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Facts
The assessee appealed against the CIT(A) orders for AY 2014-15 and 2015-16. A search was conducted on the assessee, leading to assessment under Section 153A r.w.s 143(3). The original assessment had examined loans taken by the assessee. These loans were repaid by assessment year 2015-16.
Held
The Tribunal, following the Gujarat High Court ruling in Ambe Tradecorp (P) Ltd., held that if the assessee is no longer a beneficiary of the loans and the loan transactions were proven genuine, then additions under Section 68 are unjustified. Consequently, the additions made by the AO and confirmed by the CIT(A) were deleted.
Key Issues
Whether additions under Section 68 for unsecured loans are sustainable when the loans were repaid, the identity and creditworthiness of lenders were established, and the assessee was no longer the beneficiary of the loans?
Sections Cited
153A, 143(3), 142(1), 131, 132, 147, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
आदेश / O R D E R
Per George Mathan, AM: These are two appeals filed by the assessee against the order passed by the Id. CIT(A), Kolkata-27, both dated 26.09.2024 for the assessment years 2014-2015 & 2015-2016. 2. It was submitted by the ld.AR that there was in search on the assessee on 01/12/2015. As a consequence of search, the assessment came to be completed u/s.153A r.w.s 143(3) of the Act on 31/12/2017. The Ld. AR drew our attention to the notice issued u/s.142(1) of the Act in the course of said notice is dated for 12/02/2017. Copy of which is shown at page 118 & 120 of the paper book which reads as follows:-
It was submission the AO had specifically asked the assessee to furnish the details of all loans taken during the financial year 2009-10 to 2015-16 and in the case of unsecured loans to furnish the evidence of source of fund utilization by the debtors including the copies of the bank statements etc. The Ld.AR drew our attention to the page 117 paper book which is the reply filed on 01/12/2017 which reads as follows:-
It was submission that after considering the replies and evidences produced, the AO had completed the original assessment u/s.153A/143(3) of the Act on 31.12.2017. It was submission that subsequently the AO has initiated the reopening proceedings by recording reasons which was shown at page 95 & 96 of the paper book which reads as follows:-
1. It was submitted that as all the details have been reproduced before the Assessing Officer, the reopening is liable to be quashed. Ld. AR further drew our attention to page 152 of the paper book filed in to submit that all the loans which had been taken had been repaid by the financial year 2016-17. The said evidence reads as follows:-
It was submission that none of the loans were outstanding. It was submission that in the course of assessment the AO has asked the assessee to prove the loans which have already been closed. It was submission that in view of the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxxman.com 27(Gujarat), the assessee is being not a beneficiary of the loans anymore, the addition is not liable to be made in the hands of the assessee.
In reply, the Ld.Sr.DR vehemently supported the order of the AO and CIT(A).
We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the loans taken by the assessee had at the initial stage itself being examined as is evident from notice issued u/s.142(1) of the Act and the response filed and the assessment order passed originally. Further a perusal of evidences filed, more specifically, in regard to the repayment of the loans shows that all the loans had been repaid during the assessment year 2015-16 and after 2016-17 no loans remained outstanding. The Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd, referred to supra, has held that as the assessee is not being a beneficiary of the loans anymore, no addition u/s.68 of the Act could be made on account of such loan. The relevant observations of the Hon’ble Gujarat High Court are as under :- Section 68 of the Income-tax Act, 1961 - Cash credit (Bogus loan) - Assessment year 2012-13 - Assessee received loans from two parties - Assessing officer treated same to be sham for reason that creditworthiness of loan givers was not established and, accordingly, made addition under section 68 - It was noted that Tribunal recorded findings of facts that assessee had furnished details such as copy of ledger account, bank statements, income-tax returns, balance sheet etc. of loan givers - It was also recorded that notice under section 133(6) was issued to said loan givers which were duly responded by them, therefore, identity of parties could not be disputed - It was also noticed that assessee was not beneficiary as loan was repaid by assessee in subsequent year - Whether, on facts, identity and creditworthiness of parties and genuineness of loan transactions were well established, therefore, impugned addition made under section 68 on account of said loan amount was unjustified - Held, yes [Paras 3.4, 3.5 and 5] [In favour of assessee] 9. Respectfully following the principle laid down by the Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P) Ltd., referred to supra, the addition as made by the AO and as confirmed by the CIT(A) for both the years under consideration stands deleted.
In the result, both appeals of the assessee are allowed. Order dictated and pronounced in the open court on 29/01/2026.