2021 (2) TMI 424 - AT - Income Tax

Unexplained investment u/s 69 - HELD THAT - Considering the fact that the assessee s business is confined to that of finance broker and this business is consistently been followed since many years and further since the Ld. A.O has not brought any corroborative evidence on record by calling for necessary information from the various parties whose names are mentioned in the seized document, the case of the revenue becomes weak. In the paper book assessee has filed ledger account of various parties and the names of most of them are also appearing in the seized document BS-28 and these confirmation accounts clearly reveals that there were regular transactions with these parties through account payee cheques with regard to the loan given by the lenders and received by the borrowers and the repayment there after. No evidence have been brought on record that any of these parties have accepted to have taken loan in cash from the assessee - we find no reason to interfere in the finding of Ld. CIT(A) deleting the addition. - Decided against revenue Unaccounted interest income - addition made by Ld. A.O on the basis of seized document BS-28 observing that the alleged interest income is received by the assessee on monthly basis on cash loan given - as per assessee there was no cash loan given and all the transactions were through account payee cheques which have been duly accounted in the books - CIT(A) deleted the addition - HELD THAT - AO has picked up transactions which have narration as interest received in cash, however, did not discuss about the interest portion received through cheques. The interest portion received through cheques is also not recorded in books of appellant, if the AO has treated interest received in cash as undisclosed interest income they why the interest received through cheques is not charged to tax. The one and only reason for not making addition on account of interest received through cheque was that the interest has been actually received by the lender and not by the appellant. Thus, the AO was not justified in making additions on assumption and presumption basis - DR failed to rebut the finding of Ld. CIT(A) by placing any material in its favour and thus we find no reason to interfere in the finding of Ld. CIT(A) deleting the addition. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition of ?1,85,72,100/- made under Section 69 of the Income Tax Act, 1961.
2. Deletion of addition of ?2,03,610/- on account of unaccounted interest income.

Issue-wise Detailed Analysis:

1. Deletion of Addition of ?1,85,72,100/- under Section 69:
The Revenue challenged the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] to delete the addition of ?1,85,72,100/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961. The AO alleged that the assessee had given cash loans based on seized documents (BS-28) during a search operation. The assessee contended that they acted purely as a finance broker, arranging loans between lenders and borrowers, and all transactions were conducted through account payee cheques. The CIT(A) found that the AO did not conduct any independent inquiry to substantiate the claims of cash loans and accepted the assessee's explanation that the transactions were brokered and conducted via cheques. The CIT(A) relied on judicial precedents, including the cases of Biren V Savla vs ACIT and ACIT vs V.Kishore Lal Balwant Rai, to conclude that the AO's additions were based on assumptions without corroborative evidence. Consequently, the CIT(A) confirmed a minor addition of ?27,900/- as brokerage income and deleted the remaining ?1,85,72,100/-.

2. Deletion of Addition of ?2,03,610/- on Account of Unaccounted Interest Income:
The AO made an addition of ?2,03,610/- alleging that the assessee received interest income in cash from the cash loans given. The assessee rebutted this by stating that no cash loans were given and all transactions were through account payee cheques, duly accounted for in the books. The CIT(A) observed that the AO selectively picked transactions showing interest received in cash while ignoring interest received through cheques. The CIT(A) concluded that the AO's addition was based on assumptions and lacked substantive evidence. Therefore, the CIT(A) deleted the addition of ?2,03,610/-.

Conclusion:
The Tribunal upheld the CIT(A)'s findings, emphasizing that the AO failed to provide corroborative evidence for the alleged cash loans and interest income. The Tribunal noted that the assessee's business as a finance broker was consistently carried out through account payee cheques, and no evidence supported the AO's claims of cash transactions. Consequently, the Tribunal dismissed the Revenue's appeal, confirming the deletion of both additions.

Judgment:
The appeal by the Revenue was dismissed, and the order pronounced in the open Court on 09.02.2021.