ACIT Vs Dayal Steel P. Ltd (ITAT Delhi)
ITAT Delhi held that AO is not justified in adding unsecured loan received u/s. 68 as AO has rejected the evidences furnished by the appellant without establishing falsity of the documents. Further, documents duly proved identities and source of investors.
Facts- The case of the assessee was selected for scrutiny under CASS. During the year, the assessee received unsecured loan from 22 individuals and 3 HUF to the tune of Rs. 2,25,40,000/-. AO held that, the parties do not have creditworthiness to extend unsecured loans to the assessee. Hence, AO held that, the assessee failed to establish the creditworthiness of the parties and made addition of Rs.2,25,40,000/- u/s 68 of I.T Act.
CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that, AO has rejected the evidences furnished by the appellant without establishing falsity of the documents filed by the assessee. The personal identities of these investors were proved, the sources have been proved, the ITRs and the subsequent repayments has been examined. Having so examined the ld.CIT( A) came to a conclusion that the AO is not justified treating the unsecured loans received u/ s. 68 of I.T Act 1961.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal has been filed by the revenue against the order of ld. CIT-34 , Delhi dated 30 .07.2019 for the A.Y. 2012 -13.
2. The Revenue has raised the following ground of appeal:-
1. “ On the facts and in circumstances of the case and in law, the CIT( A) has erred in deleted the addition made by the AO of Rs. 2 , 25 , 40 , 000 /- u/ s. 68 on account of unsecured loans”
3. The brief facts of the case are that return declaring an income of 11,28,235 /- was filed on 17 .09.2012. The case was selected for scrutiny under CASS. During the year the assessee received unsecured loan from twenty two individuals and three HUF to the tune of Rs. 2,25 ,40,000 /-. The Assessing Officer issued notice u/s. 133(6) to all the parties and only five parties have replied. The AO held that, the parties do not have creditworthiness to extend unsecured loans to the assessee. Hence, relying on the judgment of the Hon’ble High Court of Delhi in the case of Titan Securities Ltd. in ITA No. 263 /2012 the Assessing Officer held that, the assessee failed to establish the creditworthiness of the parties and made addition of Rs.2, 25,40 ,000/- u/s 68 of I.T Act.
4. Aggrieved, the assessee filed appeal before the ld. CIT( A), who deleted the addition made by the AO.
5. Aggrieved with the order of the CIT( A), the Revenue filed before the Tribunal.
6. During the arguments before us, the DR referred to para 2 of the Assessment Order page no. 1 ,2 & 3 and argued that it is responsibility of the assessee to prove identity, genuineness and creditworthiness of the loan parties failing which the amount be treated as undisclosed income of the assessee. The money is being credited to their account either by depositing cash or through RTGS from unexplained sources and money is being immediately transferred to the appellant which reflects that these are merely accommodation entries and lack genuineness. The ld. DR argued that the notices issued by the Revenue Authorities have not been complied by the loan parties and hence there is an absolute failure on the part of the assessee to prove the credential of the loan parties.
7. On the other hand, the AR submitted that they have provided each and every detail before the Revenue Authorities based on which the remission has been given by the ld. CIT(A). The ld. AR argued based on the order of the ld. CIT(A) page no. 4 to 46.
8. Heard the arguments of both the parties and perused the material available on record.
9. The appellant has filed the confirmation of few parties and copy of acknowledgement of their income tax return for various assessment year to prove the genuineness of the transaction and creditworthiness of the The ld. CIT( A) called remand report from the Assessing Officer on the additional evidences filed and also examined the submission of the assessee on the comments of the Assessing Officer on the remand report.
10. The evidences filed comments of the AO and the submissions of the assessee with regard to all the twenty five parties are as under:
