ITO Vs Sagar Vyapaar Pvt. Ltd. (ITAT Kolkata)
Short-Term Commercial Loan Repaid with Interest Cannot Be Branded as Bogus Entry: ITAT Deletes ₹80 Lakh Section 68 Addition
The Kolkata ITAT upheld deletion of ₹80 lakh addition made under Section 68 after holding that a short-term commercial loan received and repaid through banking channels with interest and TDS compliance cannot be treated as a bogus accommodation entry merely on the basis of investigation wing allegations.
The reassessment against Sagar Vyapaar Pvt. Ltd. was reopened alleging that the assessee had received accommodation entry in the guise of unsecured loan from M/s Tedium Sales Pvt. Ltd. The Assessing Officer treated the loan as unexplained cash credit by alleging that the lender was a shell company and that the transaction merely represented routing of assessee’s own unaccounted money.
However, the CIT(A) and subsequently the Tribunal noted that the assessee had taken the loan purely for commercial purposes and had repaid the same within the very same financial year along with interest after deducting TDS. The records showed that ₹30 lakh was borrowed in May 2012 and repaid within six days, while the balance ₹50 lakh borrowed in August 2012 was repaid within six months during the same year itself. Interest payment was also subjected to TDS compliance.
The Tribunal further observed that the lender company was duly assessed to income tax, possessed substantial net worth exceeding ₹10.90 crore and all transactions were carried out through account-payee banking channels. Loan confirmations, bank statements and supporting documentary evidences were furnished before the authorities.
Relying upon Gujarat High Court decisions including CIT vs. Ayachi Chandrashekhar Narsangji, PCIT vs. Ambe Tradecorp (P) Ltd. and Ojas Tarmake (P) Ltd., the ITAT reiterated that once the assessee proves identity, creditworthiness and genuineness of the transaction, additions under Section 68 cannot survive merely on assumptions or investigation reports unsupported by concrete evidence.
The Tribunal held that the Assessing Officer failed to establish that the assessee had routed its own unaccounted money through the lender company and accordingly dismissed the Revenue’s appeal in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
