Sunder Marketing Associates Vs DCIT (ITAT Delhi)
Delhi ITAT Deletes Section 68 Addition as Loan Amount Was Paid Directly to Government; Identity and Creditworthiness Not in Doubt
The Delhi ITAT deleted the addition of ₹3 crore under section 68 after holding that the amount could not be treated as an unexplained unsecured loan when the funds had never been credited to the assessee’s bank account. The assessee produced copies of the cheques before the Tribunal, demonstrating that the entire amount was paid directly through banking channels to the Director of Mines, Government of Haryana, towards mining-related obligations, without routing the money through the assessee. The Tribunal observed that, in such circumstances, the usual tests of identity, creditworthiness and genuineness applicable under section 68 lost significance, as the payments were made directly to a Government department and the source and destination of the funds were fully verifiable. Holding that the Assessing Officer and the CIT(A) had erred in treating the transaction as an unexplained unsecured loan, the Tribunal deleted the addition of ₹3 crore under section 68 and allowed the assessee’s appeal on this issue.
FULL TEXT OF THE ORDER OF ITAT DELHI
Appeal in this case has been filed by the assessee against the order dated 21.07.2025 passed by the Ld. CIT(A), Delhi for the A.Y. 2016-17. Grounds of appeal are as under :-
1. That on the facts, circumstances and legal position of the case, Worthy CIT(A), NFAC in Appeal No. CIT (A), Delhi- 13/ 10222/2018-19 has erred in passing order dtd. 21.07.2025 in contravention of provisions of S. 250 of Income Tax Act, 1961 (hereinafter referred to as “Act”).
2. That on facts, circumstances and legal position of the case, Worthy CITA) has erred in confirming the impugned addition of Rs. 3,00,00,000/ -/ s 68 on account of unsecured loans raised.
3. That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) deserves to be quashed since the same have been passed without affording reasonable opportunity of being heard to the appellant
4. That the appellant craves for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
2. Brief facts of the case are that as per the order of the Ld. CIT(A) are as under :-
“The assessee firm filed its return of income for the A.Y. 2016-17 on 28.03.2017 declaring a total income of Rs. 8,39,79,000/ -. The case was selected for scrutiny under CASS. Order U/s 143(3) was passed on 26.12.2018 by making a disallowance U/s 37(1) of Rs. 66,16,766/ – towards CSR expenses, unsecured loan of Rs. 3,00,00,000/ – from Kamlesh Lath and an amount of Rs. 34,21,692/- from Sunder Singh Daman (Sundry Creditor).”
3. During proceedings before us the ld. Counsel for the assessee argued that the Ld. CIT(A) has erred in confirming the addition of Rs.3,00,00,000/- u/s.68 of the IT Act on account of unsecured loans.
4. During proceedings before us the Ld. Counsel for the assessee brought it to the notice of the Bench that the photocopies of all the cheques totaling to Rs.3,00,00,000/-were submitted before the Ld. CIT(A) and from the photocopies of the cheques it is clear that all the cheques have been paid directly to the Director of Mines in the state of Haryana. So nothing has come directly to the account of the assessee. The cheques were issued to the Government and payment was made to the mining department.
5. Per contra the Ld. DR relied on the orders of the authorities below.
6. We have considered the findings given by the lower authorities below. From the details filed before the ld. CIT(A) it is clear that all the cheques totaling to Rs.3 crores were directly paid to the mining department State of Haryana through banking channel. Therefore, the question of identity and creditworthiness in such transactions does not arise. Accordingly, the addition made by the AO and confirmed by the Ld. CIT(A) amount of Rs.3 crore u/s.68 of the Act for unsecured loans cannot be sustained.
7. In the result, the appeal filed assessee is allowed on this issue.
Order pronounced in the court on 24.07.2026.
