2023 (7) TMI 507 - HC - Income Tax

Addition u/s 68 - unsecured loans - Discharge of onus or not by assessee? - whether no evidences and material to establish the creditworthiness, genuineness and identities of lenders in the transactions? - Tribunal justification upholding the order of the appellate Commissioner in deleting the addition - HELD THAT - The findings recorded by the appellate Commissioner as well as the Income Tax Tribunal are based on material and proper appreciation thereof. They are the findings of facts not liable to be interfered with. As noted by Tribunal during the remand proceedings, the details such copy PAN, ledger account and confirmation and other details such as bank statement, audited books were made available before the AO. However, the AO without considering and pointing any deficiency in the above primary document held that the assessee failed to prove the identity of the creditor, explain the genuineness of transaction and establish the credit worthiness of the creditor - No substantial question of law.

Summary

Issues involved:
The judgment involves the following issues:
1. Whether the Tribunal was justified in holding that the assessee has discharged the onus cast u/s. 68 of the Income Tax Act.
2. Whether the Income Tax Appellate Tribunal is justified in upholding the order of the CIT(A) in deleting the addition made on account of unsecured loans of Rs. 11,69,50,000/- u/s. 68 of the Act.

Issue 1:
The appellant-department questioned whether the Tribunal was correct in determining that the assessee fulfilled the burden under section 68 of the Act. The assessee, a proprietor of a trading company, filed a return of income declaring Rs. 7,05,650/-. After scrutiny, the assessment order was passed declaring total income at Rs. 23,01,11,530/-. The Commissioner of Income Tax (Appeals) partially allowed the appeal, deleting a substantial amount under section 68. The Tribunal dismissed the department's appeal, leading to the current appeal under section 260A of the Act.

Issue 2:
The main issue raised was whether the Tribunal was justified in upholding the CIT(A)'s decision to delete the addition of Rs. 11,69,50,000/- concerning unsecured loans under section 68 of the Act. The appellate Commissioner found discrepancies in the evidence provided by the assessee regarding the identity, genuineness of transactions, and creditworthiness of depositors. However, the Commissioner deleted a significant portion of the addition. The Tribunal endorsed the findings, stating that adequate details were provided to establish the credibility of the lenders, but the Assessing Officer failed to acknowledge this, leading to the deletion of the addition.

The judgment emphasized that the findings of the appellate Commissioner and the Income Tax Tribunal were based on substantial evidence and proper evaluation. These findings were considered as factual and not subject to interference. Consequently, the substantial questions of law raised were deemed not to be applicable, and no other significant legal issues arose. As a result, the appeal was dismissed.