2025 (9) TMI 944 - AT - Income Tax

s.68 unsecured loan addition deleted where bank statements, tax audit report, ledger confirmations and unrebutted third-party statements proved transactions

ITAT deleted addition under s.68 relating to an unsecured loan, holding that the assessee had furnished bank statements, tax audit report, ledger ... Addition on account of unsecured loan invoking provisions of section 68 - no opportunity to rebut to cross examine the statement recorded of the third party being the basis of the addition - HELD THAT:- Admittedly assessee had furnished necessary details such as the copy of the bank account, financial statement, copy of tax audit report, copy of confirmation in the ledger account, copy of return of income and all the details to prove the genuineness of the transaction before the lower authorities. Transactions was carried out through the banking channel. If the details filed by assessee were neither cross verified by revenue from the alleged third parties and no infirmity was pointed out by rebutting the assessee, the loan transaction cannot be held non-genuine. CIT(A) was required to controvert the evidence filed on record and disapprove the claim with support of corroborative documentary evidence that said transaction of receiving loans by assessee was an accommodation entry. We hold that the decision of the CIT(A) in confirming the addition is infirm and perverse to the facts on record and as such, it is deleted. Appeal allowed. Issues: Whether the addition of Rs. 30,00,000 made under section 68 of the Income-tax Act, 1961 by treating an unsecured loan as unexplained cash credit can be sustained where the assessee furnished bank records, financial statements, tax audit report, ledger confirmations and return of income and the revenue did not controvert or corroboratively disprove those materials or cross-examine the third-party statements relied upon by the Assessing Officer/CIT(A).Analysis: The Tribunal examined whether the three customary ingredients relied on by revenueidentity of the lender, mode of payment and creditworthinesswere effectively controverted by the Assessing Officer or CIT(A). The assessee had produced bank account copies, financial statements, tax audit report, ledger confirmation and return of income showing the loan routed through banking channel. The CIT(A) upheld the addition by treating the lender and transactions as part of an accommodation-entry conduit, relying on pattern of transactions and a precedent concerning a different factual matrix. The Tribunal found that the lower authorities did not rebut or disprove the documentary evidence filed by the assessee, did not obtain corroborative material from alleged third parties, and did not point out specific infirmities in the furnished records; mere reliance on transactional patterns without controverting the assessee's evidence was insufficient to sustain the addition under section 68.Conclusion: The addition of Rs. 30,00,000 under section 68 is deleted and the appeal is allowed in favour of the assessee.