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2023 (4) TMI 676 - AT - Income TaxAddition u/s 68 - identity and credit worthiness of loan creditors along with genuineness of transactions and factum of repayment of the alleged creditors not proved - HELD THAT - Neither the AO nor ld. CIT(A) has controverted a very relevant submission of assessee that assessee has repaid loans to the respective creditors before initiating the assessment proceedings and in such a situation the genuineness of transaction and identity creditworthiness of creditors cannot be doubted by the AO Authorities below have not further discharged the onus shifted onto their shoulders to bring on record any positive adverse material against the assessee controverting the documentary evidence filed by the assessee and establishing the fact that the assessee could not substantiate the identity and credit worthiness of loan creditors along with genuineness of transactions and factum of repayment of the alleged creditors. Therefore, we are unable to agree with the findings recorded by the ld.CIT(A) in confirming the addition made by the AO u/s 68 and, thus, we are inclined to hold that the ld.CIT(A) has confirmed the addition without any justified reason and basis and, thus, the same is not found to be sustainable. Respectfully following the judgement of Hon ble Supreme Court in the case of Orissa Corporation Pvt. Ltd. 1986 (3) TMI 3 - SUPREME COURT , judgement of Hon ble jurisdictional High Court of Delhi in the case of Mod Creations Pvt. Ltd. 2011 (8) TMI 476 - DELHI HIGH COURT as relied by the ld. Counsel of the assessee the grievance of the assessee is allowed.
Issues:
Challenge to addition of unsecured loan creditors under section 68 of the Income Tax Act, 1961. Dispute over failure to discharge onus of proving credit-worthiness of lenders. Rejection of application under rule 46A for additional evidence. Allegation of not filing application under rule 46A. Request to amend/alter/modify grounds of appeal. Analysis: Issue 1: Addition of unsecured loan creditors under section 68 of the Income Tax Act, 1961 The Appellate Tribunal noted that the assessee had taken a loan from Shri Naveen Kumar, not Shri Bhupinder Singh as mentioned by the Assessing Officer. The Tribunal found that the assessee had not taken any loan from Shri Bhupinder Singh. The Tribunal observed that the assessee had submitted documentary evidence regarding the loan transaction with Shri Naveen Kumar, which was not disputed by the Revenue. Consequently, the Tribunal held that the addition of unsecured loan creditors was not justified. Issue 2: Failure to discharge onus of proving credit-worthiness of lenders The Tribunal considered the contention that the assessee had filed an application under Rule 46A for additional evidence, which the CIT(A) allegedly failed to consider. The Tribunal found that the CIT(A) did not comment on the reasonable cause shown by the assessee for non-furnishing of relevant evidence before the AO. The Tribunal criticized the CIT(A) for rejecting the submission of the assessee without proper consideration. Ultimately, the Tribunal dismissed the observations made by the CIT(A) regarding the failure to prove credit-worthiness of lenders. Issue 3: Rejection of application under rule 46A for additional evidence The Tribunal analyzed the submission of additional evidence by the assessee and found that the CIT(A) had not considered the documentary evidence provided by the assessee. The Tribunal held that the rejection of additional evidence by the CIT(A) was unjustified and lacked a reasonable basis. Consequently, the Tribunal dismissed the observations made by the CIT(A) in this regard. Issue 4: Allegation of not filing application under rule 46A The Tribunal examined the contentions regarding the alleged failure to file an application under Rule 46A for additional evidence. The Tribunal found that the assessee had indeed filed an application under Rule 46A along with relevant submissions and evidences. The Tribunal criticized the CIT(A) for incorrectly alleging that no such application had been filed. The Tribunal held that the CIT(A) had not considered the application and evidences submitted by the assessee, which was an unjustified approach. Issue 5: Request to amend/alter/modify grounds of appeal The Tribunal considered the request of the appellant to amend/alter/modify the grounds of appeal. The Tribunal allowed the appeal of the assessee, directing the Assessing Officer to delete the addition of unsecured loan creditors under section 68 of the Income Tax Act, 1961. The Tribunal relied on various judgments to support its decision, emphasizing that the assessee had discharged the initial onus and the authorities had failed to provide any adverse material against the assessee. The Tribunal concluded that the addition made by the AO and confirmed by the CIT(A) was not sustainable, and therefore, allowed the appeal of the assessee. This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's findings on each issue.
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