The Tax Publishers2019 TaxPub(DT) 1103 (Rai-Trib) : (2019) 197 TTJ 0044

INCOME TAX ACT, 1961

Section 68

Merely because lender companies had done meagre business or had declared meagre income, the same could not be a ground to disbelieve their creditworthiness especially when their respective balance sheets showed sufficient capital and reserves to advance such loans to assessee-company. Accordingly, addition under section 68 was deleted.

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - AO doubting creditworthiness of lender companies

Assessee received unsecured loans from certain companies. AO doubted creditworthiness of lender companies on the ground that they had done meagre business or had declared meagre income. Accordingly, AO treated loan amount as unexplained cash credit under section 68.Held: So far as creditworthiness of loan creditors was concerned, it was an admitted fact that on the basis of various documents submitted by assessee, AO had issued commission under section 131(1)(d) concerned AO of loan creditors. The concerned AOs of the loan creditors conducted enquiries by issuing summons under section 131 to directors of lender companies and their statements were recorded. The directors in their statements recorded under section 131 had confirmed to have given loans to assessee company and bank statements, PAN, and audited accounts of lender companies were also forwarded by AOs of lender companies to AO of assessee. There was no adverse finding given by concerned AOs of lender companies. Further, from the date of receipt of report from concerned AOs till the date of finalizing of assessment order, AO had not made any further efforts to find out that balance sheets showing creditworthiness of lender companies and transactions made through banking channel were false or untrue. Merely because lender companies had done meagre business or had declared meagre income, the same could not be a ground to disbelieve their creditworthiness especially when their respective balance sheets showed sufficient capital and reserves to advance such loans to assessee-company. Accordingly, addition was deleted.

Relied:CIT v. Dataware (P) Ltd., vide ITA No.263 of 2011, Order, dt. 21-9-2011, CIT v. Kinetic Capital finance Ltd. ITA No. 87/2007, Order, dt. 2-9-2011.

REFERRED : CIT v. Metachem Industries, (2000) 245 ITR 160 (MP) : 2000 TaxPub(DT) 0822 (MP-HC), CIT v. Abdul Aziz (2012) 251 CTR (Chhattisgarh) 58 : 2012 TaxPub(DT) 2354 (Chhattisgarh-HC), Dy. CIT v. Rordni Builders (2002) 256 ITR 360 (Guj) : 2002 TaxPub(DT) 0305 (Guj-HC), CIT v. Jai Kumar Bakliwal (2014) 366 ITR 217 (Raj) : 2014 TaxPub(DT) 1890 (Raj-HC), Aravali Trading Co. v. ITO (2008) 220 CTR (Raj) 622 : 2008 TaxPub(DT) 0495 (Raj-HC). ITO v. Koushal Agarwal, ITA No. 220/BLPR/2010 (Raipur-Trib), ITO v. Gauram Prasad Nishad, ITA No. 101/BLPR/2012 (Raipur-Trib) and CIT v. Ranchhod Jivabhai Nakhava (2012) 208 Taxman 35 (Guj) : 2012 TaxPub(DT) 2351 (Guj-HC).

FAVOUR : In assessee's favour.

A.Y. : 2014-15



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