When it has been established that unsecured loans are accommodation entries, mere repayment is not a ground to drop the addition U/S 68: Mumbai ITAT
J.K. Global versus ITO
Case Number: I.T.A. Nos. 3260, 3259 & 3258/Mum/2023
Facts:
1. The assessee had taken huge unsecured loans of 25 lacs from Ryan International, 5 lacs from Casper Enterprises and 20 lacs from Duke Business. These loans were also repaid during the year.
2. These unsecured loan were treated as unexplained and added u/s 68 of the Income Tax Act based on the information received from DGIT (Investigation), Mumbai that one Pravin Kumar Jain through a web of concerns run and operated by him is engaged in providing accommodation entries in the nature of bogus unsecured loans, bogus share application etc through various paper entities and the assessee is one of the beneficiaries who has taken accommodation entry.
ITAT Mumbai held as below:
1. The contention of the counsel that the loans have been repaid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water.
2. It has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries.
3. Section 68 of Income Tax Act aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of such credits.
4. The money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee, and deserves to be added u/s 68.
The copy of the order is as under:
