Under S.68, creditworthiness proven by confirmations and bank statements via S.133(6); non-filing of returns insufficient without adverse verification.

आदेश/ORDER

PER MAKARAND VASANT MAHADEOKAR, AM:

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as "CIT(A)"], u/s 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], dated 02/07/2025, for A.Y. 2017-18, arising from the assessment order passed by the Income Tax Officer, Ward 26(2)(7), Mumbai[hereinafter referred to as "Assessing Officer or AO"], u/s 143(3) of the Act dated 24/12/2019.

Facts of the Case

2. The assessee filed its return of income declaring total income of Rs. 85,300/-. The return was processed under section 143(1) of the Act. Thereafter, the case was selected for scrutiny and notices under sections 143(2) and 142(1) along with a detailed questionnaire were issued by the Assessing Officer. According to the assessment order, despite opportunities having been afforded, the assessee did not furnish complete details as called for, particularly in relation to the fresh loans reflected in the balance sheet, and therefore the assessment was completed on the basis of material available on record.

3. In the course of assessment proceedings, the Assessing Officer noticed that the assessee had shown unsecured loans of Rs. 3,21,32,603/- in the year under consideration as against unsecured loans of Rs. 2,88,49,939/- in the immediately preceding year. The Assessing Officer, therefore, treated the difference of Rs. 32,82,664/- as fresh unsecured loan received during the year. Since the assessee, according to the Assessing Officer, failed to furnish confirmations and failed to establish the identity of the lenders, their financial capacity and the genuineness of the transactions, the said amount of Rs. 32,82,664/- was treated as unexplained cash credit under section 68 of the Act and brought to tax under section 115BBE. The total income was accordingly determined at Rs. 33,67,960/- after making the said addition.

4. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). In the statement of facts filed before the first appellate authority, the assessee contended that though certain details had been furnished before the Assessing Officer, it could not collect and file confirmations of unsecured loans within the limited time available and, therefore, the Assessing Officer had erroneously added the difference between the closing and opening balance of unsecured loans to the returned income. The assessee also contended that the addition under section 68 was made without granting full and proper opportunity and that invocation of section 115BBE was not justified.

5. During the appellate proceedings, the assessee furnished detailed reconciliation of the secured and unsecured loans and pointed out that a part of the difference considered by the Assessing Officer actually pertained to a secured loan from HDFC Auto Loan, which had been wrongly taken as unsecured loan in the assessment order. The assessee further submitted complete details of unsecured loans, ledger confirmations in cases where there was increase or decrease in the balances, and contended that the net increase in unsecured loans was Rs. 23,55,319/- and not Rs. 32,82,664/- as taken by the Assessing Officer. The assessee requested that the matter be restored to the Assessing Officer or, in the alternative, that the additional evidences be admitted and considered.

6. Since additional evidences had