2016 (3) TMI 1475 - AT - Income Tax

Addition u/s 68 - unsecured loans raised by the assessee - loan which was received prior to the start of the previous year - CIT(A) deleted addition - HELD THAT - A categorical finding has been given by CIT(A) that there is no cash credit received during the present year and all the loans were received prior to 01/04/2008. This finding of CIT(A) could not be controverted by Learned D. R. of the Revenue. Hence we find no reason to interfere in the order of CIT(A) because no addition can be made u/s 68 of the Act in respect of any loan which was received prior to the start of the previous year relevant to present assessment year. Accordingly this ground is rejected. Addition u/s 41(1) - Addition of amount appearing in the books of accounts of the assessee against sundry creditors since the assessee could not substantiate these credits - CIT(A) deleted addition - HELD THAT - It cannot be said that there is any liability which has ceased to exist thus we find no reason to interfere in the order of learned CIT(A) and accordingly reject ground No. 2 of the Revenue. Disallowance of expenses - expenses not wholly necessarily and exclusively related to own business - CIT(A) deleted addition - HELD THAT - CIT(A) has examined each and every item of expense in detail and the disallowance was deleted by him on the basis of his categorical finding that all the expenses are fully necessarily and exclusively related to assessee s business and the same are allowable expenses except small portion which is already disallowed by him and these findings of CIT(A) could not be controverted by Learned D. R. of the Revenue. Hence we find no reason to interfere in the order of CIT(A). Appeal of the Revenue stands dismissed.

Summary

Issues Involved:
1. Deletion of addition of Rs. 76,58,226/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961.
2. Deletion of addition of Rs. 32,82,000/- made by the Assessing Officer concerning sundry creditors.
3. Deletion of addition of Rs. 4,25,000/- made by the Assessing Officer concerning disallowed expenses.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68:
The Revenue contested the deletion of Rs. 76,58,226/- added by the Assessing Officer as unsecured loans under Section 68 of the Income Tax Act, 1961. The CIT(A) found that no cash credit was received during the assessment year 2009-10; all loans were received before 01.04.2008 and had been considered in previous assessment proceedings (A.Y. 2002-2003 to A.Y. 2005-2006). The CIT(A) noted that the transactions were through banking channels and supported by bank statements and confirmations. The Assessing Officer's doubts about the genuineness and creditworthiness of the creditors were deemed untenable as no new loans were received in the relevant year. The Tribunal upheld the CIT(A)'s findings, noting that the Revenue could not controvert the fact that no loans were received during the relevant year, thus rejecting the addition under Section 68.

2. Deletion of Addition concerning Sundry Creditors:
The Revenue challenged the deletion of Rs. 32,82,000/- related to sundry creditors. The CIT(A) found that the appellant had filed confirmations for these liabilities, and the transactions were through banking channels. Specifically, amounts advanced to Shri Ajay Kumar Gupta and Shri Dinesh Kumar Gupta for property purchases were returned and credited to the appellant's business concern in May 2008. The CIT(A) concluded that these were not extinguished trade liabilities nor business receipts, thus not attracting Section 41(1) of the Act. The Tribunal agreed with the CIT(A), noting that the liabilities had not ceased to exist and were properly accounted for, thereby rejecting the Revenue's ground.

3. Deletion of Addition concerning Disallowed Expenses:
The Revenue disputed the deletion of Rs. 4,25,000/- related to various business expenses disallowed by the Assessing Officer. The CIT(A) provided a detailed analysis of each expense category, including audit fees, advertisement, bank charges, depreciation, insurance, legal expenses, loading expenses, miscellaneous expenses, postage, printing and stationery, repairs and maintenance, salary, sales promotion, telephone expenses, traveling expenses, vehicle running and maintenance, brokerage expenses, DP charges, and security transaction tax. The CIT(A) found that most expenses were fully, necessarily, and exclusively related to the appellant's business, supported by evidence such as bank statements, invoices, and vouchers. Minor disallowances were made for personal use of car-related expenses. The Tribunal upheld the CIT(A)'s findings, noting that the Revenue could not provide contrary evidence to dispute the detailed and categorical findings of the CIT(A).

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order in its entirety, and confirming that the additions made by the Assessing Officer were rightly deleted based on the evidence and detailed analysis provided by the CIT(A).