When Primary Onus is Discharged by submitting documents Dept to Prove that Money Belongs to Assessee: ITAT

Shri Mahesh Kumar Duhlani V/s. Deputy Commissioner of Income Tax

(Order pronounced in open court on 9th June 2022)

The case is that the assessee is an individual. He has filed his return of Income on the total income of Rs. 16,17,300 electronically in ITR-V. Vide return, the payment of tax of Rs. 3,49,366 on the returned income has been claimed against TDS of Rs. 5,23,053. The return had been duly processed on AST by CPC Bangalore u/s 143(1) of the Income Tax Act, 1961, and a refund of Rs. 1,79,780 including interest of Rs. 6,076 u/s 244 A of the Act was generated and duly issued to the assessee.

The case was selected for scrutiny for verification of unsecured loans, sundry creditors, and major expenses.

The total alleged unsecured loan aggregates to Rs. 25,00,000 is the assessee’s own concealed income which he could not explain and thus the total sum of Rs. 25,00,000 is the assessee’s unexplained cash credit and liable to be added u/s 68 of the Act. The AO alleged the assessee has borrowed unsecured loans during the previous year from different persons. So, with a view to examining the identity of the lenders, genuineness of the loans and their transaction, and creditworthiness of the lenders, summons u/s 131 were issued to all the alleged lenders by AO. All the lenders on oath had averred that they have given the loans to the assessee, which was disregarded and the addition of the abovementioned amount was made.

Appeal before CIT(A): Aggrieved from the order of the assessing officer the assessee preferred an appeal before the CIT(A) and the ld. CIT(A) confirmed the addition.

Appeal before ITAT: It was held in the case Shri Pawan Kumar Agarwal Vs. ITO ward 2 (2) Bilaspur in Tax No. 24 of 2011, when the primary onus is discharged by filling the required details on records then the department has to prove that the money is not belonging to that person but to the assessee.

Based on the above findings of facts placed on record by the assessee and not controverted by the ld. DR, we are of the considered view that the assessee has primarily discharged his onus, and following the decision of the above case the addition made by the assessing officer to the extent of Rs. 25,00,000 was deleted.

Also, based on the findings of the various orders of the coordinate bench of the ITAT the tribunal found that the amount of SD/EMD write-off by the assessee to the extent of Rs. 17,26,809 is revenue expenditure and the reasons are also substantiated that it is nothing but an amount kept out of the work done amount as security deposit and the same amount on write-off just as bad debt written off is allowable as expenses. Considering the set of facts and amount being shown in the books in an earlier year as receivable and write-off in the year as an amount not receivable is revenue expenditure and allowable as such. Thus, ground raised by the assessee was allowed. Hence, the appeal of the assessee is allowed.

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