2021 (6) TMI 725 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - HELD THAT - As assessee has filed all the details required from these loan creditors for proving the identity and creditworthiness of each of the loan creditors and the genuineness of the transactions. The documents filed are copy of loan confirmation letters, copy of the bank pass books evidencing the fact that the transactions are taken place through banking channels, copy of the income tax returns filed by each of the loan creditors which proves that they are all income tax assessee s, annual accounts including balance sheet of each of the loan creditors. CIT(A) has discussed each of the documents filed by these loan creditors - He has given factual findings on each of these cash credits. The ld. D/R could not controvert any of these factual findings. AO has issued notices u/s 133(6) of the Act to each of the loan creditors and all these notices were complied with. We uphold the factual findings of the ld. CIT(A) and dismiss this ground of the Revenue. Addition made u/s 2(22)(e) - HELD THAT - The loan/advance carried an interest of 12% per annum. On these facts, the ld. CIT(A) relied on the decision of Pradip Kr. Malhotra 2011 (8) TMI 16 - CALCUTTA HIGH COURT as well as CIT vs. Creative Dyeing Printing (P.) Ltd. 2009 (9) TMI 43 - DELHI HIGH COURT and deleted the addition. We find no infirmity in the same.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Addition u/s 68 of the Income Tax Act - Unexplained cash credits.
3. Addition u/s 2(22)(e) of the Income Tax Act - Loan carrying interest.

Condonation of Delay:
The appeal filed by the Revenue was directed against the order of the CIT(A) for the Assessment Year 2013-14, with a delay of 52 days. The delay was condoned due to valid reasons preventing timely filing.

Addition u/s 68 - Unexplained Cash Credits:
The case involved a partnership firm engaged in trading and manufacturing, where the AO made additions under section 68 of the Act for unexplained cash credits. The CIT(A) deleted these additions after thorough examination of documents, including loan confirmations, bank passbooks, ITRs, and balance sheets of loan creditors. The AO's remand report confirmed the legitimacy of the loans, and the CIT(A) upheld the deletion of these additions.

Addition u/s 2(22)(e) - Loan Carrying Interest:
Regarding the addition made under section 2(22)(e) of the Act for a loan carrying 12% interest, the CIT(A) referred to relevant case laws and deleted the addition. The Tribunal found no fault in this decision and upheld the deletion of the addition.

In conclusion, the Tribunal dismissed the Revenue's appeal after considering all submissions, factual findings, and relevant case laws. The factual findings of the CIT(A) were upheld, leading to the dismissal of the appeal. The judgment highlighted the importance of providing necessary documentation to prove the legitimacy of transactions and the applicability of relevant legal precedents in deciding tax matters.