Where the AO issued summons under section 131 to enforce the attendance of the creditors at the fag end of the assessment not giving sufficient time either to the creditors to appear before him or to assessee to enforce the appearance of these creditors. In (2021)86 ITR (Trib) 261 (ITAT[Del]) the AO has issued summons against the share applicants and creditors only on May 17, 2018, for May 24, 2018, and made no further efforts to enforce attendance and passed the assessment order on May 31, 2018.
As the assessee has discharged the initial burden to prove the identity and creditworthiness of the creditors and the genuineness of the transaction it managed relief before the tribunal which is final fact authority.
The ITAT also brushed aside the following three common arguments of the revenue :
- Low-income theory —-Mere record of low income in the creditor’s return of income is not a ground to make additions against the assessee under section 68 of the Income-tax Act, 1961.
- Nonattendance of creditor —Failure by the creditor to comply with summons issued by the Assessing Officer, alone, is not sufficient to make an addition on the assessee under section 68 of the Act where the identity and creditworthiness of the creditor and genuineness of the transaction stand established.
- Source of source ——-the assessee need not prove the source of the source of funds