Delhi ITAT Deletes Section 68 Addition on Loans from Wife & Company – Identity, Creditworthiness & Genuineness Fully Established

ACIT Vs Dr. Sameer Gupta (ITAT Delhi)

Delhi ITAT Deletes Section 68 Addition on Loans from Wife & Company – Identity, Creditworthiness & Genuineness Fully Established

Summary: The Delhi ITAT dismissed the Revenue’s appeal and upheld the CIT(A)’s deletion of additions of ₹1,72,50,000 and ₹50,00,000 made under Section 68 of the Income-tax Act, 1961. The Assessing Officer had treated the unsecured loan received from the assessee’s wife and the loan received from Umkal Healthcare Pvt. Ltd. as unexplained cash credits, alleging that the loan from the wife was not reflected in the balance sheet. The CIT(A) found that the loan from the wife was duly reflected in the assessee’s Statement of Affairs under sundry creditors, supported by a loan confirmation, and that the lender had filed her income tax return declaring substantial income. The loan from Umkal Healthcare Pvt. Ltd. was supported by a confirmation and ledger account showing repayment during the same year through the assessee’s disclosed bank account. The ITAT noted that both lenders were assessed to tax by the same Assessing Officer, had confirmed the loans, advanced funds through disclosed bank accounts, and possessed sufficient financial capacity. Holding that the assessee had established the identity of the lenders, their creditworthiness, and the genuineness of the transactions, the ITAT found no basis for additions under Section 68 and confirmed the CIT(A)’s order.

The Delhi ITAT dismissed the Revenue’s appeal and upheld the deletion of additions made u/s 68 in respect of unsecured loans of ₹1.725 crore received from the assessee’s wife and ₹50 lakh received from Umkal Healthcare Pvt. Ltd. The Tribunal held that the assessee had satisfactorily established the identity of the lenders, their creditworthiness, and the genuineness of the transactions, leaving no scope for invoking section 68.

The AO had treated the loan from the assessee’s wife as unexplained on the ground that it was not reflected in the balance sheet. The Tribunal found that the AO had overlooked the distinction between the assessee’s professional balance sheet and his personal Statement of Affairs. Since the loan related to a personal transaction for purchase of residential property, it was rightly disclosed in the Statement of Affairs under “Loans from Friends & Relatives”. The lender, Dr. Sonia Lal Gupta, had confirmed the loan, had filed her income-tax return declaring substantial income, and was assessed by the same AO, thereby fully establishing her creditworthiness.

With regard to the ₹50 lakh loan from Umkal Healthcare Pvt. Ltd., the Tribunal noted that the assessee had furnished the loan confirmation as well as the ledger account, which demonstrated that the loan had been repaid during the same year through banking channels. The company was also assessed by the same AO, and the funds were traceable to disclosed bank accounts. Accordingly, the Tribunal rejected the Revenue’s contention that the addition should be restored merely because the ledger account had not been specifically remanded to the AO.

The Tribunal reiterated that once an assessee proves the identity of the lender, creditworthiness, and genuineness of the transaction, the conditions of section 68 stand satisfied. Since both lenders were income-tax assessees with sufficient financial capacity and the transactions were fully supported by documentary evidence and banking records, the additions were rightly deleted by the CIT(A).

Author’s Comments: The ruling reiterates the settled principle that section 68 cannot be invoked merely because of an accounting presentation issue. Where the source of funds is fully explained, confirmations are furnished, transactions are routed through banking channels, and the lenders are identifiable tax assessees with proven financial capacity, no addition can be sustained. The decision also highlights that the AO must examine the entire set of financial statements, including the Statement of Affairs, instead of drawing adverse inferences by looking only at the professional balance sheet.

FULL TEXT OF THE ORDER OF ITAT DELHI

1. The appeal in ITA No.5327/Del/2025 for AY 2022-23, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 17.06.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.03.2024 by the Assessing Officer, ACIT, Central-2, Faridabad (hereinafter referred to as ‘ld. AO’).

