Entry Operator Link Alone Cannot Make Unsecured Loans Bogus: ITAT Delhi

DCIT Vs New Age Infosys Pvt. Ltd. (ITAT Delhi)

Search Allegation Against Lender Cannot Replace Proof Against Borrower: ITAT Upholds Deletion of Loan Additions

A lender’s alleged connection with an accommodation entry operator does not, by itself, establish that every loan made by that lender is bogus. The borrower’s transaction must be examined on its own evidence. Applying this approach, the Delhi ITAT in DCIT v. New Age Infosys Pvt. Ltd., ITA Nos. 6798 to 6800/Del/2026, upheld the deletion of additions relating to unsecured loans, repayments, interest and alleged commission. The common order was pronounced on 29 September 2026.

The Revenue had brought three appeals concerning AYs 2016–17 and 2017–18. The assessee filed cross objections raising legal challenges to the reassessment proceedings. The Tribunal dismissed the Revenue’s appeals on the merits of the additions and left the assessee’s legal objections unexamined.

Allegations Arising from a Third-Party Search

A search had been conducted on third parties, and the Department alleged that companies associated with an entry provider had given accommodation entries. The assessee was not itself searched. According to the assessee, the material referred to in its case consisted of ledger accounts reflecting transactions already recorded in its regular books.

The AO treated loans involving M/s S.W. Consultants Pvt. Ltd. and M/s Lenient Consultants Pvt. Ltd. as non-genuine. For AY 2016–17, the disputed receipts were ₹3.50 crore and ₹2.50 crore, respectively. The assessment also contained additions relating to ₹65 lakh of transactions described by the assessee as loan repayments, ₹16,39,455 concerning interest, and ₹19,95,000 estimated as commission at 3%. The total additions disputed for that year were ₹7,01,34,455.

For AY 2017–18, the other two appeals concerned ₹1,33,49,191 linked to Lenient Consultants and a separate ₹8,49,191 addition for alleged interest expenditure. The CIT(A) deleted the additions, following which the Revenue appealed to the ITAT.

Documents Supporting the Loans

The assessee furnished the lenders’ confirmations, PAN and return details, audited financial statements and company master data, as well as its own ledgers and bank records. The transactions were routed through banking channels. It also produced records concerning payment of interest and subsequent repayment of the loans.

The assessee argued that the lenders’ financial statements demonstrated their capacity to advance the amounts. More importantly, it submitted that the AO had not identified material directly contradicting the particular loans. The Department relied on its broader findings about the alleged entry network and maintained that entries in books and bank statements merely gave sham transactions an appearance of legitimacy.

The Tribunal accepted the CIT(A)’s evaluation of the transaction-specific material. For AY 2016–17, it recorded that the assessee had received ₹6 crore through account payee banking channels and furnished evidence establishing the identity of the creditors, their creditworthiness and the genuineness of the transactions. The Bench also considered the loan repayment and interest records. It held that the assessee had discharged its evidentiary burden and declined to restore the additions.

Later Year and Estimated Interest Addition

For AY 2017–18, the ITAT similarly upheld the deletion of ₹1,33,49,191 concerning Lenient Consultants. It referred to the lender’s confirmation, financial records, bank statements and the assessee’s ledger, as well as the banking trail of the transaction. The Bench followed its reasoning for AY 2016–17 and the coordinate Bench decision in Real Innerspring Technologies (P) Ltd., ITA No. 647/Del/2023.

The separate ₹8,49,191 addition under Section 69C was also deleted. The Tribunal found it to be ad hoc and unsupported by independent evidence that the alleged interest expenditure had actually been incurred or paid. An addition for unexplained expenditure requires a factual foundation for the expenditure itself; an assumed amount cannot be sustained merely because the AO doubts the underlying loan.

The order’s descriptions of the ₹1,33,49,191 transaction are not entirely consistent: parts refer to repayment, while the Tribunal’s discussion describes it as a loan received. That detail should be checked against the ledger and assessment record before citing the case for the character of that particular entry. The operative finding is that the ITAT upheld the CIT(A)’s deletion after considering the documentary evidence.

Author’s Comment

The useful principle is transaction-specific examination. An investigation report about a lender may justify scrutiny, but the AO must confront the borrower’s documents with relevant contrary material. Bank transfers and later repayment are corroborative circumstances, especially when supported by confirmations and financial records; they are not an automatic guarantee that every loan is genuine.

The distinction between the additions is equally important. The ITAT upheld deletion of the loan-related sums after evaluating identity, creditworthiness and genuineness. It upheld deletion of the Section 69C interest addition because the alleged expenditure itself lacked evidentiary support. Since the Revenue’s three appeals failed on merits, the assessee’s cross objections on the legality of reopening were dismissed without adjudicating those grounds.

