ITAT Mumbai Upholds Deletion of ₹6 Crore Loan Addition in Alleged Accommodation Entry Case

Remand Enquiry Confirms Genuineness of Unsecured Loans Under Section 68

The Mumbai “D” Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeal challenging deletion of ₹6 crore added as unexplained cash credits in the case of Deserve Exim Pvt. Ltd. for Assessment Year 2012–13. The Bench comprising Saktijit Dey and Makarand Vasant Mahadeokar held that once the lenders had confirmed the transactions and furnished supporting documents during remand proceedings, the additions under Section 68 of the Income-tax Act could not survive. The Assessing Officer had treated unsecured loans of ₹4 crore as bogus, relying on material gathered during investigations into alleged entry operators. However, before the CIT(A), the assessee produced additional evidence, following which notices under Section 133(6) were issued to the lender companies. Both lenders responded, filed income tax returns, bank statements and loan confirmations, and the Assessing Officer, in his remand report, found no discrepancies while verifying the transactions.

Interest Disallowance Also Falls Once Loan Genuineness Established

Taking note of the remand findings, the Tribunal observed that the Department itself had verified the identity, creditworthiness and genuineness of the loan transactions. It further recorded that one loan had been repaid in the same year, while the other was returned in a subsequent assessment year, reinforcing the commercial reality of the borrowings. Holding that suspicion based solely on third-party investigations cannot override verified documentary evidence, the ITAT upheld the CIT(A)’s order deleting the addition under Section 68. Consequentially, the disallowance of interest paid on the loans was also rejected. With this, the Revenue’s appeal was dismissed in entirety, reaffirming that once primary facts are proved and independently verified, accommodation entry allegations cannot be sustained on presumptions alone.