2018 (3) TMI 1734 - AT - Income Tax

Addition u/s 68 - unsecured loan from the person engaged in providing accommodation entry - HELD THAT - Assessee duly paid the interest on the loan amount and deducted. Copy of Form no.16A was also filed and the AO has not brought on record any evidence / reason to disbelieve the evidence filed by the assessee. As satisfied with the reasoning of the CIT(A) that the addition was merely made on the basis of presumption that all the five concerns from whom loan was taken were managed and controlled by Shri Bhawarlal Jain. The statement was also recorded wherein there is no mention that any accommodation entry was obtained. The case of the assessee is fortified by the reply to question no.40 and 41 wherein it has been tendered that the loan was advanced and interest @ 9% p.a. was charged. The name of the assessee is nowhere mentioned in the list of suspicious dealer / person. Thus, find no infirmity in the conclusion of the CIT(A), resulting into dismissal of the impugned ground raised by the Revenue. Addition of interest expenditure on alleged bogus loans - HELD THAT - On a perusal of record and the assertions made by the respective Counsels. There is a finding in the impugned order that the assessee duly produced the bank statement from where interests were paid also copies of form no.16A evidencing the TDS made and deposited into the Government account with respect to payment of interest. Since in earlier paras of this order since have upheld the order of the learned CIT(A), therefore, the issue of interest is consequential in nature, therefore, the conclusion drawn in the impugned order is upheld. - Decided against revenue.

Summary

Issues:
1. Addition of unsecured loan under section 68 of the Income Tax Act, 1961.
2. Deletion of addition of interest expenditure on alleged bogus loans.

Analysis:
1. The first issue revolves around the addition of an unsecured loan under section 68 of the Income Tax Act, 1961. The assessee, engaged in the business of builder and developer, declared a loss in the return. The assessment was completed, and the case was reopened based on information regarding unsecured loans from various parties. The Assessing Officer treated the loan as unexplained cash credit, leading to an addition of a specific amount. However, the assessee provided documentary evidence during assessment proceedings, including confirmations, bank statements, and acknowledgments. The Tribunal noted that the lender responded to notices confirming the transaction, and the loans were taken through the banking channel. The loans were reflected in the balance sheet, and no cash deposits or withdrawals were found to suggest accommodation entries. The Tribunal found no reason to disbelieve the evidence filed by the assessee, concluding that the addition was based on a presumption. The Tribunal upheld the decision of the CIT(A) to delete the addition, dismissing the Revenue's appeal.

2. The second issue involves the deletion of an addition of interest expenditure on alleged bogus loans. The Tribunal found that the assessee produced bank statements and Form 16A to evidence TDS payments on interest. Given the previous decision to uphold the CIT(A)'s order on the primary issue of unsecured loans, the Tribunal considered the interest issue consequential and upheld the conclusion drawn in the impugned order. Consequently, the appeal of the Revenue was dismissed, affirming the decisions made in favor of the assessee.

This detailed analysis of the judgment highlights the key arguments, factual findings, and legal reasoning behind the decisions made by the Tribunal regarding the issues raised in the appeal.