Ashok Airen Vs DCIT (ITAT Indore)
The ITAT, Indore Bench held that loans cannot be treated as unexplained u/s 68 merely on the basis of third-party statements branding lenders as “entry providers”, when the assessee has discharged the primary onus of proving identity, creditworthiness & genuineness.
In this case, the AO relied on Investigation Wing inputs alleging that the lender companies were controlled by an accommodation entry operator and made ₹50 lakh addition u/s 68. The assessee, however, furnished complete documentary evidence—PAN, confirmations, bank statements & financials—which remained uncontroverted. Crucially, the same lenders & same AY had already been examined by the ITAT, Indore in earlier cases, where identical additions were deleted.
Following the principle of judicial consistency, the Bench held that the ingredients of s.68 stood satisfied and deleted the entire addition. The appeal was allowed in full
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by appeal-order dated 02.04.2025 passed by learned Commissioner of Income-Tax (Appeals)-National Faceless Appeal Centre, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 20.09.2021 passed by learned National Faceless Assessment Centre, Delhi [“AO”] u/s 147 r.w.s. 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2013-14, the assessee has filed this appeal on following grounds:
“1. On the facts and circumstances of the case and in law the learned CIT(A) erred in upholding the decision of AO in passing the order u/s 147 of the Income tax Act. The Appellant prays that the said proceedings be directed to be quashed.
2. On the facts and circumstances of the case and in law the learned CIT(A) erred upholding the decision of AO based on third party material and statement for addition without producing the witness of department for cross examination. The AO failed to appreciate and ought to have held that opportunity of cross examine contemplates ensuring attendance of person whose statement is sought to be used against the Appellant. Accordingly the addition made in violation of natural justice be directed to be deleted.
3. On the facts and circumstances of the case and in law the learned CIT(A) erred upholding the addition made by Id. AO of Rs.50,00,000 in respect of unsecured loan received during the year by allegedly treating them as unexplained credit under Section 68 of the Act. The Appellant prays that the said addition be directed to be deleted.
4. The Appellant craves leave to add, amend any or all grounds at the time of hearing.”
2. The background facts leading to present appeal are such that the AO, taking into account an information received from Investigation Wing of Income-tax Department, issued notice u/s 148 dated 19.03.2020 to assessee to initiate the assessment u/s 147. In response, the assessee filed return on 23.06.2020. Thereafter, the AO issued notices u/s 143(2)/142(1) which remained uncomplied by assessee. Thereafter, the AO issued a show-cause notice to which though the assessee filed a short reply but the AO considered assessee’s reply as improper. Ultimately, the AO passed assessment-order dated 20.09.2021 u/s 147 r.w.s. 144B after making a total addition of Rs. 50,00,000/- treating the loans taken by assessee from these lenders as unexplained cash credits u/s 68, namely (i) loan of Rs. 20,00,000/- from ‘M/s Jay Jyoti India Pvt. Ltd.’ and (ii) loan of Rs. 30,00,000/- from ‘M/s Jayant Securities and Finance Pvt. Ltd.’ Aggrieved, the assessee carried matter in first-appeal before CIT(A) but did not get any success. Still aggrieved, the assessee has come in next appeal before us.
