On appeal, the Tribunal held that,all the lenders were either directors or relatives of the directors. The assessee had furnished PANs, bank statements, confirmations and copies of income-tax returns of the lenders. None of the lenders was alleged to be an entry provider. They have given loans to the assessee out of their available balances and it was not the case of the Department that prior to issuing cheques, there was a deposit of cash in the lender’s bank account. Therefore, the assessee had not purchased cheques by paying cash and hence no addition can be made under S. 68 of the Act. (AY.2011-12)
R. G. Consultants P. Ltd. v. DCIT (2020) 78 ITR 37 (SN)(Delhi) (Trib)
S. 68 : Cash credits — Unsecured loans — Lenders either directors or relatives of directors of Assessee — Assessee furnishing PAN, bank statements, confirmations and copies of income-tax returns of lenders — None of lenders were entry providers — No cash deposited in lenders’ account prior to issuing cheques — Assessee not purchasing cheque by paying cash — Addition unsustainable.