Transactions in the present appeal are example of the constant use of the deception of loan entries to bring unaccounted money into banking channels. This device of loan entries continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called creditors would lend such huge unsecured, interest free loans – that too without any agreement. In the absence of the same, the creditors fail the test of creditworthiness and the transactions fail the test of genuineness. The findings of the CIT (A) are upheld and the order of the ITAT dated 19th July, 2016 is set aside to the extent of the deletion of four entries. The deletions made in respect of the transactions of the Assessee with Shri Amar Singh, Shri Chandan Singh, Shri Ram Charan/Ram Chander and Smt. Sunita to the tune of Rs. 50,00,000/-, Rs. 1,10,00,000/-, Rs. 10,00,000/- and Rs. 98,00,000/-, respectively, are liable to be added back to the returned income of the Assessee for the relevant AY, under Section 68 of the Act.
Full Text of the High Court Judgment / Order is as follows:-
1. In the present Appeal, the Principal Commissioner of Income Tax – 7,impugns the order dated 19th July, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 5609/Del/2015 for Assessment Year 2011-12.
2. Admit. The following question of law is framed for consideration:
“Whether the ITAT was correct in law in deleting the addition under Section 68 of the Income Tax Act, 1961 in respect of four individuals when the genuineness of the transactions and the creditworthiness of the said four individuals were in serious doubt?”
3. The Respondent- Assessee filed its return of income for AY 2011-12 on 17th August, 2011 declaring a total income of Rs. 80,45,590/-. During the assessment proceedings, the Assessing Officer, on 13th March 2014, made additions under Section 68 of the Income Tax Act, 1961 (‘the Act’) to the tune of Rs. 3,25,50,000/- in respect of loans/advances received from eight persons, on the ground that the Assessee was unable to establish the identity, creditworthiness and genuineness of the said persons and transactions.
4. The details of the loans/advances, received by the Assessee, as recorded by the AO, are :
