2021 (11) TMI 84 - AT - Income Tax

Addition u/s 69 - investment made from undisclosed sources - CIT-A deleted the addition - HELD THAT - AO has also not doubted the identity of the persons or entities from whom the assessee raised loans in question. CIT(A) further noticed that all the transactions had been made through banking channels. CIT(A) rightly delete the addition made by the AO. AO has not pointed out any evidence on the basis of which he reached at the conclusion that the assessee had obtained accommodation entries from the parties concerned. In our considered opinion, since the AO had made the addition in question on assumption and presumption basis the Ld. CIT(A) has rightly deleted the addition. We are therefore, of the considered view that the order passed by the Ld. CIT(A) is based on evidence on record and as per the settled principles of law, hence, does not require any interference. Therefore, we find no merit in the appeal of the revenue.

Issues Involved:
1. Deletion of addition under Section 69 of the Income Tax Act.
2. Genuineness and creditworthiness of loans raised by the assessee.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 69 of the Income Tax Act:
The Revenue filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] who had deleted the addition of ?2,80,46,000/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act. The AO had determined the total income of the assessee at ?2,85,50,990/- after making the addition on account of investment made from undisclosed sources. The CIT(A) allowed the appeal filed by the assessee and deleted the addition, leading to the Revenue's appeal.

2. Genuineness and Creditworthiness of Loans Raised by the Assessee:
The Revenue contended that the CIT(A) erred in deleting the addition made by the AO, arguing that the assessee failed to establish the genuineness of the transactions and the creditworthiness of the persons from whom unsecured loans were raised. The AO had questioned the sources of the deposits and loans shown by the assessee, stating that they were concocted entries to justify the investment.

Detailed Analysis:

a. Withdrawals from M/s. Mittal Traders:
The assessee provided evidence of withdrawals amounting to ?1,57,00,000/- from M/s. Mittal Traders, where he was a partner. The CIT(A) noted that the firm was regularly audited and assessed to tax, and the withdrawals were made from the firm's bank account. The AO's concerns about the firm's low capital base and high creditors were addressed by the CIT(A), who concluded that the assessee had discharged the burden of proof regarding the identity and creditworthiness of the firm.

b. Withdrawals from Joint Bank Account with Smt. Kusum Lata:
The assessee demonstrated that ?10,00,000/- was withdrawn from a joint bank account with Smt. Kusum Lata, which was used to receive rental income. The CIT(A) found that the source of funds and the identity of the creditor were established, and the transaction was genuine.

c. Withdrawals from Joint Kissan Gold Card Bank Account:
The assessee provided evidence of ?60,00,000/- transferred from a joint Kissan Gold Card bank account with relatives. The CIT(A) concluded that the source of the loan was established and genuine.

d. Loan from Shri Rajinder Pal Mittal:
The assessee received ?3,00,000/- from Shri Rajinder Pal Mittal, who was regularly assessed to tax. The CIT(A) found that the identity, creditworthiness, and genuineness of the transaction were established.

e. Loan from Shri Surinder Pal Mittal:
The assessee received ?25,00,000/- from his father, Shri Surinder Pal Mittal, who had substantial rental income and was regularly assessed to tax. The CIT(A) concluded that the burden of proof regarding the identity, creditworthiness, and genuineness of the transaction was discharged.

f. Loan from Smt. Parveen Mittal and Smt. Kiran Bala:
The assessee received ?21,00,000/- from Smt. Parveen Mittal and Smt. Kiran Bala, who were regularly filing returns of income. The CIT(A) found that the identity, creditworthiness, and genuineness of the transaction were established.

g. Loan from M/s. Garg Chemicals:
The assessee received a short-term loan of ?10,00,000/- from M/s. Garg Chemicals, which was repaid within ten days. The CIT(A) concluded that the identity, creditworthiness, and genuineness of the transaction were established.

h. Loan from M/s. J.R. Printing Press:
The assessee received ?55,00,000/- from M/s. J.R. Printing Press. The CIT(A) found that the identity, creditworthiness, and genuineness of the transaction were established.

Conclusion:
The CIT(A) examined each transaction and found that the assessee had provided sufficient documentary evidence to establish the identity, creditworthiness, and genuineness of the loans. The AO's addition under Section 69 was based on assumptions and conjectures without firm evidence. The Tribunal upheld the CIT(A)'s order, concluding that the deletion of the addition was based on evidence and settled principles of law. The Revenue's appeal was dismissed.

← Previous Next →