Kalpana Ramesh Jain Vs DCIT (ITAT Mumbai)
ITAT Deletes ₹50 Lakh Addition – Mere Search Allegations Against Lender Cannot Make Every Loan Bogus
The Mumbai ITAT deleted an addition of ₹50 lakh made u/s 69A in respect of an unsecured loan received through banking channels from M/s Aneri Fincap Ltd. The reassessment was triggered based on search proceedings conducted in the case of “One World Group”, where certain entities including the lender were allegedly found involved in accommodation entry operations. The AO treated the loan as non-genuine and also disallowed consequential interest expenditure and denied set-off of interest income.
The assessee contended that the entire loan transaction was genuine, duly recorded in books, routed through banking channels, supported by loan agreement, confirmations, audited financial statements, RBI registration certificate of the lender NBFC, PAN, ITR acknowledgements, repayment proofs and no-dues certificate. It was further argued that no direct incriminating material existed against the assessee and no cash trail or evidence showed routing back of assessee’s own unaccounted funds.
The Tribunal held that the Department had merely relied on generalized allegations arising from third-party search statements without bringing any independent material linking the assessee to accommodation entry operations. The ITAT emphasized that suspicion, however strong, cannot replace legal evidence. It observed that the lender’s audited financials demonstrated substantial financial strength and that the entire transaction – receipt, utilization and repayment of loan – stood fully evidenced through contemporaneous records and bank statements.
Importantly, the Tribunal held that section 69A itself was wrongly invoked since the transaction was fully recorded in the books and no unaccounted money or asset was found with the assessee. The ITAT ruled that additions cannot be sustained merely because the lender was allegedly involved in accommodation entries unless there is direct evidence connecting the assessee with such activity. Accordingly, the addition of ₹50 lakh and the consequential disallowance of interest/set-off of ₹17.50 lakh were deleted in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The aforesaid appeal has been filed by the assessee against the order dated 21.05.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), arising out of reassessment proceedings framed under section 147 of the Income Tax Act, 1961 for the assessment year 2018-19. In various grounds of appeal, including the additional ground raised before us, the assessee has challenged the validity of reassessment proceedings on multiple legal and jurisdictional issues, inter alia, assailing the assumption of jurisdiction under section 147 instead of section 153C of the Act, validity of reopening under section 148, and, on merits, challenging the addition of Rs.50,00,000/- made under section 69A by treating the unsecured loan received from M/s Aneri Fincap Ltd. as non-genuine and in the nature of accommodation entry. Consequentially, the assessee has also challenged the disallowance of interest expenditure and denial of set off of interest income amounting to Rs.17,50,000/-, which, according to the Assessing Officer, was intrinsically linked to the alleged bogus loan transaction.
