The Income Tax Appellate Tribunal (ITAT), Delhi deleted the income tax addition after the assessee discharged the burden of proving identity, capacity and creditworthiness of the lender company and genuineness of transaction.
BACKGROUND
The assessee took an unsecured loan of Rs. 3.60 crore from M/s. Fennie Commercial Pvt. Ltd. and the assessee was asked by the Assessing Officer to give documentary & supportive evidence establishing the creditworthiness of creditor/lender and genuineness transaction explaining the source of credits to discharge onus as per requirement of section 68.
The department submitted that despite several opportunities given by the Assessing Officer the assessee failed to prove creditworthiness of lender and genuineness of transaction till the date of passing assessment order. Therefore the Assessing Officer was quite correct and justified in making addition treating the unsecured loan as unexplained credit.
RULING
The tribunal held that the assessee has successfully discharge onus lay on him as per requirement of section 68 of the Act and hence proved identity, capacity and creditworthiness of lender company and genuineness of transaction and no addition u/s. 68 of the Act was required to be made thus he was right in deleting the addition.
Case Title: ITO V/s Alfa Contech Pvt. Ltd
Citation: ITA No.3351/Del/2016