The Pr. Commissioner of Income Tax -Central -1 v. Sperry Plast Ltd.

1. The instant appeal under Section 260A of the Income Tax Act 1961 (hereinafter referred to as „Act of 1961‟) impugns the order dated 04.06.2025 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘G’ New Delhi (hereinafter referred to as „the Tribunal‟), whereby the appeal filed by the respondent-assessee was allowed.

2. While allowing the appeal, the Tribunal recorded the following findings:-

3. Mr. Bhatia, learned Senior Standing Counsel appearing for the appellant-Department argued that the Tribunal has not appreciated the facts in their true nature and has failed to consider the crucial aspect that merely within two days, the loan which the respondent-assessee had taken was repaid.

4. He further submitted that so far as the second loan which had been taken from Pioneer Dealtrade Pvt. Ltd. is concerned, in face of clear report given by the investigation Wing Kolkata, there could not be any iota of doubt that the same was only a paper transaction and that the creditor was an entry provider.

5. Having heard learned counsel for the appellant and upon perusal of the record, we are of the view that the issue which is sought to be canvassed before us is essentially a finding of fact and appreciation of evidence and material which the Tribunal has taken into account.

6. While observing that simply because the loan has been paid within two days, it cannot be said with certitude that the loan was not a genuine loan and was only a paper entry. According to us, the other argument that no interest was paid to the creditor is also mis-placed because if the short-term loan for two-three days is taken, for whatever reason because of family or business relation or friendship, a creditor may advance the amount with lesser or even without interest.

7. As a matter of fact the enquiry which ought to have been contended by the respondent-assessee is lacking in the case, which in instant case could have been – whether the creditor has license under the Bengal Money Lender’s Act, 1940 or not, and/or what is the relationship (friendly or business/blood relationship) due to which a creditor situate in Kolkata had advanced such a huge amount of loan to the respondent-assessee situate in Delhi.

8. In absence of requisite enquiry or exercise which should have been undertaken, we do not find it to be a case warranting interference. The appeal is, therefore dismissed.

9. Pending application also stands disposed of.

DINESH MEHTA (JUDGE)