2021 (4) TMI 39 - AT - Income Tax

Unsecured loans considered as unexplained cash credit u/s. 68 - CIT-A restricted part addition - HELD THAT - CIT(A) has granted substantial relief to the assessee. However, the assessee is contesting the same. Despite conceding before the ld. CIT(A) with respect to some of the loans remaining unconfirmed, the assessee has raised an appeal. Moreover, despite noting that the A.O. has observed that the additional evidence should not be admitted, the ld. CIT(A) has held that the A.O. in his remand report seems to have accepted the other loan creditors. Hence, we find that this is obvious contradiction in CIT(A)'s observation. Hence, in the interest of justice, we set aside the issue to the file of A.O. for consideration anew. Assessee's appeal is allowed for statistical purposes.

Summary

Issues:
1. Treatment of unsecured loans as unexplained cash credit under section 68 of the Income Tax Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai concerned the treatment of unsecured loans as unexplained cash credit under section 68 of the Income Tax Act, 1961 for the assessment year 2011-12. The Assessing Officer had made additions to the income of the assessee due to non-compliance and lack of evidence regarding the nature and source of cash deposits made by the assessee. The assessee, a Hindu Undivided Family engaged in F & O business, had shown total income after setting off losses, along with deposits of cash and unsecured loans in the balance sheet. The Assessing Officer found discrepancies in the details provided by the assessee regarding the loans and cash deposits.

The ld. CIT(A) accepted additional evidence submitted by the assessee during the appeal. However, upon detailed examination, it was revealed that the appellant failed to produce confirmations for a significant portion of the loans. The appellant admitted the inability to substantiate loans from several parties during the remand proceedings. The ld. CIT(A) partially allowed the appeal, restricting the addition of unsecured loans to a lower amount based on the confirmed loans.

In the absence of representation from the assessee during the Tribunal hearing, the Tribunal noted the contradictions in the observations of the ld. CIT(A) regarding the acceptance of additional evidence by the Assessing Officer. In the interest of justice, the Tribunal set aside the issue to the file of the Assessing Officer for a fresh consideration.

Ultimately, the Tribunal allowed the appeal of the assessee for statistical purposes, indicating that the issue required further examination by the Assessing Officer. The decision was pronounced in accordance with the rules of the Income Tax (Appellate Tribunal) Rules, 1962 on 02.03.2021.