DCIT Vs Surym Infrastructure (ITAT Ahmedabad)
Interest on Unsecured Loans Allowed: ITAT Ahmedabad Holds AO Cannot Disallow ₹1.95 Cr Interest on Mere Presumptions & Third-Party Statements
In this Revenue appeal for AY 2018-19, the Assessing Officer had disallowed ₹1,95,44,506 of interest paid by Surym Infrastructure on unsecured loans. No fresh loans were taken in the year; only interest on opening balances was credited with proper TDS. AO doubted genuineness of ten lender-companies, relying on (i) a general statement of one Jigar Trivedi recorded u/s 131 (page 2), (ii) a letter given by HJM Fuels Pvt Ltd to the Investigation Wing (page 3), & (iii) newspaper reports regarding GST fake-billing scams involving some entities (page 6). AO presumed that all these lenders were accommodation-entry providers & disallowed the entire interest.
CIT(A), after a detailed 10-page analysis, deleted the disallowance. CIT(A observed that the statement of Jigar Trivedi was a general statement not naming Assessee, no cross-examination was offered, no cash-trail was established, & no link existed between appellant & any alleged accommodation entry. The letter of HJM Fuels related to entirely different entities & years, and the GST newspaper report had no correlation with Assessee’s loan transactions. Assessee had filed confirmations, PAN, ITRs, audited accounts, & TDS proofs for all ten lenders.
Tribunal examined the entire record & upheld CIT(A)’s findings. It noted that AO never examined lenders, issued no summons, conducted no independent enquiry, and relied solely on generic material unrelated to Assessee. Further, once the opening loan balances were never held as non-genuine, interest on those balances cannot be disallowed in a subsequent year without first disproving the loan u/s 68 in the year of receipt.
Tribunal relied on binding Gujarat HC precedents such as Ambe Tradecorp Pvt Ltd, Merrigold Gems Pvt Ltd, & Ayachi Chandrashekhar Narsangji, all holding that when repayments or balances are accepted, genuineness of the loan cannot be doubted later without evidence. Tribunal also accepted CIT(A)’s finding that nothing in the Tally data or GST investigation linked Assessee to any bogus transaction.
Accordingly, Tribunal dismissed the Revenue’s appeal & confirmed deletion of the entire ₹1.95 crore interest disallowance.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
