Documentary Evidence Clears Loan Trail: ITAT Quashes ₹1.63 Crore Addition u/s. 68, Appeal Allowed [Read Order]
The Tribunal noted that the loan repayment trail was duly substantiated through bank statements and confirmation from the lender, leaving no scope for treating the amount as unexplained. The role of documentary evidence in establishing genuineness proved the addition under Section 68 to be unsustainable and accordingly set aside.
![Documentary Evidence Clears Loan Trail: ITAT Quashes ₹1.63 Crore Addition u/s. 68, Appeal Allowed [Read Order]](https://images.taxscan.in/h-upload/2025/08/28/2081602-section-68-addition-itat-delhi-unexplained-cash-credit.webp "Documentary Evidence Clears Loan Trail: ITAT Quashes ₹1.63 Crore Addition u/s. 68, Appeal Allowed [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Delhi Bench deleted an addition made under Section 68 of the Income Tax Act, 1961, holding that the impugned sum received from a private company was a repayment of earlier deposit and not an unexplained cash credit.
The appellant, Ravi Kumar resident of New Delhi, remitted funds abroad in Assessment Year 2017-18. While gifts from family members were accepted, the Assessing Officer (AO) treated Rs.1.63 crore received from M/s S.R. Credits Pvt. Ltd. as unexplained and added the same under Section 68.
The Dispute Resolution Panel upheld this view, leading to the appeal before the Tribunal.
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Advocate Ved Jain represented the assessee, argued that the transaction was not a fresh loan but a refund of earlier deposit, duly supported by balance sheets of prior years, audit report in Form 3CD, and contra entries in the bank accounts. It was submitted that identity and genuineness were undisputed, and that only creditworthiness was doubted without basis.
Senior Departmental Representative Subhash Chandra represented the authority, defended the assessment. He argued that the financials of S.R. Credits Pvt. Ltd. did not establish the capacity to refund such a sum, justifying the addition under Section 68.
The Bench comprising Judicial Member Challa Nagendra Prasad and Accountant Member Avdhesh Kumar Mishra held that the assessee had satisfactorily demonstrated the source of the impugned funds.
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It was observed that the assessee had substantiated the transaction through documentary evidence, and the AO’s reasoning was unsustainable. Additionally, the addition was based merely on doubts regarding creditworthiness and ignoring supporting evidence.
Reliance was placed upon the assessee’s bank statements, ledgers, balance sheets of S.R. Credits Pvt. Ltd., and the tax audit report in Form 3CD, which corroborated the claim of repayment.
Therefore, deleting the addition, the Tribunal allowed the appeal.
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