2018 (3) TMI 39 - AT - Income Tax

Addition u/s 69A - assessee got its money routed in the form of unsecured loans and after repayment to parties, the money was transferred / withdrawn to the assessee - CIT-A deleted the addition - Held that - A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money bullion jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilised in repaying the loan is doubtful. The addition under section 69A cannot be made. Therefore, the decision of the learned Commissioner (Appeals) has to be sustained. In the facts of the present case, there is no doubt with regard to recording of repayment of loan in the books of account and the source of such fund. What the Assessing Officer has doubted to disallow the repayment is the genuineness of unsecured loans received by the assessee in the earlier assessment years. - Decided against revenue

Summary

Issues:
1. Addition made under section 69A of the Income Tax Act, 1961 for deletion of &8377; 80,71,317.

Analysis:
The Revenue appealed against an order dated 25th February 2016, challenging the deletion of an addition made under section 69A of the Income Tax Act, 1961 amounting to &8377; 80,71,317 for the assessment year 2011-12. The Revenue contended that the assessee routed money through unsecured loans, repaid to parties, and then transferred/withdrawn back, raising doubts on the genuineness of the transactions.

The assessee, a partnership firm in the business of builders and developers, filed its return of income for the relevant year. The Assessing Officer, upon noticing substantial payments towards repayment of old unsecured loans, sought details and conducted an inquiry. The Assessing Officer doubted the creditworthiness of the creditors and held the unsecured loans as not genuine, adding back the amount under section 69A of the Act. The assessee challenged this addition before the first appellate authority.

The Commissioner (Appeals) analyzed the situation and found that the unsecured loans were received in previous financial years without any doubts raised by the Assessing Officer. The Commissioner held that the deeming provisions of section 69A would not apply as the loans were recorded in the books and transacted through regular banking channels. Therefore, the addition was deleted.

During the appeal, the Departmental Representative argued that in cases where the source of loan is unproven and repayment doubtful, section 69A can be invoked. However, the Authorized Representative supported the Commissioner's decision. The Tribunal found that the loans in question were availed in earlier years without doubts, and the genuineness was questioned only in the impugned assessment year. As the loan repayment was recorded and the source was not in doubt, the addition under section 69A was deemed unsustainable. The Tribunal distinguished the cited case and upheld the Commissioner's order, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the addition made under section 69A of the Income Tax Act, 1961.