Ashish Girish Jain Vs ITO (ITAT Mumbai)
ITAT Mumbai Deletes ₹15 Lakh Section 68 Addition: Loan Cannot Be Rejected Solely on Third-Party Statement Without Independent Inquiry
The Mumbai Bench of the Income Tax Appellate Tribunal partly allowed the appeal of Ashish Girish Jain for AY 2010–11, deleting an addition of ₹15,00,000 under Section 68 in respect of an unsecured loan received from Mani Prabha Impex Pvt. Ltd., while upholding the validity of reassessment proceedings.
On reopening, the Tribunal held that the reassessment under Section 147 was valid, as it was initiated within four years based on tangible information from the Investigation Wing regarding accommodation entries of the Rajendra Jain/Dharmichand Jain groups. The assessee had not filed objections to the reasons recorded, and therefore the jurisdictional challenge failed.
On merits of the Section 68 addition, the Tribunal found that the assessee had discharged the initial onus by furnishing comprehensive documentary evidence, including loan confirmation, affidavit and retraction of the lender, ledger accounts, bank statements showing receipt and repayment of the loan, and income-tax return acknowledgements of the lender. The fact of repayment of the loan was also undisputed.
The Tribunal held that the Assessing Officer had rejected the assessee’s evidence solely by relying on statements of the lender recorded during search proceedings, without carrying out any independent inquiry or issuing notices under Section 133(6) to verify the transaction. Merely because the lender belonged to an alleged accommodation-entry group could not, by itself, justify treating the loan as non-genuine, especially when documentary evidence remained uncontroverted.
It was further observed that the Assessing Officer and the CIT(A) had erred in ignoring the retraction affidavit and in faulting the assessee for not producing the lender, without the Department itself making efforts to summon or examine the lender. In the absence of any contrary material brought on record by the Revenue, the Tribunal held that the addition under Section 68 was unsustainable and directed its deletion.
Accordingly, the appeal was partly allowed—the reassessment upheld, but the ₹15 lakh addition under Section 68 deleted—reiterating that third-party statements cannot override cogent documentary evidence without independent verification by the Assessing Officer
FULL TEXT OF THE ORDER OF ITAT MUMBAI