Cases Discussed

• Real Innerspring Technologies (P.) Ltd. v. ACIT (ITAT Delhi), ITA No. 647/Del/2023, order dated 27.03.2025
• PCIT Vs. M/s Goodview Trading Pvt. Ltd., 2016 (12) TMI 617 (Delhi High Court)
• ACIT, CC-25, Delhi Versus Nijhawan Clothing Private Limited, 2026 (8) TMI 40 (ITAT Delhi), dated 05.06.2026
• CIT IV Versus Fair Finvest Ltd., 2012 (12) TMI 170 (Delhi High Court), dated 22.11.2012
• M/S Safari Fine Clothing Pvt. Ltd. Versus The ACIT, Gandhidham Circle, Gandhidham, 2024 (8) TMI 875 (ITAT Rajkot), dated 12.08.2024
• Commissioner of Income-Tax Versus Ranchhod Jivabhai Nakhava, 2012 (5) TMI 186 (Gujarat High Court), dated 20.03.2012

FULL TEXT OF THE ORDER OF ITAT DELHI

1. These appeals are filed by the Revenue against the order passed by the ld. Commissioner of Income-tax (Appeals)-29, New Delhi [for short ‘ld. CIT (A)’] dated 26.02.2026 for the Assessment Years 2016-17, 2017-18 and 2017-18. The assessee has also filed cross objections against the aforesaid impugned order of ld. CIT (A) dated 26.02.2026 for Assessment Years 2016-17, 2017-18 and 2017-18.

2. Since the issues are common and the appeals and cross objections are connected, hence the same are heard together and being disposed off by this common order.

3. At the time of filing of appeal, the Registry has pointed out a defect that all the three appeals filed by the Revenue are time barred by 22 days. In response thereof, the ld. DR for the Revenue submitted that there was a reasonable cause for the delay in filing the appeals. Accordingly, he prayed that the delay in filing the appeals be condoned. We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeals before the Tribunal.

4. First we take up Revenue’s appeals wherein the following grounds of appeal are raised :-

[ITA NO.6798/DEL/2025- AY 2016-17]

a. Whether the ld. CIT (A) justified in deleting the addition of Rs.3,50,00,000/- from M/s. SW Consultants Pvt. Ltd. and Rs.2,50,00,000/- received from M/s Lenient Consultant Pvt. Ltd. u/s 69A on account of unexplained money paid to the entities which are the paper entity controlled and managed by Deepak Agarwal.

b. Whether the ld. CIT (A) is justified in deleting the addition of Rs.65,00,000/. i.e. Rs.20,00,000/- loan taken from the paper company M/s SW Consultants Private Limited and Rs,45,00,000/- from M/s Lenient Consultants Pvt Ltd.

c. Whether the Ld. CIT (A) is justified in deleting the disallowance of the interest expenditure amounting to Rs.16,39,455/, which is consequential of the accommodation entries of the aforesaid unsecured loan,

d. Whether the Ld. CIT (A) is justified in deleting the disallowance of the commission expenditure amounting to Rs.19,95,000/- which is consequential of the commission expenditure incurred for accommodation entries of the aforesaid unsecured loan.

e. The Ld. CIT (A) did not appreciate the fact that the findings, of search proceedings which establish that these entities were indulged in accepting huge cash out of books, booked bogus expenses, and taking bogus accommodation entries aggregating “routing the unexplained money” in parallel black economy through tile entry provider Shri Deepak Agarwal willingly to evade taxes as per the requirement of beneficiaries.

f. The Ld. CIT(A) has not appreciated the fact that Shri Deepak Agarwal is entry provider and willfully involved in the syndicate for organized accommodation entries through their associated entities and these entities are habitually involved in the racket without any fear of Law in force.

g, The entries shown/given in the books of accounts and the amount reflecting in the bank statements are only managed arrangement to give the sham transaction, a legal look.

h. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.

i. The grounds of appeal are without prejudice to each other.

[ITA No. 6799/DEL/2026 – AY 2017-18]

“a. Whether the ld. CIT (A) justified in deleting the addition of Rs.1,33,49,191/- u/s 69A on account of money in possession repaid to M/s Lenient Consultant Pvt. Ltd. during the year, which is the paper entity controlled and managed by Deepak Agarwal.

b. The ld. CIT (A) did not appreciate the fact that the findings of search proceedings which establish that these entities were indulged in accepting huge cash out of books, booked bogus expenses, and taking bogus accommodation entries aggregating “routing the unexplained money” in parallel black economy through the entry provider Shri Deepak Agarwal willingly to evade taxes as per the requirement of beneficiaries.

c. The loan taken from the entity M/s. Lenient Consultants Private Limited is only accommodation entry and appeal on the issue is recommended in the Assessment Year 2016-17 also. Thus to maintain the consistency, appeal in the case for the present year is also recommended.

d. The Ld. CIT(A) has not appreciated the fact that Shri Deepak Agarwal is entry provider and willfully involved in the syndicate for organized accommodation entries through their associated entities and these entities are habitually involved in the racket without any fear of Law in force.

e. The entries shown/given in the books of accounts and the amount reflecting in the bank statements are only managed arrangement to give the sham transaction, a legal look.

f. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.

g. The grounds of appeal are without prejudice to each other.”

