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2019 (3) TMI 491 - AT - Income TaxAdditions u/s 68 - loans received from eight different companies and interest paid thereon - satisfaction of all the ingredients of cash credit i.e. identity, creditworthiness and genuineness of transactions - Assessee produced confirmation of parties, copies of ack. return of income filed by the lenders , copies of the bank statement of lenders, audited accounts of the lenders - CIT(A) deleted the addition - HELD THAT - CIT(A) apart from appreciating that all the documents had been placed on record by the assessee had also categorically mentioned that the audited accounts and return of income of all the parties, show that the loans given by them to the assessee were reflected in their audited accounts and these parties had not borrowed any funds and thus had utilised their own funds for giving loans to the assessee on which they had earned interest. A.O himself stated that the turnover of these parties was in hundreds of crores and at the same time, AO stated these parties were not credit worthy. In this respect, the A.O had not placed on record any corroborative evidence to show that cash had been paid by the assessee to these parties for availing the loans and had not been able to establish the cash trail at all. On the contrary, the assessee had filed the entire documents, required to establish the identity of the creditors and their creditworthiness, as well as the genuineness of the transaction. CIT(A) had rightly concluded that the loans taken by the assessee were subsequently repaid through banking channels. Thus, if these loans were not genuine, then in that eventuality the same would not have been repaid. Therefore, considering the entirtiy of the facts, the Ld. CIT(A) had rightly held that the assessee had satisfied all the ingredients of cash credit i.e. identity, creditworthiness and genuineness of transactions and accordingly deleted the additions. - Decided in favour of assessee.
Issues Involved:
1. Granting relief for additions made under Section 68 of the Income Tax Act, 1961. 2. Proving the genuineness of the credits claimed by the assessee. 3. Establishing the creditworthiness of the creditors. 4. Compliance with the burden of proof as per the Sumati Dayal vs. CIT case. Issue-Wise Detailed Analysis: 1. Granting Relief for Additions Made Under Section 68 of the Income Tax Act, 1961: The appeal by the revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] who granted relief regarding additions made under Section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) had added ?15,43,74,600/- as 'Unexplained Cash Credit' due to loans received from eight different companies and the interest paid on these loans. The CIT(A) deleted these additions after considering the evidence provided by the assessee. 2. Proving the Genuineness of the Credits Claimed by the Assessee: The revenue argued that the assessee failed to prove the genuineness of the credits. However, the assessee provided extensive documentation, including bank statements, loan confirmations, and audited accounts of the lender companies. The CIT(A) found that the assessee had satisfactorily demonstrated the genuineness of the transactions, as the loans were received and repaid through banking channels, and the lenders' identities were established through PAN and other official documents. 3. Establishing the Creditworthiness of the Creditors: The AO questioned the creditworthiness of the lenders, noting their meager declared incomes. However, the CIT(A) observed that the lenders had substantial turnover and significant assets, as reflected in their balance sheets. The assessee provided audited accounts and income tax returns of the lenders, proving their financial capability to extend the loans. The CIT(A) concluded that the AO's assessment was flawed as it ignored the lenders' overall financial health and focused solely on their declared income. 4. Compliance with the Burden of Proof as per the Sumati Dayal vs. CIT Case: The revenue cited the Sumati Dayal vs. CIT case, emphasizing that the burden of proof lies on the assessee to establish that the cash credits do not constitute their income. The CIT(A) determined that the assessee had met this burden by providing comprehensive evidence of the lenders' identities, creditworthiness, and the genuineness of the transactions. The Tribunal upheld this view, noting that the AO failed to provide any corroborative evidence to refute the assessee's claims or establish a cash trail indicating that the loans were not genuine. Conclusion: The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision to delete the additions made under Section 68. The Tribunal concluded that the assessee had satisfactorily proved the identity, creditworthiness, and genuineness of the transactions, and the revenue failed to provide any substantial evidence to the contrary. The appeal was dismissed with no order as to cost.
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