Unaccounted Money Brought In The Garb Of Unsecured Loan: Mumbai ITAT Confirms Addition U/s 68

Finding that loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries, the Mumbai ITAT held that the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee, and deserves to be added u/s 68. Section 68 of Income Tax Act aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of such credits. The Division Bench of Narendra Kumar Billaiya (Accountant Member) and Sunil Kumar Singh (Judicial Member) observed that “it has been established that these companies were providing accommodation entries through unsecured loans claimed to have been borrowed from these companies by the assessee during the year under consideration as unexplained and rightly added u/s 68”. Facts of the case The assessee had taken huge unsecured loans of 25b lacs from Ryan International, 5 lacs from Casper Enterprises and 20 lacs from Duke Business. These unsecured loan were treated as unexplained and added u/s 68 based on the information received from DGIT (Investigation), Mumbai that one Pravin Kumar Jain through a web of concerns run and operated by him is engaged in providing accommodation entries in the nature of bogus unsecured loans, bogus share application etc through various paper entities and the assessee is one of the beneficiaries who has taken accommodation entry. Observation of the Tribunal The Bench found that the common addition relates to the unsecured loans taken during the year considered as unexplained u/s 68 and further addition of interest paid on such unsecured loans. In the list of companies given the accommodation entries names of Duke Business Pvt Ltd, Casper Enterprises Pvt Ltd and Ryan International are mentioned which means that as per the order of the coordinate bench it has been established that these companies were providing accommodation entries through unsecured loans claimed to have been borrowed from these companies by the assessee, added the Bench. The Bench stated that the contention of the counsel that the loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water. It has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries, added the Bench. Hence, the ITAT confirmed the additions, since the loan amount has been treated as unaccounted money of the assessee for payment of interest of such loan amount claimed as unexplained. Resultantly, the ITAT dismissed assessee's appeal. Counsel for Appellant/ Assessee: Haridas Bhat Counsel for Respondent/ Revenue: R. R. Makwana Case Title: J. K. Global versus ITO Case Number: I.T.A. Nos. 3260, 3259 & 3258/Mum/2023 Click Here To Read/ Download The Order

Unaccounted Money Brought In The Garb Of Unsecured Loan: Mumbai ITAT Confirms Addition U/s 68

Pankaj Bajpai

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