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ITO, Ward-1, Kakinada Versus M/s. Aditi Associates

2016 (8) TMI 469 - ITAT VISAKHAPATNAM

Addition u/s 68 - addition towards credits brought forward from last year - Held that:- 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, assessee offers no explanations about nature and source of the credits, then the sums found credited in the books of accounts is taxable during that financial year. In the present case on hand, on perusal of the facts available on record, we noticed that the assessee has accepted loans .....

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during the financial year 2009-10. The CIT(A) after considering the relevant details deleted the additions made by the A.O. We do not see any error or infirmity in the order passed by the CIT(A). - Decided against revenue - I.T.A.No.594/Vizag/2014, C.O. No.11/Vizag/2015 - Dated:- 17-6-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Smt. D. Komali Krishna,DR For The Respondent : Shri G.V.N. Hari, AR ORDER PER G. MANJUNATHA, Accountant Member .....

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-11 on 16.12.2010 declaring total income of ₹ 1,08,158/-. The case was selected for scrutiny and accordingly, notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was issued. In response to notice, the authorized representative of the assessee appeared from time to time and furnished books of accounts and other information called for. During the course of assessment proceedings, the assessing officer noted from the assessee s balance sheet for the year en .....

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Out of the 9 loan creditors, 4 creditors have been accepted by the A.O., stating that the creditors have discharged their burden cast upon by filing the necessary proof. However, in respect of remaining 5 creditors, the A.O. observed that in the statement recorded, the creditors have stated that they have advanced loan to the firm and the sources for the said loan was borrowed from their friends. The A.O. further observed that from the books of accounts of the assessee and confirmation letter f .....

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therefore made additions of ₹ 55,63,980/-. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee has filed written submissions along with confirmation letters, statement of unsecured loans for the year 2008-09 and 2009-10 and copies of relevant ledger accounts of loan creditors. The assessee further submitted that loans in the name of 5 persons are accepted during the financial year 2008-09 and during the financial year 20 .....

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assessee held that the amount represents unsecured loans are borrowed in the financial year 2008-09, but not in the financial year 2009-10. The assessee has re-grouped the individual loans accounts into these 5 person s accounts by passing journal entries in the books of accounts during the financial year 2009-10 without any fresh credits. As the impugned loan borrowings have taken place in the year 2008-09 and there was no fresh borrowings in the subject assessment year and also the transfer o .....

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also have no creditworthiness, except stating that they have mobilized the sums from their friends. The D.R. further argued that the CIT(A) ought to have appreciated the fact that the A.O. after thorough examination of facts has disallowed the amounts grouped to 5 persons out of the total loan from 9 persons on the basis of statements given by these 5 persons. The D.R. further argued that while deposing before the A.O., these 5 creditors have stated that they have invested in the partnership fi .....

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ons are bogus. 5. On the other hand, the Ld. A.R. for the assessee strongly supported the order of CIT(A). The A.R. further submitted that the assessing officer should have considered the fact that the creditors having enough sources to advance monies to the partnership firm. The creditors have filed confirmation letters and also proved the sources for loans given to partnership firms. The A.R. further argued that the assessing officer failed to appreciate the fact that none of the credits are r .....

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hrough the orders of the authorities below. The A.O. made additions u/s 68 of the Act towards unsecured loans. The A.O. was of the opinion that the assessee has not proved the genuineness of the transactions and creditworthiness of the parties in respect of these 5 creditors out of 9 creditors. The A.O. further observed that the creditors have admitted that they themselves have invested the money in the partnership firm out of the borrowings from their friends and relatives in last 6 months that .....

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during the financial year 2009-10. 7. The issue before us is under the facts and circumstances of the case, the A.O. was right in invoking the provisions of Section 68 of the Act, to make addition towards credits brought forward from last year. Sec. 68 provides for addition, where any sum is found credited in the books of assessee maintained for the previous year and the assessee offers no explanations about the nature and source thereof, or explanations offered by the assessee is not in the op .....

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