S.68 addition deleted where lender trail was filed and untested (ITAT Delhi)

Order: ITA No. 2743/Del/2024 with CO No. 105/Del/2024 (ITAT Delhi), Assessment Year 2015-16, pronounced 28.01.2026.

Facts

The Assessing Officer completed the assessment at Rs.3,01,36,357 after making an addition of Rs.2,86,97,100 under section 68 in respect of unsecured loans.
The Assessing Officer doubted the creditworthiness of the lenders from the meagre income declared in their returns, asking how they could lend huge amounts as unsecured loans.
In appeal the Commissioner (Appeals) deleted the addition, observing that the assessee had filed all relevant details and documents for the loans, that the Assessing Officer had pointed out no discrepancy in them and made no further enquiries, and that the lenders' own funds were much higher than the amounts lent — income alone is not the criterion for making a loan.

Issue

Whether the section 68 addition survives where the assessee proves the three ingredients — identity and creditworthiness of the creditor, and genuineness of the transaction — and the Assessing Officer tests none of them.

Holding

The Tribunal restated that the onus lies on the assessee to prove identity, creditworthiness and genuineness, the facts being within its special knowledge, and that the evidence has to be examined in depth and not superficially.
Following coordinate-bench orders, it declined to disturb the Commissioner (Appeals)'s findings, finding no infirmity in them, and dismissed the Revenue's grounds.
The Revenue's appeal was dismissed and the assessee's cross-objections, which merely supported the impugned order, were dismissed as infructuous.

Why a client would care

A section 68 notice is answered with the lender paper trail — identity, creditworthiness, genuineness — and the record should show the Assessing Officer was given the documents and pointed out no discrepancy.

Questions clients ask

Q1. The Assessing Officer added Rs.2,86,97,100 under section 68 even though the lender’s papers were on record. What happened?

The addition was deleted and the Revenue’s appeal dismissed, with no infirmity found in the Commissioner (Appeals)’ order.

Q2. What did the assessee have to establish?

Identity and creditworthiness of the creditor and genuineness of the transaction, with the evidence examined in depth rather than superficially.

Q3. Does the order turn on the Assessing Officer having pointed out no discrepancy?

The record it relied on showed the documents had been filed before the Assessing Officer and no discrepancy had been pointed out.

Disclaimer

This note summarises a Tribunal order for general information. It is not professional advice and does not predict the outcome of any other case. Tax and company-law positions depend on facts and dates; take a written opinion before you act. Harun Raaj & Associates is a Chartered Accountants firm in Visakhapatnam.

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