the Income Tax Appeal Tribunal (ITAT), Delhi Bench removed addition due to unexplained loan against Society for Institute for Professional Studies Ghaziabad.

The assessed company, the Society for Institute for Professional Studies Ghaziabad, is registered with the Registrar of Society of Uttar Pradesh under Section 12AA of the Income Tax Act 1961. income tax, Ghaziabad.

The assessed person has filed a tax return declaring NIL income. The case was selected for in-depth evaluation and the necessary details were requested. The appraisee has produced books of accounts and other details which have been verified by the AO. During the tax year under appeal, the assessed company received an amount of Rs 1.25.78,000 for unsecured loans from the various parties.

The assessed person was required to verify the identity, capacity, creditworthiness and authenticity of the transaction. In accordance with the same, the appraised person filed full details about the lenders which were discussed by the AO.

The assessor argued that when the assessor applied the amount even considering the disputed amount as income, it was more than 85% of the amount spent by the assessor in favor of the object of the assessed company. Therefore, no addition could be made against the person assessed.

On the other hand, the ministry relied on the orders of the authorities below and maintained that the notices issued for examination had not responded by the creditors and that even if the amount in question had been used for the objects of the company being appraised, it would not have any impact on the income of the person being appraised. The creditors’ balance sheet is on a similar line, which is why additions have been rightly made by the authorities below.

The coram of BRR Kumar and Bhavnesh Saini noted that all loans are made through bank channels and creditors have sufficient bank balance in their bank accounts and equity according to their balance sheets. Therefore, the creditors’ solvency is not in doubt either. Therefore, the assessed person was able to prove the authenticity of the transaction in this matter, as the amounts in question were subsequently returned and were subject to interest and TDS payment on these loans.

However, the ITAT observed that the AO did not present on the record any evidence against the person assessed for not believing the documentary evidence. Regardless of the investigation conducted through the Income Tax Inspector, it does not appear to have been confronted with the person assessed or an explanation from the person assessed was not requested.

Therefore, the Tribunal, while allowing the company’s appeal, deleted the addition made by the lower authority.

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