2021 (12) TMI 1027 - AT - Income Tax

Addition u/s 68 - unsecured loan obtained by the assessee from three directors - addition on the ground that the assessee failed to substantiate with evidences to his satisfaction regarding creditworthiness of the three directors and the genuineness of the transactions - CIT(A) sustained the addition as the assessee did not appear before her to substantiate the creditworthiness of the directors and the genuineness of the transactions - as assessee submitted that adequate opportunity was not granted by the learned CIT(A) and given an opportunity, the assessee is in a position to substantiate with evidences to the satisfaction of the learned CIT(A) regarding the creditworthiness of the Directors and the genuineness of the transactions - HELD THAT - Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the learned CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law - Appeal filed by the assessee is allowed for statistical purposes

Summary

Issues:
Appeal against ex-parte order sustaining addition of unsecured loan under section 68 of the Act.

Analysis:
The appeal was filed against the ex-parte order of the learned CIT(A) sustaining the addition of ?1,36,39,191 made by the Assessing Officer under section 68 of the Act regarding an unsecured loan. The Assessing Officer noted that the assessee, a company engaged in the import/trading of mobile phones, had received unsecured loans from three directors. The assessee provided relevant details but failed to substantiate the creditworthiness of the directors and the genuineness of the transactions to the satisfaction of the Assessing Officer. As the assessee did not appear before the CIT(A), the addition was sustained.

The Tribunal considered the arguments of both sides, reviewed the orders of the Assessing Officer and CIT(A), and examined the paper book filed by the assessee. The Assessing Officer made the addition under section 68 due to the failure of the assessee to substantiate the creditworthiness of the directors and the genuineness of the transactions. The CIT(A) upheld the addition as the assessee did not appear before her. The counsel for the assessee argued that given the opportunity, they could substantiate their case. On the other hand, the DR contended that despite multiple opportunities, the assessee did not provide the necessary details.

Considering the facts and in the interest of justice, the Tribunal decided to remand the issue back to the CIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case. The assessee was instructed to appear before the CIT(A) without seeking adjournment. Failure to comply would empower the CIT(A) to pass an appropriate order. The grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed accordingly.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of the assessee substantiating their case before the CIT(A) to address the issues related to the unsecured loan.