ITO Vs Mohanbhai Laljibhai Rami (ITAT Ahmedabad)
Unsecured Loan Explained Through Evidence; Section 68 Addition Deleted and Revenue Appeal Dismissed: ITAT Ahmedabad
Summary:
The Ahmedabad Bench (SMC) of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal for AY 2012-13, thereby affirming the CIT(A)’s order deleting the addition of ₹10 lakh made under section 68 on account of an alleged unexplained unsecured loan.
The assessment was reopened under sections 147/148 based on information from the Investigation Wing relating to a loan transaction with M/s Alton Infrastructure Pvt. Ltd. During reassessment, the assessee furnished loan confirmation, bank statements of both the assessee and the lender, and evidence of repayment through banking channels. Despite this, the Assessing Officer treated the loan as unexplained cash credit under section 68.
On appeal, the CIT(A) deleted the addition after examining the documentary evidence and recording a finding that the identity, genuineness, and creditworthiness of the lender were duly established.
Before the Tribunal, the Revenue contended that routing transactions through banking channels alone was insufficient. The ITAT rejected this argument, holding that:
- The assessee had fully discharged the onus under section 68,
- The CIT(A)’s findings were factual and reasoned, and
- No material infirmity or contrary evidence was brought on record by the Revenue.
The Tribunal also clarified that although the case fell under an exception to the low-tax-effect circular, the Revenue had no sustainable case on merits.
