ITO Vs Bhagwati Prasad N Rungta (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, decided the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) for Assessment Year 2015-16, which had deleted an addition of ₹2,09,99,195 made under Section 68 of the Income-tax Act, 1961 in respect of unsecured loans received by the assessee from ten parties.
During the relevant year, the assessee had obtained unsecured loans aggregating to ₹2,09,99,195 from ten entities. To verify the identity, creditworthiness of the lenders and genuineness of the transactions, the Assessing Officer (AO) issued summons under Section 131 and recorded the assessee’s statement on oath. The assessee submitted copies of income tax returns, loan confirmations, bank statements and other supporting documents, and stated that the loans had been repaid with interest through banking channels after deduction of tax at source.
The AO nevertheless treated the loans and accrued interest as unexplained cash credits under Section 68. The AO relied on the assessee’s statement, observed that the assessee had not furnished the mobile number of Shri Manoj Tibrewal, who allegedly assisted in arranging the loans, and noted that several lender companies were based in Kolkata. According to the AO, these circumstances indicated that the entities were engaged in providing accommodation entries rather than genuine business transactions, and that the assessee had failed to establish the identity, genuineness and creditworthiness of the lenders.
