2019 (6) TMI 930 - AT - Income Tax

Addition u/s 68 - proof of identity, creditworthiness and genuineness of the loan obtained - HELD THAT:- Each of the two creditors have sufficient funds and assessee has lead all the evidences to discharge its onus under section 68 in respect of identity, creditworthiness and genuineness of the loan obtained by it, because the lenders had sufficient income at their disposal to provide loans to the assessee which is substantiated by their return of income.

Lenders are either Pvt. Ltd. Company or a Public Company whose details are available on public domain and the loans have been advanced by the companies through banking channels or from their own funds. However, there is no allegation of the AO that there was cash deposits in the bank accounts by these lenders before providing loans to the assessee and there was no adverse information with the AO in respect of the lenders. CIT(A) has rightly deleted the addition - Decided in favour of assessee.

Addition u/s 68 - creditor had little or no income - HELD THAT:- The judgment of the Supreme Court in the case of NRA Iron and Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] and Delhi High Court in Pr. CIT vs. NDR Promoters Pvt. Ltd. [2019 (1) TMI 1089 - DELHI HIGH COURT] are different on facts and distinguishable

In the present case, the assessee company has taken loan and on which it is paying interest so there is a justification for the lender company to advance money to the assessee company. Such loan and interest has been duly reflected by the lender company. Nothing adverse has come against the lender company. Further, bank statement of lender company have been submitted to establish the source of the funds along with the balance sheet and the profit and loss account.

Evidences and the explanation has been rejected by the AO merely on the basis of doubt without bringing any material to discredit the document and information on record. CIT(A) has also arbitrarily rejected the explanation of the assessee company ignoring the above facts. The assessee has lead all evidences in support of its contention and the identity, creditworthiness and genuineness of the transaction stand established and hence the addition made by the AO is directed to be deleted. In the result, the appeal of the assessee is allowed.