Sanraj Hospitality Pvt Ltd Vs ITO (ITAT Delhi)
Delhi ITAT Deletes Section 68 Addition as Assessee Proved Identity, Genuineness and Creditworthiness; AO Failed to Conduct Independent Enquiry
The Delhi ITAT deleted the addition under section 68 in respect of unsecured loans after holding that the assessee had successfully discharged the initial onus of proving the identity of the lenders, their creditworthiness and the genuineness of the transactions. Although the assessee had not furnished complete details during the assessment proceedings, it produced comprehensive evidence before the CIT(A), including confirmations, financial statements, bank statements, GST registrations, ROC records and MCA data, which were forwarded to the Assessing Officer in remand proceedings. The Tribunal observed that the Assessing Officer neither pointed out any defect in these documents nor conducted any independent enquiry under section 133(6) to disprove the evidence. It further noted that a substantial portion of the loans had been repaid through banking channels during the same year, indicating the genuineness of the transactions, and held that the amendment requiring proof of the “source of source” was not applicable to AY 2017-18. Relying on the decisions of the Supreme Court in CIT v. Orissa Corporation (P.) Ltd. and CIT v. Daulat Ram Rawatmull, as well as the Delhi High Court’s ruling in PCIT v. KRBL Infrastructure Ltd., the Tribunal held that once the assessee had discharged its burden, the onus shifted to the Revenue, which had failed to bring any contrary material on record. Accordingly, the addition under section 68 and the consequential taxation under section 115BBE were deleted. The Tribunal, however, remanded the claim for deduction under section 80G for verification of the donation receipt and directed that the ROC fee paid for increase in authorised share capital be allowed only by way of amortisation under section 35D, and not as a revenue deduction.
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