[ITA No. 6800/DEL/2026 – AY 2017-18]

“a. Whether the ld. CIT (A) justified in deleting the addition of Rs.8,49,191/- u/s 69C on account of expenditure of interest paid to M/s Lenient Consultant Pvt. Ltd., which is the paper entity controlled and managed by Deepak Agarwal.

b. The ld. CIT (A) did not appreciate the fact that the findings of search proceedings which establish that these entities were indulged in accepting huge cash out of books, booked bogus expenses, and taking bogus accommodation entries aggregating “routing the unexplained money” in parallel black economy through the entry provider Shri Deepak Agarwal willingly to evade taxes as per the requirement of beneficiaries.

c. The loan taken from the entity M/s. Lenient Consultants Private Limited is only accommodation entry and appeal on the issue is recommended in the Assessment Year 2016-17 also. Thus to maintain the consistency, appeal in the case for the present year is also recommended.

d. The Ld. CIT(A) has not appreciated the fact that Shri Deepak Agarwal is entry provider and willfully involved in the syndicate for organized accommodation entries through their associated entities and these entities are habitually involved in the racket without any fear of Law in force.

e. The entries shown/given in the books of accounts and the amount reflecting in the bank statements are only managed arrangement to give the sham transaction, a legal look.

f. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.

g. The grounds of appeal are without prejudice to each other.”

5. At the time of hearing, ld. AR of the assessee with the permission of the Bench brought to our notice relevant facts on record and submitted his submissions as under. He brought to our notice the details of deletion of the additions made by the ld. CIT (A) as under :-

Particulars	AY 2016-17 (ITA 6798/Del/2026)	2017-18 (ITA 6799/Del/2026) [1st 147]	2017-18 (ITA 6800/Del/2026) [2nd 147]
Notice issued u/s 148, invoking Explanation 2(iv)	30.03.2023	–	–
Notice u/s 148 (post Ashish Aggarwal)	–	28.07.2022	–
Notice issued u/s 148, invoking Explanation 2(iv)			31.03.2024
Addition made u/s 69A of the Act on account of loan received from following parties: 1. M/s SW Consultant Pvt. Ltd. 2. M/s Lenient Consultants Pvt. Ltd.	3,50,00,000/- 2,50,00,000/-	–	–
Addition made u/s 68 of the Act on account of loan repaid to the following parties during the year: 1. M/s SW Consultant Pvt. Ltd. 2. M/s Lenient Consultants Pvt. Ltd.	20,00,000/- 45,00,000/-	1,33,49,191/- (Addition u/s 69A)
Addition made u/s 69C on account of interest on unsecured loan from M/s SW Consultant Pvt. Ltd.	16,39,455/-	–	8,49,191/-
Ad-hoc Addition @ 3% on account of commission on above amount u/s 69C	19,95,000/-	–	–
Total Additions made	7,01,34,455/-	1,33,49,191/-	8,49,191/-

3. He submitted that the assessee is a company and had filed its return of income for the years under consideration. A search action under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was conducted on 17.11.2021 in the case of third parties, namely, Galaxy Group. No search was conducted in the case of the assessee and no incriminating material belonging to or pertaining to the assessee was found during the course of such search. He submitted that the assessee received a notice issued under section 148 of the Act. In response, the assessee duly filed his return. The notice issued under section 148 also contained the reasons recorded by the AO. The AO invoked 148 explanation 2(iv) to section 148 for the AY 2016-17 and AY 2017-18 [ITA No. 6800/Del/2026]. However, the AO followed the procedure prescribed u/s 148A in respect of the AY 2017-18 [ITA No. 6799/Del/2026].

4. He submitted that in the reasons recorded, the AO stated that an investigation report had been received from High Risk CRIU/VRU, in respect of search conducted in the case of Galaxy Group, along with copies of ledger accounts extracted from seized digital data. The AO, solely on the basis of the information, noted that the assessee had entered into transactions with certain entities allegedly managed and controlled by the searched persons, which were stated to be accommodation entry providers. During the assessment proceedings, the assessee explained that the amounts represented unsecured loans received through banking channels and furnished confirmations, bank statements, PAN details, acknowledgements of filing of returns, audited financial statements and master data of the company as per MCA portal. However, the AO completed the assessment by making an addition u/s 69A, 68 and 69C of the Act in respect of the loans received/repaid to M/s Lenient Consultants Pvt. Ltd. and M/s SW Consultants Pvt. Ltd.

5. Aggrieved against the above order, the assessee preferred an appeal before the ld. CIT(A). After going through the detailed submissions of the assessee, the ld. CIT (A) deleted the additions made by the AO.

