An assessee satisfies the burden of proof for unsecured loans by providing identity and financial documentation, shifting the onus to the Revenue. Furthermore, beneficial statutory provisions like the valuation tolerance band for real estate are curative and apply retrospectively to pending assessments.

O R D E R

Per Padmavathy S, AM:

This appeal by the Revenue is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 30.06.2024 for Assessment Years (AY) 2014-15. The Revenue raised the following grounds of appeal:

“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made of Rs. 3,20,00,000/- as unexplained cash credit u/s.68 of the I.T.Act, 1961 by the AO in respect of unsecured loans taken by the assessee from Bhanwarlal Jain who is an accommodation entry provider.

2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 9,60,000/- as unexplained expenditure u/s.69C of the I.T.Act, 1961 by AO in respect of commission paid on the said loans.

3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 90,13,442/- as unexplained cash credit u/s.68 of the I.T. Act, 1961 by the AO in respect of commission paid on the said loans.

4. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 18,18,500/- u/s.43CA of the Act without appreciating the fact that the assessee has sold the flat below the stamp duty value.”

2. The assessee is an individual and proprietor of M/s Peerless Constructions engaged in the business of constructing building. The assessee filed the return of income for AY 2014-15 on 25.09.2014 declaring a total income of Rs. 1,80,55,170/- which was subsequently revised on 03.11.2014 declaring total income of Rs. 1,76,67,500/-. The assessee's case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing officer (AO) completed the assessment by making the following additions:

(i) Unexplained cash credit under section 68 in respect of loans taken from four parties – Rs. 3,20,00,000/-.

(ii) Disallowance of interest expenses for the said loans taken earlier year – Rs. 90,13,442/-.

(iii) Addition under section 43CA – Rs. 18,18,500/-

3. On further appeal, the CIT(A) gave relief to the assessee with respect to all the additions / disallowance made by the AO. The CIT(A) while deleting the addition made towards unsecured loan and interest thereon held that the assessee had discharged the onus of substantiating the loans by providing all the relevant documents such as loan confirmation from parties, copies of returns of the lender, relevant bank statements of the lender and the assessee, copies of the financial statements of the lenders as well as the assessee. The CIT(A) also placed reliance on the decision of the Co-ordinate Bench in assessee's own case for AY 2012-13. With regard to the addition made under section 43CA, the CIT(A) gave relief to the assessee considering the fact that the difference between the sale value and the stamp duty value is only 7.7%. The revenue is in appeal before the Tribunal against the order of the CIT(A).

Addition towards unexplained loans and interest thereon.

4. The ld. DR submitted that mere submission of documents does not prove the credibility of the transactions and that the same has to be examined considering the overall circumstances surrounding the facts. The ld. DR further submitted that the loan transactions in the first place were questioned based on fact that the parties from whom the assessee has obtained the loan are accommodation entry providers controlled and managed by Bhanwarlal Jain Group who is a leading ent