₹60 Lakh Loan Addition u/s 68 Deleted as AO Relied on Assumptions, Not Evidence: ITAT Upholds CIT(A) Decision [Read Order]

The Income Tax AppellateTribunal (ITAT) upheld the Commissioner of Income Tax (Appeals) [ CIT(A) ] order, deleting an addition of ₹60 lakh made under Section68 of the Income Tax Act, 1961 and ruling that the Assessing Officer relied on presumptions and assumptions rather than concrete evidence.

The case began after a search in the Filatex Group in September 2021, where documents linked to the assessee, Sparsh Property Pvt. Ltd., were found. Based on this, the Assessing Officer reopened the company’s AY 2016–17 assessment and treated ₹60 lakh of loans received from ANM Fincap and Satsal Finlease as bogus cash credits under Section 68, also disallowing ₹9.14 lakh interest and ₹31,250 commission.

The revenue argued that the lenders were shell companies created to route unaccounted money, relying on search findings in the Filatex Group case and statements recorded under Section 132(4). It contended that audited accounts and bank statements were mere façades and that the CIT(A) erred in deleting the additions.

The assessee countered that it had discharged its burden under Section 68 by furnishing confirmations, bank statements, audited financials, Income Tax Return (ITR) acknowledgements, and responses under Section 133(6). It highlighted that the group company, Filatex India Ltd., had taken loans from the same lenders, which the Tribunal had already held genuine in earlier appeals.

The tribunal observed that the lenders' identities were established and undisputed and proved that the audited accounts and RBI filings had sufficient funds available. Also, the genuineness of transactions was shown by the banking channel transfer, repayment of loans, and deduction of atdsa on interest.

It was also noted that the AO failed to establish any direct nexus between the assessee and the alleged accommodation entries, relying only on presumptions.

The bench of Mahavir Singh (Vice President) and Krinwant Sahay (Accountant Member) upheld the deletion of the ₹60 lakh addition under Section 68, along with related disallowances of ₹9.14 lakh interest and ₹31,250 commission.

Accordingly, both the Revenue’s appeal and the assessee’s cross-objection stood infructuous and were thereby dismissed, as the Tribunal upheld the order of the CIT(A).

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