2022 (8) TMI 1077 - AT - Income Tax

Addition u/s 68 - unsecured loans treated as unexplained cash credit - CIT-A deleted the addition - HELD THAT - DR has not been able to dispute the fact that on verification of relevant details and documents furnished by the assessee, no adverse finding was recorded by the Assessing Officer in the remand report submitted to the Ld.CIT(A). He has only pointed out that there were credits found in the bank accounts of the concerned creditors/depositors just before giving loans/advances to the assessee in many cases. However, as noted by the CIT(A) in this regard, there was no allegation made by the Assessing Officer regarding any cash deposits made by the concerned creditors/depositors in their accounts before giving the loans/advances to the assessee in question. As observed by the Ld.CIT(A) in this regard, merely because there were funds transfer by depositors/creditors from another source of investment before giving loans/advances to the assessee, the transactions could not be doubted since depositors might have their funds lying elsewhere which were brought in for giving loans/advances to the assessee. Having regard to all the facts of the case, we therefore find no infirmity in the impugned order of the Ld.CIT(A) deleting the addition made by the Assessing Officer u/s.68 - Decided against revenue. Addition of unsecured loan received from Miss Pooja Manoj Haria and disallowance of interest paid thereon - HELD THAT - The relevant details giving inter-alia her PAN were also furnished by Miss Pooja Manoj Haria which also proved that the loan in question was given by her to the assessee by A/c payee Cheque.CIT(A) held that the primary onus to establish the identity and creditworthiness of the concerned creditors as well as genuineness of the relevant transaction was duly discharged by the assessee and having regard to the relevant findings of fact recorded by the Ld.CIT(A) in his impugned order, which have unrebutted by the Ld.DR, we are of the view that the addition made by the Assessing Officer u/s.68 of the Act along with disallowance of corresponding interest of Rs.15,000/- was rightly deleted by the Ld.CIT(A). We therefore find no merit in ground No.2 of Revenue s appeal and hence the same is dismissed. Disallowance of deduction u/s.80G - deduction claimed in respect of donation made to Chief Minister Kanya Kelvani Nidhi was disallowed for want of original receipt since the assessee failed to submit the donation receipt - HELD THAT - It is observed that eventhough the original receipt for payment of donation made to Chief Minister Kanya Kelvani Nidhi was not produced by the assessee as the same was lost or misplaced, sufficient evidence was produced by the assessee to support and substantiate its claim of having paid the said donation. Even the donation receipt issued by the Executive Engineer Panchayat Department Dahod evidencing payment of donation was produced by the assessee. CIT(A), in our opinion, has rightly deleted the disallowance of assessee s claim for deduction u/s.80G of the Act made by the Assessing Officer. Ground of Revenue s appeal.

Summary

Issues Involved:
1. Deletion of addition made by the Assessing Officer under Section 68 of the Income Tax Act, 1961, on account of unsecured loans.
2. Deletion of addition made by the Assessing Officer under Section 68 for an unsecured loan from Miss Pooja Manoj Haria.
3. Deletion of disallowance of the assessee's claim for deduction under Section 80G of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68 for Unsecured Loans:
The Revenue challenged the deletion of an addition of Rs.2,88,85,846/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, treating unsecured loans as unexplained cash credits. The assessee, a partnership firm engaged in road construction, had received loans/deposits from 28 parties, which were refunded within the year. The AO added these amounts to the total income due to the assessee's failure to produce confirmations from creditors. During appellate proceedings, the assessee submitted additional evidence, including ledger accounts, bank statements, and TDS details, which the CIT(A) admitted for verification. The AO's remand report acknowledged the verification of these details without adverse findings. The CIT(A) deleted the addition, noting that the assessee had satisfactorily proved the identity, genuineness, and creditworthiness of the creditors, supported by documentary evidence and income tax returns. The Tribunal upheld the CIT(A)'s decision, citing precedents that the initial onus under Section 68 was discharged by the assessee, and the AO should have made further inquiries if not satisfied with the creditors' creditworthiness.

2. Deletion of Addition under Section 68 for Loan from Miss Pooja Manoj Haria:
The Revenue contested the deletion of an addition of Rs.10,15,000/- made by the AO under Section 68 for an unsecured loan from Miss Pooja Manoj Haria. The AO doubted the genuineness of the loan due to differing signatures and questioned the creditworthiness of Miss Haria, a student. The CIT(A) noted that the assessee provided full residential address, PAN, and an affidavit confirming the loan, explaining the signature discrepancy. The CIT(A) found that the AO did not enforce attendance or make further inquiries despite having sufficient details. The Tribunal upheld the CIT(A)'s decision, stating that the assessee had discharged the primary onus of proving the identity, creditworthiness, and genuineness of the loan transaction, and the AO's suspicion was not substantiated by evidence.

3. Deletion of Disallowance under Section 80G:
The Revenue challenged the deletion of a disallowance of Rs.25,000/- claimed as a deduction under Section 80G for a donation of Rs.50,000/- to the Chief Minister Kanya Kelvani Nidhi. The AO disallowed the claim due to the assessee's failure to produce the original receipt. The CIT(A) noted that the donation was made by cheque, evidenced by bank statements, and corroborated by a donation receipt issued by the Executive Engineer Panchayat Department Dahod. The Tribunal upheld the CIT(A)'s decision, stating that the assessee provided sufficient evidence to support the donation claim, and the disallowance was not justified merely due to the absence of the original receipt.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions of the additions made by the AO under Section 68 for unsecured loans and the disallowance under Section 80G, based on the assessee's satisfactory discharge of the initial onus and provision of sufficient documentary evidence.