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2016 (2) TMI 712 - DELHI HIGH COURT

2016 (2) TMI 712 - DELHI HIGH COURT - TMI - Addition u/s 68 - Held that:- Assessee has not been able to discharge the initial onus of proving the creditworthiness of the six lenders. The mere fact that the Assessee had produced the bank account statements of the six lending parties would not per se relieve it of the burden particularly if these bank accounts gave rise to further questions regarding the creditworthiness of the six lenders. For instance, at least three of the lenders were not paid .....

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s as much as establishing their financial capacity to advance the sums in question to the Assessee. - Decided against assessee - ITA No. 79/2016 - Dated:- 17-2-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellant : Mr. Ajay Vohra, Senior Adv. with Ms. Kavita Jha and Mr. Vaibhav Kulkarni, Advs For the Respondent : Mr. Ashok K. Manchanda, Senior Standing Counsel with Mr. Vibhooti Malhotra, Junior Standing Counsel and Mr. Aamir Aziz, Adv ORDER 1. This appeal under Section 260A of the Income .....

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ficer ('AO') by the order dated 29th December 2008, of a sum of ₹ 2.40 crore under Section 68 of the Act. 3. The Appellant/Assessee, which is a private company, states that during the relevant previous year, it had taken unsecured loans of ₹ 4,04,30,000/- from thirteen parties for business purposes. The Assessee filed its return on 30th November, 2006, declaring nil income. The return was picked up for scrutiny. The AO by the assessment order dated 29th December 2008, passed .....

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otal 2,40,00,000/- 4. Aggrieved by the above order, the Assessee approached the CIT(A) and filed, in respect of the above six parties, the ledger accounts of the parties in the books of the Assessee, Income Tax Returns (ITRs) of the parties, photocopies of the cheques by which loans had been received by the Assessee, confirmation letters from all the six loan creditors, balance sheets of Nirvana India Pvt. Ltd. ('NIPL') and Cactus Menswear Fashion Pvt. Ltd. ('CMFPL') along with r .....

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Accordingly while setting aside the order of the CIT(A), the ITAT remanded the matter to the CIT(A) for a fresh decision to give a specific finding regarding the creditworthiness of the loan creditors. 6. It is stated that in the assessment proceedings before the CIT(A), the Assessee again produced all the relevant evidence including confirmation letters from the parties, ITRs, bank statements, etc. 7. By the order dated 17th January 2013, the CIT(A) came to the following conclusions: a. In fou .....

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the bank account of Gauri Gupta there were large deposits on 27th March, 2006 and 24th April, 2006, following which there was a loan of ₹ 27,25,000/- given to the Assessee. Further the ITR did not specify the nature of the income and the creditworthiness of the party could not be established. d. The bank account of Navneet Gupta also showed that immediately preceding the advancing of the loan to the Assessee large amounts had been deposited in the account. e. Likewise only a few days prior .....

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rthiness. g. No interest was paid to CMFPL, NIPL and Parul Gupta on the loans stated to have been borrowed. It was difficult to imagine that the said unsecured loans could have been given on genuine grounds without the payment of interest. 8. The CIT(A), therefore, concluded that the Assessee was not in a position to establish the credit worthiness of the six parties to the extent that they had any regular source of income or capability for advancing the loans. Further the circumstances indicate .....

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hat the Assessee had not discharged the onus of establishing the credit worthiness of the above six parties. 10. Mr. Ajay Vohra, learned Senior Advocate, appearing for the Assessee made an earnest attempt to demonstrate that the CIT(A) had committed an error of law in failing to appreciate that the Assessee had discharged its onus of proving the creditworthiness of the six lending parties once it produced the bank statements, ITRs and wherever applicable the balance sheet and the Profit & Lo .....

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