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2020 (11) TMI 937 - AT - Income TaxAddition u/s 68 - Loan taken from shell company - HELD THAT:- Assessee is engaged in the business of providing security personals consisting of security guards to provide security to various industries, individuals etc. During this year, Assessee has taken unsecured loans from 7 parties to the extent of ₹ 6 crores and the details are already placed on record. All these companies gave the unsecured loans through the banking channel and the assessee has already declared the details of the parties in its tax audit report with the details like address, PAN and details of loan taken. In order to verify, the assessing officer issued the show cause notice and summons to all the parties. Assessee has submitted all the relevant information required to substantiate that the transactions are genuine. The assessee has received the funds through banking channel and recorded the same in its books of account and filed relevant information in order to prove the identity by filing PAN and address of the parties, in few cases the parties have moved their place of work and upon enquiry assessee was able to bring on record the present address. On record that the parties are in existence as per the ROC records and they are traceable with the fact that they’ve filed the PAN detail and letter of confirmation. As discussed above, as long as the assessee submits the PAN and other details to trace the parties from whom assessee has taken unsecured loans and as per the financial records, all the parties are in a position to lend money to the assessee and the transactions are routed thru banking channel and there are no findings on record of the revenue that there is no involvement of cash deposits in the immediate past to the unsecured loan transaction. There is no dispute with regard to utilization of funds in the business and applied for the business purpose. As long as it is utilized in the business and the assessee has demonstrated that it has repaid the same along with the relevant interest, it does demonstrate that the present transaction made by the assessee is proper and for the purpose of business, therefore the transaction can only be treated as genuine business transaction. The genuineness has to be seen in two aspects, one, whether it is sourced from the concerns, who can be traced and second, whether it is sourced for the business requirement and utilized for the purpose of business. In the given case, the parties can be traced and it is utilized for the purpose of business. Therefore all the criteria mentioned in the provisions of section 68 were fulfilled by the assessee and we do not agree with the tax authorities who assessed the income of the assessee with the presumption and assumption, they also applied criteria for assessing the introduction of share capital and premium with the unsecured loan taken by the assessee, further applying the concept of human probabilities in the present transaction is far-fetched and it demonstrate that they rely on presumptions. We allow the grounds raised by the assessee relating to addition u/s 68 - Decided in favour of assessee.
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