Assessee discharges onus u/s 68 via bank statements, confirmations and source proof; housewife's non-ITR filing insufficient for small loan addition; partners' interest disallowance invalid if netted; additional evidence admissible under Rule 46A with cause.

ORDER 

PER ANUBHAV SHARMA, JM:

These are appeals preferred by the assessee and revenue against the common order dated 27.06.2025 of the Ld. National Faceless Appeal Centre (NFAC) (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No : ITBA/NFAC/S/250/2025-26/1077928804(1) arising out of the order dated 04.08.2021 u/s143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the NaFAC, New Delhi for AY: 2018-19.

2. Heard and perused the records. The appellant firm is engaged in developing a residential colony under the name and style of “Kanha Green City” situated at Siwaya Jamaullahpur, Daurala, Meerut and assessee’s return was taken up for scrutiny for examination unsecured loans and based upon the reply of the assessee addition was made at Rs.3,15,87,494/- in regard to loans received from 19 persons. Addition was also made on account of interest estimated at 12% on interest-free loan advanced to partners of Rs 10,62,000/-and assessee had succeeded before ld. CIT(A) wherein the addition was deleted to the extent of Rs.2,80,05,594/-. However disallowance of interest was confirmed. The impugned order shows that the benefit was given by the ld. CIT(A) on the basis of remand report given by the assessing officer.

3. Accordingly, both the department and assessee are in appeal and the respective appeal are adjudicated as follows.

Grounds raised in ITA No. 4675/Del/2025 Assessee’s Appeal)

“1 That the Ld. CIT(A) has erred on facts and in law in confirming the addition aggregating to Rs.39,00,000 u/s 68 r.w.s. 115BBE of Income Tax Act, 1961 ("Act") on account of unexplained cash credits in the books of accounts of the Appellant of the following parties:

(i) Abhishek Kumar Rs. 36,00,000

(ii) Deepa Sharma Rs. 3,00,000

At any rate, without prejudice, such addition of Rs.39,00,000 as confirmed is very excessive.

2. That the Ld. CIT(A) has erred on facts and in law in confirming the disallowance of interest of Rs. 10,62,000 on account of interest estimated @12% on interest free loan advanced to partners.

At any rate, without prejudice, such disallowance of interest of Rs.10,62,000 as confirmed is very excessive.

3. That the Appellant reserves its right to add, amend/modify the grounds of appeal.”

3.1 Grounds no. 1 in appeal of assesse challenge confirmation the addition of Rs 39 lakhs on account of unexplained cash credits in the books of accounts of the appellants from Abhishek Kumar of Rs 36 lakhs and Deepa Sharma of Rs 3 lakhs. In regard to these to individuals assesse had provided certain documentary evidences and same are picked from the submission of assesse and reproduced below;

“Abhishek Kumar – Addition of Rs.36,00,000

a) Copy of written submissions dated 09/08/2022 filed before CIT(A) placed at pages 1-13 of PB. Relevant portion from pages 2-3 of PB is reproduced below:

(i) Confirmatory certificate dated 19/07/2022 of Abhishek Kumar (now placed at page 46 of PB) confirming that he raised housing loan of Rs. 36,00,000 from Syndicate Bank which was advanced to the Assessee firm.

(ii) Copy of ledger A/c of Abhishek Kumar in the books of the Appellant for the year under consideration (now placed at page 47 of PB) from which it is evident that fresh loan of Rs. 36,00,000 was raised on 20/11/2017 as filed before the AO.

(iii) Relevant copy of Syndicate bank statement bearing account No.88389740000113 of Abhishek Kumar (now placed at page 48 of PB) reflecting disbursement of housing loan of Rs.36,00,000 on 20/11/2017 to Abhishek Kumar.

(iv) Relevant copy of Syndicate bank stateme