2. The revenue has raised the following grounds of appeal before us:-

“(i) Whether Ld. CITG) is right in deleting the addition of Rs.1,72,50,000/- by holding that the said amount of unsecured loan received from his wife duly reflects in the balance sheet as on 31.03.2022 of the assessee under the head sundry creditor whereas no such amount is reflecting in the balance sheet as on 31.03.2022 of the assessee under the head sundry creditor? (ii)

(ii) Whether on the facts and in the circumstances of the case, the order passed by Ld. CIT(A) is not perverse as it grossly overlooked the balance sheet as on 31.03.2022 of the assessee reflecting only an amount of Rs. 19,91,657/- under the head sundry creditors? (iii) Whether Ld. CIT(A) is right in deleting the addition of Rs. 50,00,000/- on the strength of ledger account of M/s Umkal Hospital Ltd. produced by the assessee reflecting that the said amount has been repaid during the year itself without remanding the matter back to the Ao on the backdrop that the said document was not produced before the Ao during the cours.”

3. We have heard the rival submissions and perused the materials available on record. The Assessee is an Interventional Cardiologist and had undertaken his professional studies / post graduation from USA during the period 2006 to 2014 and has been in professional practice since 2014 with recognized hospitals of NCR of Delhi. The return of income for the Assessment Year 2022-23 was filed by the assessee on 20-09-2022 declaring total income of Rs 1,08,63,450. Search and seizure operation was carried out under Section 132 of the Act on Dr. Lal Group and its related parties on 27-07-2022, in relation to which search warrants were drawn for various hospital units of Metro Group, hospital premises of SSB Heart and Multispecialty Hospital, Faridabad and for premises of their related key persons/entities. The Metro Group of Hospitals, which operates hospitals in multiple states and cities, and SSB Central Hospital and Research Center Limited Group, which was founded after October 2020, were the two hospital groups. The Assessee was in receipt of professional fees from Metro Hospitals group and Umkal Healthcare Pvt Ltd, among other clients . Accordingly, the case of the Assessee, his wife Dr Sonia Lal Gupta, his father Dr Umesh Gupta and his mother Dr Kalpana Gupta were also centralized along with Metro group cases vide order under section 127 of the Act dated 1-2-2022.

4. It is not in dispute that the assessee had received Rs 1,72,50,000 as unsecured loan from his wife Dr Sonia Lal Gupta and utilized the same for purchase of property at Q-33, Greater Kailash –1, 1st Floor, New Delhi 110048. With regard to the loan received from Dr. Sonia Lal, wife of the Assessee, the Assessee furnished confirmation from Dr. Sonia Lal Gupta. The wife of the Assessee is also assessed to tax and had declared Rs 1,42,47,910 in her return for the Assessment Year 2022-23 and assessed to tax by the same Learned AO. The loan was received through regular banking channels. The Learned AO having held that the sum of Rs 1,72,50,000 was found credited in the bank statement of the Assessee, stated that the same is not reflected in the Balance Sheet of the Assessee and accordingly proceeded to treat the said loan as unexplained cash credit under section 68 of the Act. Similar addition of Rs 50,00,000 was also made under section 68 of the Act in respect of loan received by the Assessee from Umkal Healthcare Pvt Ltd. This loan was repaid by the Assessee during the year itself out of disclosed sources of income traceable to disclosed bank account.

5. The Learned CIT(A) after examination of the entire documents that were already placed on record, found that the loan received from wife is duly reflected in the Balance Sheet under Sundry Creditors and also held that the creditworthiness of the lender is established beyond doubt. The Learned CIT(A) noted that Assessee during the course of assessment proceedings had furnished the following documents:-

a) Form 26AS along with written submissions dated 11.03.2024

b) Copy of Balance Sheet as on 31-3-2022 and Income and Expenditure Account for Financial Year 2021-22 of Dr Sameer Gupta (Professional account)

