“Explore the recent ITAT Delhi decision (Amit Tyagi vs DCIT) highlighting that the non-production of directors doesn’t justify addition for advancing loans. Assessee’s documentary evidence, PANs, and banking transactions were deemed valid. Get insights into the arguments, observations, and legal perspective.”
Amit Tyagi Vs DCIT (ITAT Delhi); ITA No. 757/Del/2017; 05/04/2023; 2010-11
Merely because the directors of the company could not produced and the companies appeared before the AO during remand proceedings through authorized representative, the other relevant documentary evidences filed by the assessee establishing the identity, capacity and credit worthiness of creditors and genuineness of transactions which were undertaken through banking channels cannot be disregarded or dismissed.-ITAT Delhi
Arguments advanced on behalf of the assessee:
1. CIT(A)’s order is bad in law and against the facts of the case:
- Added loan amount based on suspicion and conjectures, lacking cogent evidence.
- Ignored relevant aspects of Inspector’s report not confronted to the assessee.
- Failed to discharge the burden of disproving the assessee’s evidence.
2. Addition sustained without sustainable evidence:
- Failed to establish the impugned amount belonged to the assessee.
- Ignored provisions of section 131 of the Act.
- Adverse inference drawn from AO’s remand report without rebutting the assessee’s explanations.
- Assessee submitted documentary evidence that was disregarded.
3. Assessee discharged the onus of proving identity and creditworthiness:
- Cited relevant judgments supporting the assessee’s position.
- No material to disprove creditors’ identity and creditworthiness.
- Creditors regularly assessed to income tax and provided bank statements.
- Loan transaction conducted through banking channels, no grounds for doubt.
4. Assessee’s documentary evidence ignored:
- Relevant evidences submitted but ignored by authorities below.
5. Reliance on the judgment of CIT vs. Kapoor Chand Mangesh Chand:
- Burden of proof discharged with PANs, bank account details, and account payee cheques.
- Genuineness established through documentary evidence.
- Loan transaction through banking channel:
- Loan received and repaid through banking channels.
- Interest paid after deducting TDS.
- Transaction cannot be doubted or disputed
Arguments advanced on behalf of the Revenue:
1. Impugned transactions were accommodation entries.
2. Creditor companies’ identities and creditworthiness not verifiable.
Observations of the Hon. Tribunal:
1. Assessee provided documentary evidence supporting the loan transactions.
2. Legal entities with PAN, filing returns, and conducting transactions through banking channels.
3. Findings lacking to disprove genuineness of transactions.
4. Reliance on CIT vs. Kapoor Chand Mangesh Chand judgment.
5. Merely because the directors of the company could not produced and the companies appeared before the AO during remand proceedings through authorized representative, the other relevant documentary evidences filed by the assessee establishing the identity, capacity and credit worthiness of creditors and genuineness of transactions which were undertaken through banking channels cannot be disregarded or dismissed.
6. Failure to prove the real identity of companies does not dismiss other relevant documentary evidence.
7. Payment of interest after deducting TDS and loan repayment not disputed.
8. Genuineness of transaction cannot be doubted based on suspicion.
9. Assessee successfully established identity, creditworthiness, and genuineness of transactions.
10. Addition made by AO and upheld by ld. CIT(A) not valid and sustainable.
11. AO directed to delete the addition.
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