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M/s. Bharat Motor Parcel Service Versus ACIT, Circle-1, Rajahmundry

2016 (6) TMI 92 - ITAT VISAKHAPATNAM

Addition u/s 68 towards unexplained credits - proof of creditworthiness - Held that:- On verification of the bank statement filed by the assessee, we noticed that the parties have deposited cash on the same day when the money has been transferred to the assessee bank acount. The parties have not explained how a person working in abroad has deposited cash in to the normal savings Bank account maintained in India, when he is not permitted to operate normal bank account in India. Similarly, his wif .....

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of income to justify the loan of ₹ 5 lakhs, the assessee has failed to discharge his initial burden of proving creditworthiness of the parties.

The creditors have deposited cash and transferred the same to the assessee bank accounts. Except these two transactions, they are not having any considerable bank transactions in their bank account. Under these circumstances, we are of the opinion that the assessee has not discharged its burden by proving the creditworthiness of the part .....

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e - I.T.A. No. 588/Vizag/2013 - Dated:- 6-5-2016 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri G.V.N. Hari, AR For the Respondent : Smt. D. Komali Krishna, DR ORDER Per G. Manjunatha, Accountant Member This appeal filed by the assessee is directed against the order of CIT(A), Visakhapatnam dated 30.7.2013 and it pertains to the assessment year 2008-09. 2. The brief facts of the case are that the assessee is a partnership firm which is e .....

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ment proceedings, the A.O. noticed that the assessee has shown loan creditors of ₹ 15 lakhs. To ascertain the correctness of the claim made by the assessee, the A.O. issued a show cause notice and asked to furnish the details of loan creditors including confirmation letters from the parties. In response to show cause notice, the assessee has submitted that it is accepted the unsecured loans from parties by way of demand draft and cheques. The assessee also filed a confirmation letters from .....

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On verification of the details furnished by the assessee, it was noticed that on the date of transfer of amount to the assessee bank account, the parties have deposited cash into their bank account. Prior and subsequent to this date, the parties have not done any transactions in their bank account. Therefore, opined that the genuineness of the transaction and the capacity of the parties to advance loan to the assessee is in doubtful. With these observations the A.O. made additions of ₹ 15 .....

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mply, disbelieved the confirmation letters and made additions u/s 68 of the Act. It is further submitted that with regard to amount received from two persons namely Sri T. Bosu Babu and G. Vijaya Lakshmi who happened to be husband and wife, shri T. Bosu Babu is working in Antario and the loan has been given out of his past savings. The payment has been made through account payee cheque and the parties have confirmed the loan transactions. Therefore, the A.O. was not correct in coming to the conc .....

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xplanations furnished by the assessee held that the assessee has not discharged initial burden cast upon it by filing identity, genuineness of the transactions and creditworthiness of the parties. The CIT(A) further held that with regard to the credit in the name of T. Bosu Babu and Smt. G. Vijaya Lakshmi, it was not explained how a person working in Antario had sent a letter on a plain paper and what was his source for cash deposit in his account when he was a non-resident. It is further observ .....

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vancing an amount of ₹ 4 lakhs remains in doubt. The CIT(A) further observed that mere filing of confirmation letter would not discharge the burden of the assessee. It is settled law that the assessee is required to prove the identity, creditworthiness and genuineness of the loan transactions. The assessee has failed to prove the creditworthiness of the so called creditors and genuineness of the transactions. With these observations, confirmed the additions made by the A.O. Aggrieved by th .....

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ut examining the details simply disbelieved the confirmation letters filed by the respective parties and made additions u/s 68 of the Act. The Ld. A.R. further argued that the assessee has accepted loans from four parties. Out of the four parties, two persons namely Shri T. Bosu Babu and Smt. G. Vijaya Lakshmi have confirmed the loan transaction by filing the confirmation letters. It is further submitted that the assessing officer has issued summons to the parties to appear before him on 30.12.2 .....

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gricultural land and also stated that they have advanced the money out of their agricultural income. The transaction has been made in banking channel. Therefore, the A.O. was not correct in doubting the genuineness of the transactions. The assessee has discharged its initial burden by filing the necessary confirmation letters. The identity of the parties has been proved. The genuineness of the transactions and creditworthiness of the parties also have been proved. Once all the ingredients of sec .....

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re filing of confirmation letters would not discharge the burden cast upon the assessee. As per section 68 of the Act, the assessee has to discharge initial burden cast upon it by filing identity, genuineness of the transactions and creditworthiness of the parties. The A.O. observed that the assessee has failed to prove the transactions by necessary evidence. It is the contention of the assessee that it has discharged the initial burden cast upon it by filing necessary confirmation letters. The .....

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f or explanations offered by the assessee is not in the opinion of the A.O. satisfactory, then sum so credited may be charged to income tax as the income of the assessee of that previous year. A plain reading of section 68 of the Act makes it clear that any sum found credited in the books of accounts of the assessee, it is the duty of the assessee to prove to the satisfaction of the A.O. that the credits are genuine. It is the responsibility of the assessee to prove the identity, genuineness of .....

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uineness of the transactions and the creditworthiness of the parties are in doubtful. Out of the four loan creditors, two creditors namely Shri T. Bosu Babu and his wife Smt. G. Vijaya Lakshmi have advanced an amount of ₹ 10 lakhs. It is the claim of the assessee that Shri T. Bosu Babu is working in abroad and the money has been given out of his past savings. The assessee filed a paper book containing the confirmation letters filed by the parties along with their bank statement. On verific .....

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ication of her bank statement, we find that the same day she had deposited cash and transferred the money to the assessee bank account. Except these two transactions, she had not made any substantial transactions in her bank account. We further observed that she has not assessed to income tax and she does not have any source of income to advance loan to the assessee. When she does not have any source of income to justify the loan of ₹ 5 lakhs, the assessee has failed to discharge his initi .....

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