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2017 (4) TMI 865 - AT - Income TaxAddition u/s 68 - proof of identity, creditworthiness and genuineness - Held that - Though the assessee had produced the PAN, Bank details, ITR, balance sheet of the creditor company to substantiate the unsecured loan of ₹ 27.5 lacs received by it, however, it was not able to produce the creditor before the AO particularly, in view of the fact that the AO was not able verify the information furnished. The inspector had given a report that no company existed at the given address. The onus shifted back to the assessee after such report of the inspector had come. The said onus was not discharged by the assessee and the primary requirements of identity, creditworthiness and genuineness could not be conclusively established as required under section 68 of the Act. The documents available with the AO could not be ignored as they reveal the modus operandi of the working particularly in the case of the assessee, as to how with the help of a middleman, cash was first deposited into M/s Transnational Growth Fund Pvt. Ltd. and thereafter to the assessee company through RTGS. In the face of such incriminating documents evidencing the accommodation entry, we find no merit in the present appeal. - Decided against assessee.
Issues Involved:
Assessment under section 68 of the Income Tax Act, 1961 and disallowance under section 40(a)(ia) of the Act. Analysis: 1. The assessee, engaged in courier service, filed a return declaring total income of ?2,59,550 for A.Y. 2011-12. The AO made an addition of ?28,83,163 under section 68 and disallowed ?58,580 under section 40(a)(ia). 2. Assessee appealed to CIT(A) against the order. CIT(A) confirmed the addition under section 68 but deleted the disallowance under section 40(a)(ia). 3. Assessee appealed to ITAT against CIT(A)'s order, challenging the addition under section 68. Grounds of appeal included contentions against the AO's decision on unsecured loan from M/s Transnational Growth Fund Ltd. 4. During A.Y., assessee received ?27,50,000 from M/s Transnational Growth Fund Ltd, part of a group involved in providing accommodation entries. Cash was routed through a middleman to the assessee via RTGS. 5. Assessee argued all transactions were through banking channels, providing necessary documents. Creditor company's financial stability was emphasized, citing relevant case laws. 6. The DR supported CIT(A) and AO's orders, highlighting discrepancies in the creditor company's existence at the provided address and the failure to produce the creditor before the AO. 7. ITAT noted the assessee's failure to conclusively establish identity, creditworthiness, and genuineness of the loan as required under section 68. Onus shifted back to the assessee after inspector's report. 8. Referring to a similar case, ITAT emphasized the assessee's duty to establish the source of amounts added back under section 68. The concept of "shifting onus" was explained, stressing the need for verification and cooperation. 9. ITAT found incriminating documents revealing the modus operandi of cash routing to the assessee. Citing a relevant judgment, ITAT dismissed the appeal due to lack of merit and upheld the addition under section 68. 10. Grounds raised by the appellant were dismissed, and the appeal was consequently rejected. 11. The appeal of the assessee in ITA No. 1427/Del/2016 was dismissed, with the decision pronounced on 15.03.2017.
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