Law: Income Tax Act, 1961

Section: 68,131(d)

JUDGMENT R. Sudhakar, J. - This tax case (appeal) is filed by the Revenue as against the order of the Income-tax Appellate Tribunal raising the following substantial questions of law: "1. Whether, in the facts and in the circumstances of the case, the Appellate Tribunal was right in having deleted the additions made towards unexplained credits under section 68 of the Act after subjective satisfaction of the Assessing Officer contrary to the evidences available? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in deleting the addition made under section 68 especially when some of the creditors had denied to advance any loan made to the assessee and some were not creditworthy as the same was not proved satisfactorily? 3. Whether, in the facts and in the circumstances of the case, the findings rendered by the Tribunal are perverse and illegal going by the test of human probabilities as applied by the hon'ble Supreme Court in the decision rendered in Sumati Dayal v. CIT [1995] 214 ITR 801 ?" 2. The assessment in this case relates to the assessment year 2006-07. The assessee is a company incorporated on October 18, 2004. During the financial year 2005-06, the assessee had obtained unsecured loans to the tune of Rs. 52,63,000. During the course of assessment, the Assessing Officer called for details of the creditors. The assessee submitted the names and addresses of the six creditors, but did not provide their PAN cards. Following are the persons from whom the loan amounts were obtained by the assessee-company. Sl. No. Name Amount Rs. 1 Shri N. Chinnanadar 9,00,000 2 Smt. S. Lingam 16,00,000 3 Shri S. Murugesan 3,00,000 4 Shri B. Ramamoorthy 3,00,000 5 Shri S. Esakkippan 3,00,000 6 Shri M. Murugesan 3,00,000 The Assessing Officer asked the assessee to prove the identity and creditworthiness of the creditors and also the genuineness of the transactions. The Assessing Officer issued commission under section 131(d) of the Income-tax Act to the Assistant Director of Income-tax (Investigation), Tirunelveli, to verify the veracity of the claim of the assessee. The commission found that some of the creditors are not…

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