6. Aggrieved against the above order, the Revenue is in appeals before us.

[ITA NO.6798/DEL/2025- AY 2016-17]

7. Ld. AR submitted that in AY 2016-17, with regard to Ground No.1 i.e. addition of Rs.6,00,00,000/- made u/s 69A of the Act is untenable as the assessee has submitted all the documents and has fully discharged its onus to prove identity, creditworthiness and genuineness of the lenders. He submitted that during the assessment proceedings, the assessee furnished complete documentary evidences in respect of loan received from M/s Lenient Consultants Pvt. Ltd. of Rs.2,50,00,000/- and M/s SW Consultants Pvt. Ltd. of Rs. 3,50,00,000/-.The documents placed on record included the following:

• Details of entities from whom unsecured loans were taken by the assessee during the year under consideration (PB pg 50)
• Ledger of SBI A/c of the assessee for the period 01.04.2015 to 31.03.2016 (PB pg 51-52)

Documents pertaining to M/s Lenient Consultants Pvt. Ltd.

• Ledger account of M/s Lenient Consultants Pvt. Ltd. in the books of the assessee for the period 01.04.2015 to 31.03.2017 (PB pg 53)
• Confirmation of the account for the period 01.04.2015 to 31.03.2016 duly signed by M/s Lenient Consultants Pvt. Ltd. (PB pg 54)
• Acknowledgement of ITR of M/s Lenient Consultants Pvt. Ltd. for AY 2016-17 (PB pg 55)
• Audited financial statements of M/s Lenient Consultants Pvt. Ltd. for the year ending as on 31.03.2016 (PB pg 56-72)
• Master Data of M/s Lenient Consultants Pvt. Ltd. downloaded from MCA portal (PB pg 73-74)

Documents pertaining to M/s SW Consultants Pvt. Ltd.

• Ledger account of M/s SW Consultants Pvt. Ltd. in the books of the assessee for the period 01.04.2015 to 31.03.2017 (PB pg 75)
• Acknowledgement of ITR of M/s SW Consultants Pvt. Ltd. for AY 2016-17 (PB pg 76)
• Audited financial statements of M/s S.W Consultants Pvt. Ltd. for the year ending as on 31.03.2016 (PB pg 77-92)
• Master Data of M/s SW Consultants Pvt. Ltd. downloaded from MCA portal (PB pg 93-94)

8. He submitted that hence, it can be held that once the assessee has given sufficient evidences regarding the identity, creditworthiness and genuineness of the lenders. The audited financial statements of the lenders further support the argument of the assessee that the lenders possessed substantial funds and financial strength to advance loans to the assessee. He submitted that from the perusal of audited financial statements of the lender, the following is tabulated-

S. No.	Lender	Share Capital	Reserve & Surplus	Net worth [SC+ R&S]	Gross Revenue
1	M/s Lenient Consultants Pvt. Ltd.	2,43,25,400	89,08,21,483	91,51,46,883	1,91,84,112
2	M/s SW Consultants Pvt. Ltd.	2,43,12,400	76,89,78,896	79,32,91,296	2,68,34,183

9. He further submitted that the lenders have sufficient capital and reserves to advance loans to the assessee, are regular tax payers, declaring profits in their return of income for relevant assessment years. In the light of the same, the assessee had furnished complete documentary evidences and fully discharged the onus to establish the identity, creditworthiness and genuineness of the lender party. He further submitted that it is pertinent to note that in the assessment order, the AO has not referred to any adverse material whatsoever against the assessee to dislodge the documentary evidences furnished by it. No statement of any searched person, relied upon by the Revenue, contains any reference to the assessee or to the impugned loan transactions. The only material stated to have been found during the course of search were the ledger accounts of the assessee placed at pg 31-33 of the assessment order, which were duly recorded in the regular books of account and fully disclosed in the financial statements. Thus, there was no material on record to doubt the identity, creditworthiness or genuineness of the lenders.

10. He further submitted that the ledger accounts of the assessee, reproduced at Pg 31 to 33 of the assessment order, clearly shows that the loan amount of Rs.6,00,00,000/- was received by the assessee during FY 2015-16. However, despite the aforesaid fact, the AO has alleged that the assessee had made repayment to M/s Lenient Consultants Pvt. Ltd. and M/s SW Consultants Pvt. Ltd. and, accordingly, made an addition under section 69A of the Act and the section 69A is not application on the said addition.

11. He further brought to our notice Section 69A of the Act which provides that:

“Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”

12. Thus, he submitted that once complete documentary evidences establishing identity, creditworthiness and genuineness of the lenders were placed on record, no addition u/s 69A could survive.

13. He placed reliance on the decision of Hon’ble Delhi High Court in the case of PCIT Vs. M/s Goodview Trading Pvt. Ltd., 2016 (12) TMI 617, wherein it was held that once the assessee furnishes documentary evidences establishing the identity, creditworthiness of the creditors and genuineness of the transactions, the initial onus under section 68 stands discharged. Thereafter, the burden shifts upon the Revenue to bring cogent material to rebut such evidences. Mere suspicion, low tax payments by the creditors or frequent banking transactions cannot justify an addition u/s 69A.

