ITAT Delhi Deletes ₹3.5 Crore Section 68 Addition in Kuber Group Case

The Delhi Bench “E” of the Income Tax Appellate Tribunal allowed the appeal of Vijaya Devi Malu (AY 2015–16) and deleted additions made under Section 68 towards unsecured loans and alleged commission.

Background: Search, Surrender and Alleged Accommodation Entries

A search under Section 132 was conducted on the Kuber Group on 09.10.2014. The Assessing Officer relied heavily on statements of Late Shri Mul Chand Malu, who had declared undisclosed income in relation to share capital and unsecured loans. The assessee had received unsecured loans of ₹3.5 crore from Hallow Securities Pvt. Ltd. (HSPL). Based on a report from the Investigation Wing, Kolkata, the AO treated HSPL as a “jamakharchi” company allegedly controlled by entry operators and added the amount under Section 68. An additional ₹7 lakh (2%) was enhanced by the CIT(A) as commission for accommodation entries.

Tribunal: No Independent Inquiry, No Evidence Against Lender

The ITAT observed that:

1. No incriminating material was found during search.
2. The AO relied solely on statements recorded prior to the search and on a general investigation report.
3. HSPL’s name did not appear in the list of alleged accommodation entry providers.
4. The alleged operator became director of HSPL only after the relevant period.
5. The assessee had furnished confirmations, bank statements, financials and return details of the lender.

The Tribunal held that the AO conducted no independent inquiry and merely presumed HSPL to be an entry provider because it shared an address with other entities.

Following its earlier decision in group cases, the Bench deleted the addition of ₹3.5 crore under Section 68 and also set aside the ₹7 lakh enhancement.

The appeal was allowed in full.