2024 (5) TMI 1292 - AT - Income Tax

Addition u/s 68 - unsecured loans - CIT(A) has considered certain part of the loan transactions as suspicious as there were immediate credit of the exact amounts just a few days before the loan was given to the assessee - HELD THAT - The assessee had submitted that these credits were sourced by loans from family members/HUF, however, in the absence of confirmations to corroborate the same, the ld. CIT (A) has not considered them duly explained. HELD THAT - The Bench is of the considered view that when the assessee, for the purpose of section 68 of the Act, establishes the identity of the creditors and the Revenue accepts the genuineness of a part of the transaction, it is not justified to disbelieve remaining part of the transaction by mere attribution of suspicion. The burden having been discharged partly, the onus was on the Revenue to establish by some substantive evidences or series of circumstances, rather than bare suspicion on the basis of what is termed as 'happy coincidence of loan being followed by credit entries of similar amounts', more particularly, as observed earlier, at the cost of repetition, when part loan transaction from the same person is admitted to be genuine. Thus, in regard to the ground raised, the findings of the ld. CIT(A) cannot be sustained. Assessee appeal allowed.

Summary

Issues Involved:
The appeal against the order of CIT(A)-16, New Delhi u/s 143(3) of the Income Tax Act, 1961 by the ITO, Ward-46(3), New Delhi regarding unsecured loans, foreign remittance, GP rate, and addition of Rs 1.45 crore and Rs 4,78,864.

Unsecured Loans Issue:
The AO added Rs 1.45 crore of unsecured loans u/s 68. Ld. CIT(A) upheld the addition of Rs 65,00,000, stating the appellant failed to establish the genuineness of certain loans. However, the addition on account of fall in gross profits was deleted.

Grounds of Appeal:
The appellant challenged the addition of Rs. 65,00,000 on account of unsecured loans u/s 68, alleging incorrect facts and findings without granting cross-examination. The action of Ld. CIT(A) in sustaining the addition was deemed bad in law. Additionally, the charging of interest u/s 234B & 234D was contested.

Judgment:
The AR argued that identifiable lenders confirmed loans, provided bank statements, and tax returns, citing relevant case laws. The AR emphasized that once the depositor is identified, the source of the source need not be explored. The DR supported the AO's findings.

Decision on Loans Issue:
The Id. CIT(A) considered certain loan transactions suspicious due to immediate credits before loans were given. The Bench found the burden was discharged partly by the assessee, and the Revenue failed to substantiate suspicions with substantive evidence. Therefore, the findings of the ld. CIT(A) were not sustained, and the appeal was allowed.

Conclusion:
The appeal was allowed, and the order pronounced on 27.05.2024 by the Appellate Tribunal ITAT DELHI, with the addition on unsecured loans u/s 68 being overturned due to lack of substantive evidence supporting suspicions raised by the Revenue.