Surender Singh Sangwan Vs ITO (ITAT Delhi)
Assessee received unsecured loans aggregating to Rs.1.05 crore from five individuals and duly furnished confirmations, affidavits, PAN, Aadhaar, bank statements and ITR details wherever applicable. All loans were received through banking channels. AO, however, made addition u/s 68 solely on the ground of alleged lack of creditworthiness of lenders, without issuing summons u/s 131 or notices u/s 133(6) and without conducting any independent inquiry. CIT(A) confirmed the addition.
ITAT deleted the addition holding that Assessee had discharged the primary onus u/s 68 by establishing identity of creditors, genuineness of transactions and availability of funds in bank accounts of lenders. Tribunal held that for AY 2016-17, there was no requirement to prove source of source, as the amendment brought by Finance Act 2022 applies only from AY 2023-24 onwards. Once complete details were on record, AO could not sit back and make addition merely on suspicion without making inquiry. Reliance was placed on Orissa Corporation (SC), Daulatram Rawatmull (SC) and several Delhi & Allahabad High Court decisions.
Tribunal further held that strong suspicion cannot substitute evidence and addition u/s 68 cannot be sustained where AO fails to disprove evidence filed by Assessee. Consequently, entire addition of Rs.1.05 crore was deleted. Adhoc disallowance of expenses was, however, restricted to 5%. Appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal is filed by assessee against the order dated 06.12.2024 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Rohtak/10489/2018-19 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 27.12.2018 passed u/s 143(3) of the Act pertaining to Assessment Year 2016-17.
