2021 (9) TMI 895 - AT - Income Tax

Disallowance u/s.14A - CIT(A) sustained the disallowance to the extent of exempt income - HELD THAT - Assessee failed to rebut the finding of the ld. CIT(A) by placing any finding of judicial precedent to controvert the finding of ld. CIT(A) confirming the disallowance made u/s. 14A of the Act to the extent of exempt dividend income earned during the year - no infirmity in the finding of the ld. CIT(A). - Decided against assessee. Addition u/s.68 - Unexplained loan transaction - HELD THAT - In confirmation of accounts there is no transaction during the year and interest has been charged on the opening balance. Other documentary evidence in the form of bank statement has also been filed to prove that the alleged fund was not received during the assessment year under consideration. This fact remains undisputed at the end of the ld. DR also. We, therefore, under the facts and circumstances of the case, are of the considered view that since the alleged sum of ₹ 4 lakhs was not received during the A.Y under consideration, the addition made u/s. 68 of the Act is not called for during the A.Y under consideration - Thus we delete the addition u/s. 68 - Decided in favour of assessee. Disallowance u/s. 69C of interest expenditure on the alleged unexplained cash credit - HELD THAT - Since the addition made u/s. 68 of the Act for alleged cash credit stands deleted by us and there being no other finding of the ld. AO challenging the genuineness of the interest expenditure, no disallowance is called for. Relevant finding of the ld. CIT(A) is set aside and addition made u/s. 69C of the Act by the ld. AO stands deleted.- Decided in favour of assessee.

Summary

Issues involved:
- Disallowance made under section 14A of the Income Tax Act
- Addition made under section 68 of the Income Tax Act
- Addition/disallowance made under section 69C of the Income Tax Act

Analysis:

1. Disallowance under section 14A:
The assessee challenged the disallowance of ?88,558 under section 14A. The Assessing Officer (AO) initially disallowed ?9,18,028, but the Commissioner of Income-tax (Appeals) sustained the disallowance to the extent of exempt income earned. The Tribunal found no error in the Commissioner's decision, as the assessee failed to provide any judicial precedent to contest the disallowance. Consequently, the Tribunal dismissed the appeal on this ground.

2. Addition under section 68:
Regarding the addition of ?4 lakhs under section 68, the Tribunal observed that the alleged amount was actually a loan taken in the previous financial year and not during the assessment year in question. The Tribunal reviewed the documentary evidence, including confirmation of accounts and bank statements, to support this claim. As the loan was not received during the relevant assessment year, the Tribunal set aside the Commissioner's decision and deleted the addition of ?4 lakhs under section 68. Therefore, the Tribunal allowed the appeal on this ground.

3. Addition/disallowance under section 69C:
The Tribunal addressed the disallowance of interest expenditure of ?40,000 under section 69C, which was related to the alleged unexplained cash credit of ?4 lakhs. Since the addition under section 68 for the cash credit was deleted, and there was no challenge to the genuineness of the interest expenditure, the Tribunal concluded that no disallowance was warranted. Consequently, the Tribunal allowed the appeal on this ground as well.

4. General and Consequential Grounds:
The Tribunal noted that certain grounds raised by the assessee were general or consequential in nature and required no specific adjudication. These included issues related to the invocation of certain sections and the filing of new contentions. The Tribunal also highlighted that some grounds were considered consequential and did not require separate analysis.

In conclusion, the Tribunal partially allowed the assessee's appeal by ruling in favor of the assessee on the issues of addition under section 68 and disallowance under section 69C, while upholding the disallowance under section 14A. The judgment provided detailed reasoning based on the facts and legal provisions presented during the proceedings.