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Facts
M/s B.M.L. Welfare Trust received corpus donations of Rs. 25 lakhs (Rs. 5 lakhs each from five trustees) and loans of Rs. 75 lakhs (Rs. 15 lakhs each from the same five persons) which were added back by the AO under Section 68 of the Income Tax Act, 1961. The CIT(A) granted partial relief of Rs. 40 lakhs for two persons but rejected the explanation for the remaining three due to insufficient evidence regarding their identity, creditworthiness, and genuineness.
Held
The Income Tax Appellate Tribunal remanded the matter back to the CIT(A) to provide the assessee with sufficient opportunity to submit the necessary evidence for the creditworthiness of the three remaining trustees. The assessee is directed to file all submissions and evidence and cooperate fully in the appellate proceedings.
Key Issues
Whether the CIT(A) was justified in not accepting explanations for cash credits and loans from three trustees and denying the assessee an adequate opportunity to furnish evidence regarding their identity, creditworthiness, and genuineness under Section 68 of the Income Tax Act.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 143(3) of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 68 of the Income Tax Act, 1961, Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963
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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
This appeal is filed by the assessee against the order of the ld. CIT(A) NFAC, Delhi dated 20.11.2024 passed u/s 250 of the Income Tax Act, 1961 which has emanated from the order of the AO, NFAC, Delhi passed u/s 143(3) r.w.s. 144B of the Act, dated 24.09.2021. issue that the ld. first appellate authority has not considered the submissions filed by the assessee in its proper perspective and has dismissed the appeal without allowing any opportunity to explain the credit worthiness of the investor members of the
On perusal of records it is seen that the assessee trust has received corpus donations from five persons of Rs.25 lakhs, (Rs. 5 lakhs each from its trustees) and has also taken loans from the said persons totaling Rs. 75 lakhs (Rs.15 lakhs each) during the year under appeal, which has been added back by the AO u/s 68 of the Act, in absence of any explanation or evidence being filed before him.
In course of first appeal, explanations and evidences has been filed and the Ld CIT ( A ) has allowed part relief of Rs.40 lakhs, in case of two persons, whose identity, credit worthiness and genuineness , was to his satisfaction, and refused to accept the explanations regarding the remaining three, for want of sufficient evidences.
Before the tribunal , the Ld AR of the assessee submitted a short paper book containing copies of income tax returns of the remaining three trustees, along with bank statements, and copies of audited accounts of a partnership firm Tarmac Road and Roof Builders (PFAS), where these persons are partners and referring to the that the funds transferred to the assessee trust, has been withdrawn by each partner , from the capital balance in the partnership , through bank channel, and the identity, creditworthiness and genuineness, are fully established. He further submitted that though all documents were before the Ld first appellate authority, he has refused to give cognizance to the same only in the absence of the ITR of individual three trustees being not filed before him, which could have been easily called for in course of first appeal, instead of confirming the addition.
He prays for another opportunity to produce the said evidence before the Ld CIT (A).
The Ld. DR relied on the order of the first appellate authority, but has no objection if the matter is remanded on this issue for submission of further evidence.
We have heard the rival contention and considered the materials on record and the paper book filed and we consider it fit and proper to remand the matter back to the Ld first appellate authority to allow sufficient opportunity to the assessee to submit the necessary evidence in respect of the three trustees to prove the creditworthiness and we also direct the assessee to file all submissions and necessary evidence in support of its contention and to fully cooperate in appellate proceedings.
The assessee to be allowed reasonable opportunity of being heard.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 28.08.2025.