2006 (11) TMI 504 - AT - Income Tax

Summary

Issues involved: Dispute regarding deletion of addition u/s 68 of Rs. 11,10,000 made by Assessing Officer for assessment year 2000-01.

Details of the judgment:

Issue 1: Addition u/s 68 for credit in the name of Smt. Vimlaben S. Shah
The Assessing Officer added Rs. 10,00,000 to the income of the assessee as Smt. Vimlaben S. Shah, an 80-year-old lady, was deemed to lack the capacity to provide such a loan. However, the CIT(A) noted that the funds were sourced from a gift and a loan received from Mr. Vinod Shah, her son, who had sufficient funds from a bank retirement. The funds were transferred through banking channels, and the identity of the source was established. The CIT(A) referred to a similar case law and directed the deletion of the addition, emphasizing that the law required accounted funds for the loan, not necessarily an independent income source.

Issue 2: Addition u/s 68 for credit in the name of Dr. Asim V. Shah
Regarding the loan of Rs. 1,10,000 from Dr. Asim V. Shah, the Assessing Officer added the amount due to lack of response from the assessee. However, the appellant provided full particulars, and the identity of the creditor was established with relevant details available on record. The entire loan amount was received through banking channels, and the accumulation of funds was also through such channels. The CIT(A) found the facts similar to a precedent case and directed the deletion of the addition, as the identity of the creditors was established, the sources of funds explained, and all transactions were through banking channels.

The Tribunal upheld the CIT(A)'s decision, noting that the initial onus under section 68 was discharged by proving the identity of the creditors, their capacity, and the receipt of amounts through account payee cheques. The Tribunal emphasized that the assessee was not required to prove the source of the source of funds. The appeal was dismissed, affirming the deletion of the addition u/s 68 of Rs. 11,10,000 made by the Assessing Officer for the assessment year 2000-01.