Neeta Choudhary Vs ITO (ITAT Indore)
The Indore Bench of the ITAT allowed the assessee’s appeal for AY 2017-18 and deleted the addition of ₹5 lakh made under section 68 read with section 115BBE in respect of an unsecured loan. The Tribunal observed that the Assessing Officer had inconsistently accepted nine subsequent loan transactions aggregating to ₹3.35 lakh from the same lender while treating only the first loan of ₹5 lakh as unexplained, without any cogent justification.
The Tribunal noted that the assessee had regularly paid interest on the loan, deducted and deposited TDS, and ultimately repaid the entire outstanding amount through banking channels, which strongly established the genuineness of the transaction. Relying on binding Gujarat High Court decisions, including Ayachi Chandrashekhar Narsangji, Ambe Tradecorp Pvt. Ltd., and PCIT v. Merrygold Gems (P.) Ltd., the Tribunal held that once an unsecured loan is duly repaid and supported by banking and tax compliance records, no addition under section 68 is warranted. Accordingly, the impugned addition was deleted and the appeal was allowed.
FULL TEXT OF THE ORDER OF INDORE
Feeling aggrieved by order of first appeal dated 30.12.2024 passed by learned Commissioner of Income-Tax (Appeals)-Addl/JCIT(A), Agra [“CIT(A)”] which in turn arises out of assessment-order dated 22.12.2019 passed by learned ITO, Ward-Sendhwa [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:
“1. On the facts and circumstances of the case and applicable law Ld. CIT(A) erred in sustaining the assessment order passed by Ld. AO u/s 143(3) which is contrary to the material on records and provisions of the Act, unjust and bad in law.
2. On the facts and circumstances of the case and applicable law. Ld. CIT(A) erred in sustaining the addition made u/s 68 r.w.s. 115BBE of Rs. 5,00,000 by treating the unsecured loan as unexplained cash credit.
3. On the facts and circumstances of the case and applicable law. Ld. CIT(A) erred in sustaining the addition made u/s 68 r.w.s. 115BBE of Rs. 5,00,000 by treating the unsecured loan as unexplained cash credit more particularly when the identity, genuineness and creditworthiness of the transaction has been explained.
4. On the facts and circumstances of the case and applicable law Ld. CIT(A) erred in sustaining the addition made u/s 68 r.w.s. 115BBE of Rs. 5,00,000 without considering the submissions made and documentary evidences in proper perspective.
5. The appellant craves leave to add, amend, alter otherwise raise any other ground of appeal.”
2. The background facts leading to present appeal are such that the assessee-individual filed her return of AY 2017-18 declaring a total income of Rs. 8,35,620/-. The case was selected under scrutiny and the AO issued statutory notices u/s 143(2)/142(1) which the assessee complied. Finally, the AO completed assessment u/s 143(3) after making an addition of Rs. 5,00,000/- u/s 68 on account of unexplained cash credit/loan taken from one Shri Amit Choudhary. Aggrieved, the assessee carried matter in first-appeal but did not get any success. Now, the assessee has come in next appeal before us.
