DCIT Vs Mahavir Pulses Pvt. Ltd. (ITAT Delhi)
Delhi ITAT: Repayment of Unsecured Loan Through Banking Channels Rebuts Allegation of Accommodation Entry; Section 68 Addition Deleted
The Delhi ITAT dismissed the Revenue’s appeals and upheld the deletion of additions under sections 68 and 69C, holding that where an unsecured loan is duly supported by documentary evidence and is subsequently repaid with interest through banking channels, the allegation that it is merely an accommodation entry cannot be sustained on suspicion alone.
The Revenue had challenged the CIT(A)’s order deleting additions under section 68 in respect of unsecured loans received by the assessee, contending that the lender was an accommodation entry provider. The assessee, however, produced the loan agreement, confirmations, PAN, income-tax returns, audited financial statements, bank statements and evidence showing that the loan had been repaid in the subsequent year through banking channels.
The Tribunal noted that the assessee had discharged the primary onus under section 68 by establishing the identity of the lender, its creditworthiness, and the genuineness of the transaction. It also found that the Assessing Officer had not brought any material linking the assessee with cash deposits or demonstrating that the loan represented an accommodation entry. The addition was based only on general information received from the Investigation Wing and statements of third parties without any direct nexus to the assessee’s transaction.
Approving the reasoning of the CIT(A.), the Tribunal relied on its earlier decisions in Real Innerspring Technologies Pvt. Ltd. and Dazzling Construction Pvt. Ltd., holding that repayment of the loan with interest through banking channels is a strong indicator of the genuineness of the transaction. Every transaction must be evaluated on its own facts, and merely because the lender was allegedly controlled by an entry operator, every loan cannot automatically be branded as bogus.
Consequently, the Tribunal also upheld the deletion of the addition under section 69C towards alleged commission and bogus interest, observing that once the loan itself was held to be genuine, there was no basis to presume payment of commission for obtaining accommodation entries. The Revenue’s appeals for both AYs 2016-17 and 2019-20 were accordingly dismissed
Cases Discussed
- Real Innerspring Technologies (P.) Ltd. v. ACIT (ITAT Delhi), ITA No. 647/Del/2023, order dated 27.03.2025
- Dazzling Construction Pvt. Ltd. Vs ITO Ward-7(2), New Delhi (ITAT Delhi), ITA No. 3771/Del/2023
- ACIT vs Filatax India Ltd (ITAT Delhi), 2025 (7) TMI 1285, dated 30.06.2025
- Pr CIT vs Jagmag Builders (Delhi High Court), ITA No. 325/2024
- PCIT vs. Bhupendra Champaklal Dalal (Bombay High Court), (2024) 160 com 645 (Bom)(HC)
- Pr CIT vs. Ambe Tradecorp (P.) Ltd. (Gujarat High Court), [2022] 145 com 27 (Gujarat)
- CIT Vs Skylark Build, 2018-TIOL-2323-HC-MUM-IT
- CIT v. Green Infra Ltd. (Bombay High Court), [2014] 367 ITR 102 (Bom)
- CIT v. Vrindavan Farms Pvt. Ltd. (Delhi High Court), [2015] 63 taxmann.com 333
- CIT v. Kamdhenu Steel & Alloys Ltd. (Delhi High Court), [2012] 361 ITR 220 (Del)
- DIT vs. Modern Charitable Foundation (Delhi High Court), 335 ITR 105 (Del)
- CIT v. P. Mohankala (Supreme Court), [2007] 291 ITR 278 (SC)
- CIT v. Rohini Builders (Gujarat High Court), [2002] 256 ITR 360 (Guj)
- ACIT v. Bhavya Construction (ITAT Ahmedabad), [2012] 139 ITD 90 (Ahd)
- CIT vs Mahavir Crimpers, 95 com 323 (Guj)
- CIT vs Karaja Singh, 15 com 70 (P&H)
- CIT vs Ayachi Chandrashekhar Narsangji, 42 Com (Guj)
- Panna Devi Chowdhary (Bombay High Court), 1994 (3) TMI 80 – BOMBAY HIGH COURT
FULL TEXT OF THE ORDER OF ITAT DELHI
