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2016 (11) TMI 325 - AT - Income TaxAddition u/s 68 - AO treated the transactions of loan by the assessee as sham transactions for the two reasons i.e. non establishment of the genuineness of transactions and secondly for not proving the creditworthiness of the creditors - Held that:- The parties have responded to the summons issued under section 133 of the Act by the AO, their PAN number and copy of income tax returns have also been submitted. The amount advanced to the assessee has also been reflected in their books. The more peculiar fact is that there was no cash deposited in the accounts of the creditors. The creditors have also explained their source. The assessee has also produced evidences regarding the amalgamation of the Ved Investments and Trading Company Pvt. and Niranwal Credit and Holding Pvt. into Wisdom Engineering Pvt. Ltd. and Flair Engineering Pvt. Ltd. respectively. The assessee therefore has explained the reasons for recording the name of creditors as Wisdom Engineering Pvt. Ltd. and Flair Engineering Pvt. Ltd. in its books of account. So far as creditworthiness of the of the creditor companies is concerned, it has been explained that the creditor companies are legal entities and are already assessed to income tax. The assessee has also explained the source of the creditors also. He has invited our attention to a table to show that an amount of ₹ 10 crores had been advanced by Niranwal Credit and Holding Pvt. to the assessee. The said Niranwal Credit and Holding Pvt. had amalgamated with Flair Engineering Pvt. Ltd. and further that the source of this ₹ 10 crores was the amount received from Sulabhya Engineering Pvt. Ltd. Similarly, an amount of ₹ 16.02 crores was advanced to the assessee by Ved Investments and Trading Company Pvt. which has amalgamated with Wisdom Engineering Pvt. Ltd. The assessee has also explained the source of credits in the account of Ved Investments. Additions made by the AO treating the loans as unexplained is not held to be justified. The same is accordingly ordered to be a deleted. - Decided in favour of assessee
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