2024 (12) TMI 501 - AT - Income Tax

Addition u/s 68 - Addition @ 60% u/s. 115BBE - HELD THAT - All the loan transactions were done through banking channels, wherein due interest is also paid by the assessee after deducting TDS u/s. 194A. The corresponding interest income is offered by the unsecured creditors in the Returns of Income filed before their respective Income Tax Authorities. The entire loans were repaid through banking channels within a very short period. Thus the above loans transaction cannot be doubted and the additions made on this account is liable to be deleted. The additions made u/s. 68 by the AO is not sustainable in law and the same are hereby directed to be deleted. Consequently, taxing income u/s. 115BBE does not arise. Thus the Grounds raised by assessee are hereby allowed.

Summary

Issues:
Challenge to addition of unexplained cash credit under section 68 of the Income Tax Act, 1961.
Validity of taxing the amount under section 115BBE.
Levying of interest under sections 234B, 234C, and 234D.
Appellant's request to amend grounds of appeal.

Analysis:

Issue 1:
The appeal was filed against the appellate order passed by the Commissioner of Income Tax (Appeals) concerning the addition of unexplained cash credit under section 68 of the Income Tax Act, 1961 for the Assessment Year 2017-18. The assessee had shown unsecured loans from various creditors, and the Assessing Officer treated the entire unsecured loans as unexplained income under section 68, taxing it at 60% u/s. 158BBE. The CIT(A) confirmed the additions, stating that the creditworthiness of the loan transactions was not established by the assessee.

Issue 2:
The appellant challenged the validity of taxing the amount under section 115BBE of the Income Tax Act. The appellant contended that the loan transactions were genuine and supported by substantial evidence. The appellant provided details of the loan transactions, repayments made through cheque payments, and interest paid to the creditors. The appellant argued that the lower authorities erred in treating the loan transactions as non-genuine. The appellant relied on a Jurisdictional High Court Judgment to support their claim.

Issue 3:
Regarding the levying of interest under sections 234B, 234C, and 234D, the appellant sought the deletion of the interest amounts imposed by the Assessing Officer. The appellant contended that the additions made by the lower authorities were not sustainable in law and should be deleted. The appellant presented evidence of all loan transactions being conducted through banking channels, interest being paid, and loans being repaid within a short period, indicating the genuineness of the transactions.

Issue 4:
The appellant requested leave to add, amend, or alter any ground of appeal before the hearing. The appellant's counsel presented a Paper Book containing relevant documents supporting the genuineness of the loan transactions. The appellant argued that the loans were repaid through banking channels, interest income was offered by the creditors in their income tax returns, and the transactions were legitimate.

In conclusion, the Tribunal allowed the appeal filed by the Assessee, directing the deletion of the additions made under section 68 of the Income Tax Act. The Tribunal held that the additions were not sustainable in law, following a Jurisdictional High Court Judgment. Consequently, the taxing of income under section 115BBE was deemed unnecessary. The Tribunal also directed the deletion of the interest levied under sections 234B, 234C, and 234D.