2015 (12) TMI 1864 - AT - Income Tax

Assessee's Appeal Upheld: Burden of Proof Met in Income Tax Dispute

ACIT Circle-2, Meerut Versus Sarvahit Trust

ACIT Circle-2, Meerut Versus Sarvahit Trust - TMI Issues Involved:Appeal against deletion of addition u/s 68 of the Income Tax Act - Unsecured loan received by assessee trust from M/s Nishyam Farms (P) Limited.Analysis:Issue 1: Addition u/s 68 of the Income Tax ActThe appeal was directed by the revenue against the deletion of addition u/s 68 of the Income Tax Act concerning an unsecured loan of &8377; 2,99,50,000/- received by the assessee trust from M/s Nishyam Farms (P) Limited. The assessee, a trust running a university, received the unsecured loan during the year. The Assessing Officer (AO) made the addition based on information obtained regarding the lender company's fund flow, despite the assessee providing confirmation of the company, director's examination, and audited annual accounts. The CIT (A) deleted the addition, leading to the revenue's appeal.Issue 2: Arguments and SubmissionsThe Revenue argued that the lender company did not engage in any business activity and provided a substantial loan to the assessee trust, supporting the AO's decision. The assessee contended that it fulfilled its burden under section 68 by presenting substantial evidence confirming the creditors, leading to the deletion of the addition by the CIT (A).Issue 3: Analysis and DecisionThe Tribunal carefully considered the contentions and evidence presented. The assessee had received the loan from Nishyam Farms (P) Limited and provided extensive documentation to prove the transaction's genuineness, including the director's affidavit, confirmation letter, income tax returns, and bank statements. The sources of funds were explained, and the AO's concerns regarding cash deposits were addressed satisfactorily. The information gathered by the AO from the Ministry of Corporate Affairs (MCA) website did not undermine the transaction's legitimacy. The Tribunal held that the assessee had fulfilled the requirements of section 68 by establishing the identity, creditworthiness, and genuineness of the transaction. Consequently, the Tribunal confirmed the CIT (A)'s decision to delete the addition of &8377; 2,95,00,000/- under section 68 of the Income Tax Act.Conclusion:Ultimately, the Tribunal dismissed the revenue's appeal, upholding the CIT (A)'s decision to delete the addition under section 68 of the Income Tax Act. The judgment emphasized the importance of the assessee meeting the burden of proof regarding the loan transaction's legitimacy, which was successfully demonstrated in this case.