14. Further reliance is placed on the following judgments:

• ITAT Delhi in the case of ACIT, CC-25, Delhi Versus Nijhawan Clothing Private Limited, 2026 (8) TMI 40, Dated:- June 5, 2026
• Delhi High Court in the case of CIT IV Versus Fair Finvest Ltd., 2012 (12) TMI 170, Dated: – November 22, 2012
• ITAT Rakjot in the case of M/S Safari Fine Clothing Pvt. Ltd. Versus The Acit, Gandhidham Circle, Gandhidham, 2024 (8) TMI 875, Dated: – 12-8-2024
• Gujarat High Court in the case of Commissioner of Income-Tax Versus Ranchhod Jivabhai Nakhava, 2012 (5) TMI 186, Dated: – 20-3-2012

15. He further submitted that once the loans have been received and subsequently repaid through identifiable banking channels and the assessee has produced complete documentary evidence in support thereof, the addition under section 69A cannot be sustained merely on suspicion or on the basis of an investigation report without any contrary evidence. The subsequent repayment through banking channels constitutes a strong corroborative circumstance establishing the genuineness of the transactions. Accordingly, he submitted that the ld. CIT (A) rightly deleted the addition.

16. With regard to Ground No.2 regarding addition of Rs.65,00,000/- made u/s 68 of the Act, he submitted that the same is untenable as the assessee has submitted all the documents and has fully discharged its onus to prove identity, creditworthiness and genuineness of the lenders. He submitted that during the assessment proceedings, the assessee furnished complete documentary evidences such as ledger accounts, Bank statements, confirmations etc. to prove the repayment of loan amount to M/s SW Consultants Pvt. Ltd. and M/s Lenient Consultants Pvt. Ltd. It is submitted that the ledger accounts of the assessee, reproduced at pg 31-33 of the assessment order, evidences the repayment of loan amount of Rs. 20,00,000/- to M/s SW Consultants Pvt. Ltd. and Rs. 45,00,000/- to M/s Lenient Consultants Pvt. Ltd. But the AO treated the same as loan received from the above parties and accordingly, made an addition u/s 68 of the Act and it is not applicable to the assessee. It is further submitted that the assessee had made repayment of Rs.3,20,00,000/- during the same FY in which the loan was obtained. However, as per the ledger account reproduced at pg 31-33 of the assessment order, the assessee has made repayment of Rs.20,00,000/- only. Thus, the ledger account reproduced in the assessment order does not correctly reflect the actual repayment made by the assessee.

“68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year :

Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,—

(a)	the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and
(b)	such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless—

(a)	the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and
(b)	such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided also that nothing contained in the first proviso or second proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10 . .”

17. Thus, he submitted that once complete documentary evidences establishing identity, creditworthiness and genuineness of the lenders were placed on record, no addition under section 68 could survive.

18. He further submitted that once the loans have been received and subsequently repaid through identifiable banking channels and the assessee has produced complete documentary evidence in support thereof, the addition under section 68 cannot be sustained merely on suspicion or on the basis of an investigation report without any contrary evidence. The subsequent repayment through banking channels constitutes a strong corroborative circumstance establishing the genuineness of the transactions. Accordingly, the impugned addition deserves to be deleted.

19. With regard to ground nos.3 and 4 regarding additions towards alleged commission under section 69C is unsustainable, he submitted that AO has made two additions u/s 69C towards alleged commission which are as follows:

• Addition of Rs. 16,39,455/- in respect of payment of interest on unsecured loan from M/s SW Consultant Pvt. Ltd.
• Addition of Rs. 19,95,000/-, being 3% of the alleged accommodation entries

20. He submitted that the addition has been made merely on presumption without bringing any evidence on record to show that the assessee had incurred any such expenditure. No statement, seized material or any other evidence has been brought on record to establish payment of commission.

21. He submitted that the addition has been made merely on estimated basis and in the absence of any evidence regarding actual payment of commission, no addition under section 69C can be sustained. The loans on account of which the addition u/s 69A and 68 are made, are proved to be genuine through multiple documentary evidences placed on record by the assessee. Therefore, the consequential addition towards alleged commission also cannot survive.

22. In view of his above submissions, he submitted that the ld. CIT (A) has rightly deleted the additions and passed a well-reasoned and detailed order, which may be upheld.

23. On the other hand, ld. DR of the Revenue after relying on the assessment order submitted that the conditions of section 68 was not fulfilled in the transactions carried on by the assessee with the bogus and dummy company and all these facts were found during the search conducted in the case of Shri Himanshu Verma. He heavily relied on the findings of Assessing Officer.

24. Considered the rival submissions and material placed on record. We observed that ld. CIT (A) has rightly deleted the addition of unsecured loan u/s 68 of the Act on the basis of creditworthiness, genuineness of transaction and identity of the lenders. Various Courts have held that to determine the creditworthiness of the lenders, earning capacity is one of the criteria and ability to arrange and make the payment is relevant. We observed that lender has made the payment through banking channel and the lender has filed the confirmations of the same and assessee has brought to our notice bank statements and ledger account for payment of interest as well as repayment of loan subsequently. The above details clearly show that the assessee has taken unsecured loans and also paid the relevant interest and returned the relevant loan subsequently.

