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2022 (7) TMI 511 - HC - Income TaxAddition u/s 68 - Unsecured loans - loans made by the Assessing Officer qua loans advanced - non-compliance of notices u/s 133(6) - HELD THAT - A perusal of the paperbook reveals that CIT(A) and ITAT after examining the copies of audited financial statement acknowledgement of return of income confirmation from lender bank statement of lender have held that the lenders are entities duly assessed to tax and have made unsecured loans through banking channels which fact has not been denied nor rebutted in the assessment order. CIT(A) and ITAT have also categorically held that the Assessee had furnished complete details and evidences to discharge the burden in respect of unsecured loans reflecting in the financial statement of the assessee-company. It is settled law that non-compliance of notices under Section 133(6) of the Act to all entities giving unsecured loans cannot be the sole basis to make additions under Section 68 of the Act. Consequently this Court is of the view that it would not be justified in reversing in second appeal the concurrent finding of facts recorded by two authorities below especially when the said findings suffer from no perversity. See Ram Kumar Aggarwal Anr. Vs. Thawar Das (through LRs) 1999 (8) TMI 1008 - SUPREME COURT and State of Haryana Ors. Vs. Khalsa Motor Limited Ors 1990 (8) TMI 416 - SUPREME COURT .
Issues: Challenge to ITAT Order Dismissing Cross Appeal on Unsecured Loans
Analysis: The High Court dealt with an Income Tax Appeal challenging the ITAT's Order that dismissed the cross appeal filed by the appellant regarding unsecured loans for the Assessment Year 2015-16. The appellant contended that the CIT(A) and ITAT erred in deleting the additions of unsecured loans made by the Assessing Officer concerning various lenders. The appellant argued that the genuineness, creditworthiness, and identity of the lenders needed more than mere paperwork to be established. The Court observed that the CIT(A) and ITAT had examined the audited financial statements, return of income acknowledgments, lender confirmations, and bank statements. They found that the lenders were entities assessed to tax and had provided unsecured loans through banking channels. The Court noted that the Assessee had furnished complete details and evidence to discharge the burden regarding the unsecured loans reflected in the financial statements. The Court emphasized that non-compliance with notices under Section 133(6) of the Income Tax Act to all entities providing unsecured loans could not be the sole basis for adding under Section 68 of the Act. Referring to legal precedents, the Court stated that it would not be justified to reverse the concurrent factual findings of the lower authorities unless they suffered from perversity. Therefore, the Court dismissed the appeal as it lacked merit. In conclusion, the High Court upheld the decision of the lower authorities regarding the unsecured loans, emphasizing the importance of establishing the genuineness and creditworthiness of lenders beyond mere paperwork and highlighting that non-compliance with notices alone could not be a basis for additions under the Income Tax Act. The appeal was dismissed for lacking merit, with reference to established legal principles.
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