ITAT · Surat Bench2024§68

ITO v. Mahavir Corporation · ITAT Surat on §68: loans carried from earlier years cannot be added in a later year

Can old unsecured loans be added under §68 in a subsequent assessment year?

No. Loans reflected in prior audited records (Rs. 3.56 crore of the Rs. 4.96 crore) cannot be added under §68 in a later year.

Reviewed by Adidam Sridhar, Deputy Commissioner of Income Tax (Retd.) · Published 2026-07-07

For AY 2015-16 the AO added Rs. 3.53 crore as unexplained unsecured loans under §68.
The assessee showed most loans originated in earlier years, the increase being interest accrual, supported by ledger accounts and confirmations.
CIT(A) found Rs. 3.56 crore of the Rs. 4.96 crore loan already reflected in prior audited records.

Whether §68 reaches credits that first appeared, and were audited, in earlier years.

The Surat Bench upheld CIT(A)'s deletion: credits traceable to earlier audited years are outside §68 for the year under assessment.

Chart every loan's first-appearance year against the audited balance sheets; §68 addition fails for any credit that predates the assessment year.

Practice note · Adidam Sridhar, Deputy Commissioner of Income Tax (Retd.)