25. We observed that burden of the assessee stands discharged. From the records, it is clear that during the instant assessment year, assessee received unsecured loan of Rs.6,00,00,000/- from M/s. SW Consultant Pvt. Ltd. (Rs.3,50,00,000/- and from M/s. Lenient Consultants Pvt. Ltd. (Rs.2,50,00,000/-) through banking channel vide account payee cheque and further the assessee has led complete evidence. Thus, we observed that the assessee has discharged the burden u/s 68 of the Act by establishing identity of the creditors, creditworthiness of the creditors and genuineness of the transaction.

26. We observed that the similar issue was considered by the coordinate Bench in the case of Real Innerspring Technologies (P) Ltd. in ITA No.647/Del/2023 order dated 27.03.2025 and held as under :-

“10. Considered the rival submissions and material placed on record. We observed that the AO has initiated reassessment proceedings on the basis of information received from the Investigation Wing and search proceedings in the case of Shri Verma. It is brought on record that these two companies were found to be controlled by the accommodation entry providers, Shri Verma and Shri Anil Agarwal. Merely because the assessee has taken the unsecured loan from the companies controlled by them, the addition was made rejecting the various supporting documents provided by the assessee relating to transactions.

11. In our considered view, the additions were made only on the basis of alleging that the loan taken by the assessee from the above said two companies are only accommodation entries and assessee’s own money was routed through these companies with the help of accommodation entry providers. On careful note, the accommodation entries are taken which will remain in the books of account and they will ultimately written off over the period of time. These loans were normally not repaid. In the given case, it is brought to our notice that the assessee has received the unsecured loan through the banking channel and repaid thru the banking channel as under :-

Name of the Lender	Amount of the Loan	Date on which loan taken	Date of interest payment	Date of repayment of loan
M/s. Citzy Infraheights Pvt. Ltd.	50,00,000	09.07.2015 (Pg 38 of the PB)	30.12.2017 (Pg 40 of the PB)	06.12.2017 30.12.2017 (Pg 39 & 40 of the PB)
M/s. CEA Consultants Pvt. Ltd.	50,00,000	18.03.2016 (Pg 81 of the PB)	27.04.2016 28.03.2017 (Pg 81 of the PB)	17.03.2017 18.03.2017 21.03.2017 (Pg 83 & 84 of the PB)

12. From the above, it is clear that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion. Therefore, we are inclined to allow the grounds raised by the assessee.

13. In the result, appeal filed by the assessee is allowed.

27. In view of the above and respectively following the aforesaid decision, we observed that the ld. CIT (A) has rightly appreciated the facts and material and passed a well-reasoned and detailed order rightly relying on various decisions, one of which is Real Innerspring Technologies (P) Ltd.. Accordingly, we are inclined not to disturb the findings of the ld. CIT (A) and dismiss all the grounds raised by the Revenue. Hence, the appeal being ITA No.6798/Del/2026 for AY 2016-17 is dismissed.

[ITA No. 6799/DEL/2026 – AY 2017-18]

28. With regard to only ground raised in the aforesaid appeal regarding addition of Rs.1,33,49,191/- made u/s 69A of the Act, ld. AR submitted that the same is untenable as the assessee has submitted all the documents and has fully discharged its onus to prove Identity, Creditworthiness and genuineness of the lenders and the ld. CIT (A) rightly deleted the addition. He submitted that dduring the assessment proceedings, the assessee furnished complete documentary evidences in respect of loan received from M/s Lenient Consultants Pvt. Ltd. The documents placed on record included the following:

Documents pertaining to M/s Lenient Consultants Pvt. Ltd

• Ledger Account of M/s Lenient Consultants Pvt. Ltd in the books of the assessee for the period of 01.04.2016 to 31.03.2017 (PB pg 78)
• Ledger Account of SBI Bank Book in the books of the assessee for the period 01.04.2016 to 31.03.2017 (PB pg 79-82)
• Bank statement of the assessee reflecting the loan repaid during the FY 2016-17 (PB pg 83-98)
• Audited Financial Statements of the M/s Lenient Consultants Pvt. Ltd for the year under consideration (PB pg 99-114)
• Confirmation of Accounts related to transactions with M/s Lenient Consultants Pvt. Ltd given by the assessee for the FY 2015-16 and FY 2016-17 (PB pg 173-174)
• Audited Financial Statements of the M/s Lenient Consultants Pvt. Ltd for the year ended 31st March 2016(PB pg 175-191)

Documents pertaining to M/s Tirupati Sales

• Ledger Account of assessee in the books of M/s Tirupati Sales for the period 01.04.2016 -31.03.2017.(PB pg 115)
• Acknowledgement of ITR of M/s Tirupati sales for AY 2017-18(PB pg 116)
• Audited Financial Statements of the M/s Tirupati Sales for the year under consideration(PB pg 117-121)
• Tax Audit Report of M/s Tirupati Sales for the year under consideration (PB pg 122-132)

