Tribunal dismisses Revenue's appeal, upholds deletion of additions under Section 69 for lack of evidence

The Tribunal upheld the CIT(A)'s decision to delete additions totaling Rs. 1,85,72,100/- under Section 69 and Rs. 2,03,610/- for unaccounted interest income. The Tribunal found that the AO lacked evidence to support claims of cash transactions, as the assessee's business was conducted through account payee cheques. Therefore, the Revenue's appeal was dismissed on 09.02.2021.

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Issues Involved:
1. Deletion of addition of Rs. 1,85,72,100/- made under Section 69 of the Income Tax Act, 1961.
2. Deletion of addition of Rs. 2,03,610/- on account of unaccounted interest income.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 1,85,72,100/- under Section 69:
The Revenue challenged the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] to delete the addition of Rs. 1,85,72,100/- made by the Assessing Officer (AO) under Section 69 of the Income Tax Act, 1961. The AO alleged that the assessee had given cash loans based on seized documents (BS-28) during a search operation. The assessee contended that they acted purely as a finance broker, arranging loans between lenders and borrowers, and all transactions were conducted through account payee cheques. The CIT(A) found that the AO did not conduct any independent inquiry to substantiate the claims of cash loans and accepted the assessee's explanation that the transactions were brokered and conducted via cheques. The CIT(A) relied on judicial precedents, including the cases of Biren V Savla vs ACIT and ACIT vs V.Kishore Lal Balwant Rai, to conclude that the AO's additions were based on assumptions without corroborative evidence. Consequently, the CIT(A) confirmed a minor addition of Rs. 27,900/- as brokerage income and deleted the remaining Rs. 1,85,72,100/-.

2. Deletion of Addition of Rs. 2,03,610/- on Account of Unaccounted Interest Income:
The AO made an addition of Rs. 2,03,610/- alleging that the assessee received interest income in cash from the cash loans given. The assessee rebutted this by stating that no cash loans were given and all transactions were through account payee cheques, duly accounted for in the books. The CIT(A) observed that the AO selectively picked transactions showing interest received in cash while ignoring interest received through cheques. The CIT(A) concluded that the AO's addition was based on assumptions and lacked substantive evidence. Therefore, the CIT(A) deleted the addition of Rs. 2,03,610/-.

Conclusion:
The Tribunal upheld the CIT(A)'s findings, emphasizing that the AO failed to provide corroborative evidence for the alleged cash loans and interest income. The Tribunal noted that the assessee's business as a finance broker was consistently carried out through account payee cheques, and no evidence supported the AO's claims of cash transactions. Consequently, the Tribunal dismissed the Revenue's appeal, confirming the deletion of both additions.

Judgment:
The appeal by the Revenue was dismissed, and the order pronounced in the open Court on 09.02.2021.

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