ITAT Upholds Deletion of Addition made on Account of Unsecured Loan due to Failure to Produce Genuine Documents [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Appeals) for deleting the addition made by the assessing officer on account of an unsecured loan due to failure to produce genuine documents. 

Bansal Separators and Spares Pvt. Ltd, the respondent-assessee was a private company engaged in the business of Trader of Machinery and Machinery Parts. The revenue appealed against the order passed by the Commissioner of Income Tax (Appeals) for deleting the addition made by the assessing officer during the assessment proceedings. 

Sameer Dalal, the counsel for the assessee contended that the assessee has submitted all the relevant information before the assessing officer giving all the relevant details before him during the assessment proceedings. 

It was also submitted that all the confirmations, financial statements, return of income, and bank statements were submitted before the assessing officer, and the same was submitted before the Commissioner and had considered the information which was provided in the order and accordingly, the Commissioner gave the relief to the assessee by deleting the addition made by the assessing officer. 

Chetan M. Kacha, the counsel for the department contended that after proper verification by issue of notices by the assessing officer under section 133(6) of the Income Tax Act,1961 that the unsecured loans are unexplained cash credits under section 68 of the Income Tax Act wherein the assessee had not proved the identity, creditworthiness and genuineness of the parties from whom it had received the above said unsecured loans. 

It was also submitted that all the observations made by the Commissioner to give relief to the assessee are only general observations and there was no specific finding given and the assessee had not submitted financial information for verification before the Commissioner of Income Tax (Appeals) and are liable to be deleted. 

The bench observed that the assessing officer had not given sufficient opportunity to the assessee and also not brought on record any material to prove the nature of transactions other than unsecured loans and had not properly verified the transactions. 

The two-member panel comprising Amit Shukla ( Judicial) and S. Rifaur Rahman ( Accountant) held that there was no merit in the case built by the assessing officer and upheld the decision made by the Commissioner of Income Tax (Appeals) while dismissing the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

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