2019 (4) TMI 1369 - AT - Income Tax

Addition u/s 68 - loan received from Mrs. Laxmi R. - HELD THAT - Assessee has furnished the bank statement, Form 26 AS and confirmation, the copy of income-tax return but the authorities below have not pointed out any defect in such detail filed by the assessee. In case, the details as discussed above were not believable, then the authorities below were empowered to verify the same to the concerned party, but none of the authority below has exercised power given under section 131/133(6). Once the assessee has submitted basic details of the party from whom he has taken a secured loan, then the onus imposed on the assessee u/s 68 was discharged. Therefore, without verifying the necessary details filed by the assessee, there cannot be any addition u/s 68 of the Act. See MURLIDHAR LAHORIMAL VERSUS COMMISSIONER OF INCOME-TAX. 2005 (11) TMI 32 - GUJARAT HIGH COURT - no addition can be made in the hands of the assessee u/s 68. Hence, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition made by him. Thus, the ground of appeal of the assessee is allowed.

Summary

Issues:
- Applicability of Sec.68 of the Income Tax Act
- Confirmation of addition of ?8,20,000 made by the Assessing Officer
- Dismissal of the appeal related to the addition of ?20,000
- Dispute over the addition of ?8 lakhs under Sec.68 of the Act
- Verification of the source and nature of receipts from a specific party
- Doubt regarding the creditworthiness of the loan creditor
- Discrepancy in the books of accounts regarding the loan source
- Disagreement with the order of the Assessing Officer and the CIT(A)
- Compliance with the conditions stipulated under Sec.68 of the Act

Analysis:
The appeal was filed against the CIT(A)'s order confirming the addition of ?8,20,000 under Sec.68 of the Income Tax Act, relating to a loan received. The appellant argued that the creditors were known persons, their identity established, and creditworthiness proven, thus the amount should not be treated as a cash credit under Sec.68. However, the Assessing Officer found discrepancies in the details provided, leading to the addition. The appellant's claim that the loan source was proved was disputed due to missing details from the creditor. The CIT(A) upheld the addition, doubting the creditworthiness of the creditor and noting the discrepancy in the loan source's representation in the books of accounts.

The Appellate Tribunal noted that the appellant had submitted relevant documents, including bank statements and confirmations, which were not found defective by the authorities. The Tribunal emphasized that once basic details of a secured loan were provided, the onus under Sec.68 was met, citing relevant case law. Referring to precedents, the Tribunal highlighted that the appellant was not required to prove the source of the source of credit, only the source in their books. As the authorities did not verify the details submitted by the appellant, the addition under Sec.68 was deemed unjustified.

Ultimately, the Tribunal ruled in favor of the appellant, directing the Assessing Officer to delete the addition, as no substantial evidence supported the addition under Sec.68. The judgment emphasized the importance of meeting the onus of proof under the Income Tax Act and the significance of verifying details before making additions to an assessee's income.