High Court at Calcutta · Judgments and reasoned final orders
Principal Commissioner of Income Tax-5, Kolkata v. Tapan Kanti Roy
ITAT/224/2025 (IA No: GA/2/2025) ·
Deletion of Section 68 unsecured loan addition and Section 69C interest disallowance for AY 2011-12 where loan from M/s Lily was taken through account-payee cheques, subjected to TDS on interest, and repaid in subsequent years (FYs 2011-12 to 2013-14).
1. FACTS OF THE CASE
For AY 2011-12, the Assessing Officer treated an unsecured loan received by the assessee from M/s Lily as unexplained cash credit under Section 68 and disallowed the interest paid thereon under Section 69C on the ground that the lender did not appear in response to a Section 131 summons. The CIT(A) and ITAT deleted both additions.
2. DISCUSSION BY THE COURT
Applying the three-prong test in CIT v. Shankar Industries (1978) 114 ITR 689 (Cal), the Division Bench noted that the assessee had proved the identity and creditworthiness of M/s Lily and the genuineness of the transaction through loan confirmations, PAN details, ITRs, bank statements, deduction of TDS on interest, and complete repayment of the loan through banking channels during FYs 2011-12, 2012-13, and 2013-14. If the lender did not respond to the initial Section 131 summons, it was incumbent upon the AO to enforce attendance rather than draw an adverse inference against the assessee.
3. JUDICIAL DECISION
Holding that no substantial question of law arose from the concurrent factual findings of the appellate authorities, the High Court dismissed the Revenue's appeal.
4. OUTCOME
Assessee - Revenue appeal dismissed; deletion of Section 68 loan addition and Section 69C interest disallowance upheld.
5. AKHB REVIEW POINT
Repayment of an unsecured loan in subsequent financial years through banking channels coupled with TDS deduction on interest payments strongly corroborates genuineness under Section 68 and negates disallowance of interest under Section 69C.
Source and verification
4-page official High Court at Calcutta judgment PDF (20260311_WBCHCO0044152025.pdf, 58,949 bytes).
Original PDF: 4 pages · SHA-256: 62605aa33844c0319696890f435aa13c573c997b3874ce418eb77b8bb631979b
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Sections 68, 69C, and 131 of the Income-tax Act, 1961 for AY 2011-12. Income-tax Act, 2025 equivalence is not verified.
Full 4-page primary judgment PDF text read and verified page-by-page. Follows CIT v. Shankar Industries (1978) 114 ITR 689 (Cal) on the three ingredients of Section 68.
AI disclosure and professional disclaimer
AI-assisted source review. Independent human approval is not represented.
General research only. Read the complete judgment and verify applicable law and subsequent treatment before reliance.