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2021 (12) TMI 811 - AT - Income TaxAddition u/s 68 - unsecured loans treated as unexplained credit - Onus to prove - CIT- A deleted the addition - HELD THAT - Assessee has taken unsecured loans and submitted all the relevant information in support of the sum credited in the books for which assessee has offered explanation in respect of the nature and source of the same and in the given case assessing officer is not satisfied due to the fact that none of the principal officers of the lender companies appeared before him. AO merely issued show cause notice to the lenders and apparently stopped without making any further verification. He cannot merely reject all the detailed submissions and supporting documents which were submitted before him and further he has not pointed out any defect in the documentary evidences submitted by the assessee before him and made addition merely because none appeared before him for explanation. After considering the detailed findings of Ld. CIT(A), we do not see any reason to interfere with his findings and in our view the assessing officer treated the unsecured loans as unexplained credit under section 68 even though all the documentary evidences were submitted before him. Therefore, we are inclined to dismiss the grounds raised by the revenue.
Issues Involved:
1. Validity of addition under Section 68 of the Income Tax Act, 1961. 2. Burden of proof regarding the identity, creditworthiness, and genuineness of unsecured loans. Detailed Analysis: 1. Validity of Addition under Section 68 of the Income Tax Act, 1961: The primary issue revolves around the addition of ?3,45,00,000/- as unexplained cash credits under Section 68 of the Income Tax Act, 1961. The Assessing Officer (AO) observed that the assessee received unsecured loans from three entities but doubted the genuineness of these transactions due to the financial status of the lenders and their non-appearance for verification. Despite the assessee providing confirmations, financial statements, and other relevant documents, the AO added the entire loan amount to the assessee's income, relying on precedents set by the Delhi High Court in similar cases. 2. Burden of Proof Regarding the Identity, Creditworthiness, and Genuineness of Unsecured Loans: The assessee contended that it had discharged its burden by providing necessary documentation, including confirmations, financial statements, and bank statements of the lenders. The AO's rejection was based on the lenders' non-appearance and the perceived inadequacy of their financial capacity to lend the amounts in question. The assessee argued that the AO failed to conduct further inquiries or issue summons to the bankers of the lenders to verify the transactions. Findings and Judgment: Assessment by CIT(A): The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the assessee's submissions, noting that all necessary details regarding the loans were provided, and the lenders confirmed the transactions. CIT(A) emphasized that suspicion alone, without concrete evidence, cannot justify additions under Section 68. The CIT(A) cited various judicial precedents, including decisions from the Gujarat High Court, to support the view that when the assessee has provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the transactions, the onus shifts to the AO to disprove the same. Tribunal's Decision: The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, reiterating that the assessee had submitted all relevant documents, including confirmations and bank statements, proving the transactions were through banking channels. The ITAT criticized the AO for not making further inquiries or verifying the documents provided by the assessee. The Tribunal noted that the AO's reliance on the non-appearance of the lenders was insufficient to disregard the substantial documentary evidence submitted. Conclusion: The ITAT dismissed the Revenue's appeal, confirming that the assessee had satisfactorily discharged its burden of proof under Section 68 by providing comprehensive documentation. The AO's addition of ?3,45,00,000/- as unexplained cash credits was deemed unjustified, as the assessee had established the identity, creditworthiness, and genuineness of the lenders and the transactions. Order Pronouncement: The appeal filed by the Revenue was dismissed, and the judgment was pronounced in the open court on 25/11/2021.
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