Sangameshwar Coffee Estates Limited Vs Asssitant/ Deputy Commissioner (ITAT Bangalore)
Bangalore ITAT Deletes ₹15-Lakh Section 68 Addition: Managing Director’s Bank Statement Established Identity, Genuineness and Creditworthiness
The assessee-company received a loan of ₹15 lakh from its Managing Director, S. Appadurai, through banking channels. The AO treated it as unexplained cash credit under Section 68, holding that the assessee had failed to establish the lender’s identity, creditworthiness and the genuineness of the transaction. The CIT(A) upheld the addition even after considering the lender’s confirmation, bank statement and income-tax return.
The Bangalore ITAT found that the company’s annual report conclusively established that the lender was its Managing Director and therefore his identity stood proved. The transaction was supported by the company’s books, receipt voucher, confirmation and bank entries. The fact that the company had received total loans of ₹1.90 crore from its directors further supported the genuineness of the transaction.
Regarding creditworthiness, the lender’s bank statement showed receipt of ₹16.23 lakh from HDFC Standard Life Insurance on 5 March 2020, resulting in a balance of ₹18.86 lakh. Immediately before advancing the loan, his bank balance was ₹17.12 lakh, which was sufficient to fund the ₹15-lakh transfer.
Since the assessee had satisfactorily proved all three ingredients required under Section 68—identity, creditworthiness and genuineness—the Tribunal held that there was no basis for sustaining the addition and deleted it entirely.
