2021 (8) TMI 684 - AT - Income Tax

Addition u/s 68 - unsecured loans borrowed by the appellant company - assessee submitted that proper time was not given by AO to supply the requisite details - HELD THAT - We note that very short time was granted by the Assessing Officer to the assessee to make the submission in connection with the loans. It is also the plea of learned Counsel of the assessee that certain crucial submissions were made before learned CIT(A) who has not considered the same. The assessee has also requested to admit additional evidence in connection with the loan creditors financials which were not before the Assessing Officer. CIT(A) also on the issue of opening balance of loan has remanded the matter to the Assessing Officer to make factual verification. Hence we deem it appropriate to remit the entire matter to the Assessing Officer. We make it clear that we have not considered the issue on merits in any manner whatsoever. Appeals are allowed for statistical purposes.

Summary

Issues:
1. Assessment of unsecured loans under section 68 of the Income Tax Act for the assessment year 2014-15.

Analysis:
The case involved cross-appeals by both the Revenue and the Assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The Revenue raised grounds challenging the direction of the CIT(A) to verify the opening balance of unsecured loans added under section 68 of the Income Tax Act. The Revenue contended that the CIT(A) lacked the authority to set aside the case under the guise of issuing directions. The Assessee appealed against the addition of ?1,48,34,623 towards unsecured loans borrowed during the assessment year. The Assessing Officer had added unsecured loans totaling ?4,63,14,993 to the total income of the Assessee, as the Assessee failed to provide necessary documents to prove the creditworthiness and genuineness of the transactions with the loan creditors.

The CIT(A) partially allowed the Assessee's appeal by holding that the opening balance of the loan could not be added during the year, sustaining the addition only with regard to the loans taken during the year. The CIT(A) emphasized the importance of verifying the identity, creditworthiness, and genuineness of the transaction with the creditor parties. The CIT(A) directed the Assessing Officer to verify the facts and determine if the opening balance of ?3,14,81,000 was not part of the loans taken during the year, in line with previous decisions of the Jurisdictional Tribunal. The CIT(A) instructed the AO to take necessary actions if the unsecured loans worth ?3,14,81,000 were found to pertain to earlier years.

Upon further appeal, the Tribunal noted that the Assessing Officer had granted insufficient time to the Assessee for submitting details related to the loans. The Tribunal also observed that crucial submissions made before the CIT(A) were not adequately considered. Considering these factors, the Tribunal remitted the matter back to the Assessing Officer for a fresh examination, allowing the Assessee to present additional evidence regarding the loan creditors' financials. The Tribunal directed the Assessing Officer to decide the issue afresh after providing the Assessee with a fair opportunity to be heard.

In conclusion, the Tribunal allowed the appeals for statistical purposes, emphasizing the need for a thorough and fair assessment process in determining the treatment of unsecured loans under section 68 of the Income Tax Act for the assessment year 2014-15.