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2019 (9) TMI 146 - AT - Income TaxAddition u/s 68 - undisclosed cash credit - creditworthiness of share applicants - HELD THAT:- All the lender companies are (i) income tax assessee’s, (ii) they are filing their return of income, (iii) confirmations available on record, (iv) the loan was made by account payee cheques, (v) the details of the bank accounts belonging to the lenders and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee , (vii) the lenders are having substantial creditworthiness which is represented by a capital and reserve as noted above. In the instant case, the credit is in the form of receipt of loan from lending companies. The nature of receipt towards loan is seen from the entries passed in the respective balance sheets of the companies as loan to assessee firm. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of lenders, genuineness of transactions and creditworthiness of lenders. For proving the identity of lenders, the assessee furnished the name, address, PAN of lender companies together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, as we noted supra, these Companies are having capital in several crores of rupees and the investment made in the appellant company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the lenders, so creditworthiness is proved. It will be evident from the paper book that the appellant has even demonstrated the source of money deposited into their bank accounts which in turn has been used by them to lend it to the assessee firm as loan. Hence the source of source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The lending companies have confirmed about the loan in response to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. Assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the lender companies, thereafter the onus shifted to AO to disprove the documents furnished by assessee and it cannot be brushed aside by the AO to draw adverse view which action cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the AO, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. - Decided in favour of assessee
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