TaxTMI 
TaxTMI 
2022 (5) TMI 853
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the following grounds of appeal: 1. The order of the Ld. Commissioner of Income Tax(Appeals) is contrary to the law and the facts of the case. 2. The Ld. CIT(A) has erred in law and on facts in holding that the income offered for tax by the creditors may not be the criteria to disprove the credits u/s.68 of the Act, and it is not in the mandate of the Act. 2.1 The Ld. CIT(A) has failed to note that mere filing of confirmation letters and acknowledgement copy of returns not supported by financial statements are not sufficient to prove the creditworthiness of the creditors. 2.2 The Ld. CIT(A) ought to have noted that the assessee has not fulfilled his primary onus of proving the creditworthiness of the lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n taken from the above persons. In response, the assessee had submitted confirmation letters from the loan creditors along with relevant bank statement to show that the amounts were received through banking channel. The assessee had also filed their ITR acknowledgment copies to prove that all loan creditors are Income Tax payers. The AO, however, was not satisfied with the explanation furnished by the assessee and according to the AO, although there is no dispute with regard to the identity of the loan creditors and genuineness of transactions, but when it comes to creditworthiness of the parties, none of the loan creditors does have capacity to explain huge amount of loan given to them. Therefore, rejected the arguments of the assessee and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from five parties and confirmed addition to the extent of Rs.28 lakhs being amount of loan taken from M/s.Rich Gold Hardware. 5. Aggrieved by the order of the Ld.CIT(A), the Revenue is in al before us. 6. The Ld.DR, submitted that the Ld.CIT(A) erred in deleting additions made by the AO towards loan taken from five parties without appreciating the fact that the assessee needs to satisfy all three conditions including creditworthiness of the parties. The Ld.DR further submitted that although, the AO had accepted identity of the creditors and genuineness of transactions, but doubted creditworthiness of the creditors, mainly on the basis of their ITRs filed for the relevant assessment year. As per which, they had declared meagre income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e relevant assessment years, which is insufficient to explain amount of loan given to them. Except this, the AO has never doubted identity of the parties and genuineness of transactions. In fact, the assessee filed confirmation letters from all five parties along with their bank statements for the relevant assessment years and also ITR acknowledgment filed for the relevant assessment years. From the details filed by the assessee, the Ld.CIT(A) had recorded categorical findings that Mr.Mohammed Lawfir from whom assessee had received a sum of Rs.3.5 Crs. loan through cheque had declared income of Rs.48,98,470/-. Further, the loan had been taken through proper banking channel. As regards, the observation of the AO on creditworthiness of the pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he decision of the Hon'ble Supreme Court in the case of CIT v. Lovely Exports Private Limited reported in [2008] 216 CTR 195 (SC), wherein, it has been held that once names of creditors are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but some received from them cannot regard as undisclosed income of the assessee. This legal position further supported by the decision of the Hon'ble Supreme Court in the case of CIT v. Steller Investment Ltd. reported in (2001) 251 ITR 263 (SC). The sum and substance of ratio laid down by various decisions of the Hon'ble Supreme Court and High Courts is that once assessee discharged its burden by filing various evidences including confi....