ACIT Vs Filatax India Limited (ITAT Delhi)
The ITAT Delhi considered cross appeals and cross-objections involving Filatex India Ltd. for multiple assessment years. For AY 2013-14, the assessee had received total loans of INR 24.25 crores from four entities, of which the Assessing Officer treated INR 5.90 crores as accommodation entries under Section 68. The AO also disallowed interest of INR 1,00,53,494 under Section 37(1) and added INR 7,87,500 under Section 69C as alleged commission. The CIT(A) deleted these additions after considering the documentary evidence and the lender companies’ responses to notices under Section 133(6).
The Tribunal noted that the assessee furnished confirmations, bank statements, audited financial statements, ITR acknowledgements and compliance letters from the lender companies. The assessee also furnished the source and source of source of the funds, although the Tribunal noted that the requirement concerning source of source for loans applies from AY 2023-24 and was therefore not applicable to AY 2013-14. The Tribunal further observed that the loans were routed through banking channels, were partly repaid during the year and subsequently repaid, while the lender companies had sufficient funds reflected in their accounts.
The Tribunal also considered statements recorded during the search, WhatsApp chats and the alleged cash trail. It noted that no corroborative material established that the WhatsApp chats related to any specific loan taken by the assessee or that cash had been exchanged against those loans. The Tribunal also noted the absence of an opportunity for cross-examination of persons whose statements were relied upon. It held that the documentary evidence establishing identity, creditworthiness and genuineness could not be rejected merely on the basis of statements without contrary documentary evidence.
