2023 (1) TMI 762 - AT - Income Tax

Addition u/s 68 - unsecured loan - loan transaction as bogus - Whether creditworthiness of the creditor(s) be decided by the AO of the assessee? - HELD THAT:- It is an undisputed fact that the assessee during the assessment proceedings provided the copies of the Income Tax Returns, Confirmation Letters, Bank Statement of M/s. Rudra Enterprise and also produced copies of the interest payment on the unsecured loan with TDS for the subsequent Assessment Year 2017-18. CIT(A) has correctly followed the case of CIT vs. Ranchhod Jivabhai Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] wherein it was held that the primary onus had been discharged by the assessee by producing the copies of the Income Tax Returns, Bank Statements and Confirmation Letters of the creditors. The creditworthiness of the creditor(s) cannot be decided by the AO of the assessee.

AO of assessee can get the matter investigated through the AO of the creditors. The AO of assessee cannot become AO of the creditors. It is not the case of AO that the impugned amount is assessee's own money generated out of books of account and the same is introduced in its books of accounts through bogus creditors.

If that is so, what evidences AO has collected to place it on record. Once confirmations have been filed, further action, if any, is required to be taken in case of creditor and not in case of assessee. Explanation about 'source of source' or 'origins of origin' cannot be asked from the assessee while making inquiry under section 68 as per ratio laid down in the case of DCIT v. Rohini Builders [2001 (3) TMI 9 - GUJARAT HIGH COURT].

We have no hesitation in rejecting the grounds raised by the Revenue. Thus, we do not find any infirmity in the order passed by the Ld. CIT(A), therefore it does not require any interference. Appeal filed by the Revenue is hereby dismissed.