2016 (5) TMI 325 - AT - Income Tax

Addition on account of interest income - CIT(A) deleted addition - Held that - We are of the considered view that the CIT(A) has decided the said issue after noticing that the final accounts filed by the assesee, was approved by Auditors, Board of Directors and Shareholders. The CIT(A) further took into consideration that the auditors have issued the separate certificate thereby confirming the stand taken by the ld. AR. Hence, we are of the view that the AO was not justified in placing reliance on financial statements which were not approved by shareholders. After appreciating the same the ld. CIT(A) has rightly held that AR of the assessee had established that the final accounts approved by the Auditors, Board of Directors and Shareholders of the Company as well as the final accounts filed before the Registrar of Companies did not contain the impugned note. - Decided against revenue Addition on account of unexplained cash credit - CIT(A) deleted addition - Held that - CIT(A) has correctly held that the AO proceeded to make the additions only on the ground that no confirmation was submitted by the assessee, but during the appellate proceeding, assessee submitted the confirmation before the CIT(A)which was duly verified and examined by the AO in the remand proceeding. Therefore considering those facts the CIT(A) has rightly came to the conclusion that the additions made by the AO in the absence of confirmation are not sustainable. We are of the considered opinion that the findings recorded by the CIT(A) are well reasoned and no material evidence has been brought before us to controvert or rebut the findings recorded by CIT(A) and hence, we see no reason to interfere or deviate from the orders passed by the CIT(A) - Decided against revenue

Summary

Issues Involved:
1. Deletion of addition on account of interest income
2. Deletion of addition on account of unexplained cash credit

Issue 1: Deletion of addition on account of interest income:
The case involved an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the deletion of an addition on account of interest income. The Assessing Officer (AO) had added the interest income to the total income as income from other sources due to the absence of the interest income in the final accounts attached with the return of income. The AO also disallowed brokerage paid and held a loan amount to be not genuine. The CIT(A) partly allowed the appeal. The Revenue appealed, arguing that the CIT(A) erred in deleting the addition. The CIT(A) considered the final accounts filed by the assessee, noting that they were approved by Auditors, Board of Directors, and Shareholders. The CIT(A) found merit in the argument that the impugned income could not be established to have accrued to the assessee. The ITAT upheld the CIT(A)'s decision, stating that the CIT(A) had rightly considered the evidence provided by the assessee and rejected the Revenue's appeal.

Issue 2: Deletion of addition on account of unexplained cash credit:
The second issue concerned the deletion of additions made by the AO on account of unexplained cash credit. The AO disallowed a loan amount received from a company due to the absence of a confirmation letter. The CIT(A) reviewed the case and found that the confirmation and related evidence were submitted by the assessee during the appellate proceedings. The CIT(A) concluded that the additions made by the AO in the absence of confirmation were not sustainable. The ITAT analyzed the CIT(A)'s decision and agreed that the AO's additions were based solely on the lack of confirmation, which was later provided by the assessee. As a result, the ITAT upheld the CIT(A)'s decision to delete the additions and dismissed the Revenue's appeal.

In summary, the ITAT Mumbai upheld the CIT(A)'s decision to delete the additions on both issues: interest income and unexplained cash credit. The ITAT found that the CIT(A) had considered the evidence presented by the assessee and made reasoned decisions based on the facts of the case. The Revenue's appeal was dismissed, and the orders of the CIT(A) were upheld in both instances.