ITO Vs K K Ventura (ITAT Mumbai)
Identity, PAN, ITR & Repayment Proved – ITAT Rules in Favour of Assessee on Unsecured Loans- Suspicion No Substitute for Evidence: ITAT Mumbai Upholds CIT(A) in ₹8.43 Cr Unsecured Loan Case
Case Background
- Assessee: K K Ventura LLP, engaged in financing & trading.
- Issue: Sharp rise in unsecured loans (₹21.03 Cr vs ₹6.25 Cr in prior year), squared-up loan transactions & borrowings from non-filers.
- AO’s Action: Added ₹8.43 Cr u/s 68 as unexplained unsecured loans + disallowed ₹29.95 Lakh interest (AY 2018–19).
- HC Intervention: Bombay HC (26/10/2023) quashed earlier order for lack of opportunity, remanded for fresh assessment.
Assessment Findings
AO identified 21 lenders (individuals & companies) where loans totaling ₹8.43 Cr were treated as unexplained.
Grounds:
- Low returned incomes (many in losses).
- Insufficient reserves/capital.
- Bank credits just before loan advances (entry-provider suspicion).
- Inconsistent/unaudited financial statements.
- Some lenders unresponsive to notices u/s 133(6).
- Allegation that assessee introduced its own unaccounted money through loan entries.
CIT(A) Decision (12/08/2024)
- Deleted entire addition & allowed interest claim.
- Held that assessee had discharged burden by filing confirmations, ITRs, PAN, bank statements.
- Noted that transactions were routed through banking channels, TDS was deducted on interest, & repayments were made.
Revenue’s Appeal Before ITAT
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