2021 (10) TMI 1436 - AT - Income Tax

Addition u/s 68 - bogus loan transaction - AO suspected the transaction to be bogus as on the loan amount no interest was paid by the assessee on repayment of loan - HELD THAT - Assessee has furnished bank statement indicating that the loan was taken by the assessee from M/s. Fastline Multitrade Pvt Ltd. through banking channel on 16/01/2012 i.e. during the period relevant to the assessment year under appeal. The said loan was repaid by the assessee through cheque and the amount was debited from the account of assessee on 26/03/2013 i.e. loan was repaid in the immediately succeeding assessment year. The assessee has filed confirmation from M/s. Fastline Multitrade Pvt Ltd. admitting the genuineness of aforesaid loan transaction. A perusal of the aforesaid communication further reveals that the statement made by Shri P.K.Jain during the course of search was subsequently retracted. It is an undisputed fact that the assessee had repaid the loan amount. It is not the case of Revenue that the assessee after having accepted loan has never repaid the loan. Taking into consideration entirety of facts, find no reason to sustain the addition. Once the assessee has repaid loan amount the addition is not sustainable. Consequently, the impugned order is quashed and appeal by the assessee is allowed.

Summary

Issues involved: Assessment of loan transaction u/s 68, genuineness of loan transaction, repayment of loan, addition of loan amount as bogus.

Summary:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) for assessment years 2012-13. The assessee, engaged in retail sale of jewelry, had taken a loan from a company and repaid it through banking transactions.

2. The assessee provided evidence of the loan transaction, including bank statements and confirmation from the lending company. The Department alleged the lending company was a shell entity, but the assessee maintained the genuineness of the transaction.

3. The Department argued that the loan transaction was bogus, citing various case laws. However, the Tribunal found the evidence provided by the assessee to be sufficient to establish the genuineness of the transaction.

4. The Assessing Officer suspected the transaction due to the lending company's association with shell entities. Despite this, the Tribunal noted that the loan was repaid and found no reason to sustain the addition of the loan amount as bogus.

5. The Tribunal considered the evidence presented, including bank statements and confirmation of the loan transaction, and concluded that once the loan amount was repaid, the addition was not sustainable. The appeal by the assessee was allowed, quashing the impugned order.

Separate Judgement: No separate judgment was delivered by the judges in this case.