Loading judgment…
Facts
The assessee, a partnership firm, challenged the CIT(A)'s order which upheld additions under Section 68 of the Income Tax Act, 1961, for unsecured loans received from three individuals: Brham Pal Singh (Rs. 7,50,000), Lekh Raj Singh (Rs. 13,00,000), and Naresh Chauhan (Rs. 6,50,000), after the AO had initially added an aggregate of Rs. 79,45,130/-. The assessee had submitted additional evidence to prove the genuineness and creditworthiness of these lenders.
Held
The Tribunal deleted the additions made in respect of Brham Pal Singh and Lekh Raj Singh, finding the assessee had sufficiently proved their creditworthiness and genuineness, and emphasizing that the assessee is not required to prove the "source of source." However, the addition related to Naresh Chauhan was confirmed, as the Tribunal agreed with the CIT(A) that the lender's creditworthiness for advancing Rs. 6,50,000/- was not adequately established.
Key Issues
Whether the CIT(A) was correct in upholding additions under Section 68 of the Income Tax Act, 1961, for unsecured loans from three specific lenders when the assessee had furnished evidence regarding their genuineness and creditworthiness.
Sections Cited
68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “G”, DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
अपीलाथ� �ारा/ Appellant by : Shri R Navneet Nair, Advocate �ितवादी�ारा/Respondent by : Shri Anuj Garg, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 24/04/2024 घोषणा क� ितिथ/ Date of pronouncement : 10/06/2024 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Dehradun dated 27.02.2015, for the Assessment Year 2010-11.
(A.Y.2010-11) 2. The assessee in appeal has assailed the findings CIT(A) in upholding addition u/s. 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) in respect of following unsecured loans:
1. 1. Brham Pal Singh 7,50,000/- 2. Lekh Raj Singh 13,00,000/- 3. Naresh Chauhan 6,50,000/- 3. Shri R Navneet Nair, appearing on behalf of the assessee submitted that the assessee is a partnership firm. During the period relevant to assessment year under appeal, the assessee had taken unsecured loans from various parties. The Assessing Officer (AO) made addition u/s. 68 of Act, in respect of all unsecured loans aggregating to 79,45,130/- .
4. Aggrieved by the assessment order dated 28.03.2013, the assessee carried the issue in appeal before the CIT(A). In First Appellate proceedings, the assessee furnished additional evidences to substantiate, genuineness and creditworthiness of the transactions and the lenders. The CIT(A) after examining additional evidences deleted addition in respect of all unsecured loans, except unsecured loans taken from Brham Pal Singh, Lekh Raj Singh and Naresh Chauhan. Though the assessee had furnished relevant documents to prove creditworthiness and identity of the aforesaid three lenders, the CIT(A) failed to appreciate the same. He submitted that the assessee had taken unsecured loans from related parties. After having discharged the onus of proving creditworthiness of the lenders, the assessee was not required to prove source of source. The assessee prayed for deleting addition u/s. 68 of the Act, upheld by the CIT(A).
(A.Y.2010-11) 5. Per contra, Shri Anuj Garg representing the Department vehemently supported the order of CIT(A) and prayed for dismissing appeal of the assessee. The ld. DR submitted that the assessee has failed to prove creditworthiness of three lenders qua which CIT(A) has confirmed the addition. The CIT(A) has deleted the addition made u/s. 68 of the Act by Assessing Officer, wherever, he was satisfied with the documents furnished by the assessee as additional evidence.
We have heard the submissions made by rival sides and have examined the orders of authorities below. The solitary issue raised by the assessee in appeal is with regard to addition made u/s.68 of the Act on account of unproved loans. The assessee had taken unsecured loans from various parties (12) aggregating to Rs. 79,45,130/-. Since, the assessee failed to provide relevant documents during assessment proceedings to prove genuineness of the transactions and creditworthiness of lenders, the AO made addition of the entire aforesaid amount. The assessee furnish additional evidences before the CIT(A) to prove genuineness of the transactions, identity and creditworthiness of the lenders. The additional evidences filed by assessee were admitted and remand report from the AO on the additional evidences filed by the assessee was sought. The AO failed to carry meaningful investigation and enquiries on the additional evidences filed by the assessee and squandered the opportunity by raising objections on admission of additional evidences. The CIT(A) after examining additional evidences granted substantial relief to the assessee by deleting additions made u/s. 68 of the Act. However, CIT(A) upheld addition in respect of three persons i.e. (i) Brham Pal Singh, (ii) Lekh Raj Singh and (iii) Naresh Chauhan.