2021 (9) TMI 1286 - HC - Income Tax

Addition u/s 68 - unexplained credit - Onus to prove - identity and creditworthiness of the lenders and genuineness of the loans proved or not? - HELD THAT - Keeping in view the fact that CIT(A) had not considered the appellant s defence with regard to identity and creditworthiness of lenders and genuineness of the loans in question, this Court remands the matter to the CIT(A) to consider the appellant s said defence under Section 68 of the Act - the finding given by the CIT(A) in the impugned is set aside.

Summary

Issues involved:
Challenging the order of the Income Tax Appellate Tribunal regarding taxation of the same amount twice in the same year in hands of different tax entities without considering the defense related to identity and creditworthiness of lenders and genuineness of loans under Section 68 of the Act.

Analysis:
The High Court heard an appeal challenging the order passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2011-12. The appellant did not contest the finding that the same amount could not have been taxed twice in the same year in hands of different tax entities. However, it was emphasized that neither the Commissioner, Income Tax (Appeal) nor the ITAT adjudicated upon the merits of the case. The respondent's counsel referred to the judgment of the Supreme Court regarding the onus on the assessee under Section 68 of the Act to prove the identity and creditworthiness of the lenders and genuineness of the loans.

The Court observed that neither the Commissioner, Income Tax (Appeal) nor ITAT had considered the appellant's defense related to the issue of identity and creditworthiness of the lenders and genuineness of the loans as required under Section 68 of the Act. Consequently, a question of law was framed regarding the Tribunal's decision without remanding the case for adjudication on merits by the CIT(A). Referring to the Supreme Court judgment, the Court emphasized the legal obligation of the assessee to prove the genuineness of the transaction, identity of creditors, and creditworthiness of investors to discharge the primary onus.

Given that the CIT(A) had not considered the appellant's defense regarding identity and creditworthiness of lenders and genuineness of loans, the Court remanded the matter to the CIT(A) for further consideration. The finding in the impugned order was set aside, and the appeal, along with pending applications, was disposed of. The Court directed the order to be uploaded on the website and forwarded to the counsel through e-mail, concluding the judgment.