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2025 Supreme(Online)(ITAT) 6193
INCOME TAX APPELLATE TRIBUNAL (HYDERABAD BENCH)
G. Manjunatha, ACM, Ravish Sood, JM
Viva Boards Private Limited – Appellant
Versus
Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi – Respondent
I.T.A.No.1303/Hyd/2025
For the Appellants/Petitioners:Shri A.V. Raghuram, Advocate
For the Respondents: Ms. U. Mini Chandran
Under Section 68, the initial burden to prove identity, genuineness, and creditworthiness shifted to the AO once the assessee provided evidence, highlighting deficiencies in the AO's determinations.
Headnote:(A) Income Tax Act, 1961 - Section 68 - Unexplained cash credits - Addition of Rs.7,73,20,616/- made by the AO for non-verification of loans claimed from related parties, upheld by the CIT(A). The Tribunal found that the assessee discharged the onus of proving creditors' identity, the genuineness of transactions, and their creditworthiness. Court emphasized that once initial onus is met, it shifts to the AO to disprove, which was not done in this case. Thus, the addition was deleted. (Paras 10, 11, 12, 15, and 16)
(B) Appeal - Tribunal's role - Tribunal must assess whether the authorities below properly established the need for disallowance and ensure due process was followed by the AO. The findings of the AO and CIT(A) that transactions were not genuine or creditors lacked creditworthiness were not substantiated. (Paras 10.1 - 10.3)
| Table of Content |
|---|
| 1. appeal filed against the cit(a) order. (Para 1 , 2) |
| 2. factual background of the assessee's business. (Para 3 , 4) |
| 3. arguments presented before the cit(a). (Para 5 , 6) |
| 4. assessee's claims and evidence for loans. (Para 8 , 9) |
| 5. court's analysis of the a.o.'s findings. (Para 10 , 11) |
| 6. legal principles regarding burden of proof. (Para 12 , 14 , 15) |
| 7. final order allowing the appeal. (Para 16) |
ORDER
PER MANJUNATHA G., A.M :
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 29.07.2025 relating to the assessment year 2017-18.
2. The grounds raised by the assessee read as under :
“1. On the facts and in the circumstances of the case, the order of the Id. CIT(A) is erroneous both on facts and in law.
2. The Id. CIT(A) erred in sustaining the addition made by the AO of Rs.7,73,20,616 as unexplained credit u/s.68 of the Act.
3. The authorities failed to appreciate that once the creditors are income tax assesses and have confirmed the advancing of loan and the medium of loan, the same cannot be treated as unexplained credits in the hands of the Appellant.
(Tax Effect: Rs.5,97,30,177)
4. The findings of the Id. CIT(A) are factually and legally incorrect. The ld. CIT(A) has rejected the submissions and documents filed by the Appellant for flimsy reasons.
5. Any other ground that may be urged at the time of hearing.”
3. The brief facts of the case are that, the assessee company “Viva Boards Private Limited” is engaged in the business of manufacturing of paper and paper products, had filed its return of income for A.Y. 2017-18 on 30-10-2017, admitting total loss of Rs. 4,23,41,850/-. The case was selected for limited scrutiny through CASS and notice under Section 143 (2) of the Income Tax Act, 1961 , along with notice under Section 142 (1) of the Act, was issued and served on the assessee company. The assessee company was called for relevant details including books of accounts, financial statements, etc. In response to the notices, the assessee company has furnished information through ITBA from time to time. During the course of assessment proceedings, the A.O., from the balance sheet filed by the assessee company, observed that, loans and advances from the related parties have increased to an amount of Rs. 7,73,20,661/-. Therefore, notice under (1) dated 29-08-2019 and 19-09-2019 was issued requiring the assessee company to furnish the information related to the details of unsecured loans taken from the related parties along with their names, PAN, communication addresses, confirmations, and ledger copies of the loans. In response to the notice issued by the A.O., the assessee company, vide letter dated 17.12.2019, has furnished the details of unsecured loans taken from the related parties, along with their names and addresses, PAN numbers, copies of the ITRs and the relevant bank account statements and also confirmation letters from the parties along with ledger accounts. The A.O., after considering relevant submissions of the assessee company, observed that, the income of the persons, who have given loans to the assessee company is very meagre in comparison to the amount of loan given. Further, the bank account statements contained frequent cash deposits in all the bank account statements, thereby raising suspicion relating to the genuineness and creditworthiness of the transactions. Therefore, issued summons under Section 131 of the Act, dated 17-12-2019 to Shri Pattipati Subbarao, Director of the assessee company, to produce all the persons, who had given unsecured loans during the year, along with their copies of ITRs filed for A.Y. 2015 to 2017-18 and copy of the bank account statement for F.Y. 2016-17. Since there was no response from the Director of the assessee company in response to the summons issued u/s 131 of the Act, the A.O. opined that, the unsecured loans claimed to have been receive
