NG Brothers Vs ACIT (ITAT Kolkata)
Loans Repaid—Section 68 Cannot Apply
These five appeals—three quantum & two penalty—arose from NFAC orders for AYs 2014-15, 2015-16 & 2016-17, concerning additions u/s 68 toward unsecured loans, consequential disallowances of commission & interest, & levy of penalty u/s 271(1)(c). The Tribunal disposed all appeals through a consolidated order.
AY 2014-15
AO treated unsecured loans of ₹22 lakh (Shresth Builders Pvt Ltd) & ₹50 lakh (BSR Finance & Constructions Pvt Ltd) as unexplained cash credits u/s 68 on the ground that Inspector could not trace the lender offices & responses to s.133(6) were inadequate. CIT(A) merely affirmed.
Tribunal found that the Assessee had furnished PANs, addresses, confirmations, audited financials, bank statements, & crucially, the loans were repaid in subsequent years. Applying multiple Calcutta High Court rulings (Rahul Premier India Agency, Narayan Tradecom, Alom Extrusions, Edmond Finvest, Parwati Lakh Udyong) & Gujarat HC in Ambe Tradecorp, Tribunal held that once the identity, transactions through banking channels, & repayment stand established, s.68 cannot apply.
Thus, entire addition deleted.
Consequential additions— ₹2,16,000 (commission) & ₹99,649 (interest) were also deleted.
Tribunal further held that reopening was invalid because AO reused reasons of AY 2016-17 for reopening AY 2014-15, which is legally impermissible.
