2016 (4) TMI 1375 - AT - Income Tax

Addition of unsecured loans u/s. 68 - HELD THAT - Assessee has proved identity genuineness of the transaction and the credit worthiness of the lenders by furnishing requisite details like confirmations PAN details return of income bank statements etc. It is the finding of the CIT(A) that on perusal of the bank statements all the lenders have advanced monies to the assessee out of funds obtaining the bank statements out of deposits through bank transfers into their accounts. CIT(A) that first deposits are received through bank transfers from the lenders accounts and thereafter they were given to the assessee company by account payee cheque. CIT(A) that AO has not disputed the above facts nor has brought any material on record to suggest that the said transfers are not genuine transfers and the lenders also confirmed giving funds to the assessee through account payee cheque and shares were also allotted by the assessee company against such funds. CIT(A) concluded that assessee has established not only the credit worthiness and identity of the said creditors but also established the genuineness of the transaction. None of the finding of the CIT(A) has been dislodged by the revenue with evidences. We uphold the order of the CIT(A) in deleting the addition made u/s. 68 - Decided against revenue.

Summary

Issues:
1. Validity of assessment order
2. Disallowance of interest expenses under Income from House Property
3. Disallowance of Municipal Taxes
4. Admission of additional evidences by CIT(A)
5. Addition of unsecured loans u/s. 68 of the Act

Validity of Assessment Order:
The appellant challenged the validity of the assessment order, claiming it was illegal and without jurisdiction. However, the Ld. CIT(A) upheld the order. The Ld. Counsel for the assessee did not press ground No. 1 & 3, leading to their dismissal.

Disallowance of Interest Expenses and Municipal Taxes:
The appellant contested the disallowance of interest expenses under Income from House Property, along with Municipal Taxes. The Ld. CIT(A) upheld these disallowances, prompting the appellant's appeal. The Ld. Counsel argued that additional evidences were not considered, suggesting a remand to the Assessing Officer for a fresh decision.

Admission of Additional Evidences by CIT(A):
The dispute centered on the admission of additional evidences by the CIT(A). The Ld. Departmental Representative highlighted that the CIT(A) rejected the evidences as they were not filed before the Assessing Officer. The ITAT opined that technical grounds should not hinder the consideration of additional evidences, directing a re-examination by the Assessing Officer in the interest of justice.

Addition of Unsecured Loans u/s. 68 of the Act:
The Revenue contested the deletion of an addition of unsecured loans amounting to ?2,66,05,000 under section 68 of the Act. The Assessing Officer treated the loans as unexplained cash credits due to non-appearance of creditors. However, the Ld. CIT(A) deleted the addition based on the genuineness of transactions and creditworthiness of the creditors, citing relevant case laws. The ITAT upheld the CIT(A)'s decision, emphasizing that the assessee proved the identity, genuineness, and creditworthiness of the creditors adequately.

In conclusion, the ITAT partly allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal. The judgment highlighted the importance of substantiating transactions and maintaining proper documentation to establish the legitimacy of financial dealings in tax assessments.