2023 (8) TMI 375 - AT - Income Tax

Disallowance u/s 68 - amounts received as loans - CIT(A) directing the AO to disallow interest on above mentioned loans - HELD THAT - In the present case, undisputedly the assessee obtained unsecured loan from 9 entities and submitted details of PAN and copies of ITR, copies of ledger accounts and documentary evidence showing repayment of loans along with interest after deducting TDS as per IT Rules then the allegations of authorities below doubting the creditworthiness and genuineness of the transaction cannot be held as unproved particularly when there is deliberations by the ld CIT(A) in his order regarding documentary evidences submitted before him as well as before AO. The identity and creditworthiness of the creditors and genuineness of the transaction rooted through banking channel. As the factual position also gets strong support from the fact that the authorities below have not disputed or controverted the very relative fact that the assessee has repaid entire loan amount along with interest payable thereon during the relevant financial period securing by the loan account and at the end of the year there was no credit or unsecured loan was issued in the books of account of the assessee. After submission of documentary evidence and details of 9 loan creditors there is deliberation on the documentary evidences submitted by the assessee by the CIT(A) and thus, the Tax Authorities below did not discharge onus shifted on him by disapproving unsecured loan creditors. Therefore, the addition made by the AO and sustained by the ld CIT(A) is not justified and sustainable. Addition u/s 68 - amount received as advance against property - HELD THAT - As cause of cancellation agreement to sale of property and other compensation etc to be given by one party to other is concerned. Firstly, these facts are not clear from the material available on record and secondly, these fact have no bearing on the glaring factual position that the assessee received advance and repaid back to the said entity due to cancellation of agreement. In such a situation, no addition can be made and sustained in the hands of the assessee by invoking deeming provision of section 68 and by alleging and considering the same as unexplained in the hands of the assessee. Accordingly, AO is directed to delete the impugned addition and thus, ground of assessee is allowed.

Summary

Issues involved:
The appeal against the order of the ld CIT(A)-VIII, New Delhi dated 26.10.2010 for AY 2007-08.

Ground Nos. 1 and 2:
The appeal raised concerns about the disallowance of loans received from various entities, totaling Rs. 31,55,000, under section 68. The appellant argued that the loans were repaid with interest and TDS deducted, thus no addition was warranted. The ld CIT(A) upheld the addition, stating lack of evidence on creditworthiness. The Tribunal found that the appellant provided substantial documentary evidence, including ledger accounts and bank statements, proving the loans' genuineness. The Tribunal also noted that the creditors showed interest income in their returns. Relying on a Bombay High Court judgment, the Tribunal held that the appellant had discharged the onus of proving the loans' legitimacy, leading to the deletion of the addition and the direction to disallow interest reversed.

Ground No. 3:
The appellant did not press this ground, leading to its dismissal as not pressed.

Ground No. 4:
The appeal contested the addition of Rs. 15,00,000 received from M/s Rishi Promoters (P) Ltd. as advance against property. The appellant provided evidence of the advance and its return, including ledger accounts and balance sheets. The ld CIT(A) upheld the addition due to lack of details on the cancellation of the sale agreement. The Tribunal observed that the appellant had repaid the advance due to the agreement's cancellation, and the lack of clarity on the cancellation circumstances did not warrant the addition. Consequently, the Tribunal directed the deletion of the addition.

Ground No. 5:
The appellant did not press this ground, leading to its dismissal as not pressed.

In conclusion, the Tribunal partly allowed the appellant's appeal, directing the deletion of the additions related to loans and the advance against property.