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2018 (2) TMI 1916 - AT - Income TaxAddition u/s 68 - AO has observed that the assessee has failed to discharge the onus placed upon it u/s 68 - HELD THAT - We notice that the assessing officer has made the impugned addition on the basis of search conducted by CBI in the hands of Arun Dalmia, wherein it was stated that the transactions of M/s Basant Marketing P Ltd are not genuine. However, it is noticed that, after the search action, the assessments of M/s Basant Marketing P Ltd have been completed for AY 2009-10 accepting the transactions as genuine. Though the AO of M/s Basant Marketing P Ltd has taken a different view and held the transactions to be bogus in AY 2010-11, yet the said view of the AO has been set aside by Ld CIT(A), Kolkatta in the appellate proceedings by observing that the view so taken by the AO is not supported by evidences. It is pertinent to note that the order so passed by Ld CIT(A) has been accepted by the revenue and thus has attained finality. Hence the very basis, on which the impugned addition has been made, has failed. From the arguments of the Ld A.R, we notice that the assessee has discharged the onus by proving the identity of the creditor, genuineness of transactions and credit worthiness of the creditor. The financial statements of M/s Basant Marketing P Ltd show that it was having sufficient sources to lend money to the assessee. The financial statements also show that M/s Basant Marketing P Ltd was carrying on certain trading activities and it has invested funds in Investments, inventories and in giving loans and advances. On the contrary, we notice that the AO did not disprove the contentions and submissions of the assessee, i.e., the AO has failed to discharge the burden of proof shifted to his shoulder. When the assessee is proving the transactions and further when the transactions have been accepted as genuine in the hands of lender, in our view, the theory of human probabilities could not be applied here. CIT(A) was not justified in confirming the addition of ₹ 100 lakhs made u/s 68 of the Act - Decided in favour of assessee.
Issues:
1. Addition of ?100.00 lakhs made by the AO u/s 68 of the Act. 2. Validity of reopening of assessment. Analysis: 1. Addition of ?100.00 lakhs u/s 68 of the Act: - The AO assessed the loan of ?100 lakhs from M/s Basant Marketing P Ltd under section 68 of the Act based on evidence from a CBI search showing the loans as accommodation entries. - The assessee contended that transactions were accepted in M/s Basant Marketing's hands until AY 2009-10, supported by an affidavit and financial statements. However, Ld CIT(A) found discrepancies in the affidavit and bank transactions, questioning creditworthiness and interest payments. - The Ld CIT(A) relied on legal precedents and deemed the transactions improbable, upholding the addition. The assessee appealed, arguing M/s Basant Marketing's legitimacy and citing a favorable order for AY 2010-11. - The Ld A.R demonstrated M/s Basant Marketing's authenticity through filings and audits, challenging the AO's premise of bogus transactions. The Ld D.R supported Ld CIT(A)'s decision based on Delhi High Court's ruling. - The ITAT found the AO's basis for the addition flawed, noting M/s Basant Marketing's accepted genuineness in previous assessments. The ITAT determined the assessee met the burden of proof under section 68, overturning Ld CIT(A)'s decision and directing deletion of the addition. 2. Validity of Reopening of Assessment: - The ITAT did not address the challenge to the assessment's reopening due to the deletion of the addition on merits, rendering the issue moot. This detailed analysis highlights the legal arguments, evidentiary considerations, judicial interpretations, and final decision rendered by the Appellate Tribunal ITAT Mumbai in the cited case.
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