Skip to main content

Burden is upon the Assessee to prove identity of the creditor, creditworthiness of the creditors and genuineness of the transaction

In ACIT, New Delhi vs. Sidhavandan Enterprises, appeal was filed before the INCOME TAX APPELLATE TRIBUNAL by the revenue department against the order of the Commissioner of Income Tax CIT(A).

The Assessee is a company and filed return of income showing loss of Rs.35,53,560. The Assessing Officer, (AO) noted that, in assessment year under appeal, the Assessee Company has received an amount of unsecured loan of Rs.2 crores from Varrenyam Securities Pvt. Ltd., The AO noted back ground of the case with regard to bogus accommodation entry provided by various entities controlled by S.K. Jain and V.K. Jain and Investigation conducted by Investigation Wing of the Department. The AO has given an opportunity to the Assessee to prove creditworthiness of the investor and genuineness of the transaction and required the Assessee to produce Director Director of Varrenyam Securities Pvt. Ltd., and C.A. who has arranged the funds in the matter. However, both the above persons were not produced. 

The AO after considering the fact that, burden is upon the Assessee to prove the ingredients of Section 68 of the Income Tax Act, 1961 (IT Act) i.e., identity of the creditor, creditworthiness of the of the creditors and genuineness of the transaction, found that assessee failed to prove the same, therefore, addition of Rs.2 crores was made against the Assessee under Section 68 of the IT Act, 1961. The assessee challenged the addition before the Learned Commissioner of Income Tax CIT(A). The learned CIT(A) deleted the addition. 

Setting aside the Order of the Ld. CIT(A), Appellate Tribunal agreeing with the AO further held that the CIT(A) in his finding reproduced above has merely referred to the facts noted in the preceding A.Y. 2012-013 with regard to loan transaction between the assessee and the Investor company. Merely because loan is repaid through banking channel in assessment year by itself may not be a ground to delete the addition because ultimately assessee shall have to prove the ingredients of Section 68 of the I.T. Act to the satisfaction of the A.O. According to Section 250(6) of the I.T. Act, the Ld. CIT(A) is required to mention point for determination and reasons for decision in the appellate order while deciding the appeal. The impugned findings of the Ld. CIT(A) however clearly show that he did not mention the evidence and material on record in the light of finding of fact arrived at by the A.O. in appellate order. The Ld. CIT(A) has also not recorded any finding of fact for deleting the addition in the matter. The Ld. CIT(A) did not give any finding as to what is the implication of making addition of Rs.2 crores in the hands of the creditor in preceding A.Y. 2012-2013.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

When debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company

In SHITAL FIBERS LTD.  vs  INDIAN ACRYLICS LIMITED, as per the respondent, appellant had made a payment of Rs.61,83,218/­. However, there was an outstanding balance of Rs.8,92,723/­ as on 28.7.2008. Since despite repeated requests, balance amount was not paid, the respondent issued a statutory notice to the appellant. The same was duly responded to. As the payment was not made despite notice being duly served on the appellant, the respondent filed the aforesaid Company Petition seeking winding up of the present appellant for its inability to pay admitted debts. The learned Company Judge vide order dated 28.9.2015 admitted the Company Petition. However, while doing so, the learned Company Judge observed, that since the appellant was an on­going concern, an opportunity should be granted to it to settle the accounts with the respondent by 31.12.2015. Only in case of failure of the settlement, the citation was directed to be published. On appeal, the Division Bench of the High Cou...
Post a Comment
Read more

Abusing in-laws a ground for divorce: SC

Abusing in-laws and not allowing them to reside in the matrimonial home by a woman amounts to cruelty to her spouse, ground enough for grant of divorce, the Supreme Court has ruled while allowing an NRI's plea for legal separation from his wife. A bench of Justices Vikaramajit Sen and A M Sapre said such incidents could not be termed as "wear and tear" of family life as held by Madras High Court which had said that a couple must be prepared to face such situations in matrimonial relationship. The NRI had filed a divorce petition alleging that his wife was abusive to his family members and did not allow his parents and siblings to stay in his house when they visited the US. Referring to an incident, the husband told the court that his wife had once locked him and his sister out of the house and abused them saying they belonged to a 'prostitute family'. She refused to allow her sister-in-law to enter the house and even lodged a police complaint against her hu...
4 comments
Read more