ITO-3(1), Raipur Vs. Nandika Consultancy Services Pvt. Ltd.

Parties Involved

Facts Summary

The case involves an appeal by the Income Tax Officer-3(1), Raipur against the decision of the Additional Director of Income Tax (Appeals) to delete an addition of Rs.51,54,110/- made under Section 68 of the Income Tax Act, 1961. The addition was made treating the unsecured loans as unexplained cash credit in the hands of the assessee, Nandika Consultancy Services Pvt. Ltd. The assessee had repaid the loans with interest through banking channels in the subsequent financial year, which was accepted by the Revenue. The assessee argued that the repayment through banking channels established the genuineness of the transactions. The Tribunal upheld the deletion of the addition, finding that the Revenue's case was based on a sparse inquiry report and did not exhaust all reasonable avenues of inquiry.…

Legal Issues

• 1. Whether the unsecured loans treated as unexplained cash credit can be sustained?
• 2. Whether the repayment of loans through banking channels establishes their genuineness?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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