The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that income addition under section 68 of the Income Tax Act,1961 is not allowable when the genuineness and Creditworthiness of the creditor are proven with the Bank statement and other evidence.
M/s Ashrita Construction Pvt. Ltd, the assessee is a private limited company engaged in the business of construction activity. The assessee maintained regular books of accounts which are duly audited and original returns of income were filed. A search action u/s. 132 of the Act was conducted in the case of Venus Group of Ahmedabad on 10.03.2015, various premises were covered u/s. 132/133A of the Act, during the search and various incriminating documents, were seized.
It was challenged that CIT(A) erred in deleting the addition of Rs. 5 Crores made u/s. 68 of the Act and the same is liable to be restored.
It was observed that the addition made by the Assessing Officer invoking Section 68 does not hold good since the assessee has filed the confirmation letter from the lender, Bank statement from the assessee, Income Tax Return and statement of the total income of the lender namely Mr Rajesh Vaswani proprietor of M/s. Sunderdeep Builders.
The assessee has discharged its initial onus namely the identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. Further, the Assessing Officer has disbelieved Rs. 5 Crores received from the creditor and not doubted the Rs. 30 Crores received from the same lender.
The Assessing Officer has not doubted the interest payment of Rs. 1,83,79,553/- as against the above loan, with appropriate TDS made by the Assessee. Therefore, the addition made by the Assessing Officer u/s. 68 of the Act is not sustainable in law.
While deleting the appeal of the revenue, a Coram comprising of Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member upheld the order of the CIT(A), which deleted the addition made by the Assessing Officer u/s. 68 of the Act.
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