No Income Tax Addition without Examination of Documents Furnished by Assessee, on Ground of No Response to Notice Issued by AO: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the assessee has proved the genuineness, identity and creditworthiness of the creditors and the Assessing Officer(AO) is directed to delete the addition made under Section 68 of the Income Tax Act, 1961

The assessee company Vachitra Builders Pvt. Ltd engaged in the business of civil construction filed its return of income for the assessment year 2015-16 declaring a loss of Rs.46,247.

 During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee had taken un-secured loans and treated the loans from these parties amounting to Rs.4,63,00,000 as unexplained credits under Section 68 read with Section 115BBE of the Income Tax Act.

The AO concluded that the loan transactions by the assessee are not genuine transactions as the lenders did not respond to the notices and, therefore, the identity, creditworthiness and genuineness of the transactions could not be established.

Aggrieved by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], the first appeallate tribunal observed that two companies out of all the companies the assessee taken usecured loans are bogus companies and accordingly the addition made by the Assessing Officer has been sustained by the CIT(A).

The Authorised Representative (AR) highlighted various documents such as bank statements, ITR, Balance Sheet, Company Master data apart from confirmation giving PAN and payments were made through RTGS/NEFT and explained that most of the loans received were either returned in immediately succeeding year when the property was sold or adjusted against the purchase of the property and nothing was outstanding.

Further the AR stated that CIT(A) observed that the appellant provided AO with Bank Statement, Ledger and copy of ITR  but the CIT(A) also observed that notice under Section 133(6) of the Income Tax Act was not complied and so upheld the additions.

The Departmental Representative (DR) filed a brief note along with the observation of the  Assessing Officer that some of the documents which were stated to be filed before the AO as well as CIT(A) and now before ITAT are not available or not found in the case record file.

The Bench comprising of G.S Pannu, President and Challa Nagendra Prasad, Judicial Member observed that the AO did not make any efforts to analyse the transactions and after having PAN number of the two parties he did not examine the same from the returns of these two companies.

And also held that the assessee has proved the genuineness, identity and creditworthiness of the creditors and the Assessing Officer is directed to delete the addition made under Section 68 of the Income Tax Act.

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