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ITAT deletes addition on account of investment from undisclosed sources
ITAT deletes addition on account of investment from undisclosed sources It marked that all transactions were made through banking channels The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition on account of investment made from undisclosed sources as all transactions were made through banking channels. The Coram headed by Vice President, N K Saini...
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ITAT deletes addition on account of investment from undisclosed sources
It marked that all transactions were made through banking channels
The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition on account of investment made from undisclosed sources as all transactions were made through banking channels.
The Coram headed by Vice President, N K Saini and judicial member R L Negi held that the assessment officer (AO) had not pointed out any evidence on the basis of which he reached the conclusion that the assessee had obtained accommodation entries from the parties concerned.
They stated that since the AO had made the addition on the basis of an assumption and presumption, the Commissioner of Income Tax (Appeals) (CIT (A) had rightly deleted the addition.
Earlier, the assessee had filed his return of income for the assessment year, declaring the total income of Rs.5,04,990. The case was selected for scrutiny and the AO passed the assessment order and determined the total income of the assessee at Rs.2,85,50,990, after making an addition of Rs.2,80,46,000.
The assessee challenged the order before CIT(A), which allowed the appeal and deleted the addition made by the AO. The revenue was in an appeal against the said findings of CIT(A).
The issue raised was whether CIT(A) had erred in deleting the addition of Rs.2,80,46,000 on account of investment made from undisclosed sources. The observations were made while disbelieving the evidence produced during the assessment proceedings.
These related to the creditworthiness and genuineness of the parties from whom the loans were raised. It was not based on probabilities, but the evidence produced by the assessee was baseless. These parties had no financial capacity to give huge interest-free loans.
Supporting the order passed by CIT(A), the assessee submitted that during the relevant period, he was a partner in the firm Mittal Traders and had been receiving the remuneration, apart from the rental income. During the assessment year, he and his wife had jointly purchased the basement of the shop vide two sale deeds.
The assessee had paid Rs.2,75,00,000 as his share (excluding the registration expenses). He explained the source of investment on the basis of the documentary evidence.