#accommodation entry

ITAT Ahmedabad has ruled that when a company repays loans through traceable banking channels like RTGS, with documented lender financial capacity and TDS compliance, such transactions cannot be treated as unexplained cash credits under Section 68. This sets a critical precedent for businesses relying on legitimate borrowings, shifting the burden away from mere source-of-funds speculation to verified transactional evidence.

The ITAT Delhi has ruled that funds received as a refund of a prior advance payment cannot be taxed as unexplained credit under Section 68 merely because the payer is a bogus entity. This clarifies that the nature of the transaction-refund of consideration-trumps the source’s legitimacy, offering critical relief to businesses engaged in legitimate commercial advances.

ITAT Delhi sets aside reassessment notices issued under Sections 147/148 of the Income Tax Act, ruling that mere conjectural estimates from accommodation entry networks do not meet the threshold of 'tangible evidence'. The decision reinforces the principle that reassessment proceedings must be grounded in concrete facts, not assumptions, safeguarding taxpayers from arbitrary scrutiny.

The ITAT Ahmedabad quashed a Rs. 59.97 lakh addition under Section 68 because the Assessing Officer failed to produce any statement under Section 132(4) or verifiable transaction records to prove the alleged accommodation entry. This reinforces that mere suspicion or third-party allegations, without procedural compliance, cannot sustain a tax addition - a critical safeguard for taxpayers facing speculative assessments.

The ITAT Delhi has ruled that an investigation wing’s report identifying a company as bogus is insufficient to sustain additions under Sections 68 and 69C unless corroborated by independent, verifiable evidence such as bank trails, stock records, or third-party confirmations. This reinforces the burden of proof on the Revenue and protects taxpayers from speculative assessments based solely on departmental assertions.

ITAT Delhi holds that repayment of loans with interest before scrutiny proceedings, coupled with banking trail, establishes genuineness under Section 68, overturning arbitrary additions.