Vikas Oil Mill Vs ITO (ITAT Jaipur)
TDS on Interest Proves Loan Genuineness -Unsecured Loans & Partners’ Capital Fully Explained
AO completed reassessment on 30.12.2016 determining income at Rs.41,64,313/- by making additions on three counts- trading addition of Rs.16,98,023/-, unexplained unsecured loans of Rs.10,00,000/- & unexplained capital introduced by partners of Rs.4,00,000/-. CIT(A) deleted the trading addition but sustained the other two.
Before Tribunal, Assessee contended that loan of Rs.7,00,000/- from M/s Hardayal & Co. & Rs.3,00,000/- from Smt. Lokmanya was genuine, supported by confirmations, PAN, bank accounts, ITRs & fact that interest paid was subjected to TDS & duly declared in lenders’ returns. Tribunal noted that once lenders had disclosed such interest income in their ITRs & Assessee deducted TDS, the loans could not be treated as unexplained. The contradictory findings of AO, who himself recorded availability of confirmations & ITRs, further strengthened Assessee’s case. Accordingly, the addition of Rs.10,00,000/- on account of unsecured loans was directed to be deleted.
On the issue of partners’ capital of Rs.4,00,000/- introduced during the year, Tribunal observed that Assessee explained the source as withdrawals made by partners in earlier year & produced cash book entries, partners’ capital accounts & ITRs. Once such explanation supported by evidence was furnished, onus shifted to Revenue to disprove the same. Neither AO nor CIT(A) gave cogent reasons to reject Assessee’s explanation. Tribunal held that source of partners’ capital was satisfactorily explained & directed deletion of addition of Rs.4,00,000/-.
