ITR Reflecting PAN, Bank Statement & Confirmation Of Creditors Duly Adduced: Delhi ITAT Deletes Addition Based On Unsecured Loan

On finding that AO has rejected the evidences furnished by the assessee relating to bank statement and confirmation of the creditors, without establishing any falsity in the same, the Delhi ITAT deleted the addition made by AO u/s 68 of the Income Tax Act, 1961.

The Bench of Challa Nagendra Prasad (Judicial Member) and B.R.R. Kumar (Accountant Member) observed that, “The AO has disregarded the creditworthiness of the lenders stating that they did not have sufficient sources or that their income is dispropo rtionate to the loan advanced without making any verification in the case of the depositors. During the course of assessment proceedings and through additional evidence, the appellant has submitted the ITR reflecting the PAN and address details, relevant bank statement and confirmation of the creditors. Thus, the assessee can be said to have discharged the onus laid upon them.” (Para 11)

As per the brief facts of the case, the assessee's return was selected for scrutiny under CASS, wherein AO found that the assessee had received unsecured loan from twenty-two individuals and three HUF. The AO issued notice u/s. 133(6) to all the parties and only five parties had replied. The AO held that, the parties do not have creditworthiness to extend unsecured loans to the assessee. Hence, relying on the judgment of the High Court of Delhi in the case of Titan Securities Ltd. in ITA No. 263/2012 the AO held that, the assessee failed to establish the creditworthiness of the parties and made addition u/s 68. The CIT(A) found that the assessee has furnished all the required documents and deleted the addition made by AO.

The Bench noted that the assessee has filed the confirmation of few parties and copy of acknowledgement of their income tax return for various assessment year to prove the genuineness of the transaction and creditworthiness of the parties.

The Bench further found that the CIT(A) called remand report from the AO on the additional evidences filed and also examined the submission of the assessee on the comments of the AO on the remand report.

The Bench observed that the assessee has furnished all the required documents during course of assessment and the AO has disregarded the creditworthiness of the lenders stating that they did not have sufficient sources or that their income is disproportionate to the loan advanced without making any verification in the case of the depositors.

Therefore, on finding that AO is not justified in treatment of unsecured loans received u/s. 68, the ITAT dismissed the Revenue's appeal.

Counsel for Appellant/ Department: Vivek Kumar Upadhyay

Counsel for Respondent/ Taxpayer: Sampath

Case Title: ACIT verses M/s. Dayal Steel P. Ltd

Case Number: ITA No. 9121/Del/2019

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