Prarthana Gems Vs DCIT (ITAT Surat)
ITAT Surat held that addition under section 68 of the Income Tax Act deleted since appellant has satisfactorily explained the nature and source of the credit. Accordingly, appeal allowed and addition deleted.
Facts- During the year, the assessee derived income from the business of importing, exporting, processing and trading of rough and polished diamonds. The assessee had obtained loans and deposits from 5 persons amounting to Rs.3,45,00,000/- including Rs.25,00,000/- from Mr. Rafique Peer Mohammad during the year. The AO had received replies from four creditors, but not from Mr. Rafique Peer Mohammad. AO observed that the creditworthiness of the person has not been established. Accordingly, AO added the amount as unexplained cash credit u/s 68 of the Act. Further, AO also disallowed interests thereon amounting to Rs.1,25,000/-, claimed to have been paid on this unsecured loan. Accordingly, total income was assessed at Rs.46,52,660/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that since the lender expired on 29.06.2016 in Breach Candy Hospital, he was not able to respond to the notices issued to him u/s 133(6) of the Act. This fact alone cannot negate the overwhelming factual and circumstantial evidences advanced by the appellant. In view of this fact discussed above, we are of the considered view that the appellant has satisfactorily explained the nature and source of the credit of Rs.25,00,000/- in its books for the subject assessment year. Accordingly, the order of CIT(A) is set aside and the AO is directed to delete the addition of Rs.2,50,000/- made u/s 68 of the Act.
