2019 (8) TMI 704 - ITAT KOLKATA - Income Tax

Head Note / Extract:
Unexplained credit u/s 68 - unsecured loans receipts - HELD THAT:- Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the loan received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the lender / loan creditor. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, we do not want to interfere in the impugned order of Ld. CIT(A) which is confirmed and consequently the appeal of Revenue is dismissed. Addition of interest on loan granted - Since we have found the loan amount given to the assessee to the tune by M/s. Silver Cross Marketing Pvt. Ltd. as genuine, the interest expenditure booked by the assessee is an allowable expenditure and we note that the interest received from assessee company on the loan has been offered by the lender [M/s. Silver Cross Marketing Pvt. Ltd]. in its return and offered to tax. Therefore, the addition made by AO disallowing the interest claim also has been rightly deleted by the Ld. CIT(A) which action of the Ld. CIT(A) does not deserve to be interfered with. Therefore we confirm the same. - Decided against revenue.