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2021 (10) TMI 215 - AT - Income TaxAddition u/s 68 - Unexplained unsecured loan - failure to reply to summons - whether assessee company has satisfied the three ingredients of section 68 namely:(i) Identity; (ii) Genuineness; and (iii) Creditworthiness, in respect of Lenders/Creditors? - main plank on which the assessing officer made the addition was because the Lenders did not turn up before him - HELD THAT:- Merely because the summons could not be served on these lenders for want of complete addresses or that they failed to comply with the summons, the loans taken by the assessee from them cannot be treated as non-genuine mere particularly when from sufficient documentary evidences furnished by the assessee. Merely because the summons could not be served on these lenders for want of complete addresses or that they failed to comply with the summons, the loans taken by the assessee from them cannot be treated as non-genuine mere particularly when from sufficient documentary evidences furnished by the assessee. AO has not brought on record any finding or report of investigation agency to establish his allegation that impugned lenders were 'paper companies' or found indulged in racket of providing 'accommodation entries'. In absence of such material, we cannot take judicial notice about unfounded allegation in respect of these Lender Companies. Hence, reasons mentioned by the assessing officer in his assessment order, is not sufficient for making the addition under section 68. both the nature and source of the lenders were fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the Lenders. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments, subsequent repayment through banking channel, were placed on assessing officer's record. Accordingly all the three conditions as required u/s 68 of the Act i.e. the identity, creditworthiness and genuineness of the transactions were placed before the assessing officer and the onus shifted to assessing officer to disprove the materials placed before him. Without doing so, the addition made by the assessing officer is based on conjectures and surmises, hence cannot be justified. - Decided in favour of assessee.
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