ACIT Vs Antilia Venture Capital (ITAT Chennai)
Chennai ITAT: Once Lender’s Source Is Taxed and Attains Finality, Borrower Cannot Face Section 68 Addition Again
The Chennai ITAT dismissed the Revenue’s appeal and upheld the deletion of an addition of ₹14.50 crore under section 68, holding that where the identity of the lender and genuineness of the loan transaction are undisputed, and the source of funds in the lender’s hands has already been independently examined and subjected to tax, the borrower cannot again be saddled with an addition on the ground of lack of creditworthiness.
In the present case, the Assessing Officer accepted that the loans were received and repaid through banking channels and did not dispute the lender’s identity. The only objection was regarding the lender’s creditworthiness. However, the Tribunal noted that the very cash deposits constituting the source of the loan had already been examined in the lender’s assessment, resulting in an addition under section 68, which subsequently attained finality under the Direct Tax Vivad Se Vishwas Scheme, 2024. Further, part of the deposits had also been admitted before the Settlement Commission by another concerned person.
Rejecting the Revenue’s argument that settlement under the Vivad Se Vishwas Scheme does not amount to acceptance of the tax position, the Tribunal clarified that the CIT(A) had not treated the settlement as an admission of correctness, but merely relied upon the undisputed fact that the source had already been examined and taxed in the lender’s case. In the absence of any material showing that the loan emanated from any different unexplained source, the lender’s creditworthiness could not be doubted again.
Accordingly, the Tribunal held that the assessee had discharged the burden under section 68 by establishing the identity, genuineness, and creditworthiness of the lender, and confirmed the deletion of the addition.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The captioned Appeal filed by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals), CIT(A) Chennai-20 [CIT(A)] dated12.09.2025 Assessment Year 2016-17.
