The Income-Tax Appellate Tribunal, Chennai bench held that an addition to income tax u/s 68 cannot sustain when source of credit is explained with details of creditors.
The appellant was represented by Shri S. Sridhar and the respondent was represented by Shri V. Vivekanandan.
The search and seizure operations under section 132 of the Act took in the residential premises of Shri Pankaj Agarwal, Managing Director of M/s. Suryadev Alloys and Power Pvt. Ltd., documents belonging to the assessee were seized and the Assessing Officer has completed the assessment under section 143(3) r.w.s. 153A of the Act by making an addition of ₹.1,25,00,000/- under section 68 of the Act. On appeal, CIT(A) confirmed the addition made under section 68 of the Act.
The assessee contended that the transactions are genuine as those are received from the lender whose identity was genuine and had filed all the evidence including the name and address of the creditors, confirmation from the parties, financial statements, etc. with the necessary bank statement to prove the genuineness of the transaction. Further contended that the investing company has sufficient sources to explain the investment made to the assessee company.
It was observed that no addition can be made in the assessment framed under section 143(3) r.w.s. 153A of the Act unless, the addition was supported by incriminating material found during the search, if such assessment was unabated/concluded as on the date of search.
Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member observed that the assessee has discharged the onus by filing necessary pieces of evidence and the Assessing Officer failed to adduce evidence to justify his contention. The Coram while allowing the appeal directed the Assessing Officer to delete the addition made under section 68 of the Act.
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