Suketu Rajnikant Jhaveri Vs ACIT (ITAT Pune)
Mere Link with Alleged Entry Operator Not Enough – ITAT Deletes Section 68 Addition of Loan After Assessee Proves Identity, Creditworthiness and Genuineness
ITAT Deletes Section 68 Loan Addition; Mere Link to Entry Operator Insufficient
The Pune ITAT deleted an addition of ₹4.50 lakh under section 68, holding that once the assessee furnishes documentary evidence establishing the identity of the lender, genuineness of the transaction and creditworthiness of the creditor, the burden shifts to the Revenue to disprove the claim. Mere association of the lender with an alleged accommodation entry operator is insufficient to sustain the addition.
The assessee had received a loan of ₹4.50 lakh from M/s. Natasha Enterprises and utilized it for repayment of a housing loan. The Assessing Officer treated the loan as unexplained cash credit on the basis of information that the concern was allegedly connected with the accommodation entry network of Praveen Jain.
Before the Tribunal, it was demonstrated that the assessee had furnished comprehensive evidence including the lender’s confirmation, PAN, address, bank statements, income-tax return, balance sheet, profit and loss account and ledger account. It was also undisputed that the loan had subsequently been repaid.
The Tribunal observed that despite the assessee discharging the primary onus under section 68, the Assessing Officer neither issued notice under section 133(6) nor summons under section 131 to verify the lender’s credentials. No defect or discrepancy was found in the documents furnished. The addition was made solely because of the alleged connection of the lender with Praveen Jain.
The ITAT further noted that for AY 2008-09, prior to the amendment in section 68 effective from 01.04.2013, the assessee was required to explain the source of the credit and not the source of the source. Since the assessee had satisfactorily established the nature and source of the loan, invocation of section 68 was unjustified. Accordingly, the entire addition of ₹4.50 lakh was deleted.
FULL TEXT OF THE ORDER OF ITAT PUNE
