ITAT Kolkata Remands ₹13.83 Cr Section 68 Addition Case, Stresses Strict Verification of Creditors

April 7, 2026 : The Kolkata Bench of the Income Tax Appellate Tribunal has held that additions under Section 68 of the Income Tax Act cannot be deleted merely on the basis of documentary submissions without proper verification of the identity, creditworthiness, and genuineness of creditors. The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remanded the matter for fresh adjudication.

The Bench comprising Judicial Member George Mathan and Accountant Member Rakesh Mishra was dealing with an appeal filed by the Revenue in DCIT v. Anushikha Investments Private Limited for Assessment Year 2016–17.

The dispute concerned additions of ₹13.83 crore under Section 68 on account of unsecured loans received from 37 NBFCs, along with disallowance of ₹88.18 lakh towards interest expenditure under Section 69C. The Assessing Officer had treated these amounts as unexplained, noting that summons issued under Section 131 to several creditor companies remained unserved and that inspectors were unable to locate such entities at their registered addresses.

On appeal, the CIT(A) deleted the additions, observing that the assessee had furnished PAN details, MCA registrations, bank statements, and evidence of transactions through banking channels. It also relied on the fact that the loans were repaid in subsequent years and that tax was deducted at source on interest payments.

However, the Tribunal found this approach deficient. It noted that none of the directors of the creditor companies were produced for examination and that the creditors were not traceable at their declared addresses. In such circumstances, mere reliance on documentary evidence was insufficient to establish the genuineness of transactions, particularly in the case of private limited companies where a higher degree of scrutiny is required.

The Bench also observed inconsistencies in the assessment process, including errors in computation of income and lack of clarity regarding the business loss that triggered scrutiny. It held that both the Assessing Officer and the CIT(A) had failed to bring complete and conclusive facts on record.

Importantly, the Tribunal emphasized that the CIT(A) ought to have called for a remand report and directed production of the directors before granting relief. It further rejected the contention that non-appearance of directors could be justified on practical grounds, reiterating that the burden under Section 68 lies squarely on the assessee.

Accordingly, the Tribunal set aside the appellate order and remanded the matter to the Assessing Officer with directions to conduct a fresh examination. The assessee has been directed to produce the directors of the creditor companies, and the Assessing Officer has been instructed to provide an opportunity of hearing and record categorical findings on identity, creditworthiness, and genuineness of the transactions.

The appeal was partly allowed for statistical purposes, with the assessment to be completed de novo in accordance with law.