ITAT Remands Rs 6.50 Crore Section 68 Loan Addition for Fresh Investigation:

The Revenue filed an appeal against the order of the CIT(A) which had deleted an addition made under Section 68 of the Income Tax Act, 1961, in reassessment proceedings under Section 147 read with Section 143(3). The Revenue challenged the deletion of the addition relating to loans received by Alpha Infrasolution Pvt. Ltd., alleging that the assessee was used for providing accommodation entries.

The reassessment proceedings were initiated on information received from the Central Circle alleging that the assessee had received loans from four entities stated to be accommodation-entry providers. The CIT(A) held that the AO had not conducted adequate inquiries into the identity and creditworthiness of the lenders and the genuineness of the transactions.

Before the Tribunal, the Revenue argued that the assessee had furnished confirmations, ITR acknowledgements, bank statements and financial statements of the lender companies only at the fag end of the reassessment proceedings. It was argued that the CIT(A) failed to address the specific doubts raised by the AO concerning the financial capacity of the lenders and their alleged role in accommodation entries.

The Tribunal noted that the assessee furnished the details of the four lenders on 26 November 2019, whereas reassessment proceedings had commenced in September 2019. It was also observed that the assessee itself was not carrying on regular business activity and did not appear to have sufficient creditworthiness to explain why the lender companies would advance funds to it out of their own borrowed funds. 

Accordingly, the Tribunal held that proper and sufficient inquiries had not been undertaken before concluding that the loans were genuine. It therefore set aside the orders of the lower authorities and remanded the matter to the AO for fresh investigation, directing that summons under Section 133(6) may be issued, if considered necessary, and the issue be decided afresh in accordance with law.