Loading judgment…
Facts
The assessee, Mahadev Dairy Pvt. Ltd., appealed against the CIT(A)'s order for AY 2014-15, which sustained an addition of Rs. 28 lakhs (as submitted by DR) under Section 68 of the Income-tax Act, 1961. This addition pertained to unexplained cash credits representing unsecured loans from Sh. Kuldeep Nagar, with lower authorities citing the assessee's failure to prove genuineness and creditworthiness.
Held
The Tribunal found merit in the assessee's appeal, noting that the unsecured loan of Rs. 25 lakhs was from a promoter, Sh. Kuldeep Nagar, who is assessed in the same jurisdiction. The Tribunal held that the lower authorities failed to examine Sh. Nagar's creditworthiness and capacity to advance such loans, and the assessee successfully discharged the onus regarding identity, genuineness, and creditworthiness of the loan.
Key Issues
Whether the addition of unexplained cash credits under Section 68 for unsecured loans from a promoter can be sustained when the assessee has discharged the onus of proving identity, genuineness, and creditworthiness, and the lower authorities failed to examine the lender's capacity to lend.
Sections Cited
Section 143(3), Section 68, Income-tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI M. BALAGANESH
This assessee’s appeal for assessment year 2014-15, arises against the Commissioner of Income Tax (Appeals)-6 [in short, the “CIT(A)”], Delhi’s order dated 30.09.2019 passed in case No. CIT(A) Delhi-6/10163/2019-20 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Case called twice. None appears at the assessee’s behest. We accordingly proceeded ex-parte against the assessee.
Learned Departmental Representative vehemently submits during the course of hearing that both the lower authorities have rightly invoked section 68 unexplained cash credits addition of Rs.28 lakhs representing unsecured loans from Sh. Kuldeep Nagar. Our attention is further invited to the Assessing Officer’s assessment discussion dated 07.12.2016 that the assessee has failed to prove the genuineness/creditworthiness of the said credits coming to its books in the relevant previous year. And also, that Sh. Kuldeep Nagar’s bank account has witnessed cash deposits followed by the corresponding loans given to the assessee.
We have given our thoughtful consideration to the assessee’s foregoing sole substantive grievance as well as both the lower authorities’ respective discussions making the impugned addition. We find no reason to disagree with the assesee’s instant sole substantive grievance as the impugned unsecured loan has come from none other than its promoters as evident from CIT(A)’s lower appellate discussion in paragraph 4.2 and the fact that he is also assessed in the same jurisdiction. It is further noticed that both
2 | P a g e the learned lower authorities have nowhere examined Sh. Nagar’s creditworthiness in light of the cash in hand available in his books as well so as to question his capacity to advance such loans to his own company. We accordingly see merit in the assessee’s sole substantive grievance once it has discharged all the three aspects of identity, genuineness and creditworthiness of impugned unsecured loan amount of Rs.25 lakhs for being subject matter of adjudication before us. The assessee succeeds in this instant sole substantive grievance therefore.