2015 (10) TMI 1897 - AT - Income Tax

Addition on unsecured loans - CIT(A) deleted the addition admitting additional evidence - Held that - AO had vide order sheet entry dt. 13.12.2010 asked the assessee for details and passed the order of assessment on 24.12.2010. Thus we are of the considered opinion that the First Appellate Authority has rightly admitted the application of the assessee under Rule 46A as in our view the assess was prevented from sufficient cause in filing the evidence before the A.O. during the assessment proceedings. This decision of the First Appellate Authority does not call for any interference. Addition u/s 68 correctly deleted by FAA as the assessee has already discharged the burden that lay on it by proving the identity, credit worthiness and genuineness of the transactions , and as the A.O. could not find any evidence to contradict the claim of the assessee, we uphold the order of the First Appellate Authority and delete this addition.- Decided in favour of assessee. Disallowance of Processing fee - CIT(A) deleted the addition - Held that - First Appellate Authority has given a categorical finding that there was an error committed by the bank. The HDFC bank had wrongly debited processing fee to the account of M/s Research Co. Book Centre, which is a sister concern of the assessee, instead of the assessee s bank account. This mistake was latter realised and the processing fee in question which was due and paid to HDFC bank by the assessee, was claimed as revenue expenditure. In view of the above evidences the First Appellate Authority correctly deleted the disallowance.- Decided in favour of assessee. Addition u/s 2(22)(e) - CIT(A) deleted the addition - Held that - First Appellate Authority correctly deleted the addition for the reason that the assessee company s business, is the same as the business of M/s Arihant Literary Works Pvt.Ltd. and M/s Researchco Book & Periodicals Pvt.Ltd. and that an advance of loan made in the ordinary course of business, does not fall within the purview of S.2(22)(e) of the Act. Further the assessee is not a registered share holder of M/s Arihant Literary Works Pvt.Ltd. or M/s Researchco Book & Periodicals Pvt. Ltd. and that the assessee is also not a benefincial owner of the shares. Under the circumstances, the decision of the First Appellate Authority does not call for any interference - Decided in favour of assessee.

Summary

Issues:
Admission of additional evidence under Rule 46A, Disallowance of processing fee, Addition under section 2(22)(e), Addition of unsecured loans under section 68.

Admission of Additional Evidence under Rule 46A:
The appeal questioned the admission of additional evidence by the First Appellate Authority under Rule 46A despite the objections of the Assessing Officer. The appellant argued that the assessee had sufficient time to provide evidence during the assessment proceedings. However, the respondent contended that the assessee filed available details within a short period, and the assessment was completed before further evidence could be collected. The Tribunal upheld the admission of additional evidence, stating that the assessee was prevented from submitting evidence to the AO due to sufficient cause, thus dismissing the appeal on this ground.

Disallowance of Processing Fee:
Regarding the disallowance of processing fee, the First Appellate Authority found that the bank had erroneously debited the processing fee to a sister concern's account instead of the assessee's account. The authority considered various documents submitted by the assessee, including bank account details, ledger accounts, and a letter from the bank acknowledging the error. Consequently, the disallowance was deleted, and the Tribunal upheld this decision, dismissing the appeal on this ground.

Addition under Section 2(22)(e):
The First Appellate Authority deleted the addition under section 2(22)(e) based on the business relationship between the assessee and certain companies, stating that the loan transactions were in the ordinary course of business and did not fall under the provision. The Tribunal agreed with this decision, noting that the assessee was not a registered shareholder or beneficial owner of the shares in question, and dismissed the appeal on this ground.

Addition of Unsecured Loans under Section 68:
The final issue concerned the addition of unsecured loans under section 68. The Tribunal examined the details of various loans provided by different parties, along with confirmations, income tax returns, and other supporting documents submitted by the assessee. Despite the substantial amount involved, the Tribunal found that the assessee had proven the identity, creditworthiness, and genuineness of the transactions through the evidence presented. As the Assessing Officer failed to provide contrary evidence, the Tribunal upheld the First Appellate Authority's decision to delete this addition, ultimately dismissing the appeal of the Revenue.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decisions of the First Appellate Authority on all grounds, including the admission of additional evidence, disallowance of processing fee, deletion of the addition under section 2(22)(e), and deletion of the addition of unsecured loans under section 68.