DCIT Vs Shomit Finance Limited (ITAT Delhi)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) dated 23.10.2025 for Assessment Year 2020-21, challenging the deletion of additions under Sections 68 and 69C of the Income Tax Act, 1961. The Assessing Officer had treated loans of ₹1,49,50,000 received from two companies as accommodation entries and made further additions towards alleged commission and unexplained interest expenditure. The Revenue contended that the lenders were connected with alleged entry operators and that the transactions were non-genuine.
The CIT(A) examined the assessment order, the assessee’s submissions and the documentary evidence. The assessee had produced confirmations, PAN details, income tax returns, loan agreements, bank statements, TDS certificates, audited financial statements of the lenders, and evidence showing that the loans were received and subsequently repaid through banking channels with interest after deduction of TDS. The assessee also contended that the Assessing Officer had not demonstrated any specific cash deposits linked to the impugned loans and had relied on third-party statements without providing an opportunity for cross-examination.
The CIT(A) held that the assessee had established the identity of the creditors, their creditworthiness and the genuineness of the transactions. It observed that the loans, interest payments and repayments were made through banking channels and that the Assessing Officer had not produced credible evidence directly linking the impugned loans with accommodation entries. Accordingly, the CIT(A) deleted the addition of ₹1,49,50,000 under Section 68, the addition of ₹2,65,488 under Section 69C relating to interest expenditure, and the addition of ₹4,48,500 under Section 69C towards alleged commission.
