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2021 (3) TMI 455 - AT - Income TaxAddition u/s 68 - unsecured loan sundry creditors - addition made as assessee failed to discharge the onus of proving the genuineness of the said liabilities - HELD THAT - It is admitted position that the loan from Sinclair Builders Pvt. Ltd., has been obtained by account payee cheque. Confirmation, copy of account as well as the bank statement of the creditor has also been furnished. The assessee has also deducted TDS on the interest amount and the tax has also been deducted at source. The creditor is also assessed to tax - AO found the difference between the account of the assessee and information obtained through invoking section 133(6) of the Act without considering the reconciliation statement produced by the assessee in regard to TDS. Hence, the issue is squarely covered by the decision of the Supreme Court in the case of Orissa Corporation P. Ltd. 1986 (3) TMI 3 - SUPREME COURT As regards to the disputed amount showing in the name of Subarban Industries Ltd. since the confirmation from the said party is furnished, no addition is called for on this account. In the case of loan from MAKs and from Pratap Chandra jena we find that the loan has been brought in cheque and repayment was also made in cheque through banking channel. In this regard, bank statements were furnished but the AO has not issued notice to the creditor u/s. 133(6) of the Act to know the truth and added the same to the income of the assessee. Hence, we also find no justification to confirm the said amount and delete the same. - Decided in favour of assesee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Legitimacy of the addition of ?48,36,421/- as unsecured loan & sundry creditors under Section 68 of the Income Tax Act. Detailed Analysis: Condonation of Delay: The appeal was filed 19 days late. The assessee submitted a condonation petition supported by an affidavit from the Managing Director, explaining that the delay was due to the Authorized Representative's failure to file the appeal on time. The Tribunal, after hearing both parties and considering the condonation petition, was satisfied that there was a reasonable cause for the delay. Therefore, the delay of 19 days was condoned, and the appeal was admitted for adjudication. Legitimacy of the Addition of ?48,36,421/-: The primary issue in this appeal was whether the CIT(A) erred in confirming the addition of ?48,36,421/- as unsecured loan & sundry creditors under Section 68 of the Income Tax Act. Background: The assessee company, engaged in manufacturing polymer products, faced an addition of ?48,36,421/- in its original assessment completed on 30.12.2018. This addition was contested and subsequently remanded by the Tribunal to the Assessing Officer (AO) for verification of the loan creditors. The AO, in the reassessment, concluded that the assessee failed to prove the genuineness of the liabilities and added the amount under Section 68. The CIT(A) upheld this addition after considering the AO's remand report and the assessee's rejoinder. Findings and Arguments: 1. Sinclair Builders Pvt. Ltd.: - The AO found discrepancies between the ledger accounts submitted by the assessee and those obtained from Sinclair Builders Pvt. Ltd. under Section 133(6). The AO concluded that the cash credit of ?39,76,766/- remained unexplained. - The assessee argued that the loan was obtained and repaid via cheque, with TDS deducted. Confirmations and bank statements were provided, but the AO did not consider the reconciliation statement regarding TDS debits. 2. Suburban Industries Ltd., MAKS International, and Sri Pratap Chandra: - No confirmations were received for these creditors, leading the AO to conclude that the credits of ?8,60,655/- were unexplained. - The assessee contended that these amounts were either against outstanding balances for raw materials supplied or were brought in via cheque, with supporting bank statements provided. The AO did not issue notices under Section 133(6) to verify these claims. Tribunal's Decision: 1. Sinclair Builders Pvt. Ltd.: - The Tribunal noted that the loan was obtained by account payee cheque, with confirmations, bank statements, and TDS deductions provided. The AO's failure to consider the reconciliation statement was highlighted. Citing the Supreme Court's decision in the case of Orissa Corporation P. Ltd., the Tribunal held that no addition was warranted for this amount. 2. Suburban Industries Ltd.: - The Tribunal accepted the assessee's argument that the amount was against outstanding balances for raw materials, supported by a confirmation from Suburban Industries Ltd. The Tribunal found no justification for the addition and deleted it. 3. MAKS International and Sri Pratap Chandra: - The Tribunal found that the loans were brought in via cheque, with supporting bank statements provided. The AO's failure to issue notices under Section 133(6) was noted. The Tribunal found no justification for the addition and deleted these amounts. Conclusion: The Tribunal allowed the appeal, holding that the assessee had sufficiently discharged its onus of proving the identity, genuineness, and creditworthiness of the creditors. The addition of ?48,36,421/- was deleted, and the grounds of appeal were dismissed. Order Pronounced: The order was pronounced on 18/1/2021.
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