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Facts
The Revenue appealed against the CIT(A)'s deletion of an addition of ₹1,45,00,000/- made by the AO under Section 68 for bogus unsecured loans. The AO's assessment was based on statements recorded during a survey, which were later retracted by the individuals. The CIT(A) found that the assessee had provided sufficient evidence regarding the identity, creditworthiness, and genuineness of the loan transactions.
Held
The Tribunal upheld the CIT(A)'s order, finding that the AO's addition was based on unsubstantiated allegations and retracted statements. The assessee had discharged its onus by providing necessary documentation, and the AO failed to bring any corroborative evidence to prove the loans were non-genuine.
Key Issues
Whether the addition made by the AO on account of unsecured loans under Section 68 is valid when the assessee has established the identity, creditworthiness, and genuineness of the lenders, and the AO lacks corroborative evidence beyond retracted statements?
Sections Cited
68, 139(1), 143(3), 133A, 131, 147, 148, 69C, 36(1)(iii)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata-27(hereinafter referred to as the “Ld. CIT(A)”] dated 25.03.2025 for the AY 2016-17.
The issue raised in ground no.1 is against deletion of addition of ₹1,45,00,000/- by the ld. CIT (A) as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (the Act) in respect of bogus unsecured loans.
2.1. The facts in brief are that the assessee company is a flagship company of ‘Avima Group’ and is in the business of trading in jute items. The assessee filed the return of income u/s 139(1) of the Act on 30.09.2016, declaring total income at ₹49,57,450/-. The 2.1.1. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by recording a very detailed finding as under:-
“6.2. Discussion and decision: 6.2.1. I have gone through the assessment order as well as the submission of the assessee. On examining the same, it is observed that during the year under consideration, the assessee had received the following unsecured loans from the following entities: Sl. No. Name of Loan Creditors Loan taken during the Interest paid during the year (in Rs.) year (In Rs.) 1. Avion Tradelinks Pvt. Ltd. 50,00,000/- 1,22,877/- 2. Goodpoint Realestate Pvt. Ltd. 65,00,000/ 99,726/- Sl. Name of Loan parties Share Capital, Reserves Unsecured loan Percentage Revenue & Surplus (Rs.) (%) from operations 1 Avion TradelinksPvt. Ltd. 6,48,60,682/- 50,00,000/- 7.70 23,07,036/- 2 Goodpoint RealEstate Pvt. Ltd. 18,25,42,578/- 65,00,000/- 3.56 10,05,635/- 3 Snowbird Computers Pvt Ltd 6,10,54,380/- 30,00,000/- 4.91 7,97,405/-
Total 1,45,00,000/- However, without considering the net-worth of the lending entities, the AO had alleged that the aforesaid entities are bogus and dummy entities which were controlled and managed by some famous entry operators namely Shri. Mukesh Banka and Arun Nangalia only based on the statements recorded of the above person by the Search team. However, in the said statement, nowhere the said persons had admitted that they had given accommodation entry to the assessee in any mode. Further, during the course of the assessment proceedings, the AO had asked the assessee to provide explanation with regard to identity, creditworthiness and genuineness of the lending entities. In reply to the same, the assessee had furnished the PAN, address of the lending entity, loan confirmation, ledger and bank statement showing the receipt and The revenue appeal against the above order was dismissed by Hon’ble Supreme Court vide order dt. 21st Jan 2008 dismissed the SLP and held that if the share application money is received by the assessee company even from the bogus shareholders whose names are given to the AO then the Department is free to proceed to reopen their
2.2. On the issue that the lending entity did not have minimum financial strength to lend money to the assessee, such as, no fixed assets, low turnover, no rent payable etc, the ld. CIT (A) noted that the financial strength cannot be determined based on the aforesaid parameters and one should obtain 360-degree financials of any entity to infer any adverse view against its genuineness. The case of the assessee find support from the decision of Hon'ble Delhi High Court in case of ‘CIT, Dehi vs. Ms. Mayawati, 338 ITR 563 (Del), 03/08/2011’, wherein the Hon'ble Delhi High court held that “the capacity of any person does not mean how he earns monthly or annually but the term capacity is a wide term and that can be pursued by how wealthy he is. Therefore, we do not find any infirmity
The issue raised in ground no.2 is against the deletion of interest on the loans by the ld. CIT (A) and the issue in ground no.3 is against the deletion of addition made u/s 69C of the Act in respect of commission expenses.
3.1. We note that both the grounds are consequential to ground no 1 and therefore, we are inclined to upheld the order of ld. CIT (A) by dismissing the ground nos.2 and 3 of the Revenue’s appeal.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 26.02.2026.