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2017 (6) TMI 949 - AT - Income TaxUnexplained cash credit u/s 68 - proof of creditworthiness of the creditors and genuineness of the lenders - Held that:- AO examined six persons only and accordingly made addition by forming the opinion that the loans taken by the assessee were non-genuine and bogus. It is also undisputed fact that the AO has allowed interest on these borrowings amounting to ₹ 7,78,282/- during the year. While making the addition of money borrowed from these parties as being bogus and non-genuine. Similar deduction in respect of interest on these unsecured loans was also allowed in the subsequent years. Now it is very strange that how the AO has accepted the transaction in part by allowing the interest on these loans while making the addition for the amount of loans by treating the same as non- genuine and bogus under section 68 of the Act. Moreover, these loans were repaid by account payee cheques in the subsequent years and no more outstanding in the books of account of the assessee. The identity of the creditors have not been doubted whereas the creditworthiness of the creditors and genuineness of the lenders seems to be doubted which becomes meaningless and absurd in the present case as the AO has allowed interest on the borrowed funds in the current years and also in the subsequent years and therefore the order of the ld.CIT(A) confirming the addition u/s 68 in respect of 31 creditors is not correct and cannot be sustained. - Decided in favour of assessee.
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