Real Innerspring Technologies Pvt. Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that addition under section 68 of the Income Tax Act towards unsecured loan is not sustainable since the loan taken was repaid by assessee before the reopening of assessment. Held that transaction is genuine when loan is taken and the same is repaid with interest.
Facts- During the course of assessment, AO observed that assessee has taken entry of Rs. 50 Lakhs from Shri Himanshu Verma who is engaged in providing accommodation entries to various beneficiaries. Accordingly, AO formed an opinion that income escaped assessment and hence directed reopening of assessment u/s. 147. Post considering submission of the assessee, AO concluded that advances are nothing but undisclosed income of the assessee u/s 68 of the Act and the assessee has not satisfied the criteria of credit worthiness and genuineness of the transactions.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee has repaid the loan even before the assessment was reopened. When the assessee takes the loan and repaid along with the interest clearly shows that the transactions are genuine. By returning the loan, the assessee has only utilised the loan for the purpose of business and repaid the same. Merely because some operator has managed the affairs and all the transactions cannot be labelled as non-genuine. Every transaction has to be evaluated on its merit rather than on the basis of suspicion. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same on the basis of information available with him as the same on the basis of suspicion.
