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of <h1>ITAT rules in favor of assessee on unsecured loans, overturns additions under section 68</h1> <h3>M/s Shubham Prime Builders Pvt. Ltd. Versus D.C.I.T., Central Circle, Kota.</h3> M/s Shubham Prime Builders Pvt. Ltd. Versus D.C.I.T., Central Circle, Kota. - TMI Issues:Appeals against orders of ld.CIT(A) for A.Y. 2010-11 and 2012-13 - Addition made U/s 68 treating unsecured loans as unexplained.Analysis:1. Background: The assessee, engaged in real estate business, filed returns for A.Y. 2010-11 declaring Nil income. Subsequent search operations led to additions under sections 40A(3) and 68 of the Income Tax Act, 1961.2. Legal Standpoint: Assessee argued that as no incriminating material was found during the search and assessment proceedings were not pending, no additions were warranted for unsecured loans taken in previous years under section 153A.3. Judicial Precedents: Citing decisions from Bombay and Gujarat High Courts, assessee contended that section 153A assessments should be limited to incriminating evidence found during the search for pending years.4. Assessee's Defense: Assessee provided confirmations, ITR, and bank statements of creditors to justify unsecured loans. Assessee relied on High Court decisions to support the genuineness of transactions.5. Revenue's Argument: Revenue contended that original assessment under section 143(1) cannot be considered an assessment, thus abatement theory does not apply. Revenue highlighted immediate cash deposits before issuing cheques as suspicious.6. Judgment: ITAT found that the assessee adequately explained loans received and confirmed by creditors. The tribunal relied on High Court judgments to assert that the burden on the assessee is to prove the existence of creditors and the source of funds, not beyond that. Hence, additions under section 68 were deemed unjustified.7. Conclusion: The ITAT allowed both appeals, emphasizing that the assessee had sufficiently proven the identity and genuineness of loan transactions, and the source of the source was not required to be proved. The additions made by the CIT(A) were overturned based on the lack of evidence linking cash deposits to the assessee. Legal issues were not delved into as the merits of the additions were already decided.
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