2015 (1) TMI 1416 - AT - Income Tax

Addition of loan - two loans from parties who are regular assesses and confirmations were fully filed before AO as well as before CIT(A) - whether appellant has discharged the primary onus and AO has nothing against it? - difference in PAN is because in top of the certificate PAN of appellant is given and near the signature PAN of party is given - HELD THAT - In the application it is, inter alia, stated that the evidences filed by the assessee were not placed on record and in the remand report called for by CIT(A) it was, inter alia, stated that assessee did not file any particulars/ source of income of parties, their creditworthiness etc. and accordingly CIT(A) observed that no confirmation letters from the creditors were filed before the AO and the assessee failed to prove the identity of the creditor, creditworthiness of the creditor and the genuineness of the transaction. After hearing both the parties, as the evidences filed by assessee before AO were not considered, we admit the additional evidence filed by the assessee and restore the matter back to the file of AO for deciding the issue de novo after affording reasonable opportunity to the assessee of being heard - Assessee s appeal is allowed for statistical purposes only.

Summary

Issues:

1. Addition of loan amount by CIT(A) despite confirmations from regular assesses.
2. Application under Rule 29 for admission of additional evidence.
3. Failure to prove identity, creditworthiness, and genuineness of transaction.

Analysis:

1. The appeal pertains to the addition of a loan amount of Rs. 750,000 by the CIT(A), despite confirmations being provided by parties who are regular assesses. The appellant contended that they had fulfilled the primary onus by submitting confirmations before both the AO and CIT(A). The discrepancy in PAN numbers was explained as being due to the appellant's PAN being on top of the certificate, while the party's PAN was near the signature. However, the CIT(A) did not inquire about this difference. The Tribunal acknowledged the additional evidence submitted by the appellant, including affidavits, confirmations, cheques, and bank account details. Consequently, the Tribunal admitted the additional evidence and remanded the matter back to the AO for a fresh decision, emphasizing the need to afford the assessee a fair opportunity to be heard.

2. The assessee filed an application under Rule 29 seeking admission of additional evidence, which included various documents supporting the loans in question. The application highlighted that these crucial pieces of evidence were not considered during the earlier proceedings. The remand report indicated that the assessee had not provided particulars regarding the parties' income sources or creditworthiness, leading to the CIT(A) questioning the identity and creditworthiness of the creditors, as well as the genuineness of the transaction. The Tribunal, after considering the arguments from both sides, accepted the additional evidence and directed the AO to re-examine the issue comprehensively.

3. The failure to establish the identity, creditworthiness, and genuineness of the transaction was a critical aspect of the case. The CIT(A) had pointed out the lack of confirmation letters from the creditors before the AO, which resulted in the assessee's inability to prove essential aspects such as the creditors' identity and creditworthiness. This deficiency in evidence led to the CIT(A) upholding the addition of the loan amount. However, with the admission of additional evidence by the Tribunal and the subsequent remand to the AO, the opportunity to address these shortcomings and substantiate the legitimacy of the transactions was provided to the assessee, ensuring a more thorough examination of the case.

In conclusion, the judgment by the ITAT Delhi highlighted the importance of substantiating claims with concrete evidence, especially concerning financial transactions, and underscored the significance of providing a fair opportunity for parties to present their case effectively before reaching a final decision.