Tribunal finds that the Rs. 6.45 lakh loan difference related to past years and that the assessee proved identity, creditworthiness and genuineness for Rs. 16 lakh fresh loans.
Meetu Kumari | Dec 5, 2025 |
ITAT Deletes Section 68 Additions on Unsecured Loans; Holds Difference in Father-Son Loan Balance Not Taxable
The assessee, an individual engaged in business and earning rental income, filed his return for AY 2020-21, declaring total income of Rs. 6.41 lakh. The case was scrutinised following a search on the assessee and related entities in the R.B. group. During assessment, the Assessing Officer made additions of Rs. 22.45 lakh under Section 68 on account of unsecured loans and also disallowed Rs. 1.50 lakh under Chapter VI-A. The additions included a Rs. 6.45 lakh difference in the loan balance appearing between the assessee’s books and those of his father. The remaining Rs. 16 lakh pertained to new loans from three lenders. Assessment was completed at Rs. 30.36 lakh.
Before the CIT(A), the assessee secured relief only for the Chapter VI-A deduction, while the additions under Section 68 were upheld. The CIT(A) accepted part of the submissions but largely affirmed the AO’s view, leading the assessee to appeal before the Tribunal.
Main Issue: Whether the additions of Rs. 6,45,300 and Rs. 16,00,000 under Section 68 were justified when the difference in the father-son loan account related to earlier years and the assessee had furnished confirmations, ITRs and bank statements for the new lenders.
ITAT Ruled: The Tribunal first addressed the Rs. 6.45 lakh addition arising from the mismatch in the loan account of the assessee vis-à-vis his father. After examining ledger extracts produced in the paper book, the Bench found that the difference was carried forward from earlier assessment years and did not arise from any transaction in AY 2020-21. It also noted that similar additions made for AYs 2017-18, 2018-19, and 2019-20 were deleted by the first appellate authority since they were not backed by any incriminating material found during the search. The Tribunal held that it could not be added again under Section 68 and thus deleted it.
The Tribunal observed that the AO neither conducted any meaningful enquiry nor pointed out any inconsistencies in the documents submitted. The Tribunal held that once the assessee discharges his primary onus under Section 68, the burden shifts to the department to rebut the evidence, which was not done. Therefore, the Tribunal deleted the entire Rs. 16 lakh addition. The appeal was allowed in full.
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