2012 (3) TMI 622 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition u/s 68 on account of share application money.
2. Deletion of addition on account of interest and commission paid on the loan.
3. Deletion of addition u/s 41(1).
4. Deletion of addition on account of unsecured loan and interest paid thereon.

Summary:

1. Deletion of addition u/s 68 on account of share application money:
The Revenue was aggrieved by the deletion of an addition of Rs. 22 lakhs made by the Assessing Officer (AO) u/s 68 on account of share application money received by the assessee company. The assessee provided confirmations, bank statements, and other documents to establish the genuineness of the share application money. The CIT(A) deleted the addition, and the Tribunal found no infirmity in the CIT(A)'s order, noting that the identity of the share applicants was established and the transactions were genuine.

2. Deletion of addition on account of interest and commission paid on the loan:
The Revenue's grievance related to the deletion of addition made on account of interest and commission paid on the loan. The Tribunal referred to its decision in the assessment year 2005-06, where similar additions were made by the AO on account of unsecured loans taken from the Lunkad Group and interest paid thereon. The CIT(A) had deleted the addition, and the Tribunal upheld this deletion.

3. Deletion of addition u/s 41(1):
The Revenue was aggrieved by the deletion of an addition of Rs. 45,86,946/- u/s 41(1). The AO added the amount stating that balances of these parties were outstanding for more than three years. The CIT(A) deleted the addition, noting that the amounts were paid through account payee cheques in subsequent years. The Tribunal found no reason to interfere with the CIT(A)'s order, as the outstanding amounts were duly paid.

4. Deletion of addition on account of unsecured loan and interest paid thereon:
For the assessment year 2005-06, the Revenue was aggrieved by the deletion of an addition of Rs. 1.10 crores from five parties and interest paid thereon. The CIT(A) deleted the addition, observing that the Lunkad Group had issued confirmatory letters supporting the genuineness of the loans and share application money. The Tribunal, referring to its earlier decision in the case of Mittal Group, restored the matter to the AO for fresh consideration, emphasizing that the addition should be made in the hands of the right person as per the Supreme Court's decision in ITO vs. CH Atchaiah.

Conclusion:
The Tribunal upheld the CIT(A)'s deletion of additions on account of share application money, interest, and commission paid on loans, and u/s 41(1). However, it restored the matter of unsecured loans and interest paid thereon to the AO for fresh consideration, following its earlier decision in the case of Mittal Group. The appeals of the Revenue were allowed in terms indicated.