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2021 (6) TMI 889 - AT - Income TaxReopening of assessment u/s 147 - Addition u/s 68 - assessment was reopened based on the information furnished by Investigation Wing, Mumbai that the assessee had introduced unaccounted money in the form of loan creditors - Assessee has not satisfactorily proved the genuineness of the transactions and identity of the creditors. Lenders have only meagre incomes and therefore the Assessing Officer treated the transactions as not genuine since ingredients of section 68 of the Act have squarely attracted in this case - HELD THAT - On a perusal of the Assessment Order we observed that except stating the creditworthiness of the creditors cannot be relied on merely because they have shown loss return, no conclusive evidences were brought on record to show that the loan amount credited in the Books of Accounts of the assessee is nothing but unaccounted money of the assessee. As the assessee has discharged its initial onus of proving the identity, genuineness and creditworthiness of the creditors by providing all necessary details as stated in earlier paragraphs and thus the assessee has proved identity, genuineness and creditworthiness of the creditors. The Assessing Officer has not controverted the evidences furnished by the assessee. No further enquiries have been made by the Assessing Officer to disprove the evidences furnished by the assessee. What is discussed above and in view of the evidences furnished by the assessee, we are of the view that the assessee has discharged his onus of proving the identity, genuineness and creditworthiness of the creditors and fulfilled the requirement of ingredients of section 68 of the Act. Thus, the addition made u/s. 68 of the Act without any enquiry is liable to be deleted. Thus, we direct the Assessing Officer to delete the addition made u/s. 68 - Decided in favour of assessee.
Issues Involved:
1. Validity of the addition made under Section 68 of the Income Tax Act. 2. Assessment of the identity, genuineness, and creditworthiness of the loan transactions. 3. Burden of proof and the role of documentary evidence in proving the genuineness of transactions. 4. The impact of the lender's financial status and income tax returns on the assessment. Detailed Analysis: 1. Validity of the Addition Made Under Section 68 of the Income Tax Act: The primary issue revolves around the addition of ?33,05,950 under Section 68 of the Income Tax Act, which was contested by the assessee. The assessee argued that the sum had been credited in an earlier year, not in the year of reopening, thus Section 68 should not apply. The Tribunal reviewed the evidence provided by the assessee, including bank statements and repayment details, and concluded that the addition was not justified as the assessee had discharged its primary onus by furnishing all necessary details. 2. Assessment of the Identity, Genuineness, and Creditworthiness of the Loan Transactions: The assessee provided various documents to establish the identity, genuineness, and creditworthiness of the loan transactions, including: - Annual reports, income tax returns, and bank statements. - Confirmation letters from lenders. - Ledger accounts and repayment details. The Tribunal observed that the assessee had provided sufficient evidence to prove the identity, genuineness, and creditworthiness of the creditors. The loans were received and repaid through banking channels, and TDS was deducted on the interest paid. 3. Burden of Proof and the Role of Documentary Evidence in Proving the Genuineness of Transactions: The Tribunal emphasized that once the assessee has discharged the initial burden of proof by providing credible evidence, the onus shifts to the Assessing Officer (AO) to disprove the claim. The AO failed to provide conclusive evidence to show that the loan amounts were unaccounted money of the assessee. The Tribunal referred to several judicial precedents, including the Supreme Court's decision in CIT v. Orissa Corporation, which held that the assessee's burden is discharged upon providing the names and addresses of creditors and other relevant details. 4. The Impact of the Lender's Financial Status and Income Tax Returns on the Assessment: The Tribunal noted that the lenders had filed their regular income tax returns, and the assessee had provided copies of these returns along with other financial documents. The AO's argument that the lenders had meager incomes was not supported by any concrete evidence. The Tribunal cited various judgments, including those from the Delhi High Court and Bombay High Court, which supported the assessee's position that the documentary evidence provided was sufficient to establish the genuineness of the transactions. Conclusion: The Tribunal concluded that the assessee had adequately discharged its onus of proving the identity, genuineness, and creditworthiness of the loan transactions. The AO's addition under Section 68 was based on suspicion and not on concrete evidence. Therefore, the Tribunal directed the AO to delete the addition made under Section 68 of the Act. The appeal of the assessee was allowed.
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