PCIT Vs Harsh Stock Portfolio Pvt. Ltd. (Rajasthan High Court)
The Rajasthan High Court dismissed the Revenue’s appeal challenging the deletion of an addition relating to unsecured loans obtained by Harsh Stock Portfolio Pvt. Ltd. from M/s Desire Vincom Pvt. Ltd. and M/s Wellworth Tradeling Pvt. Ltd. The Revenue contended that once doubts were raised regarding the creditworthiness of the loan companies, allegedly shell companies, the assessee was required to produce the parties along with necessary documents to establish the genuineness of the transactions.
The High Court noted that the loans had been returned along with interest to the concerned companies during the same assessment year. It therefore held that no addition could be made of the income received by way of such loans as the amounts had already been returned. The Court further noted that the assessee had sufficiently proved the genuineness of the companies by producing their PAN numbers and establishing that they remained duly registered with the ROC.
The Court held that the requirement of producing the companies to remove the Assessing Officer’s doubt was far-fetched and could not be regarded as a question of law requiring examination by the High Court. Since the other aspects had been factually examined by the CIT and ITAT, the appeal was found devoid of merits and was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. Learned counsel for the Revenue submits that the CIT and ITAT have erred in deleting the addition made by the Assessing Officer relating to the unsecured loans obtained by the assessee company from M/s Desire Vincom Pvt. Ltd. and M/s Wellworth Tradeling Pvt. Ltd. Once a doubt is created relating to the credit worthiness of the concerned loan company, which is alleged to be a shell company, the onus would lie upon the assessee to produce the parties along with the necessary documents to establish the genuineness of the transaction.
2. We notice that the loan taken by the assessee was returned along with interest to the said companies in the same assessment year. Therefore, it is apparent that no addition can be made of such income received by way of loan as the same has already been returned. The assessee has sufficiently proved the genuineness of the companies as their PAN numbers were produced as well as the companies remain duly registered with the ROC and, therefore, cannot be said to be shell companies.
3. The requirement of the companies being produced by the assessee in support, to remove the doubt of the Assessing Officer is only far-fetched and cannot be said to be a question of law to be examined by this Court. All the other aspects have been factually examined by both the CIT as well as ITAT. The present appeal being devoid of merits is accordingly, dismissed.
4. All the pending application(s), if any, stand disposed of.
