The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the onus which lays upon the assessee to explain that the entries made are real and not fictitious, has been duly discharged.
The assessee is engaged in the business of investments and financial activities and has filed its return of income at Rs.96,19,580/- on 26.09.2015 for AY 2015-16 in question. The case was selected for limited scrutiny. As per paragraph 2 of the assessment order, The AO averred that the assessee duly complied with notices, attended before the AO and filed necessary details. The books of account were also produced and test checked as per CASS reasons.
In the course of the assessment, from the tax audit report, the AO inter-alia observed that the assessee has shown squared off unsecured loans to the tune of Rs. 47,72,95,676/- allegedly received from an entity named M/s. Pioneer Fincon Services Pvt. Ltd. (PFSPL). The Assessing Officer considered an amount of Rs.47,72,95,676/- received from PFSPL and credited in the books of the assessee an unexplained credit and added the same total income to the assessee.
Aggrieved, the assessee preferred appeal before the CIT(A) to assail the action of the AO towards additions made under Section 68 of the Income Tax Act. The CIT(A) took note of gist of submissions made on behalf the assessee. Aggrieved by the relief granted by the CIT(A), the Revenue appealed before the Tribunal.
After hearing both the parties, the tribunal noted that there was no need to amplify the findings of CIT(A). Without reiteration of wide ranging observations led by the CIT(A), the bench was convinced that the onus which lays upon the assessee to explain that the entries made were real and not fictitious. Ordinarily, it is difficult to fathom an onus tagged upon the assessee to explain the circumstances as to why third party had needed such funds so long as the transactions are embedded with commercial considerations. Furthermore, the onus towards source in the hands of borrower in relation to repayment entries qua preexisting loans is indeed onerous and can seem be visualized.
The two member bench consisting of Chandra Mohan Garg (Judicial member) and Pradip Kumar Kedia (Accountant member) were thus in agreement with the pith and substance of plea advanced on behalf of respondent assessee and endorsed the action of the CIT(A). Thus the appeal was dismissed.
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