ACIT Vs Jayantilal Babulal Shah (ITAT Ahmedabad)
Conclusion: Additions of unsecured loans were sustained where creditworthiness was not proved, and relief upheld only for creditors who responded to notices under section 133(6) or furnished adequate documentation.
Held: Assessee’s case was reopened under section 148, where AO noticed unsecured loans aggregating to ₹14.94 crore from 164 creditors. On verification, AO found that in several cases, assessee failed to furnish even basic details such as PAN, ITRs, or bank statements, while in others, the creditors had declared meagre income disproportionate to the loans advanced. In two instances, the alleged lenders denied having given any loans and reported misuse of their identities. Accordingly, AO treated ₹14.81 crore as unexplained cash credits under section 68. On appeal, the CIT(A) deleted additions of ₹11.54 crore, holding that once assessee had furnished PAN, ITRs, confirmations, and received amounts through banking channels, the onus stood discharged. It was held that the onus under section 68 lied squarely on assessee to prove the identity, genuineness, and creditworthiness of creditors. Mere submission of confirmations, PANs, or routing transactions through banking channels did not establish genuineness. In several cases, the creditors’ returned income was too meagre to justify the loans advanced, and no bank statements were furnished. Hence, relief allowed by the CIT(A) in such cases was unwarranted. However, where creditors had duly responded to notices under section 133(6) or had provided satisfactory evidence, the CIT(A)’s relief was upheld. In the interest of justice, Tribunal allowed the AO to verify the documents related to identity and creditworthiness that the assessee had failed to provide during the original assessment and appellate proceedings. The appeal of assessee was partly allowed for statistical purposes.
