2018 (11) TMI 133 - AT - Income Tax

Tribunal allows appeals, directs deletion of Rs. 82 lakhs additions for unsecured loans & interest payments.

Shri Vasant Ramji Salva Versus ACIT - 18 (1), Mumbai

Shri Vasant Ramji Salva Versus ACIT - 18 (1), Mumbai - TMI Issues Involved:1. Addition of Rs. 2,27,50,000/- under Section 68 for unsecured loans (A.Y. 2010-11).2. Addition of Rs. 27,97,283/- on account of interest paid on unsecured loans (A.Y. 2012-13).3. Addition of Rs. 20 lakhs under Section 68 for an unsecured loan from Smt. Rachana Ravan (A.Y. 2013-14).4. Addition of Rs. 32,08,252/- on account of interest paid on unsecured loans (A.Y. 2013-14).Issue-wise Detailed Analysis:1. Addition of Rs. 2,27,50,000/- under Section 68 for unsecured loans (A.Y. 2010-11):The assessee's appeal was against the CIT(A)'s order confirming the addition of Rs. 2,27,50,000/- under Section 68 of the Act. The AO had treated these loans as unexplained cash credits due to the failure to establish the creditworthiness and genuineness of the lenders. Despite the assessee submitting bank statements, ITRs, confirmations, and PAN details, the AO concluded that the creditworthiness of the lenders was not established. The CIT(A) upheld this view, noting that the lenders were not available at the given addresses and that the assessee failed to produce them for verification.However, the Tribunal found that the assessee had discharged the primary onus by providing necessary documentation. The Tribunal observed that the Revenue did not carry out further investigations despite receiving responses to notices under Section 133(6). The Tribunal cited several judicial precedents, including CIT vs. Orissa Corporation Pvt. Ltd., which held that once the assessee provides sufficient evidence, the onus shifts to the Revenue. The Tribunal concluded that the Revenue's acceptance of interest on the loans while doubting their genuineness was contradictory. Consequently, the addition of Rs. 2,27,50,000/- was deleted, and the appeal was allowed.2. Addition of Rs. 27,97,283/- on account of interest paid on unsecured loans (A.Y. 2012-13):This issue was related to the interest paid on the unsecured loans treated as bogus in A.Y. 2010-11. Since the Tribunal had already decided that the loans were genuine in ITA No. 1633/Mum/2017, it applied the same rationale to this appeal. The Tribunal directed the AO to delete the disallowance of Rs. 27,97,283/-, and the appeal was allowed.3. Addition of Rs. 20 lakhs under Section 68 for an unsecured loan from Smt. Rachana Ravan (A.Y. 2013-14):The AO had added Rs. 38 lakhs as unexplained cash credit, which the CIT(A) partly allowed, sustaining Rs. 20 lakhs. The CIT(A) doubted the genuineness of the loan due to the lender's low income. The assessee provided confirmation letters, bank statements, PAN, and addresses of the lender. The Tribunal found that the assessee had discharged the onus by providing necessary evidence, and it was the Revenue's responsibility to carry out further investigations. The Tribunal applied its findings from ITA No. 1633/Mum/2017 and directed the AO to delete the addition of Rs. 20 lakhs, allowing the appeal.4. Addition of Rs. 32,08,252/- on account of interest paid on unsecured loans (A.Y. 2013-14):This issue pertained to the interest paid on unsecured loans treated as bogus in A.Y. 2010-11. Since the Tribunal had already decided that the loans were genuine, it directed the AO to delete the disallowance of Rs. 32,08,252/-, and the appeal was allowed.Conclusion:The Tribunal allowed all the appeals filed by the assessee, setting aside the orders of the CIT(A) and directing the AO to delete the respective additions. The Tribunal's decisions were based on the assessee having discharged the initial onus of proof and the Revenue's failure to conduct further investigations, supported by various judicial precedents.