The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition under Section 68 of the Income Tax Act, 1961 as the loan transaction validated by duly furnishing the identity and creditworthiness of the creditors.
A search and seizure operation was carried out under Section 132 of the Income Tax Act on 26.11.2015 by the Income Tax Department in the case of the assessee. However, no incriminating material relating to the assessment year under consideration was found during the course of the said search action. Thereafter, the assessment was carried out under Section 153A of the Income Tax Act
During the assessment proceedings, the Assessing Officer noticed that the assessee inter alia had received unsecured loans during the year of Rs.3,00,00,000/- from three creditors namely M/s. Leisure Devcon Private Limited, Progress Infra Estate Private Limited and Saffron Devcon Private Limited. The Assessing Officer asked the assessee to prove the identity and creditworthiness of the creditors and genuineness of the transaction.
The Commissioner of Income Tax ( Appeals ) [CIT(A)] has submitted that the assessee had duly furnished all the details pertaining to the loan transactions including documents relating to the identity and creditworthiness of the creditors and also has duly established the nature and genuineness of the transaction. That the financials of the creditors were duly provided.
Mr. S Dutta, representing the assessee has referred to the various documents on record, copies of which have been placed in the paper-book and has submitted that the assessee has duly furnished the ITR acknowledgement of the assessee, computation of income of the assessee, audited accounts of the assessee, relevant portion of the bank statement from where the payment was made to the aforesaid loan creditors
Further submitted that all the documents relating to the creditors were also furnished e.g. covering letter of reply submitted in response to notice under Section 133(6) of Income Tax Act, ITR acknowledgement, audited accounts, ledger for A.Y 2015-16, ledger for entire period till repayment made, account confirmation, bank statements.
The two member bench of the tribunal comprising Rajesh Kumar ( Accountant member ) and Sanjay Garg ( Judicial member ) observed that no incriminating material was found during the course of search action. Even all the creditors have duly confirmed the transactions and also established the source of the credits and the loan being also repaid in a short span of time. The CIT(A), therefore, has rightly held that the addition made by the Assessing Officer was not justified.
ITAT does not find any reason to interfere with the order of the CIT (A) and there was no merit in the appeal of the revenue and the same was accordingly dismissed.
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