2012 (8) TMI 798 - HC - Income Tax

Addition u/s 68 - unexplained loan credit from M/s C and M/s A - part of transaction with M/s C held genuine and addition made deleted, other part sustained - confirmation with identity was not presumed sufficient compliance - Held that - In respect of amount of Rs.2 lacs from M/s A, it is found that confirmation was available with signatures of the partners and PAN. In DCIT v. Rohini Builders (2001 (3) TMI 9 - GUJARAT HIGH COURT), it has been held that identity of creditor could be proved from PAN. As far as loan from M/s C was concerned, the Tribunal has rightly observed that Rs.1,50,000/- was part of the same total amount which was considered for deleting the addition u/s 68. When two amounts belonged to the same transaction, and in respect of one part, the confirmation was available from PAN and the statement of account filed by the very party, the creditworthiness and genuineness of the whole transaction could have been considered from those documents. Appeal of revenue dismissed.

Summary

Issues:
Challenge to deletion of addition under section 68 of the Income Tax Act.

Analysis:
The case involves a challenge by the Revenue against the deletion of an addition under section 68 of the Income Tax Act, 1961. The Assessing Officer had added an amount of Rs. 9,03,228 on account of unexplained loans and interest. The Appellate Commissioner partially allowed the appeal by the assessee, deleting the addition related to a loan credit of Rs. 2,00,000 from Anand Corporation but upholding the addition regarding a loan from Chandan Tea Enterprises. The matter was then brought before the Income Tax Appellate Tribunal through cross appeals filed by both the Department and the assessee.

The Tribunal considered the issue of addition of loan credit under section 68 of the Act and observed that a portion of the amount was part of the total sum considered for deletion. The Tribunal noted that the confirmation for the loan from Chandan Tea Enterprises was not filed by the assessee initially but was later explained with supporting documents. The Tribunal set aside the Appellate Commissioner's order and remanded the matter for further consideration, directing the Appellate Commissioner to redecide the issue after allowing the assessee to provide additional evidence.

The High Court upheld the Tribunal's decision, stating that the Tribunal had rightly considered the interconnected nature of the transactions and the availability of confirmation for a portion of the loan amount. The Court found no substantial question of law in the case and dismissed the appeal, agreeing with the Tribunal's reasoning and decision.

In conclusion, the High Court affirmed the Tribunal's decision to remand the matter for reconsideration, emphasizing the importance of considering all relevant evidence and the interconnected nature of the transactions in determining the genuineness of the loan credits under section 68 of the Income Tax Act.