2018 (12) TMI 994 - HC - Income Tax

Addition of bogus unsecured loans u/s 68 - Held that - There are concurrent finding on facts rendered by the CIT(A) and the Tribunal holding that only ₹ 36 lakhs can be added to the declared income and the balance amount of ₹ 2.99 crores was not hit by section 68 of the Act. This finding is premised on the fact that no enquiry was made in respect of 76 creditors out of 77 creditors and the respondent had provided required documentary evidence in respect of the 76 creditors. Thus, these are essentially finding of fact and the view taken by the Tribunal is a possible view on these facts. In view of the above, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding addition of unsecured loans under Section 68 of the Act for Assessment Year 2009-10.

Analysis:
1. The appeal challenged the Income Tax Appellate Tribunal's order regarding the addition of unsecured loans under Section 68 of the Income Tax Act. The respondent, a builder and developer, had taken unsecured loans from 90 persons, but confirmations were filed only for 77 persons. The Assessing Officer added loans worth &8377; 3.35 crores to the respondent's income, considering them hit by Section 68 of the Act.

2. The Commissioner of Income Tax (Appeals) found that out of 90 parties, loans of 13 parties were hit by Section 68, confirming an addition of &8377; 36 lakhs. However, loans worth &8377; 2.99 crores were deemed genuine and not hit by Section 68, resulting in their deletion. Both the assessee and the Revenue appealed to the Tribunal, challenging different aspects of the CIT(A)'s order.

3. The Tribunal considered the case, noting that confirmations were submitted for 77 out of 90 loan creditors. Enquiries revealed discrepancies, with some parties admitting to providing entries for loans against cash received from the assessee. The Tribunal upheld the deletion of &8377; 2.99 crores, finding the assessee had provided required documentary evidence for 76 creditors, shifting the burden of proof to the Revenue.

4. The Tribunal emphasized that in cases of cash credit, the burden of proof is not static, initially lying on the assessee. If the assessee provides evidence of identity, genuineness, and creditworthiness of the lender, the burden shifts to the Revenue. The Tribunal found that the assessee failed to discharge the burden for 14 creditors, leading to the addition of &8377; 36 lakhs.

5. The Tribunal also highlighted the importance of credibility and explanations in cases under Section 68. It noted that the assessee did not request cross-examination of a key party involved, and a retraction without reason was not deemed helpful. The Tribunal upheld the FAA's decision regarding interest disallowance and confirmed the deletion of &8377; 2.99 crores from the income.

6. The High Court upheld the Tribunal's decision, emphasizing that the findings were based on facts and the view taken was reasonable. It dismissed the appeal, stating that no substantial question of law arose from the case. The appeal was therefore rejected without costs.