Documents pertaining to M/s Blue Star Buildprop Pvt. Ltd

• Confirmation of Accounts of M/s Blue Star Buildprop Pvt. Ltd provided to the assessee (PB pg 133-134)
• Ledger Account of SBI Bank Book in the books of the assessee reflecting the transactions with M/s Blue Star Pvt. Ltd. (PB pg 135-138)
• Acknowledgement of ITR of M/s Blue Star Buildprop Pvt. Ltd. for the AY 2017-18 (PB pg 139)
• Company Master Data of M/s Blue Star Buildprop Pvt. Ltd. (PB pg 140)

29. He submitted that hence, it can be held that once the assessee has given sufficient evidences regarding the identity, creditworthiness and genuineness of the lenders. The audited financial statements of the lenders further support the argument of the assessee that the lenders possessed substantial funds and financial strength to advance loans to the assessee. From the perusal of audited financial statements of the lender, the following is tabulated-

S. No.	Lender	Share Capital	Reserve & Surplus	Net worth [SC+ R&S]	Gross Revenue
1	M/s Lenient Consultants Pvt. Ltd.	2,43,25,400	89,40,15,369	91,83,40,769	3,26,56,740

30. He submitted that the lenders have sufficient capital and reserves to advance loans to the assessee, are regular tax payers, declaring profits in their return of income for relevant assessment years. In the light of the same, the assessee had furnished complete documentary evidences and fully discharged the onus to establish the identity, creditworthiness and genuineness of the lender party.

31. Further he submitted that it is pertinent to note that in the assessment order, the AO has not referred to any adverse material whatsoever against the assessee to dislodge the documentary evidences furnished by it. No statement of any searched person, relied upon by the Revenue, contains any reference to the assessee or to the impugned loan transactions. Thus, there was no material on record to doubt the identity, creditworthiness or genuineness of the lenders. Thus, he submitted that once complete documentary evidences establishing identity, creditworthiness and genuineness of the lenders were placed on record, no addition u/s 69A could survive.

32. Ld. AR further placed reliance on the derision of Hon’ble Delhi High Court in the case of PCIT Vs. M/s Goodview Trading Pvt. Ltd., 2016 (12) TMI 617, wherein it was held that once the assessee furnishes documentary evidences establishing the identity, creditworthiness of the creditors and genuineness of the transactions, the initial onus under section 69A stands discharged. Thereafter, the burden shifts upon the Revenue to bring cogent material to rebut such evidences. Mere suspicion, low tax payments by the creditors or frequent banking transactions cannot justify an addition u/s 69A.

33. Further reliance is placed on the following judgments:

• ITAT Delhi in the case of ACIT, CC-25, Delhi Versus Nijhawan Clothing Private Limited, 2026 (8) TMI 40, Dated:- June 5, 2026
• Delhi High Court in the case of CIT IV Versus Fair Finvest Ltd., 2012 (12) TMI 170, Dated: – November 22, 2012
• ITAT Rakjot in the case of M/S Safari Fine Clothing Pvt. Ltd. Versus The Acit, Gandhidham Circle, Gandhidham, 2024 (8) TMI 875, Dated: – 12-8-2024
• Gujarat High Court in the case of Commissioner of Income-Tax Versus Ranchhod Jivabhai Nakhava, 2012 (5) TMI 186, Dated: – 20-3-2012

34. Once the loans have been received and subsequently repaid through identifiable banking channels and the assessee has produced complete documentary evidence in support thereof, the addition under section 69A cannot be sustained merely on suspicion or on the basis of an investigation report without any contrary evidence.

35. The subsequent repayment through banking channels constitutes a strong corroborative circumstance establishing the genuineness of the transactions. Accordingly, the impugned addition deserves to be deleted, which the ld. CIT (A) has rightly deleted in his detailed and reasoned order.

[ITA No. 6800/DEL/2026 – AY 2017-18]

36. With regard to only ground raised regarding addition of Rs.8,49,191/- under section 69C towards payment of interest on unsecured loan, ld. AR submitted that it is purely ad-hoc and without any evidence of incurring such expenditure. He submitted that the AO has made an addition of Rs.8,49,191/- under section 69C of the Act in respect of the alleged payment of interest expenditure pertaining to the unsecured loan stated to have been received from M/s Lenient Consultant Pvt. Ltd. It is submitted that during the course of the original reassessment proceedings under section 147 of the Act, the assessee had duly furnished all relevant documents and evidences in respect of the aforesaid unsecured loan. The assessee had truly and fully disclosed all material facts relating to the transaction before the AO. Therefore, if any expenditure towards alleged interest was considered to have been incurred in connection with the said transaction, the same ought to have been examined and, if warranted, brought to tax by the AO while completing the assessment vide order dated 22.05.2023 itself, particularly when the addition under section 69A of the Act was made in respect of the underlying transaction. It is further submitted that the impugned addition under section 69C of the Act has been made merely on the basis of presumption and estimation, without bringing any cogent or independent evidence on record to establish that the assessee had, in fact, incurred or paid any interest expenditure. There is neither any statement, seized material, documentary evidence, confirmation, trail of payment nor any other material brought on record to demonstrate that any such interest was actually paid by the assessee.

