Smt. Nidhi Rani Vs ITO (ITAT Delhi)
Peak Credit Accepted, Source-of-Source Not Required & GP Estimation Struck Down: Delhi ITAT Deletes ₹1.57 Cr 68 Addition & Trading Additions
Delhi ITAT, Delhi Bench ‘E’, in Smt. Nidhi Rani Vs ITO (ITA No.3323/Del/2023; AY 2018-19; order dated 19-12-2025), allowed the assessee’s appeal in full, deleting both the unsecured loan addition u/s 68 and the gross-profit estimation.
On section 68, the Tribunal held that the assessee had discharged the onus of proving identity, genuineness & creditworthiness of the lender (M/s Tejas Handloom, proprietorship of assessee’s husband’s HUF). Transactions were through banking channels; identity was undisputed; and peak-credit analysis showed the maximum fresh exposure during the year was only ₹24.30 lakh, not ₹1.57 crore. The Tribunal accepted that repayments during the year became the immediate source for subsequent advances, and that “source of source” is not required for AY 2018-19 (amendment by FA 2022 applies from AY 2023-24). Absence of any enquiry by AO u/s 133(6) or field verification further vitiated the addition. Consequently, the ₹1.57 crore addition u/s 68 was deleted.
On trading addition, the Tribunal held that books could not be rejected without invoking s.145(3) and without pointing out specific defects. The assessee maintained day-to-day, item-wise quantitative stock registers (92 products); the AO’s allegation of negative stock was based on value-based assumptions using an average GP, ignoring item-wise margins and quantities. With multi-fold turnover growth (₹40.87 cr → ₹308.94 cr), margin compression was commercially plausible. Accordingly, the GP estimation @1.22% and the resultant addition were deleted.
The appeal was allowed in toto, reaffirming that peak-credit theory, documented fund-flows & proper stock records trump presumptions
FULL TEXT OF THE ORDER OF ITAT DELHI


