The Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that additions made on loan amount under Section 68 of the Income Tax Act 1961 are based on uttar suspicion and conjectures.Therefore the bench deleted the addition made by the assessing officer.
Section 68 of Income Tax Act deals with tax treatment of unexplained cash credits done by the assessee.
Assessee Amit Tyagi obtained unsecured loan from four companies after filing the return, while the assessment proceedings the AO made addition on loan amount under Section 68 of the Income-tax Act.
When the matter preferred before the CIT(A) they rejected the appeal and confirmed the addition.Aggrieved the order of CIT(A) assessee filed another appeal before the tribunal.
While the appeal is considered before the tribunal counsel for assessee P.C. Yadav, submitted that the First appellate authority has not discharged the onus lay on him to disprove the evidences put forth by assessee and the addition has been sustained without any sustainable relevant evidence and without establishing that the impugned amount belonged to the Assessee and not to the respective creditor.
Also the assessment order based on utter suspicion and conjectures, which has not been based on any cogent, positive or adverse material against the assessee on record.
Kanav Bali, counsel for the revenue submitted that “orders of the authorities below clearly reveal that the impugned transactions were nothing, but, accommodation entries taken by the assessee and the transaction was a colourable device and arrangement to convert unaccounted money of the assessee under the garb of unsecured loan.”
The tribunal, after considering the submissions confirmed the genuineness of the transaction carried out by the assessee by taking through loan amounts.
The assessee has successfully established by way of submission of very important and relevant documentary evidence, the identity, capacity and credit worthiness of lenders/creditors and genuineness of transaction routed through banking channels.
Moreover the bench held that the assessee has successfully demonstrated by way of sufficient documentary evidence that he has also repaid the loan amount to the respective creditors during subsequent financial periods and this fact has also not been disputed or controverted by the authorities below.
Finally the two member tribunal bench of C.M. Garg, (Judicial Member) and B.R.R. Kumar, (Accountant Member) allowed the appeal filed by the assessee.
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