2021 (10) TMI 1436 - AT - Income Tax

Loan transaction deemed genuine despite no interest payment, addition under Section 68 deleted after repayment proof established

Mr. Lokesh Devilal Jain, Versus Income Tax Officer Mumbai

Mr. Lokesh Devilal Jain, Versus Income Tax Officer Mumbai - TMI Issues involved: Assessment of loan transaction u/s 68, genuineness of loan transaction, repayment of loan, addition of loan amount as bogus.Summary:1. The appeal was against the order of the Commissioner of Income Tax (Appeals) for assessment years 2012-13. The assessee, engaged in retail sale of jewelry, had taken a loan from a company and repaid it through banking transactions. 2. The assessee provided evidence of the loan transaction, including bank statements and confirmation from the lending company. The Department alleged the lending company was a shell entity, but the assessee maintained the genuineness of the transaction. 3. The Department argued that the loan transaction was bogus, citing various case laws. However, the Tribunal found the evidence provided by the assessee to be sufficient to establish the genuineness of the transaction. 4. The Assessing Officer suspected the transaction due to the lending company's association with shell entities. Despite this, the Tribunal noted that the loan was repaid and found no reason to sustain the addition of the loan amount as bogus. 5. The Tribunal considered the evidence presented, including bank statements and confirmation of the loan transaction, and concluded that once the loan amount was repaid, the addition was not sustainable. The appeal by the assessee was allowed, quashing the impugned order.Separate Judgement: No separate judgment was delivered by the judges in this case.