c) Copy of Statement of Affairs of Dr Sameer Gupta as on 31-3-2022

d) Confirmation of loan from Dr Sonia Lal Gupta (Wife)

e) Confirmation of loan from Umkal Hospital Pvt Ltd

f) Copy of Ledger Account in the books of Umkal Hospital Pvt Ltd

g) Copy of HDFC Bank A/c No. 57810 of Dr Sameer Gupta

h) Computation of taxable income of Dr Sameer Gupta

i) Copy of acknowledgement of Booking amount with Yamuna Expressway Industrial Development Authority

j) Copy of HDFC Bank A/c No. 54131

6. The relevant observations of the Learned CIT(A) with regard to deletion of addition of Rs 1,72,50,000 are reproduced hereunder:-

“Regarding the sum of Rs.1,72,50,000/- found credited Into HDFC-23707 bank account, the appellant has furnished a letter of confirmation of loan obtained from his wife, Dr. Sonia Lal. It is mentioned in the said confirmation letter that the loan was given to the appellant for the purchase of W-33, Greater Kailash-1, 1st Floor, New Delhi-110048. This loan duly reflects in the Statement of Affairs-Balance Sheet as on 31.03.2022 of the appellant under the head “Sundry Creditors”. Regarding the creditworthiness of the lender, Mrs. Sonia Lal, it is pertinent to mention here that Dr. Mrs. Sonia Lal has filed her ITR for the AY 2022-23 at Rs.1,42,47,910/- and under the same jurisdiction of the AO.”

7. The relevant observations of the Learned CIT(A) with regard to deletion of addition of Rs 50,00,000 are reproduced hereunder:-

“Regarding the sum of Rs.50 lakhs found credited into HDFC-23707 bank account, the appellant has furnished a confirmation of loan taken from Umkal Hospital Pvt. Ltd. under the same jurisdiction of the AO. The appellant has also furnished a ledger account of Umkal Hospital Pvt. Ltd., according to which the said loan has been repaid during the year itself i.e. 05.11.2021 out of his HDFC-23707 bank account balance.”

8. It is pertinent to note that all the 4 family members of the Assessee listed supra and Umkal Healthcare Pvt Ltd are assessed by the same Learned AO. The main grievance of the revenue in its grounds is that the loan received by the Assessee from his wife is not reflected under the head Sundry Creditors in the Balance Sheet as on 31-3-2022 as stated by the Learned CIT(A). In this regard, we find that the Assessee had filed both Statement of Affairs (for personal account) as on 31-3-2022 and Balance Sheet as on 31-3-2022 (for professional account). The Learned AO had referred only to the Balance Sheet as on 31-3-2022. Since loan received from wife is a personal account transaction, the same is reflected in the Statement of Affairs as on 31-3-2022 and included in the figure of Rs 1,81,92,658.50 representing loan from friends & relatives enclosed in Page 38 of the Paper Book. Hence the contention of the Learned AO stands proved otherwise. Accordingly we hold that the Learned CIT(A) had rightly deleted the addition of Rs 172,50,000. The assessee has to prove the three ingredients of section 68 of the Act viz. identity of the lender, credit worthiness of the lender and genuineness of transaction. Both the lenders, i.e. Dr. Sonia Lalgupta and Umkal Healthcare Private Limited are assessed to tax by the same AO and are independently assessed to income tax declaring substantial income. Hence, the identity of the lenders are proved. Both the lenders had given due confirmation before the learned AO confirming the fact that they had indeed advanced loans to the assessee out of their disclosed sources traceable to disclosed bank account. Hence, genuineness of the transactions are proved. They have sufficient bank balances to advance monies to the assessee and hence credit worthiness of the lenders are also proved for both the parties. Since the assessee has proved all the three ingredients, there cannot be any amount which could be treated as unexplained cash credit, warranting any addition under Section 68 of the Act. Hence, we have no hesitation to confirm the order of the learned CIT(A) deleting the addition on merits. Accordingly, the grounds raised by the revenue are dismissed.

9. In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 08/07/2026.