Sabbirbhai Abdeali Gangardiwala Vs ITO (ITAT Ahmedabad)
Section 68 Addition Deleted — Friendly Loans Cannot Be Disbelieved Merely for Want of Loan Agreement, Interest or Repayment
The Ahmedabad ITAT (SMC Bench) allowed the assessee’s appeal for AY 2019-20 and deleted the addition of ₹39 lakh made under section 68 in respect of unsecured loans. The Tribunal held that the assessee had discharged the initial onus by furnishing confirmations on stamp paper, PAN details, NRI status documents, business licences of overseas lenders, and bank statements evidencing receipt through banking channels. It was observed that the CIT(A) had not found any infirmity in these documents and rejected the loans solely on the grounds that no written loan agreement existed, no interest was charged, and no repayment was made even after five years. The Tribunal clarified that a written agreement is not mandatory, interest-free friendly loans are common, and non-repayment over a period does not ipso facto render a loan ingenuine, particularly when the identity and capacity of lenders and the genuineness of transactions stand established. Accordingly, the addition confirmed by the CIT(A) was held to be unsustainable and directed to be deleted
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 31.05.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2019-20.
