Alom Extrusions Limited Vs ACIT (ITAT Kolkata)
Loans Through Banking Channels Cannot Be Treated as Bogus Merely on ‘Shell Company’ Allegation: ITAT Deletes ₹3 Crore Section 68 Addition
The Kolkata ITAT deleted ₹3 crore addition made under Section 68 against Alom Extrusions Limited after holding that unsecured loans received through banking channels from corporate entities cannot be treated as unexplained cash credits merely on the basis of generalized allegations that the lenders were “shell companies.”
The reassessment was initiated based on investigation wing information alleging that the assessee had received accommodation entries from M/s Sagittarians Credit Capital Pvt. Ltd. and M/s Kokila Exports Pvt. Ltd. The Assessing Officer treated loans aggregating to ₹3 crore as unexplained cash credits under Section 68 despite the assessee furnishing extensive documentary evidence including PAN details, audited balance sheets, ITR acknowledgements, MCA records, bank statements, ledger accounts and loan confirmations of both lender companies.
The Tribunal noted that notices issued under Section 133(6) were duly complied with and the lenders themselves confirmed the transactions. It further observed that both lender companies were duly incorporated corporate entities assessed to income tax and possessed substantial net worth. Importantly, all transactions were routed through banking channels and the loans had subsequently been repaid along with interest.
Relying upon multiple Calcutta High Court rulings including PCIT vs. Rahul Premier India Agency Pvt. Ltd. and earlier decision in assessee’s own case, the ITAT held that once the assessee establishes identity of creditors, genuineness of transactions and creditworthiness through documentary evidence, additions under Section 68 cannot survive merely on suspicion or investigation wing reports.
The Tribunal also noted that the Assessing Officer ignored crucial evidences and proceeded largely on surmises and conjectures without disproving the documents placed on record. Accordingly, the ITAT held that the assessee had fully discharged the burden cast under Section 68 and deleted the entire addition of ₹3 crore.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This appeal filed by the Revenue is directed against the order dated 31.03.2022 of the Office of the Assistant Commissioner of Income Tax passed under Section 147 of the Assessment Year 2013-14 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
