2018 (4) TMI 793 - AT - Income Tax

Addition u/s 68 - sundry creditor M/s. Transearch Consultations Pvt. Ltd - assessee has written back the amount in question - Held that - A.O. should have made full addition against the assessee-company of ₹ 33 lakhs. The book results of the assessee-company have not been disturbed by the A.O. The decision in the case of CIT vs. Ritu Anurag Aggarwal (2009 (7) TMI 1247 - DELHI HIGH COURT) would support the case of the assessee-company. The assessee-company has also written back the amount in question in subsequent year which is also supported by the ledger account of this party. Since the assessee-company has offered the same amount for taxation in subsequent year, therefore, if the said addition is maintained in the assessment year under appeal, it would amount to double addition. Otherwise also, it is a case of loss, therefore, when amount is surrendered subsequently for taxation, at the best, it could be a tax neutral exercise. Considering all no justification to sustain the addition. - Decided in favour of the assessee-company. Addition u/s 68 in respect of unsecured loans from M/s. Maple Technology Ltd., and M/s. Marry Gold Overseas Limited - Held that - As the assessee-company proved the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. The decisions relied upon by the Ld. D.R. do not support the case of the Revenue - no justification to sustain the addition

Issues Involved:
1. Addition of ?18 lakhs under Section 68 of the I.T. Act in respect of sundry creditor M/s. Transearch Consultations Pvt. Ltd.
2. Addition of ?5 crores under Section 68 of the I.T. Act in respect of unsecured loans from M/s. Maple Technology Ltd. and M/s. Marry Gold Overseas Limited.
3. Taxation under Section 115BBE of the I.T. Act.

Issue-wise Detailed Analysis:

Issue No.1: Addition of ?18 lakhs under Section 68 of the I.T. Act in respect of sundry creditor M/s. Transearch Consultations Pvt. Ltd.

The assessee-company challenged the addition of ?18 lakhs under Section 68 of the I.T. Act concerning the sundry creditor M/s. Transearch Consultations Pvt. Ltd. The A.O. made the addition due to the absence of a reply and supporting documents from the creditor. The assessee argued that the amount was part of a running account with substantial movement and should not be added under Section 68. The Ld. CIT(A) upheld the addition, noting that the assessee had not discharged the onus of proving the genuineness of the amount.

Upon review, the tribunal found that the ledger account of the creditor was submitted during the assessment, showing various transactions and that the amount in question was received through banking channels. The assessee-company had written off the amount in the subsequent year and offered it for taxation, which would result in double taxation if the addition were maintained. The tribunal concluded that the addition of the closing balance was not justified and deleted the addition of ?18 lakhs.

Issue No.2: Addition of ?5 crores under Section 68 of the I.T. Act in respect of unsecured loans from M/s. Maple Technology Ltd. and M/s. Marry Gold Overseas Limited

The assessee-company contested the addition of ?5 crores under Section 68 for unsecured loans from M/s. Maple Technology Ltd. and M/s. Marry Gold Overseas Limited. The A.O. questioned the genuineness and creditworthiness of the lenders, noting discrepancies in their financial statements and the manner of transactions in their bank accounts. Summons were issued to the Director of both companies, who confirmed the loans but failed to provide a copy of the agreement.

The tribunal observed that the identity of the creditors was established, and the transactions were conducted through banking channels. The creditors had provided confirmations, bank statements, ITRs, and balance sheets. The assessee-company had paid interest on these loans, which was accepted by the A.O. The tribunal noted that the amounts were either repaid or written back in subsequent years, preventing double addition. The tribunal emphasized that the assessee cannot be required to prove the source of the source and found that the A.O. did not conduct sufficient investigation. Consequently, the tribunal deleted the addition of ?5 crores.

Issue No.3: Taxation under Section 115BBE of the I.T. Act

The A.O. had stated that the additions under Section 68 would be taxed separately under Section 115BBE and not reduced from the business losses. However, since the tribunal deleted the additions under Section 68, this issue became academic, and no further finding was necessary.

Conclusion:

The tribunal allowed the appeal of the assessee, deleting the additions of ?18 lakhs and ?5 crores under Section 68 of the I.T. Act. The issue regarding taxation under Section 115BBE was rendered academic due to the deletion of the additions. The appeal was pronounced in favor of the assessee-company.

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