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2024 (6) TMI 1131 - AT - Income TaxIssues Involved: 1. Validity of re-opening under sections 147/148 of the Income Tax Act, 1961. 2. Addition of Rs. 37,18,314/- under section 69C on account of interest on alleged cash loan. Detailed Analysis: 1. Validity of Re-opening under Sections 147/148: The assessee challenged the re-opening of assessment under sections 147/148 of the Income Tax Act, 1961. The assessee argued that the re-opening was invalid as no addition was made on account of the alleged cash loan of Rs. 2,45,00,000/- from Shri Nilesh Bharani/M/s. Evergreen Enterprises. The assessee contended that once the addition based on the reasons recorded for re-opening was not made, no other addition could be made, citing the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (331 ITR 236). The Tribunal noted that the reasons for re-opening were based on information received from the DDIT (Investigation), indicating that the assessee had borrowed a cash loan of Rs. 2,45,00,000/-. The Tribunal observed that the Assessing Officer (AO) did not add the cash loan amount as income under section 68, which is required for unexplained loan credits. The Tribunal held that since the AO did not find the cash loan taxable, the basis for re-opening was vitiated. The Tribunal referred to the judgment of the Hon'ble Bombay High Court in the case of Sanjeev Amritlal Chhedda, where it was held that borrowing a cash loan cannot be considered as income, and thus, there cannot be any escapement of income. Therefore, the Tribunal quashed the reasons recorded by the AO for re-opening the assessment and held that the re-opening under sections 147/148 was invalid. 2. Addition of Rs. 37,18,314/- under Section 69C: The AO added Rs. 37,18,314/- under section 69C on account of interest on the alleged cash loan of Rs. 2,45,00,000/-. The AO based this addition on the statement of Shri Nilesh Bharani and impounded documents indicating that the assessee paid interest and commission on the cash loan. The AO calculated the interest payment, including commission, at the rate of 20%, amounting to Rs. 37,18,314/-. The assessee argued that no addition was made on account of the alleged cash loan, and the documents did not refer to the assessee's name. The assessee contended that receiving a loan cannot be added as income, and there was no reason to believe that income chargeable to tax had escaped assessment. The Tribunal observed that the AO did not add the cash loan amount as income but only added the interest payment. The Tribunal held that once the cash loan was not considered taxable, the addition of interest on such a loan could not stand. The Tribunal quashed the entire addition made by the AO. Conclusion: The Tribunal allowed the assessee's appeal, quashing the re-opening of the assessment under sections 147/148 and the addition of Rs. 37,18,314/- under section 69C. The Tribunal followed the judgment of the Hon'ble Bombay High Court in similar cases, holding that borrowing a cash loan cannot be considered as income, and thus, there cannot be any escapement of income. The Tribunal also condoned the delay of 437 days in filing the appeal, considering the reasons provided by the assessee, including the COVID-19 pandemic and procedural misunderstandings.
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