The Delhi Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition of Rs. 25 lakh as unexplained cash credits, ruling that the loan from the assessee’s promoters was genuine.
Mahadev Dairy Pvt. Ltd.,appellant-assessee,appealed against the order dated 30.09.2019 passed by CIT(A) for the Assessment Year 2014-15 which included proceedings under section 143(3) of Income Tax Act.The case was called twice, but no one appeared on behalf of the assessee. Therefore, the proceedings were conducted ex-parte.
The Revenue counsel argued that the lower authorities had rightly added Rs. 28 lakhs as unexplained cash credits under Section 68, citing unsecured loans from Sh. Kuldeep Nagar. It was noted that the assessee failed to prove the genuineness and creditworthiness of these credits, as recorded in the assessment order dated 07.12.2016.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The counsel also pointed out that Sh. Kuldeep Nagar’s bank account showed cash deposits before the loans were given to the assessee.
The two member bench comprising Satbeer Singh Godara (Judicial Member) and M.Balaganesh(Accountant Member) considered the assessee’s grievance and the lower authorities’ findings on the disputed addition. It found no reason to disagree with the assessee, as the unsecured loan came from its promoters, as noted in CIT(A)’s discussion.
The appellate tribunal also observed that the promoters were assessed in the same jurisdiction. Additionally, the lower authorities had not examined Sh. Nagar’s creditworthiness concerning the cash in hand recorded in his books to assess his ability to grant the loan.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Therefore, the ITAT accepted the assessee’s grievance, as all three aspects—identity, genuineness, and creditworthiness—had been established for the Rs. 25 lakh loan under consideration.
In short,the appeal filed by the assessee was allowed.
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