The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench deleted addition of Rupees One Crore as Loan received represents unexplained cash loan credit books of accounts.
The only issue raised by the assessee, Manibhadra Securities Services P.Ltd is that the CIT-A erred in upholding the order of the AO making addition to the tune of Rs. 1,05,05,000/- u/s 68 of the Income Tax Act as unexplained cash credit.
The assessee is a private limited company and engaged in the business of trading of Shares and Securities. The assessee in the year under consideration has received the Loan to the tune of Rs. 4,08,01,000/-from M/s Ken Securities Limited. The assessee has repaid the loan to the tune of Rs.3,02,96,000/- and in the books of account has shown the outstanding loans amounting to Rs. 1,05,05,000/- under the head unsecured loans.
However, the AO observed that the assessee has not furnished the requisite details to substantiate the loan amount as Identity, Creditworthiness, ITR, confirmation of the lender. The AO also noted that the notice u/s 133(6) of the Act was issued to M/s Ken Securities Limited was returned back with the remark as “left”. The AO thus in the absence relevant details and documents made the addition of closing balance of Rs. 1,05,05,000/- u/s 68 of the Act to the total income of the assessee.
Aggrieved assessee preferred the appeal before the CIT-A. On perusal of the aforesaid documents the Ld. CIT-A observed that M/s Ken Securities Limited had shown the loss in the return of income therefore credit worthiness of M/s Ken Securities Limited is not proved.The CIT-A thus confirmed the addition of Rs. 1,05,05,000/- made by the AO u/s 68 of the Act.Aggrieved, the assessee is in appeal before the Tribunal.
The Counsel for the assessee submitted that the paper book running from pages 1 to 12 and contended that the assessee in support of the impugned loan has furnished all the method documents. As such the assessee has discharged the onus imposed under section 68 of the Act. Furthermore, part of the transaction with the party has already been accepted by the revenue as genuine and therefore the remaining transaction reflecting at the end of the financial year in the balance sheet cannot be treated as bogus. On the other hand, the DR supported the order of the authorities below. Accordingly, no addition of whatsoever is warranted in the given facts and circumstances.
The Bench consisting of Suchitra Kamble, Judicial Member and Waseem Ahmed, Accountant Member observed that “After considering the facts in totality we hold that the amount of loan received by the assessee represents the unexplained cash credit in its books of accounts. Accordingly, we set aside the finding of the CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.”
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