Addition under section 68 was unjustified as the creditworthiness and genuineness could not be re-examined for a loan already accepted in prior years: ITAT
Where assessee was subjected to reassessment for an alleged unsecured loan treated as accommodation entry but established through records that no fresh loan was received in relevant year and amount was merely a carried forward balance from a registered company creditor, since creditworthiness and genuineness could not be re-examined for a loan already accepted in prior years, addition under section 68 was unjustified.
Let us have a Short Overview of the Case: –
1. Background –The assessee, Anandmangal Investment & Finance Pvt. Ltd., appealed against the order of NFAC, Delhi (CIT(A)) confirming addition of ₹2.5 crores under Section 68 (unexplained cash credit) for AY 2012–13.
2. Delay in Appeal –The appeal was filed 454 days late. Delay occurred because the NFAC order was sent to the email of the company’s deceased director’s CA instead of the company’s own email. The delay was condoned considering the sufficient cause shown through affidavits.
3. Assessment History –The case was reopened under Section 147 on the ground that the assessee received ₹2.5 crores as an unsecured loan, allegedly being an accommodation entry.
4. Assessee’s Defence –The assessee argued that the loan was not received in AY 2012–13 but in AY 2002–03 from M/s Piyali Trading Co. Pvt. Ltd. (formerly Revathy Resorts Pvt. Ltd.). Hence, it was an old loan merely carried forward in the balance sheet.
5. Evidence Submitted –The assessee provided bank statements, confirmations from the lender, audited financials for FY 2001–02, and supporting documents proving receipt of ₹2.5 crores on 30 March 2002 through five cheques of ₹50 lakhs each.
6. CIT(A) Decision –The CIT(A) upheld the addition, citing mismatched cheque numbers and holding that the assessee failed to conclusively prove that the loan was received in AY 2002–03.
7. ITAT’s observations –The Tribunal noted that all supporting documents were on record, and the AO ignored the evidence showing the loan was old. No material indicated a fresh loan was taken in AY 2012–13.
8. Tribunal’s Ruling –ITAT held that since the loan was already accepted in earlier years, the identity, genuineness, and creditworthiness could not be re-examined in the impugned year. Therefore, the addition under Section 68 was unjustified.
9. Final Outcome –The ITAT set aside the CIT(A)’s order and deleted the addition of ₹2.5 crores, allowing the assessee’s appeal in full (order dated 18 September 2025).
The copy of the order is as under:
