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2024 (5) TMI 1443 - HC - Income TaxAddition u/s 68 - sundry creditors unexplained - proof of genuineness of the amount on account of sundry creditor not proved - HELD THAT - ITAT has made a categorical finding that the respondent-assessee had a running account with TCPL having substantial movement in the account of the creditor. It has also been held that the copy of the ledger account of TCPL which was filed before the AO manifested that against credit balance of Rs. 33,00,000/-, there were four debit entries amounting to Rs. 15,00,000/- and as such, a sum of Rs. 18,00,000/- was outstanding as on 31.03.2013, which was written off on 31.03.2014. ITAT held that the addition of the said sum would amount to double addition, for the amount had been written off and was offered to tax. ITAT also noted that the respondent-assessee cannot be asked to prove the source of the source since the entire case of the Revenue is with regard to the source of MTL and MOL. ITAT has correctly evaluated the facts and has rightly arrived at the conclusion. The questions, answered negatively and in favour of the assessee.
Issues Involved:
1. Deletion of addition of Rs. 18,00,000/- u/s 68 of the Income Tax Act, 1961, related to sundry creditor Transearch Consultants Pvt. Ltd. (TCPL). 2. Deletion of addition of Rs. 5,00,00,000/- u/s 68 of the Income Tax Act, 1961, related to unsecured loans from Maple Technology Ltd. (MTL) and Marry Gold Overseas Limited (MOL). Summary: Issue 1: Deletion of Addition of Rs. 18,00,000/- u/s 68 related to Sundry Creditor TCPL The ITAT found that the respondent-assessee had a running account with TCPL with substantial movement in the account. The ledger account showed a credit balance of Rs. 33,00,000/- with four debit entries amounting to Rs. 15,00,000/-, leaving an outstanding sum of Rs. 18,00,000/- as on 31.03.2013, which was written off on 31.03.2014. The ITAT held that adding this amount would result in double addition since it was already written off and offered for tax. The ITAT noted that the ledger account was available to the authorities and the amount in question was received through banking channels. The ITAT concluded that the addition of the closing balance was not justified and deleted the addition of Rs. 18,00,000/-. Issue 2: Deletion of Addition of Rs. 5,00,00,000/- u/s 68 related to Unsecured Loans from MTL and MOL The ITAT noted that the respondent-assessee had provided sufficient evidence to prove the identity of the creditors, including ledger accounts, bank statements, ITR, and balance sheets. The creditors confirmed the loans in response to notices u/s 133 (6) and in statements recorded u/s 131. The ITAT emphasized that the assessee cannot be asked to prove the source of the source. The ITAT found that the creditors had sufficient amounts in their bank accounts and no cash deposits were made before giving the loans. The ITAT concluded that the respondent-assessee had proved the identity, creditworthiness, and genuineness of the transactions and deleted the addition of Rs. 5 crores. Conclusion: The ITAT correctly evaluated the facts and rightly concluded that the additions made by the AO were unjustified. The questions framed by the Court were answered negatively and in favor of the respondent-assessee. The appeal was dismissed, and pending applications, if any, were also disposed of.
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