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2025 Supreme(Online)(ITAT) 6963
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
SHRI RAJESH KUMAR, AM, SHRIPRADIP KUMAR CHOUBEY, JM
DCIT, Central Circle 4(3) – Appellant
Versus
AVIMA Exports Private Limited – Respondent
ITA No.1439/KOL/2025
For the Appellants: Shri Manish Tiwari, AR
For the Respondents: Shri Raja Sengupta, DR
The court established that retracted statements made under pressure cannot be the sole basis for income additions under Section 68 without corroborative evidence.
Headnote:(A) Income Tax Act, 1961 - Section 68 - Unexplained cash credit - Deletion of addition of Rs. 8,48,75,000/- made on account of unsecured loans - Findings that loans were repaid in subsequent years and retracted statements recorded during survey have no evidentiary value - Reliance on judicial precedent and evidential support for loan transactions needed. (Paras 3 to 10)
(B) Judicial Principle - The court established that for additions under Section 68, identity, creditworthiness, and genuineness of loan transactions must be demonstrated - The reliance on statements recorded under duress lacks evidentiary support. (Paras 4 to 8)
Facts of the case:
The assessee, involved in trading of jute products, faced scrutiny concerning unsecured loans of Rs. 8,48,75,000/- claimed as unexplained cash credits. The assessment initially added these, but the appellate authority found substantial evidence to support the transactions.
Findings of Court:
The order of the Ld. CIT(A) was upheld, supported by the fact that the loans were repaid and corroboration was provided, rendering the addition baseless.
Issues: Whether the addition of unsecured loans can be made if robust evidential support exists and statements made under pressure lack weight?
Ratio Decidendi: The authority emphasized that loans should not be added under Section 68 without corroborative evidence, particularly when retractions occurred.
Result: Appeal dismissed.
ORDER
Per Rajesh Kumar, AM:
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata-27(hereinafter referred to as the “Ld. CIT(A)”] dated 22.03.2025 for the AY 2014-15.
02. The appeal of the Revenue is time barred by 2 days. Considering the facts and circumstances of the case, we find that there is plausible reason to condone the delay and the delay of filing the appeal is hereby condoned.
03. The issue in Ground No. 1 by the Revenue is against the deletion of addition of Rs. 8,48,75,000/- by the Ld. CIT(A) as made by the AO on account of unexplained cash credit in respect of unsecured loans u/s 68 of the Act.
04. The facts in brief are that the assessee is engaged in the business of trading in jute products. During the year the return of income was filed on 26.09.2014 declaring total income of Rs. 51,08,970/-. The case of the assessee was selected under scrutiny and assessment was accordingly framed u/s 143(3) of the Act vide order dated 13.12.2016 assessing the income at Rs. 53,13,420/- A survey was conducted on 04.11.2019 u/s 133A of the Act during which certain documents were seized. During the course of survey, the survey team found that the assessee was beneficiary of bogus unsecured loans through entry operators and shell companies. The survey team noted from the statements recorded u/s 131 of the Act on 04/05.11.2019 of Shri Vishwanath Gupta, which was extracted by the AO in para 3.2 that the assessee, has brought back its own un -accounted cash in the garb of unsecured loans as he admiited to have taken such entries. The said statement was retracted subsequently by director of the assessee company Shri Viswanath Gupta on the ground that it was given under undue influence and pressure put on them during survey. According to the AO there was no substantive material to withdraw the said statement. Finally, the AO treated the receipt of unsecured loans by the assessee during the year amounting to Rs. 8,48,75,000/- as unexplained cash credit u/s 68 of the Act and added the same during the income of the assessee. While passing the order the AO noted in the assessment order that the accommodation entries by way of unsecured loans from the lenders could not be verified as summons u/s 131 of the Act were not complied though the assessee furnished all the details/evidences qua the such loan creditors.
05. In the appellate proceedings, the Ld. CIT(A) deleted the addition as made by the AO after taking into account the submissions and contentions of the assessee. In the appellate order the ld. CIT(A) recorded a very comprehensive observations in para 6.2 . In para 6.2.1 the Ld. CIT(A) noted that the assessee received unsecured loans from 16 parties aggregating to Rs. 8,48,75,000/- on which interest of Rs. 32,24,742/- was paid during the year after deducting the tax at source. The Ld. CIT(A) in para 6.2.2 dealt with the observations by the AO qua the loan transactions and why these loans were added u/s 68 of the Act. The Ld. CIT(A) also referred to the observations of the AO as regards the survey proceedings done by Investigation Wing wherein in the case of Avima Group, Shri Viswanath Gupta and Shri Vivek Gupta, directors and key persons of the said group had admitted to be involved in availing accommodation entries from several shell companies in the form of unsecured loans. The Ld. CIT(A) referred to the finding of the AO that the lenders have no financial health and no capacity to make the loans. However, in para 6.2.3 the Ld.CIT(A) noted that the AO had failed to appreciate the fact that the statements as relied by him in the assessment proceedings were retracted by the aforesaid persons namely Shri Viswanath Gupta and Shri Vivek Gupta on 28.11.2019 & 26.12.2019 respectively. The Ld. CIT(A) further noted that the retracted statement cannot be relied to make the addition . The Ld. CIT(A) relied on the decision of Kalasben Mangarlal Chokshi Vs. CIT reported in 220 CTR 138 (Guj)
