2022 (5) TMI 264 - AT - Income Tax

Addition u/s 68 - accommodation entry receipts - Genuineness of unsecured loan - HELD THAT - First of all, we note that there were double entries appearing in the bank statement for repayment of the loan which were cancelled and reflected as deposits in the bank. This fact can be verified from the necessary details of RTGS application to the bank and the bank statements. All these facts, have not been disputed by the learned DR appearing on behalf of the Revenue. Had there been any doubt about the amount of loan, the revenue could have verified the same from the bank. But we note that no such verification has been carried out by the authorities below. Accordingly we hold that, the assessee has received a sum of ₹6 lakhs from the party and not ₹12 lakhs as alleged by the revenue. It is also not out of the place to mention that the loan received by the assessee in the year under consideration was refunded in the same financial year. It implies that the assessee was not the beneficiary of the loan received by it as alleged by the AO. Thus, we can assume that the impugned transaction was the business transactions between the assessee and the loan parties. Had there been any doubt by the Revenue on the repayment of the loan as claimed by the assessee, it was the duty of the revenue to carry out the necessary verification. It is for the reason that the assessee has discharged its onus by furnishing the necessary details in support of the repayment of the loan. Accordingly the onus shifted upon the revenue to disprove the contention of the assessee based on the documentary evidence. But we note that no documentary evidence has been brought on record by the Revenue to disprove the contention of the assessee. The question arises for the adjudication whether only the credit entries should only be considered for the purpose of cash credit entries as provided under section 68 of the Act after ignoring the debit entries. To our mind the debit entries cannot be set aside for determining the income of the assessee. We are of the opinion that, though the transactions of the loan received by the assessee are not free from any doubt but in either of the case, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries. Thus in view of the above and after considering the facts in totality, we are not inclined to uphold the finding of the learned CIT-A. Accordingly we set aside the finding of the learned CIT-A and direct the AO to delete the addition - Decided in favour of assessee.

Summary

Issues Involved:
- Addition of Rs. 12,00,000 as accommodation entry under section 68 of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Addition of Rs. 12,00,000 as accommodation entry under section 68 of the Income Tax Act, 1961

The case involved an appeal by the Assessee against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 12,00,000 as unexplained cash credit under section 68 of the Act for the Assessment Year 2012-2013. The Assessing Officer treated the unsecured loan obtained by the Assessee as non-genuine based on a search and seizure operation revealing the involvement of a company in providing accommodation entries. The Commissioner upheld the addition, noting discrepancies in the documents provided by the Assessee and the involvement of the company in accommodation entries.

The Assessee contended that they had received and repaid a loan of Rs. 6,00,000 during the year, with double entries in the bank statement due to a failed repayment. The Assessee argued that the genuineness of the transaction should not be doubted solely based on the other party's activities. The Assessee also raised the issue of lack of opportunity for cross-examination. The Revenue, however, supported the lower authorities' decision.

The Appellate Tribunal considered the evidence, including bank statements and RTGS details, confirming the receipt and repayment of Rs. 6,00,000. The Tribunal noted the absence of verification by the Revenue regarding the loan amount and repayment. Referring to a previous court decision, the Tribunal emphasized that payment and repayment through account payee cheques indicate genuine transactions. The Tribunal highlighted that the Revenue failed to disprove the Assessee's claims with documentary evidence.

Furthermore, the Tribunal discussed the deeming provisions of Section 68 of the Act and emphasized that both credit and debit entries should be considered in totality, especially when repayment of the loan is established. The Tribunal concluded that the Assessee's transactions, though not entirely free from doubt, did not warrant the addition made by the lower authorities. Therefore, the Tribunal directed the Assessing Officer to delete the addition, allowing the Assessee's appeal.

In conclusion, the Tribunal found in favor of the Assessee, emphasizing the importance of considering all transactions holistically and verifying claims with documentary evidence before deeming them as income under Section 68 of the Income Tax Act, 1961.