DCIT Vs Metallica Metals India (ITAT Mumbai)
153C Additions Can’t Rest on Third-Party Statements Alone: ITAT Mumbai Upholds Deletion of Unsecured Loan & Notional Interest
ITAT Mumbai (D Bench) in DCIT-CC-8(4) vs Metallica Metals India (ITA Nos. 4289 & 4290/Mum/2025; AYs 2019-20 & 2020-21; order dated 23.12.2025) has dismissed the Revenue’s appeals, affirming the deletion of additions u/s 68 and consequential commission/notional-interest additions made in search-related assessments u/s 153C.
Pursuant to a search u/s 132 in a third-party case, the AO treated an unsecured loan of ₹50 lakh from M/s Ocean International as unexplained, relying primarily on Investigation Wing reports and a third-party statement u/s 132(4). A further 2% commission (₹1 lakh) was added, and for AY 2020-21, notional interest (₹1.28 lakh) was imputed.
CIT(A) deleted the additions after recording detailed findings that the Assessee had discharged the onus by producing loan confirmations, lender’s ITR, bank statements evidencing RTGS, adequacy of funds, absence of cash deposits before lending, interest payment with TDS, and repayment through banking channels. The AO had not conducted any independent enquiry, nor provided cross-examination, and failed to establish any live nexus between seized material and the impugned loan.
Upholding CIT(A), ITAT held that additions u/s 68 cannot be sustained on suspicion or generalized investigation reports, especially when identity, creditworthiness and genuineness are proved. Once the principal loan is accepted as genuine, commission and notional-interest additions automatically fall.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
