Income Tax & Bogus Unsecured Loan: High Court Dismisses Appeal of Income Tax Department

Income Tax & Bogus Unsecured Loan: High Court Dismisses Appeal of Income Tax Department

In a recent judgment, the appeal of Income Tax Department has been dismissed. The case was related to allegations related to bogus unsecured loan. 

It is observed that "the reasons for the CIT(A) to set aside the order of the AO is that the creditworthiness of Shashi Foods cannot be doubted, as undisputedly the loan was received through proper banking channels and even interest was also paid on the same. Therefore all essential ingredients of Section 68 of the Income -tax Act, 1961 are duly satisfied as the identity of the creditor, its creditworthiness and genuineness of transaction were all satisfied. The CIT(A) has also stated that though the AO had made an enquiry in respect of the purchases of Shashi Foods, but the same would be immaterial insofar as the examination of the loan received by the respondent/ assessee is concerned, as the same cannot be examined in the case of the present assessee and can be subject matter of examination only in the case of the aforesaid creditor."

For more details refer PCIT v. KRBL Infrastructure Ltd [2025] GCtR 1711 (Delhi).