ITAT Deletes Section 68 Addition on Unsecured Loans After Accepting Documentary Evidence

The dispute arose from an addition of Rs. 43.90 crore under Section 68 of the Income-tax Act, 1961, representing alleged unexplained unsecured loans received from four parties.

The AO held that the assessee had failed to prove the genuineness of the loans and their creditworthiness, treating the amounts as unexplained cash credits.

CIT(A) Held: The Commissioner of Income Tax (Appeals) deleted the addition, noting that the assessee had furnished confirmation letters, bank statements, audited financials of the lenders, and repayment details through banking channels.

Main Issue: Whether an addition under Section 68 could be sustained when the assessee had furnished complete documentary evidence establishing the identity, creditworthiness, and genuineness of the loan transactions.

Tribunal’s Decision: The Tribunal held that when the assessee produces all primary evidence, confirmations, bank statements, audited accounts, and proof of repayments through banking channels, the onus under Section 68 is discharged. Mere suspicion or general statements about accommodation entries cannot justify an addition.

Therefore, the Addition of Rs. 43.90 crore deleted in full. and revenue’s appeal was dismissed.

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