ACIT Vs Jayant Shamji Chheda (ITAT Mumbai)
A Loan Cannot Be Called Bogus Merely Because a Notice Went Unanswered—or a Portal Said the Lender Was Struck Off
In a consolidated order spanning three assessment years, the Mumbai Tribunal considered unsecured loans, interest and borrowing costs, and section 14A disallowances. The Revenue’s principal loan additions under section 68 failed because the documentary record established the lenders’ identity, financial capacity and the transactions’ genuineness. On section 14A, however, the Tribunal ordered limited fresh computations, making clear that the AO must examine the assessee’s own working before invoking Rule 8D.
AY 2017–18: two lenders did not answer section 133(6) notices
The assessee had received unsecured loans from 38 creditors. The AO issued notices under section 133(6), and 36 creditors responded. The remaining two were Jayesh K. Haria, who had lent ₹50 lakh, and Bharat T. Chheda, who had lent ₹80 lakh. Because they had not complied with the notices during assessment and were not produced for examination, the AO added ₹1.30 crore under section 68.
The CIT(A) examined the loan confirmations, ledgers and bank statements; an income-tax return acknowledgement was also available for one creditor. The loans had subsequently been repaid through banking channels. The Tribunal found no material showing suspicious cash deposits immediately funding the advances or indicating that the assessee’s own money had been routed back as loans. The AO had also not disallowed the interest paid to these lenders.
