2021 (10) TMI 90 - AT - Income Tax

Addition u/s 68 - unexplained cash credit - loans received from creditors - HELD THAT - Addition was made by the AO of the loans received by the assessee from six creditors. When the matter was carried before the CIT(A), Assessee furnished the copy of the ledger accounts, their bank accounts, copies of income tax returns and other evidences to prove the genuineness of the loan CIT(A) after considering all the evidences furnished by the assessee had deleted the addition by noting that the AO did not make the necessary enquires and that the AO rejected the explanation of the assessee on the basis of surmises. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed.

Summary

Issues:
Appeal against deletion of addition made under Section 68 of the Income Tax Act, 1961.

Analysis:
The case involved an appeal by the Revenue against the order of the Principal Commissioner of Income Tax (OSD) (Appeals)-8, Delhi for Assessment Year 2010-11. The Revenue challenged the deletion of an addition of ?1,60,10,000 made by the Assessing Officer under Section 68 of the Income Tax Act, 1961. The Assessing Officer noted an increase in unsecured loans taken by the company and found that the parties providing the loans were interrelated with the assessee and no interest was paid on the loans. The Revenue contended that the loans were not genuine. However, the assessee, a Non-Banking Financial Company (NBFC), provided detailed submissions including copies of confirmations, bank accounts, income tax returns, and ROC particulars to prove the genuineness of the loans.

The Commissioner of Income Tax (Appeals) (CIT(A)) considered the submissions and evidence filed by the assessee and deleted the addition made by the Assessing Officer. The CIT(A) found that the Assessing Officer rejected the explanation of the assessee without making necessary inquiries and based on surmises. The CIT(A) also noted that the non-charging of interest by the loan creditors did not render the transactions non-genuine. The Revenue, aggrieved by the CIT(A) order, appealed to the Appellate Tribunal.

During the appeal before the Appellate Tribunal, the Revenue supported the Assessing Officer's order, while the assessee reiterated its submissions made before the Assessing Officer and CIT(A) in support of the deletion of the addition. The Tribunal examined the materials on record and found that the CIT(A) had considered all the evidence furnished by the assessee and had validly deleted the addition under Section 68 of the Act. The Tribunal observed that the Assessing Officer did not conduct necessary inquiries and rejected the assessee's explanation on surmises. As no fallacy in the CIT(A)'s findings was pointed out by the Revenue, the Tribunal dismissed the Revenue's appeal and upheld the order of the CIT(A).

In conclusion, the Appellate Tribunal dismissed the Revenue's appeal against the deletion of the addition made under Section 68 of the Income Tax Act, 1961, as the CIT(A) had correctly considered the evidence provided by the assessee and found the loans to be genuine, while noting the lack of proper inquiries by the Assessing Officer.