2011 (7) TMI 1251 - AT - Income Tax

Summary

Issues involved: Addition under section 68 of the Income-tax Act, 1961.

Summary:
The appeal was against the order of the Commissioner of Income-tax (Appeals) regarding an addition of Rs. 8 lakhs sustained under section 68 of the Act. The assessee, an individual deriving income from share trading, received a loan from M/s Global Marketing. The Assessing Officer treated the loan as an unexplained cash credit. The Commissioner of Income-tax (Appeals) upheld this decision, leading to the appeal.

The assessee contended that the identity, genuineness, and creditworthiness of the creditor were proven. The loan was received via an account payee cheque, confirmed by the creditor. The assessee argued that failure to explain certain credit entries in the creditor's bank account should not be a basis for non-compliance with section 68. Various judgments were cited to support this argument.

The Revenue defended the addition under section 68, stating the assessee's explanation was unsatisfactory. The Tribunal found that the assessee had discharged the burden of proving the creditor's creditworthiness. The creditor's partner explained the income sources and loan details satisfactorily. The Tribunal held that the assessee's onus was to establish identity, creditworthiness, and genuineness, not the creditor's source of funds. Thus, the addition of Rs. 8 lakhs was deemed unwarranted, and the order to delete the addition was given.

Decision:
The Tribunal allowed the appeal, setting aside the Commissioner of Income-tax (Appeals) order and directing the deletion of the addition.