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2015 (11) TMI 1056 - AT - Income TaxAddition u/s 68 - addition on the basis of copy of the bank account statement of the assessee by holding that the genuineness of the transaction and creditworthiness of the payer have not been established - Held that - Assessing Officer and the CIT(A) did not bother to consider the documentary evidence filed by the assessee showing the factum that the amount was actually not a loan or advance to the assessee but the same was refund or return of advance/loan of USD 50000 given by the assessee to Mr. Giang Tran in the year 2000 on 14.2.2000 which was credited to the bank account of Mr. Tran on 16.2.2000. From totality of the facts emerged from documentary evidence and affidavits of the assessee payee and Mr. Tran payer, this fact is amply clear that the amount of USD 46000 equivalent to INR 26,31,257 at that time was received by the assessee from Mr. Tran in eight instalments from 20.7.2002 to 2.1.2003 pertaining to FY 2002-03 relevant to assessment year 2003-04 which is under consideration in this appeal. In this situation, we are inclined to hold that the assessee discharged its onus to prove identity and creditworthiness of the payer and the genuineness of the transaction as required u/s 68 of the Act. We are also of the opinion that the addition cannot be made u/s 68 of the Act where the assessee has established this fact that he made advance/loan to payer on 14.2.2000 which was returned during previous year under consideration and thus amount cannot be held as deemed income of the assessee u/s 68 of the Act. - Decided in favour of assessee.
Issues Involved:
1. Addition of Rs. 26,31,257 to the appellant's income as undisclosed foreign remittance. 2. Non-acceptance of the appellant's alternative plea regarding the receipt of $46,000 from an outside party. Detailed Analysis: Issue 1: Addition of Rs. 26,31,257 as Undisclosed Foreign Remittance The appellant's return declared an income of Rs. 32,54,510, which was assessed at Rs. 64,02,471. The Assessing Officer (AO) made additions on various accounts, including Rs. 27,46,531 as undisclosed income from foreign remittance. The CIT(A) confirmed the addition of Rs. 27,46,531 and noted that the appellant credited Rs. 26,31,257 to his capital account as remittance from overseas without explaining the source. The ITAT deleted the addition of Rs. 27,46,531 but remanded the issue of Rs. 26,31,257 back to the AO for fresh examination. Upon re-examination, the AO maintained the addition of Rs. 26,31,257 under Section 68 of the Income Tax Act, 1961, citing the appellant's failure to provide the payer's bank account details and prove the creditworthiness and genuineness of the transaction. The CIT(A) upheld the AO's decision, emphasizing that the appellant did not satisfactorily explain the source of the credit. The appellant argued that the amount was a return of a friendly loan given to Mr. Giang Tran, supported by various documents, including bank statements and affidavits. The ITAT found that the appellant had adequately demonstrated the identity, creditworthiness, and genuineness of the transaction. The ITAT concluded that the addition under Section 68 was not sustainable, as the amount was a return of an advance/loan, not income. Issue 2: Alternative Plea Regarding Receipt of $46,000 The appellant's alternative plea was that only $46,000 was received from Mr. Giang Tran into the Singapore bank account, and any addition should be restricted to this amount. The CIT(A) and AO did not accept this plea, maintaining the addition of Rs. 26,31,257. The ITAT reviewed the documentary evidence, including the appellant's bank instructions, confirmation from Mr. Giang Tran, and bank statements showing the transfer and return of the loan. The ITAT concluded that the appellant had sufficiently established that the amount received was a return of an advance/loan, not income. Therefore, the addition under Section 68 was unwarranted. Conclusion: The ITAT directed the AO to delete the addition of Rs. 26,31,257, finding that the appellant had adequately proved the identity, creditworthiness, and genuineness of the transaction. The appeal was allowed, and the addition under Section 68 was deemed baseless and on the wrong premise. The order was pronounced in the open court on 30.10.2015.
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