No Addition under Section 69A on Repayment of Loan Already Accepted as Genuine: Key Ruling of ITAT Delhi
Hon’ble ITAT, Delhi, in the case of M/s Gehna Impex Pvt. Ltd. v. Jt. CIT for A.Y. 2016-17 (ITA No. 4499/Del/2025), wherein has been held that no addition under section 69A can be sustained where the addition pertains to repayment of a loan which had already been accepted as a genuine loan by the CIT(A) in the year of receipt (here A.Y. 2014-15), particularly when the source of such repayment made during the year under consideration is also explained through documentary evidence.
In short if Loan accepted as genuine in earlier year then No addition under section 69A towards its repayment
Let us visit the law and judgement.
The issue of unexplained money under section 69A of the Income-tax Act, 1961 frequently arises during assessments, especially where loan transactions are involved. A recent and important decision of the Hon’ble Income Tax Appellate Tribunal, Delhi Bench has once again reaffirmed a fundamental principle of tax jurisprudence: what is accepted as genuine in one year cannot be treated as unexplained in a subsequent year without fresh and cogent material.
Facts of the Case: M/s Gehna Impex Pvt. Ltd.
In the case of M/s Gehna Impex Pvt. Ltd. v. Joint Commissioner of Income Tax for Assessment Year 2016–17 (ITA No. 4499/Del/2025), the assessee had repaid a loan during the year under consideration. The Assessing Officer treated the repayment amount as unexplained money and made an addition under section 69A, alleging that the source of repayment was not satisfactorily explained.
However, an important factual aspect emerged from the records. The very same loan had been received in an earlier year, i.e., Assessment Year 2014–15, and in that year the loan transaction had already been examined in detail. The Commissioner (Appeals) had accepted the loan as genuine after due verification of the lender, the transaction, and supporting documents.
Key Legal Issue before the Tribunal
The central question before the Tribunal was whether an amount representing repayment of a loan can be treated as unexplained money under section 69A in a later year, when the loan itself had been accepted as genuine in the year of receipt and when the assessee had also explained the source of repayment through documentary evidence.
Tribunal’s Findings and Reasoning
The Tribunal categorically held that no addition under section 69A could be sustained in such circumstances. It observed that once the loan transaction had been accepted as genuine in the year of receipt, the character of that amount stood settled. The tax authorities could not, in a subsequent year, indirectly question the genuineness of the same loan by invoking section 69A at the stage of repayment.
The Tribunal further noted that the assessee had placed on record documentary evidence explaining the source of repayment during the relevant assessment year. In the absence of any adverse material to show that the repayment was made out of undisclosed income, the addition was wholly unjustified.
Principle Emerging from the Decision
The ruling reinforces a well-settled principle of consistency in tax proceedings. If a loan is accepted as genuine in the year of receipt after examination, the Revenue cannot take a contradictory stand in a later year while examining its repayment, unless new incriminating facts or evidence are brought on record.
Section 69A is a deeming provision intended to tax unexplained money found to be owned by the assessee. It cannot be stretched to cover repayments of loans which have already passed the test of genuineness in earlier years. Doing so would amount to reviewing or reopening settled issues without following the procedure prescribed under law.
Practical Significance for Taxpayers
This decision is particularly relevant for businesses and individuals who frequently face additions on account of loan repayments during scrutiny assessments. It provides strong judicial support for the proposition that once the source and genuineness of a loan are accepted, its repayment cannot automatically be branded as unexplained.
Taxpayers should, however, ensure that proper documentation is maintained not only at the time of receipt of loans but also at the time of repayment, including bank statements and cash flow records, so that the source of repayment is clearly demonstrable.
Conclusion
In simple terms, the decision in M/s Gehna Impex Pvt. Ltd. lays down that if a loan has been accepted as genuine in an earlier year, no addition under section 69A can be made merely because the loan is repaid in a subsequent year. The ruling upholds the principles of fairness, consistency, and certainty in tax administration, and serves as a valuable precedent against arbitrary additions on settled issues.
The copy of the order is as under:
