Section 68 Addition on Unverified Loan: ITAT Delhi Remands Matter for Fresh Examination of Repayment Evidence
Case Background
Case: Saroj Agarwal Vs ACIT (ITAT Delhi)
Order Date: 22.04.2026
Arising From: Order dated 25.11.2025 passed under Section 250 of the Income Tax Act, 1961 by Addl./JCIT(Appeals)-2, Surat
Key Facts of the Dispute
The present appeal before the Income Tax Appellate Tribunal, Delhi arose out of a controversy concerning loans aggregating to Rs. 41,00,000/- that the assessee had received from five different individuals. The core question before the authorities was whether these loan transactions were genuine and could be accepted as such, or whether they warranted addition under Section 68 of the Income Tax Act, 1961.
During the course of assessment proceedings, the Assessing Officer conducted verification of the relevant documents submitted by the assessee. Upon such examination:
- Loans received from Abdul Rahuf and Shubham Agarwal were found satisfactory and accordingly accepted.
- However, loan amounts received from Faeem Ahmad, Firojali, and Waseem, cumulatively amounting to Rs. 24,00,000/-, were not accepted and were added to the assessee's income under
Section 68of the Act on account of being treated as unexplained cash credits.
Proceedings Before the First Appellate Authority
Aggrieved by the addition of Rs. 24,00,000/-, the assessee preferred an appeal before the Addl./JCIT(Appeals)-2, Surat. The appellate authority granted partial relief to the assessee:
- The loans taken from Faeem Ahmad and Firojali were accepted, and the corresponding additions were deleted.
- However, the loan amount pertaining to Waseem was upheld as unverified and the addition was sustained.
Reasons for Sustaining the Addition Related to Waseem's Loan
The first appellate authority sustained the Section 68 addition in respect of Waseem's loan primarily on the following grounds:
- The loan was interest-free in nature.
- No tax had been deducted at source (TDS) on the loan transaction.
- Details of repayment of the said loan were not furnished before the authorities.
Being dissatisfied with the partial relief and specifically aggrieved by the continued addition relating to Waseem's loan, the assessee approached the Income Tax Appellate Tribunal, Delhi.