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| The Tax Publishers2021 TaxPub(DT) 0568 (Kol-Trib) INCOME TAX ACT, 1961
Section 68 Section 69C
Assessee filed all necessary evidences on record before AO, then mere failure of the creditor parties to appear cannot form the basis to invoke section 68 and once the assessee had discharged its onus on identity, genuineness and creditworthiness of running account and discharged its onus qua credit side of loan and interest expenditure thereupon before AO, therefore, additions made under sections 68 and 69C were directed to be deleted.
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Income from undisclosed sources - Addition under sections 68 and 69C - Unsecured loans as unexplained cash credits and interest therein as unexplained expenditure under section 69C -
Assessee challenged the correctness of action of both the lower authorities' treating it unsecured loans as unexplained cash credits under section 68 and interest thereupon as unexplained expenditure under section 69C. Assessee argued that both the lower authorities had erred in law in making both the said additions thereby holding that the assessee had failed to prove identity, genuineness and creditworthiness of the creditors concerned. Assessee further submitted that creditor parties have been wrongly treated as accommodation entry providers by way of ploughing back of assessee's unaccounted income being routed back through papers transaction only. Held: In case of Crystal Networks (P) Ltd v. CIT (2012) 353 ITR 171 (Cal) : 2012 TaxPub(DT) 815 (Cal-HC), it was held that when the assessee file all necessary evidences on record before the AO, then mere failure of the creditor parties to appear cannot form the basis to invoke section 68. Keeping in mind the detailed evidence as well as judicial precedents, once assessee had discharged its onus on identity, genuineness and creditworthiness of running account and discharged its onus qua credit side of loan and interest expenditure thereupon before AO, both the lower authorities had erred in law and on facts in treating the same as unexplained cash credits and unexplained expenditure under sections 68 and 69C. Thus , additions made under sections 68 & 69C were, therefore, directed to be deleted.
Followed:CIT v. Dataware Private Ltd. ITAT No. 263 of 2011, GA No. 2856 dt. 21-9-2011 : 2013 TaxPub(DT) 1384 (Cal-HC), SK. Bothra & Sons v. ITO (2012) 347 ITR 347 (Cal) : 2012 TaxPub(DT) 815 (Cal-HC) and Crystal Networks P. Ltd. v. CIT (2012) 353 ITR 171 (Cal-HC) : 2012 TaxPub(DT) 815 (Cal-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, KOLKATA BENCH
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