PCIT Vs KRBL Infrastructure Ltd. (Delhi High Court)
Delhi HC upholds deletion of ₹10 Cr loan addition as Assessee proved identity, creditworthiness & genuineness; “source of source” cannot be examined for AY 2014-15
In this appeal u/s 260A, Revenue challenged the ITAT order dated 08.06.2024 which had upheld the CIT(A)’s deletion of addition of ₹10,00,00,000/- towards unsecured loan received from M/s Shashi Foods India Pvt Ltd & interest of ₹1,03,10,760/- for AY 2014-15.
The KRBL Group was subjected to search u/s 132 on 30.03.2016, pursuant to which the AO framed assessment u/s 153A r.w.s. 143(3) making the impugned addition by alleging that Shashi Foods was involved in bogus purchases in collusion with entities linked to one Dinesh Jain. AO doubted the loan on the ground that certain trade creditors of Shashi Foods were not found at their addresses, certain purchase bills appeared bogus & the fund-flow analysis linked Shashi Foods with entities connected to providing accommodation bills. According to AO, creditworthiness & genuineness remained unproved.
CIT(A) examined the entire material & held that the Assessee fully discharged the onus u/s 68 as (i) Shashi Foods confirmed the loan in its statement during survey & again responded to notice u/s 133(6), (ii) identity was established, (iii) the loan was advanced through banking channels, (iv) interest was paid with TDS & (v) the loan stood repaid in FY 2015-16. The CIT(A) held that AO’s enquiries into the purchases of Shashi Foods or the existence of its creditors amounted to examining “source of source”, which is impermissible for AY 2014-15. ITAT concurred with the CIT(A) noting that AO brought no adverse material disproving the confirmations, bank statements or audited financials of Shashi Foods. Even if some purchases of Shashi Foods were doubtful, AO never examined its sales though the lender specifically asserted that loan came from sale proceeds. ITAT held that Shashi Foods had sufficient banked funds & confirmation, hence identity, creditworthiness & genuineness were proved.
