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Facts
The assessee, engaged in trading electronics, received unsecured loans totaling Rs. 60.00 lakhs from two entities. The Assessing Officer added this amount as unexplained cash credit under Section 68, rejecting the furnished evidence. The CIT(A) confirmed the addition despite the assessee providing details like names, addresses, PANs, bank statements, ITRs, and loan confirmations, and demonstrating that the loans were repaid in subsequent years.
Held
The Tribunal found that the assessee had sufficiently proven the identity, creditworthiness, and genuineness of the loan transactions, especially given that the loans were fully repaid. Citing various High Court judgments, including the Gujarat High Court in Ambe Tradecorp (P.) Ltd., the Tribunal held that once repayment is established with documentary evidence, the addition under Section 68 cannot stand. The order of the CIT(A) was set aside, and the Assessing Officer was directed to delete the addition.
Key Issues
Whether the addition of unsecured loans as unexplained cash credit under Section 68 was justified when the assessee had provided all necessary documentation and demonstrated repayment of the loans in subsequent years.
Sections Cited
68, 139(1), 148A(b), 148A(d), 148, 133(6)
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
O R D E R
Per Rajesh Kumar, AM :
This is an appeal filed by the assessee against the order dated 22.03.2025, passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-2019.
At the time of hearing, ld.counsel for the assessee pressed the grounds No.8, 9, 10 & 11, which are raised by the assessee to challenge the confirmation of addition by the ld. CIT(A) of Rs.60.00 lakhs made by the Assessing Officer u/s.68 of the Act as unexplained cash credit.
Facts in brief are that the assessee is engaged in the business of trading of electronics audio, video etc. The assessee filed its return of income u/s.139(1) of the Act on 06.10.2018 declaring total income at Rs.95,23,889/-. The notice u/s.148A(b) of the Act was issued by the Assessing Officer on 10.03.2022 wherein it was stated that the assessee has received an amount of Rs.60.00 lakhs from two entities, namely, M/s Madhurashi Shoppers Pvt. Ltd. and M/s Manikala Vyaapar Pvt. Ltd. The order u/s.148A(d) of the Act was passed on 23.03.2022 and thereafter the notice u/s.148 of the Act was issued on 23.07.2022 which was responded by the assessee by filing return of income declaring at Rs.95,23,889/-. During the course of assessment proceedings, the Assessing Officer called for the various details/evidences from the assessee qua the issue raised which were duly furnished comprising names, addresses, PAN Numbers, audited balance sheets, bank statements, loan confirmations, sources of funds, ITRs, etc., however, the evidences filed by the assessee were rejected and the Assessing Officer added the unsecured loans received by the assessee at Rs.60.00 lakhs from the two companies namely M/s Madhurashi Shoppers Pvt. Ltd. and M/s Manikala Vyaapar Pvt. Ltd. without pointing out any defect in the evidences filed by the assessee during the course of assessment proceedings. Ld. CIT(A) in the appellate proceedings simply confirmed the order of the Assessing Officer.
4. After hearing the learned counsel for the parties and perusing the material on record, we find that undisputedly the assessee received money from the two entities namely, M/s Madhurashi Shoppers Pvt. Ltd. of Rs.26.00 lakhs and M/s Manikala Vyaapar Pvt. Ltd of Rs.34.00 lakhs by account payee cheques. The assessee filed before the Assessing Officer all the evidences/details in response to the questionnaire issued by the Assessing Officer by filing the names, addresses, loan details, loan confirmations, ledger accounts, bank statements, ITRs, audited accounts before the Assessing Officer as well as before the ld. CIT(A). It was submitted that the loans received by the assessee stood repaid in the subsequent years, however, the contention of the assessee did not meet the satisfaction of the authorities below resulting into affirming the order of the Assessing Officer by the ld. CIT(A).
5. We have perused the statement of loans repayment along with bank statements, which were available before the Assessing Officer. We note that there was non-compliance before the ld.CIT(A) on the various date by the assessee and the ld.CIT(A) simply confirmed the order of the Assessing Officer. Now, considering the facts on record, we are not inclined to restore the issue to the file of ld. CIT(A) for the reasons that as the issue is squarely covered by the various decisions of the Hon’ble Jurisdictional High Court as well as other Hon’ble High Courts. We note that the loans received by the assessee were repaid as is clear from page 15 of the paper book filed by the assessee before us, which reads as follows :-
6. We have verified the repayment of loans with the statements furnished at paper book at page 152 and found that the repayments were made completely. Therefore, once the assessee has established that the repayment of loans has been made then the same cannot be added u/s.68 of the Act on the ground that the assessee has failed to meet the ingredients of Section 68 of the Act. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024. In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act. Similarly, the of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :- "3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information." 3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine.
Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied.
As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied.
The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. "