The Delhi Bench of Income Tax Appellate Tribunal (ITAT), has held thatcircuitous rotation of unaccounted money is not a genuine loan transaction and upholds addition u/s 68.
The appellant, M/s South West Drilling and Infrastructure Ltd.is engaged in the business of transportation. During the year under consideration, the assessee company had received loans amounting to Rs.45 lakhs from M/s Satya Lakshmi Trade Link Pvt. Ltd.
The company filed its return showing a total income of Rs.31,154/- andthe bank account of the company clearly shows sequential credit and debit entries. The Assessing Officer added the loan amount to the total Income as unexplained cash credit u/s 68 of the Income Tax Act alleging that the appellant fails to prove the creditworthiness of the company to extend the loan and commission u/s 131. The CIT(A) upheld the assessment order.
The Coram of Mr. Shamim Yahya, Accountant Member, and Mr. Chandra Mohan Garg, Judicial Member has observed that the lender has no identity in as much it is non-existent its sources of credits itself are share premium and there is no creditworthiness of the lender company. Further observed It as a clear-cut case of circuitous rotation of unaccounted money and being such rotation of unaccounted money is absolutely not a genuine loan transaction.
The Tribunal held that “we do not find any infirmity in the orders of the Revenue authorities below and hence we uphold the same”.
Mr. Abhishek Kumar appeared on behalf of the revenue.
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