DCIT Vs Rathnamma Infratech Private Limited (ITAT Hyderabad)
ITAT Hyderabad held that addition under section 68 towards unexplained cash credits cannot be sustained since assessee has discharged the onus cast upon it and proved identity of loan creditors, genuineness of transactions and creditworthiness of parties. Accordingly, appeal of revenue dismissed.
Facts- During scrutiny assessment, AO concluded that the assessee has failed to prove the genuineness of the transactions and creditworthiness of the persons from whom the loans have taken. Thus, rejected the explanation of the assessee and made addition of Rs. 25,24,08,811/- under Section 68 of the Income Tax Act 1961, as unexplained cash credit.
CIT(A) allowed the appeal of the assessee. Therefore, being aggrieved, the present appeal has been preferred by the revenue.
Conclusion- Held that to sum up, the assessee company has satisfactorily explained the loans taken from the above parties by filing relevant evidences, including confirmation letters from the loan creditors, their financial statements along with bank statements indicating the transfer of funds from the bank account of the loan creditors to the bank account of the assessee company. The assessee has also proved the source of the source of the loan creditors by filing relevant details, including sale of land and agricultural term loans in the case of Shri K.V. Satish Kumar and Smt. K. Swapna. Similarly, the assessee has furnished the relevant details of the source of the source in respect of SSK Prime Spaces Ltd. and K.S.V. Oil Seeds Pvt. Ltd. Since the assessee has discharged the onus cast upon it under Section 68 of the Income Tax Act, 1961 and has proved the identity of the loan creditors, the genuineness of the transactions, and the creditworthiness of the parties, in our considered view, the A.O. has erred in making additions towards the loans taken from the above companies as unexplained cash credits under Section 68 of the Act. The Ld. CIT(A), after considering the relevant facts, has rightly deleted the additions made by the A.O. Thus, we are inclined to uphold the order passed by CIT(A) and direct the A.O. to delete the additions made towards loans taken from the above parties under Section 68 of the Act. In the result, the appeal filed by the Revenue is dismissed.
