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2022 (11) TMI 327 - AT - Income TaxAddition u/s 68 - assessee obtained unsecured loan from various persons who are happened to be the Managing Director s, Family Members and Relatives - HELD THAT - It is seen from record that the unsecured loans to the tune of Rs. 2.83 Crores which were already existing from the previous assessment year from the same parties. However the assessee is silent about the confirmations, bank details, Return of Income and mode of payment of the loan transactions. During the appellate proceedings before CIT(A), CIT(A) called for a Remand Report and given a relief in the case of Ganpatraj C. Salecha and in the case of Deepak G. Salecha which were found to be genuine by the Assessing Officer. The remaining balance assessee failed to discharge the primary onus by providing the loan details, confirmation letters, Income Tax Return etc. to the satisfaction of the Assessing Officer. Thus the assessee failed to discharge its initial onus cast upon it. In the absence of any further details either before the ld. CIT(A) or before us, we are not in a position to adjudicate the grounds raised by the assessee. Thus the grounds raised by the assessee are devoid of merits without supporting evidences.
Issues Involved:
1. Addition under Section 68 of the Income Tax Act, 1961. 2. Disallowance of interest expenses related to unsecured loans. Issue-wise Detailed Analysis: 1. Addition under Section 68 of the Income Tax Act, 1961: The case revolves around the addition made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, for unsecured loans amounting to Rs. 1,93,83,674/- obtained by the assessee. The AO found that the assessee failed to provide sufficient evidence to prove the genuineness of these loans, which were primarily received from the Managing Director's family members and relatives. The AO requested confirmation, bank account details, return of income, and mode of payment for these loans, but the assessee only provided the return of income, failing to discharge the burden of proof under Section 68. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's addition, emphasizing that the assessee must prove the identity of the shareholders, the genuineness of the transaction, and the creditworthiness of the shareholders. Despite the assessee filing additional documents during the appellate proceedings, the CIT(A) found that the assessee failed to explain the source of credits in the bank accounts of the directors and their relatives, except for Rs. 65,94,000/- in the case of Ganpatraj Salecha and Rs. 11,20,000/- in the case of Deepak Salecha, which were found genuine by the AO. The CIT(A) relied on various judicial precedents, including decisions of the Hon'ble Gujarat High Court and the Hon'ble Delhi High Court, to support the conclusion that the assessee failed to prove the genuineness and creditworthiness of the transactions. 2. Disallowance of Interest Expenses Related to Unsecured Loans: The AO also disallowed interest expenses amounting to Rs. 2,31,023/- related to the unsecured loans, arguing that since the loans were not genuine, the interest paid on these loans should also be disallowed. The CIT(A) directed the AO to recompute the addition of interest, acknowledging that the interest related to the genuine loans (Rs. 65,94,000/- and Rs. 11,20,000/-) should not be disallowed. The assessee contended that the unsecured loans were genuine and that the disallowance of interest was unjustified. However, the CIT(A) maintained that the assessee failed to explain the source of credits in the bank accounts, except for the amounts found genuine by the AO. Final Judgment: The Income Tax Appellate Tribunal (ITAT) dismissed the appeal filed by the assessee. The Tribunal noted that the assessee failed to provide necessary details, such as confirmation letters, bank details, and return of income, to prove the genuineness of the unsecured loans. Despite multiple opportunities, the assessee did not appear for the hearings or provide additional evidence. Consequently, the Tribunal upheld the CIT(A)'s order, confirming the addition under Section 68 and the disallowance of interest expenses related to the non-genuine loans. Conclusion: The ITAT concluded that the assessee failed to discharge the primary onus of proving the genuineness and creditworthiness of the unsecured loans. The appeal was dismissed due to the lack of supporting evidence and non-compliance by the assessee. The order was pronounced in the open court on 19-10-2022.
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