ACIT Vs Jamini Industries Private Limited (ITAT Mumbai)
ITAT Mumbai: ₹9.87 Cr. Bogus Loan Additions Deleted – Creditors’ Documents Accepted
Background
- Assessee, engaged in textile manufacturing & trading, filed returns declaring losses.
- AO made additions of ₹4.15 Cr. (AY 2014-15) & ₹5.72 Cr. (AY 2015-16) as unexplained cash credits u/s 68, treating unsecured loans as bogus.
- Also disallowed related interest payments (₹34.6 lakh & ₹63.3 lakh).
- Basis: Investigation Wing report (Kolkata) stating creditors were not traceable; some were only entry providers.
- CIT(A) deleted additions after verifying documents (PAN, ROC data, audited accounts, bank statements, ITRs, loan confirmations).
Revenue’s Appeal
- Claimed CIT(A) failed to exercise co-terminus powers to direct cross-examination of creditors.
- Argued that AO’s findings on non-appearance of creditors made loans unverifiable.
Tribunal’s Observations
AY 2014-15:
- Commission notices were sent to outdated/wrong addresses; some creditors had informed new MCA-registered addresses.
- Loan creditors filed ITRs, confirmations, audited financials & bank statements proving identity & capacity.
- AO ignored this evidence and relied solely on Investigation Wing’s report.
- CIT(A) rightly accepted loans as genuine.
AY 2015-16:
- AO wrongly relied on AY 2014-15 report.
- Out of 18 creditors, only 4 were common; others were new & fully verified with records.
- CIT(A) examined all 18 creditors’ details and confirmed genuineness.
- AO conducted no independent inquiry.
Principle:
- Mere non-appearance of creditors cannot invalidate otherwise proven transactions.
- Loans carried commercial interest, repaid via banking channels with TDS deduction.
Decision
- ITAT upheld CIT(A)’s orders.
- Additions of ₹4.15 Cr. & ₹5.72 Cr. u/s 68, and interest disallowances, were deleted.
- Revenue’s appeals dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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