DCIT Vs Dr. Jagat Narain Subharti Charitable Trust (ITAT Delhi)
Section 68 Addition Deleted: Identity, Genuineness and Creditworthiness Established Through 133(6) Enquiry — ITAT Delhi Upholds Relief to Charitable Trust
The Delhi ‘B’ Bench of the Income Tax Appellate Tribunal, Delhi Bench dismissed the Revenue’s appeals for AYs 2012-13 and 2013-14 in the case of Dr. Jagat Narain Subharti Charitable Trust, thereby upholding the deletion of additions made under section 68 in respect of unsecured loans received from M/s RAN International Pvt. Ltd.
The assessments were reopened on the allegation that unsecured loans aggregating ₹7.25 crore (AY 2012-13) and ₹2.30 crore (AY 2013-14) represented unexplained cash credits, mainly on the ground that the lender had meagre returned income and notices issued under section 131 were not complied with. The AO treated the loans as non-genuine and added them under section 68.
The CIT(A) deleted the additions after examining the complete trail of evidence, including confirmations, bank statements, ITRs of the lender and details already furnished during the original scrutiny. During appellate proceedings, additional evidence was admitted under Rule 46A and a remand report was called for. Pursuant to directions, the AO conducted an enquiry under section 133(6), in response to which the lender furnished its return, ledger accounts and bank statements. While the AO continued to doubt creditworthiness, identity and genuineness were not disputed.
The Tribunal held that the CIT(A) was justified in directing further enquiry under section 133(6) and that such direction was well within appellate powers. On merits, it was noted that the lender possessed sufficient reserves and surplus, which adequately explained its capacity to advance the loans, and this factual finding was not controverted by the Revenue. Merely low returned income could not, by itself, negate creditworthiness when balance-sheet strength and banking trail were established.
Accordingly, the ITAT found no infirmity in the CIT(A)’s order, rejected the Revenue’s reliance on generic accommodation-entry jurisprudence, and dismissed both appeals.
FULL TEXT OF THE ORDER OF ITAT DELHI
