Darshita Sureshkumar Chauhan Vs ITO (ITAT Mumbai)
Section 68 Cannot Turn Both Loan & Repayment Into Income — Same-Year Repayment With Documents Knocks Out Addition | A ₹10 lakh short-term loan becomes an accommodation-entry dispute
The assessee obtained an unsecured loan of ₹10 lakh from Consultshah Financial Services Pvt. Ltd. on 09.01.2019 for an urgent commercial requirement.
The loan was not carried forward indefinitely. It was repaid on 12.02.2019, barely a month later, together with interest. The total repayment made through banking channels amounted to ₹11,17,800.
The assessee furnished the lender’s confirmation, PAN, bank statements, ledger account & financial statements to establish the identity of the creditor, genuineness of the transaction & creditworthiness of the lender.
Nevertheless, information received through the Investigation Wing alleged that one Sanjay Shah, CA, was engaged in providing accommodation entries through dummy entities. On the allegation that the assessee was one of the beneficiaries of such entries, proceedings were initiated u/s 147.
AO counts money coming in—and money going out
The reassessment was based on alleged escapement of income of ₹20,11,178, though the actual loan transaction was only ₹10 lakh.
In response to the show-cause notice, the assessee specifically explained that the loan had been repaid during the same financial year. She also furnished a copy of the lender’s confirmation & ledger account.
