Entry Operator Link Alone Cannot Make Unsecured Loans Bogus: ITAT Delhi

DCIT Vs New Age Infosys Pvt. Ltd. (ITAT Delhi)

Search Allegation Against Lender Cannot Replace Proof Against Borrower: ITAT Upholds Deletion of Loan Additions

A lender’s alleged connection with an accommodation entry operator does not, by itself, establish that every loan made by that lender is bogus. The borrower’s transaction must be examined on its own evidence. Applying this approach, the Delhi ITAT in DCIT v. New Age Infosys Pvt. Ltd., ITA Nos. 6798 to 6800/Del/2026, upheld the deletion of additions relating to unsecured loans, repayments, interest and alleged commission. The common order was pronounced on 29 September 2026.

The Revenue had brought three appeals concerning AYs 2016–17 and 2017–18. The assessee filed cross objections raising legal challenges to the reassessment proceedings. The Tribunal dismissed the Revenue’s appeals on the merits of the additions and left the assessee’s legal objections unexamined.

Allegations Arising from a Third-Party Search

A search had been conducted on third parties, and the Department alleged that companies associated with an entry provider had given accommodation entries. The assessee was not itself searched. According to the assessee, the material referred to in its case consisted of ledger accounts reflecting transactions already recorded in its regular books.

The AO treated loans involving M/s S.W. Consultants Pvt. Ltd. and M/s Lenient Consultants Pvt. Ltd. as non-genuine. For AY 2016–17, the disputed receipts were ₹3.50 crore and ₹2.50 crore, respectively. The assessment also contained additions relating to ₹65 lakh of transactions described by the assessee as loan repayments, ₹16,39,455 concerning interest, and ₹19,95,000 estimated as commission at 3%. The total additions disputed for that year were ₹7,01,34,455.