2021 (5) TMI 174 - AT - Income Tax

Undisclosed income - addition was made on the basis of the documentary evidence - CIT-A deleted the addition - HELD THAT - We find that the ld. CIT (A) has analyzed each and every aspect of the allegations made the AO called for reports, gone through the contents of the information received, the evidences before the revenue, the explanation of the assessee and the remand reports and came to a conclusion that there is no liabilities on the part of the assessee and the revenue could not bring about any cogent material to prove the allegations. Hence, we decline to interfere with the order of the ld. CIT (A). Addition u/s 68 - unsecured loans - creditors gave the loan to the appellant either after borrowing the fund or by obtaining the share application money (in case of corporate creditors only), hence AO held that the creditors had no sufficient money of their own for giving the loan to the appellant - HELD THAT - There is no justification to treat the Credit as Unexplained, and hence the addition made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. the submission of both the parties, arguments, evidences and find that the ld. CIT (A) has given very cogent reason going through each and every creditors, the copy of ITRs, bank statement, balance sheet, receipt and repayment. No perversity or factual inaccuracies or legal in congruencies could be established. Hence, we decline to interfere with the order of the ld. CIT (A). Deduction u/s 24 - Disallowance of Interest - Miscellaneous Receipts included Rental Receipt - HELD THAT - A perusal of the facts of the case and the legal position shows that there was no challenge to the fact that the amount was received from M/s HHG Global Pte. Ltd. as Rent, and that the appellate authorities had the jurisdiction to entertain additional claims made before them. In the instant case, the claim for Deduction u/ s 24(a) had been made before the Assessing Officer during the assessment proceedings (though not by revised Return), but by revised Computation of Income, and in view of the fact that the amount in question was basically Rental Receipt, it had to be taxed as Income from House Property and hence the Deduction allowable had to be given to the Appellant. Reliance is being placed on order of the Hon ble Apex Court in the case of Goetze India Ltd. Vs CIT 2006 (3) TMI 75 - SUPREME COURT . Hence, we decline to interfere with the order of the ld. CIT (A). Disallowance u/s 14A - HELD THAT - We find that the assessee has not earned any exempt income and hence we direct that no disallowance is called for, as the Section 14 A will not apply if no exempt income is received or receivable during the relevant previous year.

Issues Involved:
1. Deletion of addition on account of undisclosed income.
2. Allowance of deduction under Section 24.
3. Deletion of addition on account of unexplained unsecured loans.
4. Deletion of addition on account of unexplained credits.
5. Deletion of addition made under Section 14A read with Rule 8D.

Detailed Analysis:

1. Deletion of Addition on Account of Undisclosed Income:
The revenue challenged the deletion of an addition of ?28,00,00,000/- made on account of undisclosed income. The Assessing Officer (AO) based this addition on email evidence suggesting the appellant received $7,000,000 from Storm International. The appellant denied receiving any money, and the CIT (A) found no corroborative evidence to support the AO's claim. The Tribunal upheld the CIT (A)'s decision, emphasizing the lack of direct evidence and the AO's reliance on presumptions and suspicions without substantial proof.

2. Allowance of Deduction Under Section 24:
The AO disallowed a deduction of ?37,59,156/- claimed under Section 24 for rental income received from HHG Global Pte. Ltd. The CIT (A) allowed the deduction, noting that the rental income was correctly classified under "Income from House Property" and thus eligible for the deduction. The Tribunal upheld this decision, citing the legal provision and the Supreme Court's ruling in Goetze India Ltd. vs. CIT.

3. Deletion of Addition on Account of Unexplained Unsecured Loans:
The AO added ?10,91,67,051/- as unexplained unsecured loans, suspecting the appellant of routing unaccounted money through intermediaries. The CIT (A) deleted the addition, finding that the appellant provided sufficient evidence (confirmations, bank statements, ITRs, and balance sheets) to prove the identity, creditworthiness, and genuineness of the lenders. The Tribunal upheld the CIT (A)'s decision, emphasizing the lack of substantive evidence from the AO to support the addition.

4. Deletion of Addition on Account of Unexplained Credits:
The AO added ?46,00,17,516/- as unexplained credits. The CIT (A) deleted the addition, noting that the appellant provided adequate documentation to substantiate the credits. The Tribunal upheld this decision, citing the AO's failure to provide concrete evidence to counter the appellant's claims.

5. Deletion of Addition Made Under Section 14A Read with Rule 8D:
The AO disallowed ?4,15,141/- under Section 14A read with Rule 8D, related to expenses incurred for earning exempt income. The CIT (A) deleted the addition, noting that the appellant did not earn any exempt income during the relevant year. The Tribunal upheld this decision, referencing the legal principle that Section 14A does not apply if no exempt income is received or receivable during the year.

Conclusion:
The Tribunal dismissed the revenue's appeals, upholding the CIT (A)'s decisions on all contested issues. The Tribunal found that the AO's additions were largely based on presumptions and lacked substantive evidence, while the appellant provided sufficient documentation to support their claims.

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