Tax Tribunal Overturns Unjustified Income Addition Due to AO's Failure to Verify Loan Transactions for Director's Account.

The ITAT held that the assessee failed to provide a satisfactory explanation regarding unexplained loan transactions/advances to a director. The AO made an addition to the company's income due to lack of clarity on the source of the loan. However, the assessee presented confirmation copies of refunds received through account payee cheques from the individuals in question, who are income tax assessees with PAN. The AO did not utilize powers u/s 133(6) to verify the transactions, despite the assessee's request. The assessee fulfilled the burden of proof by submitting PAN and confirmation of the individuals. Citing Orissa Corporation Pvt. Ltd., it was emphasized that without issuing summons u/s 131, no adverse inference can be drawn. Consequently, the addition made by the AO was deemed unjustified, and the assessee's appeal was allowed. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X