Manoj Anand Vs ITO (ITAT Guwahati)
Loan to Set Up DPS School Not Bogus: Tribunal Slams Borrowed Satisfaction- Suspicion Is Not Evidence: ITAT Deletes ₹3.43 Cr Addition u/s 68- Identity, Creditworthiness & Genuineness Proven—68 Addition Fails Completely
Assessee, a salaried individual, received ₹3,43,50,000 as unsecured loan from Urch Trading Pvt Ltd, which was immediately advanced to AARDA Education for establishing DPS School in Assam. AO reopened the case based on Insight-Portal alerts & Investigation Wing inputs alleging Urch Trading was a shell entity, lacked creditworthiness, routed funds through other shell companies, & granted interest-free loan without security. AO treated the loan as unexplained cash credit u/s 68. CIT(A) upheld the addition, relying heavily on investigation reports, money-laundering alerts & NBFC risk-classification, and on the long outstanding balance.
Before Tribunal, Assessee furnished ITRs, audited accounts, confirmations, bank statements, & 143(3) assessment order of lender. Tribunal noted that AO himself issued notice u/s 133(6) to Urch Trading & lender confirmed the transaction. The funds were used with clear commercial rationale for a joint educational project, disproving allegation of accommodation entry. Tribunal found that AO made the addition solely on suspicion, without examining the documentary evidences filed, without confronting Assessee with adverse material, without allowing cross-examination, & by relying on third-party statements not shared—squarely violating natural justice as per Andaman Timber Industries. Tribunal also applied Calcutta HC ruling in PCIT Vs Sreeleathers (448 ITR 332) that once identity, creditworthiness & genuineness are established, burden shifts to AO. AO failed to conduct any further enquiry. Tribunal held that reassessment was based on borrowed satisfaction & unsupported assumptions. Entire addition u/s 68 was deleted & appeal was allowed.
