Pattern Transactions Categorise ₹1.77 Cr Unsecured Loan as Unexplained Cash Credit: ITAT upholds Addition u/s 68 [Read Order]
The Tribunal ruled that the uniform pattern of sudden deposits followed by immediate transfers undermined the genuineness of unsecured loans.
The bench of the Income Tax Appellate Tribunal, Ahmedabad, has upheld the addition of ₹1,77,24,909/- towards unexplained cash credits under Section 68 of the Income Tax Act, 1961, observing that the unsecured loans received by the assessee lacked credibility as the banking pattern revealed abrupt deposits followed by immediate outflows to the assessee, and the financial capacity of the creditors remained unproven.
The appellant, Samkeet Arya Homes LLP, a real estate partnership firm, had received unsecured loans from seven individuals and entities. In order to verify the genuineness of the transactions, the Assessing Officer (AO) issued notices under Section 133(6) and summons under Section 131. However, most lenders did not appear, and their income tax returns reflected meagre or negligible income.
A common pattern was noticed in their bank statements: nominal balances, sudden credit entries of large sums, and immediate transfers of nearly identical amounts to the assessee. The AO held that the assessee failed to prove the creditworthiness of the lenders and made an addition of ₹1,77,24,909/- under Section 68 of the Income Tax Act. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition.
Represented by Sunjal Shah, the assessee submitted that he had discharged its onus by furnishing confirmations, Permanent Account Numbers, income tax return details, and bank statements of creditors.
It was argued that creditworthiness can be assessed not only on regular income but also on access to funds from other sources such as family wealth.
Reliance was placed on rulings of the Gujarat High Court’s in Murlidhar Lahorimal v. CIT (2006) and CIT v. Pragati Co-operative Bank Ltd.(2005), the assessee contended that once identity and genuineness are established, the burden shifts to the AO.
Represented by B.P. Srivastava, the Revenue contended that the creditors had insufficient financial means to lend such amounts and that the identical banking patterns suggested that the transactions were accommodation entries rather than genuine loans.
The Bench comprising Dr. B.R.R. Kumar, Vice President, and Siddhartha Nautiyal, Judicial Member upheld the addition. It was noted that the assessee failed to establish the creditworthiness of the lenders, noting that their meagre incomes and sudden, unexplained deposits were inconsistent with their capacity to provide large loans.
The bench referred to the Supreme Court’s ruling in PCIT v. NRA Iron & Steel (P.) Ltd. (2019), reiterating that mere furnishing of identity and bank statements does not discharge the onus if creditworthiness remains unproven.
Accordingly, the Tribunal dismissed the assessee’s appeal on this ground.
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