2010 (4) TMI 1127 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A)-II, Ahmedabad regarding disallowance of interest and unexplained cash credits.

Disallowance of interest issue: The Revenue appealed against the CIT(A)'s decision to delete the addition of interest amounting to Rs. 13,98,220 made by the Assessing Officer. The ITAT upheld the CIT(A)'s decision based on the reasoning that the borrowed funds were utilized for the business purposes of the assessee, as holding cash for timely payments was essential to the business transaction. The ITAT found no error in the CIT(A)'s order and dismissed the Revenue's appeal.

Unexplained cash credits issue: The Revenue appealed against the CIT(A)'s decision to delete the addition of Rs. 11,25,000 made by the Assessing Officer on account of unexplained cash credits. The assessee had provided details of creditors to the CIT(A) but not to the Assessing Officer. The ITAT held that the assessee had discharged the burden of proving the cash credits by providing confirmation of creditors, bank passbook copies, income tax return acknowledgments, and computation of income of the creditors. Citing the decision in Commissioner of Income Tax Vs. Orissa Corporation P. Limited, the ITAT concluded that the assessee had fulfilled the onus of proving the cash credits, and therefore upheld the CIT(A)'s decision to delete the addition. Consequently, the Revenue's appeal was dismissed.

Separate Judgement: No separate judgment was delivered by the judges.