37. He further submitted that the provisions of section 69C can be invoked only where the factum of incurring expenditure is established and the source thereof remains unexplained. In the present case, the very existence of the alleged interest expenditure has not been established by the Ld. AO. An addition based merely on an estimated percentage or presumed commission, without evidence of actual payment, cannot be sustained in law.

38. Further, he submitted that the underlying loan transaction has been duly substantiated by the assessee through various documentary evidences placed on record. Once the genuineness of the underlying transaction is duly supported by documentary evidence, the consequential allegation of payment of interest, being unsupported by any independent evidence, cannot be sustained merely on the basis of conjectures and surmises. Accordingly, he submitted that the ld. CIT (A) rightly deleted the addition of Rs.8,49,191/- made under section 69C of the Act.

39. On the other hand, ld. DR of the Revenue with regard to both the appeals for AY 2017-18, after relying on the assessment order, submitted that the conditions of section 68 was not fulfilled in the transactions carried on by the assessee with the bogus and dummy company and all these facts were found during the search conducted in the case of Shri Himanshu Verma. He heavily relied on the findings of Assessing Officer.

40. Considered the rival submissions and material placed on record. With regard to addition of Rs.1,33,49,191/- made u/s 69A of the Act, we observed that ld. CIT (A) has rightly deleted the addition of unsecured loan u/s 69A of the Act on the basis of creditworthiness, genuineness of transaction and identity of the lenders. Various Courts have held that to determine the creditworthiness of the lenders, earning capacity is one of the criteria and ability to arrange and make the payment is relevant. We observed that lender has made the payment through banking channel and the lender has filed the confirmations of the same and assessee has brought to our notice bank statements and ledger account for payment of interest as well as repayment of loan subsequently. The above details clearly show that the assessee has taken unsecured loans and also paid the relevant interest and returned the relevant loan subsequently.

41. We observed that burden of the assessee stands discharged. From the records, it is clear that during the instant assessment year, assessee received unsecured loan of Rs.1,33,49,191/- from M/s. Lenient Consultants Pvt. Ltd. through banking channel vide account payee cheque and further the assessee has led complete evidence. Thus, we observed that the assessee has discharged the burden by establishing identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. We observed that the similar issue was considered by the coordinate Bench in the case of Real Innerspring Technologies (P) Ltd. (supra) and the relevant findings are already reproduced by us in our order above. Further, we have also dealt with the issue in AY 2016-17 in detail above and the same are not repeated for the sake of brevity.

42. In view of the above and respectively following the aforesaid decision, we observed that the ld. CIT (A) has rightly appreciated the facts and material and also rightly relied on various decisions. Accordingly, we are inclined not to disturb the findings of the ld. CIT (A) and dismiss all the grounds raised by the Revenue in ITA No.6799/Del/2026 for Assessment Year 2017-18.

43. With regard to addition of Rs.8,49,191/- under section 69C towards payment of interest on unsecured loan, we observed that it is purely ad-hoc and without any evidence of incurring such expenditure. We further observed that the AO has made an addition of Rs.8,49,191/- under section 69C of the Act in respect of the alleged payment of interest expenditure pertaining to the unsecured loan stated to have been received from M/s Lenient Consultant Pvt. Ltd. Further, during the course of the original reassessment proceedings under section 147 of the Act, the assessee had duly furnished all relevant documents and evidences in respect of the aforesaid unsecured loan. The assessee had truly and fully disclosed all material facts relating to the transaction before the AO. Therefore, if any expenditure towards alleged interest was considered to have been incurred in connection with the said transaction, the same ought to have been examined and, if warranted, brought to tax by the AO while completing the assessment vide order dated 22.05.2023 itself, particularly when the addition under section 69A of the Act was made in respect of the underlying transaction. We observed that the impugned addition under section 69C of the Act has been made merely on the basis of presumption and estimation, without bringing any cogent or independent evidence on record to establish that the assessee had, in fact, incurred or paid any interest expenditure. There is neither any statement, seized material, documentary evidence, confirmation, trail of payment nor any other material brought on record to demonstrate that any such interest was actually paid by the assessee. We further observed that once the genuineness of the underlying transaction is duly supported by documentary evidence, the consequential allegation of payment of interest, being unsupported by any independent evidence, cannot be sustained merely on the basis of conjectures and surmises. Accordingly, we observed that the ld. CIT (A) has rightly deleted the addition of Rs.8,49,191/- made under section 69C of the Act. Hence, we are not inclined to disturb the findings of the ld. CIT (A) on this issue and the grounds raised by the Revenue in ITA No.6800/Del/2026 for AY 2017-18. Accordingly, the appeal being ITA No.6800/Del/2026 for AY 2017-18 is dismissed.

44. The assessee has filed cross objections in all the three appeals filed by the Revenue and later on, filed revised grounds of appeal which are basically the legal grounds. Since we have already dismissed all the three appeals of the Revenue on merits, we are not adjudicating the legal grounds raised by the assessee in the three cross objections and the same are kept open.

45. To sum up : All the three appeals filed by the Revenue are dismissed and the cross objections raised by the assessee are also dismissed.

Order pronounced in the open court on this 29th day of September, 2026.