₹1 Crore Addition for Unexplained Loans: ITAT Deletes Addition due to Sufficient Evidence [Read Order]
It was noted that one lender had responded, and the lack of interest payments did not make the loans non-genuine. Since both lenders had PAN and filed returns, the tribunal found the AO’s conclusions unjustified
![₹1 Crore Addition for Unexplained Loans: ITAT Deletes Addition due to Sufficient Evidence [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Unexplained-Loans-Loans-Sufficient-Evidence-taxscan.jpg "₹1 Crore Addition for Unexplained Loans: ITAT Deletes Addition due to Sufficient Evidence [Read Order]")
The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the ₹1 crore addition made under Section 68 of Income Tax Act,1961 for unexplained loans, due to sufficient evidence. Raj Kumari Agarwal, appellant-assessee, filed the income tax return for AY 2017-18 on October 31, 2017, declaring an income of ₹3,08,89,860. The case was selected for scrutiny under Section 143(3),...
The Jaipur Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the ₹1 crore addition made under Section 68 of Income Tax Act,1961 for unexplained loans, due to sufficient evidence.
Raj Kumari Agarwal, appellant-assessee, filed the income tax return for AY 2017-18 on October 31, 2017, declaring an income of ₹3,08,89,860. The case was selected for scrutiny under Section 143(3), and notices were issued under Sections 143(2) and 142(1). The required details were submitted through e-proceeding.
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During the assessment, the Assessing Officer (AO) found that the appellant-assessee had taken loans of ₹50,00,000 each from Smt. Suman Agarwal and Smt. Laxmi Agarwal. Notices under Section 133(6) were sent for verification, but one remained unserved, and the other received no response. Show-cause notices were issued, asking for an explanation.
The assessee submitted confirmations, but the AO found them suspicious due to identical handwriting. Key financial documents were missing, and further inquiry showed that one lender had not filed tax returns for years, while the other had very low income. No interest was recorded on the loans.
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Considering these factors, the AO treated the loans as non-genuine and added ₹1,00,00,000 to the total income under Section 68, taxing it at 60% under Section 115BBE of the Act.
Aggrieved by the decision of the AO the assessee appealed before the Commissioner of Income Tax(Appeals)[CIT(A)], who dismissed the appeal.The assessee then appealed before the tribunal.
Read More: ITAT deletes Addition of Rs. 25 Lakh as Unexplained Cash Credits, Finds Loan from Promoters Genuine
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The two member bench comprising Dr.S.Seethalakshmi(Judicial Member) and Rathod Kamlesh Jayantbhai(Accountant Member) ruled on the addition of ₹1 crore as unexplained credit under Section 68. The appellant received ₹50 lakh each from Suman Agarwal and Laxmi Agarwal. The AO found the loans suspicious due to unserved notices, missing documents, and the lenders' limited income. CIT(A) upheld the addition, citing failure to prove genuineness.
However, the tribunal noted that Suman Agarwal responded, and having no interest did not invalidate the loan. With both lenders holding PAN and filing returns, the ITAT found the AO’s conclusions unjustified and ruled in favor of the assessee.
To Read the full text of the Order CLICK HERE
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