No addition u/s 68 for unsecured loan taken without payment of interest

No addition u/s 68 for unsecured loan taken without payment of interest where assessee furnished name, address, PAN and transaction was routed through banking channels.

ABCAUS Case Law Citation
ABCAUS 3576 (2022) (02) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the disallowance made by the Assessing Officer (AO) under the provisions of section 68 of the Income Tax Act, 1961 (the Act).

The assessee was an individual earning income from medical profession, house property and other sources, filed his return of income. Thereafter, the case of the assessee was taken up for scrutiny and assessment was completed. The A.O. inter alia made an addition u/s 68 of the Act towards unsecured loan received.

The CIT(A) confirmed the addition by observing that the requirements under the provisions of Section 68 are to prove the identity, genuineness and credit worthiness of the loan creditor. Subsequent repayment of loan has no relevance on discharging of the onus cast on the appellant. 

The Tribunal observed that the AO had made the addition on the ground that the assessee had not paid interest on unsecured loans taken and also failed to explain the source of the amount generated by the loan creditors to the extend such loans were extended to the assessee.

The Tribunal further observed that assessee had furnished the particulars of the loan creditors such as name, address, PAN etc. It was also a fact that the transactions were routed through banking channels. The assessee had also partly repaid the amount  and  also obtained confirmation statement. 

The Tribunal held that the addition made by the A.O. which was further sustained by the Ld. CIT(A) was unwarranted.  Hence, the ITAT set aside the order of the CIT(A) on this issue and directed A.O to delete the addition made invoking the provisions of Section 68 of the Act.

Thus the appeal was allowed in favour of the assessee.  

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