Addition u/s 68 towards unexplained unsecure loan unsustainable as onus duly discharged

ACIT Vs Evermore Stock Brokers Private Ltd. (ITAT Delhi)

ITAT Delhi held that addition u/s. 68 towards unexplained unsecured loan unsustainable as the onus which lays upon the assessee to explain that the entries made are real and not fictitious, has been duly discharged.

Facts- The assessee is engaged in the business of investments and financial activities and has filed its return of income at Rs.96,19,580/- on 26.09.2015 for AY 2015-16 in question. The case was selected for limited scrutiny. In the course of the assessment, from the tax audit report, the AO inter-alia observed that the assessee has shown squared off unsecured loans to the tune of Rs. 47,72,95,676/- allegedly received from an entity named M/s. Pioneer Fincon Services Pvt. Ltd. (PFSPL). AO considered an amount of Rs.47,72,95,676/- received from PFSPL and credited in the books of the assessee an unexplained credit and added the same total income to the assessee.

CIT(A) answered the issue in favour of the Assessee. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that the onus which lays upon the assessee to explain that the entries made were real and not fictitious. Ordinarily, it is difficult to fathom an onus tagged upon the assessee to explain the circumstances as to why third party had needed such funds so long as the transactions are embedded with commercial considerations. Furthermore, the onus towards source in the hands of borrower in relation to repayment entries qua pre-existing loans is indeed onerous and can seem be visualized. We are thus in agreement with the pith and substance of plea advanced on behalf of respondent assessee and endorsed the action of the CIT(A) in toto. Hence, we decline to interfere with the first appellate order.

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