addition by making following observations in para 11 to 11.5 as under:-

11. Addition of Unsecured Loans — Rs. 3,65,70,000

“The AO examined alleged unsecured borrowings accepted in the books and, on the basis of his verification and investigation, concluded that the identity/creditworthiness of the lenders and the genuineness of the transactions were not satisfactorily established and accordingly made an addition of Rs. 3,65,70,000 under Section 68. The AO’s remarks and working on this head form part of the assessment record and remand report.

11.1 In response to the AO’s queries and during appellate proceedings the appellant placed additional documentary material on record. The principal evidentiary categories before me include the following:

* bank statement entries evidencing receipt of amounts credited as “loans” from identified third parties;

* corresponding bank transfer/RTGS/NEFT evidences and inward credit advices for those receipts;

* bank payment/transfer proofs showing repayments to the alleged lenders (showing that a substantial portion of the amounts was repaid, including entries in the same year;

* ledger/cash-book entries of the assessee recording the receipt and repayment of the loans;

11.2 Specific instances may be noted as under:

* Khurana Auto Ways (Rs.5,00,000): Loan fully repaid on 10.05.2011.

* Smeet Brass Components (Rs.12,00,000): Loan repaid in three instalments — Rs.7,00,000 on 16.05.2012, Rs.4,00,000 on 24.05.2012, and Rs.1,00,000 on 03.07.2012.

* Raminik Singh (Rs.22,00,000): Loan repaid in two instalments – Rs. 11,00,000 on 14.05.2011 and Rs.11,00,000 on 01.02.2013.

* Ambica Tradexpo Pvt. Ltd. (Rs. 1,58,00,000): Substantial repayments of Rs. 1,98,00,000 were made, leaving balance only Rs.29,00,000.

* Ambica Buildtrade Ltd. (Rs.1,26,00,000): Repayment of Rs.97,00,000 has been made, leaving a closing balance of Rs.29,00,000.

* Chetan Pahwa (Rs.7,70,000): Repaid fully. In fact, the amount pertains to share application money received in F.Y. 2009-10, and is not an unsecured loan, which is a mistake apparent in the AO’s working.

* Satyender Kaur (Rs. 10,00,000): Repaid fully.

* Surender Kumar Sapra (Rs.25,00,000): Repaid fully.

11.3 The question is whether, on the totality of the documentary material now rile, the appellant has discharged the legal onus to show identity/creditworthiness and genuineness of the alleged unsecured loans. The AO’s remand report does not bring forward independent adverse material (for example, evidence that the payors’ bank accounts lack funds at the relevant times, or direct evidence of fabrication). Whereas, most Important factual feature that weigh in the appellant’s favour is Bank channel evidence for repayments. It is observed that a substantial part of the borrowed sums (only 29 lakh remaining) has been shown to have been repaid through bank transfers/payments; some repayments occurred in the same accounting year as the receipts. Repayments through banking channels, corroborated by ledger entries and acknowledgements, strengthen the proposition that genuine lending and repayment took place. It is also Important to appreciate that repayment made even before issuance of sec 148 notice on 26.03.2018. Recently in accommodation entry case, Jurisdictional Tribunal has deliberated identical issue:

11.4 The recent judgment of the jurisdictional ITAT in Real Innerspring Technologies Pvt. Ltd. vs. ACIT (dated 27.03.2025). Hon ‘ble ITAT considered the same question on substantially similar facts(Himanshu Verma / Deepak Agarwal group) and held in favour of the assessee: because the loans had been repaid before the date of issue of notice under section 148. The ratio of same case is directly relevant and binding in the present appeal. A copy of the ITAT order is on file and has been examined. For sake of completeness, operating part of the said order is reproduced here as under:

^“11. In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee’s own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid thru the banking channel as under:-

12. From the above, it is clear that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Therefore, we are inclined to allow the grounds raised by the assessee.

13. In the result, appeal filed by the assessee is allowed.”

11.5 On the totality of the documentary evidence now on the appellate record bank receipts, bank payment proofs for repayments (including same-year repayments), ledger entries and lender confirmations the appellant has, in my view, substantially discharged the onus imposed by Section 68 in respect of the unsecured loans of Rs. 3,65,70,000. The addition made by the AO under Section 68 in respect of those unsecured loans is therefore not sustained.

29. Before us, Revenue has failed to controvert the findings given by Ld. CIT(A) while deleting the additions made. It is observed that ld. CIT(A) has duly considered the evidences filed by the assessee such as bank statements, confirmations etc. and also observed that all the loans were repaid in subsequent years and thus, by following the judgement of Co-ordinate Bench of Tribunal in the case of Real Innerspring Technologies Pvt. Ltd vs ACIT dated 27.03.2025 had deleted the additions made.

30. Recently, the Hon’ble Gujarat High Court in the case of PCIT vs Piyush Subodhbhai Javeri in Tax Appeal No. 759/2025 vide order dated 09.06.2026 following the judgments of Hon’ble Gujarat High Court in the case of PCIT Vs Ojas Tarmake Pvt Ltd reported in 156 com 75; PCIT vs Ganesh Plantation [20221 134 taxmann.com 149; PCIT vs Ambe Trade reported in [20231290 taxmann.com 471 has held that once the fact of repayment of loan is not disputed by the Revenue, no substantial question of law arises against the order of Tribunal accepting the credits as genuine transactions and dismissed the appeal of the Revenue.

31. The facts of the instant case are identical where the assessee has not only established the source in the hands of the lenders by filing their bank statements etc. but also it is fact that loans were repaid and no adverse inference was called for by the Revenue on such repayment. Therefore, we find no error in the order of Ld. CIT(A) in deleting the additions made. Accordingly, all Grounds of appeal raised by the Revenue are dismissed.

32. In the result, appeal of the Revenue is dismissed.

33. In the final result, appeal of the assessee in ITA No.7414/De1/2025 for AY 2011-12 is allowed and appeal of the Revenue in ITA No.138/De1/2026 for AY 2011-12 is dismissed.

Order pronounced in the open court on 29.06.2026.