ACIT Vs Jaideep Halwasiya (ITAT Kolkata)
Loans Taken & Repaid Through Banking Channels with TDS on Interest – ITAT Kolkata Upholds Deletion of Sec.68 Addition
Revenue filed appeal against the order of CIT(A) deleting addition of ₹2.35 crore made by AO u/s 68 as unexplained cash credits along with disallowance of interest ₹5.65 lakh.
During assessment, AO noticed that Assessee had taken unsecured loans of ₹50 lakh from Gagan Suppliers Pvt. Ltd., ₹60 lakh from Nitin Hire Purchase Pvt. Ltd. & ₹1.25 crore from Nusharwar Merchants Pvt. Ltd. AO held that identity, creditworthiness & genuineness were not proved and treated them as accommodation entries from shell companies. Addition u/s 68 was made along with disallowance of interest.
Before CIT(A), Assessee furnished complete evidences including confirmations, bank statements, tax audit disclosures & proof of repayment of loans with interest after deducting TDS. It was submitted that two loans were fully repaid during year itself & third repaid subsequently. CIT(A) accepted explanation, noting that loans were in normal course of business & fully repaid, hence Sec.68 could not be invoked.
Tribunal, after hearing both sides, upheld CIT(A)’s findings. It observed that Loans were disclosed in tax audit report & repaid via banking channels. Interest was paid with TDS deduction. AO did not point out any defects in evidences filed nor conducted proper enquiry. Once repayment of loans is established, credit entries cannot be isolated ignoring debit entries. Reliance placed on PCIT v. Ambe Tradecorp (P.) Ltd. (2022) 145 taxmann.com 27 (Guj.), CIT v. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC), & coordinate bench ruling in Poddar Realtors v. ITO (ITA No.265/Kol/2023). Accordingly, deletion of addition & interest disallowance was confirmed.
