ACIT Vs Singhania Alu Foil Containers Manufacturing Company (ITAT Delhi)
The Assessing Officer had added ₹2.87 crore under section 68 treating unsecured loans from three parties as unexplained cash credits. The CIT(A), after calling for a remand report and examining confirmations, PAN details, bank statements of lenders and the assessee, and evidence of repayment through banking channels, deleted the addition holding that identity, creditworthiness and genuineness stood proved.
Before the Tribunal, the Revenue contended that the CIT(A) wrongly admitted additional evidence and ignored the remand report. The Tribunal, however, noted that the assessee had furnished complete documentary evidence to establish the three ingredients of section 68 and that the loans were taken and repaid through proper banking channels, even before scrutiny commenced. There was no finding of cash deposits in lenders’ bank accounts immediately prior to advancing the loans, nor had the AO made any meaningful independent enquiry such as issuing summons or recording statements of lenders.
Relying on binding precedents including the Supreme Court in Orissa Corporation Pvt. Ltd. and the Delhi High Court in KRBL Pvt. Ltd., the Tribunal held that once the assessee discharges the primary onus by proving identity, genuineness and creditworthiness, the burden shifts to the Revenue. Mere non-response of lenders or suspicion cannot justify an addition without contrary material.
It was further held that for the year under consideration, the law did not require the assessee to prove the “source of source” for loan credits. Distinguishing the Supreme Court decision in NRA Iron & Steel on facts, the Tribunal upheld the deletion of the entire addition of ₹2.87 crore.
Accordingly, the Revenue’s appeal was dismissed and the assessee’s cross-objections, being merely supportive of the CIT(A)’s order, were treated as infructuous.
FULL TEXT OF THE ORDER OF ITAT DELHI
