Passion Realtech Pvt. Ltd. Vs ACIT (ITAT Delhi)
Loans Accepted in Lender’s Own Assessment Can’t Be Branded Bogus in Borrower’s Hands: ITAT Deletes ₹4.87 Cr Addition
The Delhi Bench “E” of the ITAT, in Passion Realtech Pvt. Ltd. v. ACIT (AY 2017-18), deleted an addition of ₹4.87 crore made under section 68 on account of unsecured loans, holding that the Revenue cannot take contradictory stands in the case of the lender and the borrower.
The assessee, a real estate company, had received loans from M/s Height Propcon Pvt. Ltd. and furnished complete documentary evidence including confirmations, ITR acknowledgements, audited financial statements and bank statements. The AO nevertheless treated the loan as unexplained, relying on third-party statements recorded during search/survey proceedings and field inquiries alleging that the lender was an accommodation entry provider. The CIT(A) confirmed the addition.
The Tribunal rejected the Revenue’s approach on multiple counts. It noted that:
- The same lender company was assessed under section 143(3) for AY 2017-18, barely days earlier, and no adverse inference was drawn regarding its identity or creditworthiness;
- There existed a substantial opening balance of loans (₹26.15 crore) from the same lender in earlier years, which had never been questioned;
- The entire loan was repaid in subsequent years, again without any adverse action by the Department; and
- The assessee had fully discharged the onus under section 68 by proving identity, genuineness and creditworthiness.
The ITAT held that once the Department has accepted the existence and financial capacity of the lender in its own assessment, it is impermissible to treat the same entity as non-existent or lacking creditworthiness in the hands of the borrower. Reliance on untested statements and suspicion, without rebutting documentary evidence, was held insufficient.
Accordingly, the Tribunal deleted the entire addition of ₹4.87 crore, while also rejecting the jurisdictional challenge relating to limited scrutiny. The assessee’s appeal was thus partly allowed, reaffirming that section 68 cannot be invoked inconsistently or on mere allegations once primary facts stand proved
FULL TEXT OF THE ORDER OF ITAT DELHI
