ACIT Vs Aayush Infotech Private Limited (ITAT Mumbai)
The Assessing Officer reopened the assessment based on investigation wing information alleging that the assessee had taken accommodation entry loans of ₹1.57 crore from two companies linked to an entry operator group and added the entire amount under section 68, along with ₹3.14 lakh as alleged commission under section 69C.
The assessee, however, produced comprehensive evidence including lender confirmations, their PAN, income-tax returns, audited financial statements, bank statements showing loan disbursement through normal banking channels, affidavits of the lenders’ directors, updated addresses, and proof that the entire loans along with interest were repaid in subsequent years.
The Tribunal noted that there was no evidence of any cash trail from the assessee to the lenders, no finding of cash deposits in lenders’ bank accounts prior to issuing cheques, and no independent enquiry by the AO to rebut the documentary evidence. Mere non-service of notices under section 133(6) or reliance on general statements recorded in some other search could not displace specific documentary proof produced by the assessee.
Distinguishing the Supreme Court decision in NRA Iron & Steel (which dealt with unexplained share capital lacking proof of investor identity and creditworthiness), the Tribunal held that in the present case the assessee had fully discharged the onus of proving identity, creditworthiness and genuineness, especially as the loans were later repaid through banking channels.
Relying on multiple High Court rulings that once properly documented unsecured loans received and repaid through banks cannot be doubted without contrary material, the Tribunal upheld the CIT(A)’s deletion of the ₹1.57 crore addition under section 68. Consequently, the related commission addition of ₹3.14 lakh under section 69C also failed.
The Revenue’s appeal was dismissed in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
