income tax

Gayatri Sewa Sansthan vs DCIT: ITAT Delhi Ruling on Loan Creditor Evidence

Gayatri Sewa Sansthan Vs DCIT: ITAT Delhi Ruling

The Income Tax Appellate Tribunal (ITAT), Delhi, ruled that the onus is on the assessee to provide evidence to satisfy the Assessing Officer (AO) regarding the identity and creditworthiness of loan creditors, as well as the genuineness of the transactions. The case was remitted to the AO to verify the transaction for the addition under section 68.

Case Background

The appeal was filed by the assessee, challenging the order of the CIT(A), Ghaziabad, dated October 31, 2018, for the Assessment Year (AY) 2015-16. The following grounds were raised in the appeal:

  1. The CIT(A) erred in confirming the addition of ₹6,92,500 made by the AO, representing interest paid on an unsecured loan from M/s Baldev Promoters Pvt. Ltd.
  2. The CIT(A) failed to address the issue concerning the applicability of Maximum Marginal Rate tax.

The assessee asserted that a similar issue had been addressed by the Tribunal, resulting in the issue being restored to the file of the AO for further consideration.

Tribunal's Observations

The counsel for the assessee stated that following the Tribunal's previous judgment, the matters for the AYs 2012-13 and 2014-15 were also restored to the AO in ITA Nos. 1927/Del/2016 and 5802/Del/2016, dated March 22, 2024.

The Departmental Representative (DR) expressed no objection to the submission. The Tribunal reviewed previous orders from the earlier years and noted the importance of the assessee providing relevant evidence.

Key Findings

  1. The Tribunal acknowledged that to establish any cash credit as genuine, the burden rests with the assessee to provide satisfactory evidence regarding the loan creditor’s identity, creditworthiness, and transaction legitimacy.
  2. The previously submitted documents were found insufficient as the assessee did not produce the directors of M/s Baldev Promoters Pvt. Ltd. or Shri Raju Khan.
  3. The AO had raised concerns about the authenticity of these transactions, indicating discrepancies such as missing documentation that supported the creditworthiness of the involved parties.

In light of these findings, the Tribunal concluded that it was necessary to restore the case to the AO to allow the assessee one more opportunity to substantiate the claims with compelling evidence.

Directives to the AO

The Tribunal directed that:

  • The assessee must present the Managing Director or Director of M/s Baldev Promoters Pvt. Ltd., as well as Shri Raju Khan, for examination by the AO.
  • The AO should reassess the matter based on factual evidence and provide ample opportunity for the assessee to respond.

Conclusion

Following the established legal criteria for substantiating cash transactions, the Tribunal restored the matter to the Assessing Officer for a fresh assessment, ensuring the assessee is granted necessary opportunities to validate their claims. The appeal is allowed for statistical purposes, and the matter is set for reconsideration based on the directives provided.