ACIT Vs Minda Capital Pvt. Ltd. (ITAT Delhi)
Returned Loan Amount Not Unexplained Credit; Section 68 Addition Deleted; Money Received Back From Debtor Is Refund, Not Bogus Credit; No Evidence of Garment Trading, Bogus Purchase Addition Deleted; Statement Without Supporting Evidence Can’t Justify Bogus Purchase Addition; Section 68 & Bogus Purchase Additions Fail for Lack of Evidence.
The appeal before the ITAT Delhi arose from an order passed under Section 147 read with Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2011–12, wherein the Revenue challenged the deletion of additions by the Commissioner of Income Tax (Appeals).
The first issue concerned an addition of ₹20 lakh treated as unexplained cash credit under Section 68, along with alleged commission expenditure of ₹40,000 under Section 69C. The Assessing Officer (AO) relied on information from the Investigation Wing alleging that the assessee received accommodation entries through intermediary entities, with a cash trail showing receipt from Rasraj Enclave. Based solely on the credit entry, the AO treated the amount as unexplained income.
The assessee explained that the amount represented a refund of advances earlier given to Rasraj Enclave Maker Pvt. Ltd. and furnished supporting account details showing that ₹20 lakh was advanced on multiple dates and subsequently returned. The CIT(A), after examining the records, held that refund of loans or advances cannot be treated as unexplained cash credit under Section 68. It was noted that the original assessment had already been completed under Section 143(3) and the transaction was duly reflected. Accordingly, the CIT(A) deleted both the addition of ₹20 lakh and the related commission addition of ₹40,000.
