2008 (1) TMI 518 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this judgment are the objection of Revenue to the order of CIT(A)-XI, Ahmedabad for asst. yr. 1990-91 regarding the carry forward of losses, deletion of credit in the name of Shri Ravi Ghai, and the addition of Rs. 11 lacs without verifying the genuineness of the creditor.

Carry Forward of Losses:
The assessee filed the return of income for asst. yr. 1990-91 based on unaudited accounts and estimate basis. The AO issued a notice under s. 139(9) of the Act for rectifying defects in the return. The assessee requested an extension of two months to rectify the defects, which was granted. The assessee submitted audited accounts within the extended time and filed a revised return. The AO, however, refused to consider the revised return for assessment under s. 143(3) and disallowed the claim of loss. The CIT(A) accepted the assessee's plea, stating that the original return was valid, and directed the AO to allow the carry forward of losses as per law.

Deletion of Credit in the Name of Shri Ravi Ghai:
The CIT(A) also directed the AO to delete the credit of Rs. 11 lacs standing in the name of Shri Ravi Ghai. The CIT(A) held that the addition made by the AO under s. 68 of the IT Act was not justified, as the creditworthiness of the creditor and genuineness of the transaction were proven by the appellant company.

Verification of Creditor's Genuineness:
The Revenue contended that new evidence was entertained without giving an opportunity to verify the genuineness of the creditor as per r. 46A of the IT Rules, 1962. However, the CIT(A) found no justification for the addition made by the AO and deleted the amount added under s. 68 of the IT Act, considering all loans to be old loans.

Conclusion:
The ITAT Ahmedabad-B dismissed the appeal of the Revenue, upholding the order of the CIT(A) to allow the carry forward of losses and delete the credit in the name of Shri Ravi Ghai. The Tribunal found the original return to be valid, and the decision relied upon by the Revenue was deemed unhelpful in this context.