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2016 (7) TMI 534 - AT - Income TaxAddition u/s 68 - Held that - CIT(A) has rightly deleted the addition of ₹ 15,00,000/- on the basis of this fact that the HUF has given loan to one Shri Bhushan Nemlekar in A.Y.2003-04 and 2004-05 of ₹ 15,00,000/- which were reflected in balance sheet. The bank statement also speaks about the entry on various dates. Mr. Bhushan Nemlekar has repaid ₹ 15,00,000/- to the HUF on 13.11.2009 and the same amount has been transferred by account payee cheque from the HUF A/c. to Shri Subodh Nemlekar on the same day. Therefore, the source of credit is the loan which were given by the HUF to one Mr.Bhushan Nemlekar. Immediately after receipt of the same amount, the amount was transferred in the accounts of the assessee. The creditworthiness and genuineness of the loan has duly been proved on record. Therefore, in the said circumstances the CIT(A) has rightly deleted the addition of ₹ 15,00,000/- u/s.68 of the Act. So far as the question of deletion of remaining amount i.e. ₹ 5,00,000/- added u/s.68 of the Act is concerned. There is no explanation on behalf of the assessee. The fact remains the same as stated by the Assessing Officer in his order. - There is no proper explanation in this regard as to why the cash was deposited in the account of payee just one or two days before the transaction. - Addition confirmed.
Issues:
- Addition of ?15,00,000 under Section 68 of the Income Tax Act - Credit-worthiness of Subodh R. Nemlekar HUF - Addition of ?5,00,000 under Section 68 on account of Unsecured Loan - Levying of interest under section 234B & 234C Analysis: 1. Addition of ?15,00,000 under Section 68 of the Income Tax Act: - The Assessing Officer added ?20,00,000 to the income of the assessee under Section 68 for unexplained cash credits. However, the CIT(A) deleted the addition of ?15,00,000 stating that the credit was explained as a loan given by HUF to Shri Bhushan Nemlekar, which was subsequently transferred to the assessee. The CIT(A) found the creditworthiness and genuineness of the loan proved, as evidenced by the balance sheet and bank statements. The order was upheld as the source of the credit was established. 2. Credit-worthiness of Subodh R. Nemlekar HUF: - The Assessing Officer questioned the credit-worthiness of Subodh R. Nemlekar HUF regarding the ?15,00,000 credit. However, the CIT(A) found that the HUF had lent the amount to Shri Bhushan Nemlekar in previous years, and the same amount was transferred to the assessee. The CIT(A) deemed the credit explained and deleted the addition under Section 68. 3. Addition of ?5,00,000 under Section 68 on account of Unsecured Loan: - The CIT(A) upheld the addition of ?5,00,000 under Section 68 for unexplained cash credits. The Assessing Officer's findings were supported by the lack of proper explanation by the assessee regarding the receipts from different creditors. The bank statements of the creditors showed cash deposits shortly before issuing cheques to the assessee, raising doubts about the transactions. The CIT(A) found the Assessing Officer's conclusions valid and sustained the addition. 4. Levying of interest under section 234B & 234C: - The appellant denied liability to pay interest under sections 234B and 234C, arguing that it was not leviable. However, the judgment did not provide detailed analysis or resolution regarding this issue. In conclusion, the ITAT Mumbai dismissed both the appeals filed by the revenue and the assessee. The CIT(A) decision to delete the addition of ?15,00,000 under Section 68 was upheld due to the established source of credit. However, the addition of ?5,00,000 was confirmed as unexplained cash credits, supported by the lack of satisfactory explanations from the assessee.
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