2021 (2) TMI 653 - AT - Income Tax

Unexplained cash credits u/s. 68 - assessee is in receipt of unsecured loans - HELD THAT - We are inclined to remit this issue back to the file of AO to verify the documentary evidences filed by the assessee, which are placed on record; the AO is also directed to verify the company's master data from ROC of lenders companies regarding their authorised capital shown in the balance sheet as well as assessee's submissions and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee. At the same time, we direct the assessee also to file all the relevant information before the AO and, if necessary, produce the loan creditors before the AO for verification, as per the directions of the AO, in order to verify in the light of the provisions of section 68 of the Act. Addition u/s. 69 towards unexplained investment - assessee reiterated the submissions as made in ground No. 2 that the lower authorities failed to consider the explanation offered by the assessee and, he requested to remit the issue back to the file of the AO to redecide the same - HELD THAT - After considering the submissions of both the parties and perusing the material on record as well as the orders of the authorities below, we remit this issue also back to the file of the AO with a direction to redecide the issue after taking into consideration the submissions of the assessee. The assessee is directed to submit the documentary evidence in support of his case. This ground is allowed for statistical purpose. Disallowance of expenditure towards hamali expenses, hamali loading unloading and transport charges, from the perusal of P L account - AO has accepted the expenditure incurred by the assessee under the said heads, but, disallowed 10% on the ground of some of the vouchers were self-made and not supported by proper bills -HELD THAT - To meet the ends of justice, we hereby restrict the disallowance to 5% of total expenditure, instead of 10% of total expenditure made by the AO and confirmed by the CIT(A). Accordingly, this ground is partly allowed.

Summary

Issues:
1. Unexplained cash credits u/s. 68 of the Income Tax Act
2. Unexplained investments u/s. 69 of the Income Tax Act
3. Disallowance of depreciation claimed by the assessee
4. Disallowance u/s. 80GG
5. Disallowance of expenses claimed by the assessee

Unexplained Cash Credits u/s. 68:
The assessee received unsecured loans totaling &8377; 1.80 crores from three parties. The AO added this amount as unexplained cash credits u/s. 68 due to non-payment of interest and inability to verify the creditors' identity. The CIT(A) upheld this addition. The assessee submitted documentary evidence to establish the creditors' identity, transaction genuineness, and creditworthiness. The tribunal remitted the issue to the AO for re-verification, directing scrutiny of the evidence and lender companies' data from ROC.

Unexplained Investments u/s. 69:
The AO treated &8377; 34,59,182 as unexplained investment since the sources were not explained. The CIT(A) affirmed this decision due to lack of documentary evidence. The tribunal remitted the issue to the AO for reevaluation, instructing the assessee to provide supporting documents.

Disallowed Depreciation:
The AO disallowed &8377; 17,640 claimed as depreciation by the assessee. No specific details were provided, and the CIT(A) confirmed this disallowance. The tribunal did not address this issue further.

Disallowance u/s. 80GG:
An amount of &8377; 24,000 was disallowed u/s. 80GG. The reason for disallowance was not detailed, and the CIT(A) upheld this decision. The tribunal did not delve deeper into this issue.

Disallowed Expenses:
The AO disallowed &8377; 4,16,129 of expenses related to hamali and transport charges due to unsupported vouchers. The CIT(A) affirmed this disallowance, leading to a 10% reduction in expenses. The tribunal reduced the disallowance to 5% to ensure fairness, partially allowing the ground of appeal.

In conclusion, the tribunal partly allowed the appeal for statistical purposes, remitting the issues of unexplained cash credits and investments back to the AO for reevaluation. The disallowance of expenses was reduced to 5% for fairness, while other issues were not addressed further.