Addition u/s 68 unsustainable as identity as well as creditworthiness proved

Poddar Realtors Vs ITO (ITAT Kolkata)

ITAT Kolkata held that addition under section 68 of the Income Tax Act unsustainable as identity of loan creditor proved along with creditworthiness of the transaction.

Facts- The return of the assessee was processed u/s. 143(1) of the Act. Subsequently, the case of the assessee was reopened by issue of notice u/s 148 of the Act. In the assessment order, the AO observed that his office was in receipt of information that on examination of the bank account held by the assessee it was gathered that the account of the assessee got credited with cash deposit of Rs.10,00,000/- from M/s Evermore Sales Pvt Ltd., in respect of which the assessee explained that there was no cash deposit of this sum and the amount received from M/s Evermore Sales Pvt Ltd was Rs.25,00,000/- and not Rs.10,00,000/- by way of interest bearing loan which was received through proper banking channel and evidence in support thereof was placed before the AO.

Upon examining the details furnished by the assessee, the AO noted that the assessee was unable to explain the purpose of loan and that the genuineness of transaction remained unproved as there was cash deposit and immediate withdrawal. The AO finally concluded that cash was deposited by M/s Evermore Sales Pvt Ltd in their bank account to advance loan to the assessee and that the assessee in this guise had brought back its accounted income into regular books of accounts. Hence, the receipt of loan of Rs.25,00,000/- was added by way of unexplained cash credit u/s 68 of the Act.

CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed by the assessee.

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