Fictitious unsecured loans alleged in tax assessment - addition reversed where department failed to prove accommodation entries.

The revenue alleged the assessee received fictitious unsecured loans and sought additions based on information from a search of entry operators. The assessee demonstrated no loans were taken during the year, so the Department bore the primary evidential burden to prove accommodation entries. The appellate finding that the assessee failed to discharge onus was reversed because allegations must be proved by the party making them; absent departmental proof of bogus loans the addition could not stand. Result: the addition was set aside and the assessee's appeal allowed.

---

---

Issues: Whether the addition of Rs. 61,75,297 as unexplained income on account of alleged accommodation entry in the form of unsecured loan is sustainable and whether the addition confirmed by the Commissioner (Appeals) should be deleted.

Analysis: The appeal concerns reassessment proceedings initiated under Section 147 and notice under Section 148 of the Income-tax Act, 1961, leading to an addition of Rs. 61,75,297 alleged to be from fictitious unsecured loans identified in investigation material relating to entry providers. The authorities below relied on information from search and seizure and investigation reports to treat the amount as unexplained income; the assessee, however, produced account and bank details and asserted that no such unsecured loan was taken during the year. The material on record shows that the Assessing Officer accepted that no loan was recorded in the assessee's books, yet proceeded to make the addition by treating the investigation report as sufficient to shift the onus. The question addressed is whether the Department has met its evidentiary burden to prove that the assessee received the alleged fictitious loan and thereby justify inclusion in income.

Conclusion: The addition of Rs. 61,75,297 is deleted and the appeal is allowed in favour of the assessee.

---