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2019 (10) TMI 303 - AT - Income TaxUnexplained credits u/s 68 - identity, creditworthiness and genuineness of the loan transaction - HELD THAT:- The addition has been made only on the basis of suspicion without looking into the totality of the facts and surrounding circumstances and without the basis of any evidence. As rightly mentioned in his assessment order by the Ld. AO, three things viz. identity of the creditor, creditworthiness of the creditor and genuineness of the transaction have to be proved to treat a loan as genuine. Identity - It is an uncontroverted fact that Smt. Jenita Wallang was not a new creditor. The Assessee had taken loans from her in earlier years and outstanding balance of such loans, as on 01/04/2012, was ₹ 29,50,000/-. In the earlier years for which assessment u/s 143(3) had been made, no adverse finding had been given in respect of the said loan. The requisition letter under Section 133 (6), sent by the AO, by speed post, was duly delivered to the creditor and she had duly sent the reply to the said letter by post. The loan creditor also holds a PAN which was duly quoted by her in her loan confirmation letter. Thus, the identity of the loan creditor was fully established. Creditworthiness of the loan creditor - From the records, it is seen that in course of hearing no efforts were made to assess the financial position of these businesses on which Assessee had relied on to prove the creditworthiness of the loan creditor. Even in the requisition sent by the AO u/s 133 (6), no details were asked about these businesses. As the Assessee had submitted, as proof, copies of the licenses of the creditor's businesses, the AO should have ascertained the financial position of these businesses to accept or of not accept the proof submitted by the Assessee.On perusal of these documents, we hold that the loan creditor, Smt. Jenita Wallang, was a person of means and had creditworthiness to advance the loan in question to the Assessee . From the records, it is seen that in course of hearing no efforts were made to assess the financial position of these businesses on which Assessee had relied on to prove the creditworthiness of the loan creditor. Even in the requisition sent by the AO u/s 133 (6), no details were asked about these businesses. As the Assessee had submitted, as proof, copies of the licenses of the creditor's businesses, the AO should have ascertained the financial position of these businesses to accept or of not accept the proof submitted by the Assessee.On perusal of these documents, we hold that the loan creditor, Smt. Jenita Wallang, was a person of means and had creditworthiness to advance the loan in question to the Assessee. Genuineness of the transaction - AO has not directly verified the loan creditor or the other documentary evidences, such as the copies of the VAT returns of the proprietary concern of the loan creditor, details of deposits in the bank statement of the loan creditor, factum of the loan creditor being a bona fide tribal person, genuineness of the sale deed etc. despite being given an opportunity to do so.To prove the creditworthiness of Smt. Jenita Wallang the Assessee had furnished copies of the licenses of her Bottling plant and Bonded Warehouse business issued by the Govt. of Meghalaya. The fact of giving of the above loan was also confirmed by Smt. Wallang directly to the ITO in response to ITO's letter sent to her for this purpose.Smt. Wallang has PAN Number and loan has been given by account payee cheque. The assessee had duly proved the identity of Smt. Jenita wallang, her creditworthiness and the genuineness of the loan transaction.It is an uncontroverted fact that Smt. JenitaWallang was not a new creditor. The Assessee had taken loans from her in earlier years and outstanding balance of such loans, as on 01/04/2012, was ₹ 29,50,000/-. In the earlier years for which assessment under Section 143(3) had been made, no adverse finding had been given in respect of the said loan. We note that assessee has proved all the three ingredients viz: identity, creditworthiness and genuineness of the loan transaction of ₹ 80,00,000/- given by the loan creditor, Smt. Jenita Wallang to the assessee. Hence, assessee has discharged his primary onus u/s 68.That being so, we decline to interfere with the order of Id. C.I T.(A) in deleting the aforesaid addition. His order on this addition is therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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