Earlier-Year Loan Not Taxable Under Section 68: ITAT Deletes Rs. 2.5 Cr Addition

Anandmangal Investment & Finance Pvt Ltd Vs ITO (ITAT Mumbai)

Section 68 Cannot Apply to Past Year’s Loan Balance – ITAT Mumbai Deletes Rs. 2.5 Cr 68 Addition-  Identity & Genuineness Established – Tribunal Protects Assessee from Double Taxation

Assessee’s case was reopened u/s 147 on the ground that it had received unsecured loans of Rs. 2.50 crore, treated by AO as accommodation entries. AO held that the Assessee failed to prove identity, genuineness & creditworthiness, & taxed the sum as unexplained cash credit. CIT(A)/NFAC upheld the addition.

Before the Tribunal,  Assessee contended that the loan was actually received in FY 2001-02 (AY 2002-03) from M/s Piyali Trading Company (earlier Revathy Resorts Pvt. Ltd.), through five cheques of Rs. 50 lakh each, duly recorded in its bank account with SBI, Indore. The amount continued as outstanding in its balance sheet & was only carried forward in AY 2012-13. Documentary evidence including confirmations, bank statements, audited financials & creditor details were furnished. The Tribunal noted that even CIT(A) acknowledged the loan pertained to AY 2002-03, yet still sustained the addition. It held that no material was brought on record by AO to show fresh loan transaction in AY 2012-13. Once a loan is accepted in earlier years, its existence in later years cannot be re-examined for creditworthiness. Accordingly,  Tribunal set aside CIT(A)’s order & directed deletion of Rs. 2.50 crore addition.