2021 (9) TMI 31 - AT - Income Tax

Addition u/s 68 - unexplained source of loan - unexplained cash credit - AO has not accepted the explanation of the assessee and stated that because of non filing of documents pertaining to the lenders, the identity of the lenders, capacity and creditworthiness of the lenders and genuineness of the transactions of loan taken by the assessee could not be examined - HELD THAT - The assessee has explained that he was prevented by the aforesaid cause from producing the details before the AO during the assessment. In spite of the undisputed fact that the assessee has categorically brought to the notice of the AO that he was not having access to the part of the information specifically available with the lenders, AO has not issued any summon u/s. 131 of the Act to the two lenders to carry out further verification and to find out legitimacy in the claim of the assessee. We have also considered the decision in the case of Smt. Prabhavati S. Shah 1998 (2) TMI 107 - BOMBAY HIGH COURT referred by the ld. counsel for need of admitting additional evidence in the larger interest of justice - we consider that it is essential to restore this case to the file of AO for deciding the issue in appeal on merit after examination, verification of the additional evidences which could not be obtained during the course of assessment proceedings because of non-cooperation from the lender parties. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
- Addition of loan u/s. 68 of the Income Tax Act
- Acceptance of additional evidences by the CIT(A)

Analysis:
1. Addition of loan u/s. 68 of the Income Tax Act:
The case involved an appeal for the assessment year 2014-15 regarding the addition of a loan amounting to ?1,13,90,000 under section 68 of the Income Tax Act. The Assessing Officer had raised concerns about the source of the loan obtained by the assessee from two parties. The assessee provided explanations and submitted various documents, including bank statements and confirmations from the lenders. However, the Assessing Officer was not satisfied due to the lack of complete information regarding the lenders' identity, capacity, and creditworthiness. The Assessing Officer treated the loan as unexplained cash credit under section 68, leading to the addition to the assessee's total income.

2. Acceptance of additional evidences by the CIT(A):
The aggrieved assessee appealed before the CIT(A) and submitted documents obtained from the registrar of companies regarding the two creditors. However, the CIT(A) did not accept these documents as evidence since they were not filed before the Assessing Officer and no application was made for their admission under rule 46A of the Income Tax Rules. During the appellate proceedings, the assessee explained that due to the confidential nature of certain information, it was not available earlier but was later obtained from the Ministry of Corporate Affairs. The assessee argued that circumstances prevented timely submission of this information and that the CIT(A) failed to consider these factors. Ultimately, the ITAT decided to allow the appeal for statistical purposes and directed the case to be restored to the Assessing Officer for a thorough examination of the additional evidences and a decision on the merit of the case.

In conclusion, the ITAT, in its judgment, addressed the issues of the addition of a loan under section 68 of the Income Tax Act and the acceptance of additional evidences by the CIT(A). The decision highlighted the importance of providing complete information, the need for timely submission of evidence, and the requirement for a fair consideration of circumstances affecting the case. The appeal was allowed for statistical purposes, emphasizing the necessity for a detailed examination of the additional evidences to ensure a just decision.