Vachitra Builders Pvt Ltd Vs ITO ( ITAT Delhi)
ITAT Delhi held that addition towards unexplained credits under section 68 of the Income Tax Act unsustainable as genuineness, identity and creditworthiness of the creditors proved.
Facts- The assessee company engaged in the business of civil construction filed its return of income on 27.09.2015 for the assessment year 2015-16 declaring loss of Rs.46,247/-. The assessment was completed u/s. 143(3) of the Act on 12.12.2017 determining the income of the assessee at Rs.4,62,53,753/- by making an addition of Rs.4,63,00,000/- u/s. 68 of the Act.
Notably, AO treated unsecured loans amounting to Rs.4,63,00,000/- as unexplained credits u/s. 68 read with section 115BBE of the Act observing that the assessee was provided sufficient opportunity to provide confirmation from the party and to discharge its onus but the assessee completely failed to do so. Therefore, he concluded that the loan transactions by the assessee are not genuine transactions as the lenders did not respond to the notices and, therefore, the identity, creditworthiness and genuineness of the transactions could not be established.
CIT(A) sustained the addition. Being aggrieved, the present appeal is filed.
Conclusion- Submission of all the documents with regard to unsecured creditors proves that loan/credit received in the books of accounts, nature and source which was clearly visible from the bank statement of the assessee, confirmation through account payee transactions prove the genuineness, identity and creditworthiness of the transactions.
Held that the assessee has proved the genuineness, identity and creditworthiness of the creditors and the Assessing Officer is directed to delete the addition made under section 68 of the Act.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-9 [hereinafter referred to CIT (Appeals)] New Delhi, dated 16.07.2019in sustaining the addition of Rs.4,63,00,000/- under section 68 of the Income Tax Act, 1961 (the Act) for assessment year 2015-16.
2. The assessee in its appeal has raised the following grounds of appeal:-
“1. That, the Ld. CIT(A) has grossly erred both in law as well as on facts in confirming the addition of Rs. 4,63,00,000/made by Ld. AO u/s 68 of the Actrelating to following loans:
(a) 2,00,00,000/-, from Ms Jackpot Dealcom Pvt. Ltd. (Now Shyam Tradex Pvt. Ltd.
(b) 45,00,000/-from M/s Marigold Buildcons Pvt. Ltd.
(c) 2,00,00,000/- from M/s Rishikesh Barter Pvt. Ltd.
(d) 5,00,000/- from Sh. Govind Sharma.
(e) Rs.13,00,000/- from Sudhir Chandra main working Director.
2. That the Ld. CIT(A) has failed to notice that AO has issued the notices u/s133(6)/131 three of the aforementioned companies at the wrong/improper
3. That both the lower authorities have erred in noticing various addressesprovided in the ledger account, confirmation, PAN, Bank Statement, in balance sheetor even in master data of those companies etc. where no notice were ever served.
4. That both the CIT (A) as well as AO have erred in noticing that Shri Govind Sharma is an old friend retired from cabinet secretariat of Government of India whose loan was already accepted in the earlier years while Shri Sudhir Chandra isworking Director of the Assessee Company.
5. That both the lower authorities have grossly erred in ignoring the documents confirming identity, genuineness, and also creditworthiness of persons and also that loan was either returned during the year or in subsequent years which was clearly depicted in the bank statements of the above persons as well as the appellant.
6. That, the Ld. CIT(A) has erred in law as well as on facts in confirming the addition merely on the basis of suspicion and surmises, ignoring the circumstances and the material available on record.
7. That the Ld. CIT(A) has also erred in law as well as on facts in ignoring that provisions of section 68 are not at all applicable in the present case so as to apply section 11 5BBE of the Act for determining tax in special cases under chapter XII.”
3. Briefly stated the facts are that the assessee company engaged in the business of civil construction filed its return of income on 27.09.2015 for the assessment year 2015-16 declaring loss of Rs.46,247/-. The assessment was completed under section 143(3) of the Act on 12.12.2017 determining the income of the assessee at Rs.4,62,53,753/- by making an addition of Rs.4,63,00,000/- under section 68 of the Act. In the course of assessment proceedings the Assessing Officer noticed that assessee had taken un-secured loans during the year under consideration from the following parties:-
