2018 (8) TMI 1744 - AT - Income Tax

Addition towards unsecured loans u/s 68 - CIT-A deleted the addition - Held that - CIT-A had given a finding that on examination of books and records the unsecured loans of 31, 58, 367/- were only brought forward from earlier assessment years by the assessee and that the same were not received during the year under appeal. This fact remain un-controverted by the ld DR before us. Hence the provisions of section 68 of the Act cannot be applied at all for the year under appeal before us. Hence we hold that the CIT-A had rightly deleted the addition thereon which does not require any interference - decided against revenue TDS u/s 194C - disallowance u/s 40(a)(ia) - assessee had contracted work with sub-contractors with non deduction of tds on payments - CIT-A had deleted the disallowance on verification of facts available on record that the assessee had indeed deducted tax at source on sub-contract payments made to aforesaid two parties and remitted the TDS to the account of the Central Government which is supported by TDS certificates which were available in the assessment records itself. Hence we find no infirmity in the order of the ld CIT-A. - decided against revenue

Summary

Issues Involved:
1. Justification of deleting the addition towards unsecured loans under section 68 of the Income Tax Act.
2. Justification of deleting the disallowance under section 40(a)(ia) of the Income Tax Act.

Analysis:

Issue 1: Addition towards Unsecured Loans under Section 68 of the Act
The first issue in this appeal revolved around the justification of deleting the addition towards unsecured loans under section 68 of the Income Tax Act. The assessee, a Government Contractor, had borrowed loans from various individuals and entities, totaling &8377; 31,58,367. The assessing officer (AO) added this amount as unexplained cash credit under section 68 due to non-verification of loan creditors' details. However, the assessee claimed that these loans were brought forward from earlier years and were duly reflected in the balance sheet. The Commissioner of Income Tax (Appeals) (CITA) examined the facts and confirmed that the loans were indeed brought forward from earlier years, supported by confirmation letters from loan creditors. Consequently, the CITA deleted the addition under section 68. The Income Tax Appellate Tribunal (ITAT) upheld the CITA's decision, emphasizing that the loans were not received during the year under appeal, thereby dismissing the revenue's appeal.

Issue 2: Disallowance under Section 40(a)(ia) of the Act
The second issue pertained to the deletion of disallowance under section 40(a)(ia) of the Income Tax Act. The assessee had made payments to subcontractors without deducting tax at source under section 194C. The AO disallowed &8377; 1,00,72,161 under section 40(a)(ia) for non-compliance with TDS provisions. However, the assessee provided TDS certificates and evidence of tax deduction to the CITA, which were ignored by the AO. Upon verification, the CITA found that the TDS was indeed deducted and remitted to the government, leading to the deletion of the disallowance. The ITAT upheld the CITA's decision, stating that the TDS certificates and records supported the assessee's compliance with TDS provisions. Consequently, the revenue's appeal was dismissed.

In conclusion, the ITAT upheld the CITA's decisions in both issues, emphasizing the importance of verifying facts and compliance with tax provisions. The appeal of the revenue was dismissed, affirming the deletions of the addition towards unsecured loans and the disallowance under section 40(a)(ia) of the Income Tax Act.