Unsecured Loan Transaction Duly Substantiated: ITAT upholds Deletion of Addition [Read Order]

The Raipur bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the decision of the Commissioner of Income Tax Appeals [CIT(A)], which deleted the additions made by the assessing officer (AO) by noting that the transactions were duly substantiated.

In this case, the revenue had appealed against the order of the CIT(A) which had ruled in favor of the assessee.

Coming to the facts of the present case, the assessment proceedings were completed, making an addition of Rs. 9.06 lakhs on account of unexplained cash credit under Section 68 of the Income Tax Act, 1961. Also, an addition under Section 40a(ia) was made for non-deduction of TDS for Rs. 58,000.

The assessee appealed before the CIT(A), and the latter ruled in favor of the assessee.

The revenue’s counsel contended that the additions were made under Section 68 of the act as there was a failure on the part of the assessee to substantiate the identity and creditworthiness of the lenders/investors and the genuineness of transactions with corroborative evidence before the AO.

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The bench relied on the observation of CIT(A) that there were justifiable reasons for which the additional evidence could not be furnished before the AO. Whereas the same was submitted before the First Appellate Authority.

With respect to the issue of deletion on the addition of an unsecured loan, the bench observed that the assessee had submitted a copy of the confirmation, ITR filed, and computation of the lender.

The assessee company’s counsel strongly submitted that the failure to submit the necessary documents before the AO was mainly due to the compelling circumstances of Covid-19.

The ITAT held that CIT(A) had rightly observed that there is no justification to treat the aforesaid transaction as unexplained cash credit.

The bench comprising Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) held that the addition made under Section 68 would not be sustained, and the bench dismissed the appeal filed by the revenue. 

To Read the full text of the Order CLICK HERE

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