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2021 (3) TMI 220 - AT - Income TaxAssessment of trust - addition being loans from three parties - whether deemed income u/s 68 is applied for charitable purposes? - assessee society has been granted Registration under section 12AA and also granted exemption under section 80G - HELD THAT:- The assessee has taken the loans from the above 05 parties out of which 03 are the Companies. The assessee admittedly filed confirmation of all the creditors, their ITRs, bank statements, ledger accounts and wherever balance-sheets of the companies were prepared have been filed, copies of the same are also filed in the paper book. The creditors have confirmed giving loan to the assessee through banking channel and their bank accounts shows sufficient balance with them to give loan to the assessee. In the balance-sheet of 03 creditors sufficient balances are available to show their net worth to give loan to the assessee. The loans are subject to payment of interest earned and TDS has also been deducted. Details of the TDS are filed and the assessee has filed the details to show that all the loan amounts have been utilised towards objects of the assessee society. Also loans have been later on returned to the parties. Initial onus upon the assessee to prove identity of the creditors, their creditworthiness and genuineness of the transaction have been discharged by the assessee. The decisions relied upon by the Learned Counsel for the Assessee before the authorities below clearly supports the explanation of assessee that assessee received genuine loans into the matter which were later on returned to the concerned parties. It may also be noted here that assessee has registration under section 12AA which is in force in assessment year under appeal and A.O. has also computed the income of the assessee as per Section 11 of the Income Tax Act, 1961 and accepted the NIL returned income filed by the assessee because the amount more than 85% have been incurred by the assessee towards its objects. Since assessee came into existence in part of the assessment year under appeal and it was the first year of charitable activities conducted by the assessee, therefore, it is highly unbelievable that assessee would earn huge undisclosed income in assessment year under appeal. Thus, no addition could be made against the assessee of such nature in assessment year under appeal particularly when the nature of the activities of the assessee is admittedly mentioned in the assessment order to run an Educational Institution. It is well settled Law that assessee need not to prove source of the source. A.O. entirely on different reasons that there is a common Director in 03 companies and common address disbelieved the explanation of assessee. It may not be relevant criteria to decide the issue under section 68 - A.O. has not brought any evidence against the assessee on record to disbelieve the documentary evidences. Whatever enquiry was conducted through Income Tax Inspector does not appear to have been confronted to the assessee or explanation of assessee have been called for. Therefore, such material cannot be used in evidence against the assessee - Decided in favour of assessee.
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