Society for Institute for Professional Studies v. JCIT

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The Tax Publishers2021 TaxPub(DT) 1368 (Del-Trib) : (2021) 087 ITR (Trib) 0269

INCOME TAX ACT, 1961

Section 68

All the creditors were assessed to tax, therefore, their identity could not be disputed by AO. All the loans were given through banking channel and the creditors had sufficient bank balance in their bank accounts and net worth as per their balance-sheets. Therefore, creditworthiness of the creditors was also not in doubt. Further, assessee was able to prove genuineness of the transactions in the matter because amounts in question had been returned subsequently which were subjected to interest and TDS payment on such loans. Accordingly, assessee society discharged onus cast under section 68 and, common director and common address could not be relevant criteria to decide the issue under section 68. Therefore, addition was deleted.

Income from undisclosed sources - Addition under section 68 - Receipt of unsecured loan - AO made addition on the reasoning that there was a common director in 3 lender companies and common address--Assessee proved identity, creditworthiness and genuineness of transactions

Assessee society received an amount of Rs. 1,25,78,000 on account of unsecured loans from three companies. As there was a common director in 3 lender companies and common address, AO treated loan amount as unexplained credit and thus made addition under section 68. Held: All the creditors were assessed to tax, therefore, their identity could not be disputed by AO. All the loans were given through banking channel and the creditors had sufficient bank balance in their bank accounts and net worth as per their balance-sheets. Therefore, creditworthiness of the creditors was also not in doubt. Further, assessee was able to prove genuineness of the transactions in the matter because amounts in question had been returned subsequently which were subjected to interest and TDS payment on such loans. Accordingly, assessee society discharged onus cast under section 68 and, common director and common address could not be the relevant criteria to decide the issue under section 68. Therefore, addition was deleted.

Relied:Kishanchand Chellaram v. CIT (1980) 125 ITR 713 (SC) : 1980 TaxPub(DT) 1130 (SC) and Dwarkadhish Investment (P) Ltd. (2011) 330 ITR 298 (Del-HC) : 2011 TaxPub(DT) 374 (Del-HC) and Rohini Builders (2002) 256 ITR 360 (Guj.) : 2002 TaxPub(DT) 0305 (Guj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

IN THE ITAT, DELHI BENCH