2026 (2) TMI 633 - AT - Income Tax

Unsecured loans from specified lenders examined for genuineness; documentary proof and bank trails lead to quashing of additions under unexplained credits

Whether unsecured loans totaling Rs. 2.46 crores from four specified lender companies were genuine was determined by applying the assessee's onus to prove ... Addition u/s 68 - bogus Share premium and bogus Unsecured loan taken from other Shell companies - HELD THAT:- As decided in Filatax India Limited [2025 (7) TMI 1285 - ITAT DELHI] ​​​​​​​once it is accepted that the lender has creditworthiness for part of the amount, the remaining amount cannot be held as unexplained. There is no case of any cash deposition in the account of any of the lender companies at the time of issuing cheques/RTGS in favour of the Assessee. Therefore, Appellant has duly discharged the burden casted upon it u/s 68. Assessee appeal allowed. Issues: Whether the unsecured loans totaling Rs. 2.46 crores received by the assessee from four specified lender companies are genuine loans (and thus not exigible to addition under section 68 of the Income-tax Act, 1961), where the Assessing Officer treated the lenders as bogus shell/accommodation entities based on material from search proceedings and related enquiries.Analysis: The issue was examined with reference to documentary evidence produced by the assessee (confirmations of accounts, bank statements of the lenders, audited financial statements, ITRs and responses under section 133(6)), the flow of funds through banking channels, and findings in a coordinate bench decision in the Filatax India Limited matters concerning identical lenders and identical facts. The legal framework includes the onus on the assessee under section 68 of the Income-tax Act, 1961 to prove identity, creditworthiness and genuineness of the creditors; the requirement that suspicion without corroborative material cannot substitute proof; and the principle that where relevant documentary evidence establishes genuineness and transactions occur through banking channels, additions under section 68 are not warranted. The coordinate bench had recorded that documentary evidence demonstrated creditworthiness and genuineness, that loans were received and repaid through banking channels, and that suspicion based on statements recorded in search proceedings without tangible contrary documentary evidence was insufficient to sustain additions.Conclusion: The loans from the four lender companies are held to be genuine. The Revenue's additions under section 68 (and related assessments) are dismissed. The assessee's cross-objection is rendered academic and dismissed.