Mahadev Dairy Pvt. Ltd. Vs ITO (ITAT Delhi)
In case of Mahadev Dairy Pvt. Ltd. vs. ITO (ITAT Delhi), the Income Tax Appellate Tribunal (ITAT) Delhi ruled in favor of the assessee by deleting an addition of ₹25 lakh made under Section 68 of the Income-tax Act, 1961, as unexplained cash credit. The dispute arose during the assessment year 2014-15, where the Assessing Officer (AO) had added the amount, citing the assessee’s failure to prove the genuineness and creditworthiness of an unsecured loan received from Sh. Kuldeep Nagar. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition, stating that cash deposits were made into Nagar’s bank account before the loan was extended. However, ITAT found that Nagar was a promoter of Mahadev Dairy Pvt. Ltd. and was assessed under the same jurisdiction.
Upon review, the ITAT Delhi bench observed that the lower authorities had not thoroughly examined the creditworthiness of Sh. Kuldeep Nagar by considering his available cash-in-hand records. Since the assessee successfully established the identity, genuineness, and creditworthiness of the transaction, ITAT ruled in its favor. The tribunal concluded that the loan from the promoter could not be treated as an unexplained cash credit, leading to the deletion of the ₹25 lakh addition. The appeal was allowed on December 5, 2024. This decision reinforces the importance of assessing cash credit transactions holistically, particularly when funds originate from promoters.
