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2023 (7) TMI 1276 - AT - Income TaxAddition u/s. 68 - unexplained cash credit - discharge of onus to prove or not? - HELD THAT - Assessee has successfully discharge onus lay on him as per requirement of section 68 of the Act and hence proved identity, capacity and creditworthiness of lender company and genuineness of transaction and no addition u/s. 68 of the Act was required to be made thus he was right in deleting the addition. Our conclusion also gets strong support from the judgments of CIT vs Odeon Builders Pvt. Ltd. 2019 (8) TMI 1072 - SUPREME COURT and case CIT vs Vrindavan Farms (P) Ltd. 2015 (11) TMI 279 - DELHI HIGH COURT and PCIT vs. Goodveiw Trading Company ( 2016 (12) TMI 617 - DELHI HIGH COURT - Accordingly, grounds of revenue are dismissed. Appeal of revenue is dismissed.
Issues Involved:
1. Deletion of addition of Rs. 3,60,00,000/- made by A.O. under Section 68 of the Income Tax Act, 1961, being unexplained cash credit. Summary: Issue 1: Deletion of Addition under Section 68 of the Income Tax Act The appeal was filed by the revenue against the order of CIT(A)-I, New Delhi, which deleted the addition of Rs. 3,60,00,000/- made by the Assessing Officer (A.O.) under Section 68 of the Income Tax Act, 1961, treating it as unexplained cash credit. The A.O. had made the addition on the grounds that the assessee failed to prove the creditworthiness of the lender and the genuineness of the transaction despite several opportunities. The assessee had taken an unsecured loan of Rs. 3.60 crore from M/s. Fennie Commercial Pvt. Ltd. The A.O. demanded documentary evidence to establish the creditworthiness of the lender and the genuineness of the transaction, which the assessee failed to provide satisfactorily. In response, the assessee submitted various documents, including the PAN, financial statements, and bank statements. The A.O. issued notices under Sections 133(6) and 131 of the Act, which were duly served on the creditor, but no compliance was made. The assessee also filed additional evidence under Rule 46A of the I.T. Rules, 1962, during the first appellate proceedings. The CIT(A) admitted this additional evidence and called for a remand report from the A.O. The remand report indicated that the lender company had provided details of unsecured loans advanced to the assessee and produced the ledger account of the company. The A.O. admitted that the funds given by the lender company were from its own sources, as evidenced by the balance sheet showing a share premium reserve in the immediately preceding year. The CIT(A) found that the identity, capacity, and creditworthiness of the lender company, as well as the genuineness of the transaction, were established based on the documentary evidence provided. The CIT(A) relied on various judicial pronouncements, including the judgments of the Hon'ble Supreme Court in the case of CIT vs. Odeon Builders Pvt. Ltd. and the Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms (P) Ltd., to conclude that the addition made by the A.O. could not be sustained. The CIT(A) directed the deletion of the addition of Rs. 3,60,00,000/-. The ITAT, upon careful consideration of the submissions and evidence, agreed with the CIT(A)'s conclusion that the assessee had successfully discharged the onus as per the requirement of Section 68 of the Act. The ITAT found that the identity, capacity, and creditworthiness of the lender company, as well as the genuineness of the transaction, were proven, and no addition under Section 68 was required. The ITAT dismissed the revenue's appeal. In conclusion, the ITAT upheld the CIT(A)'s order deleting the addition of Rs. 3,60,00,000/- made by the A.O. under Section 68 of the Income Tax Act, 1961, and dismissed the revenue's appeal.
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