ITAT sets aside CIT(A)'s orders, directs AO to delete additions.

The ITAT allowed the appeal, setting aside the CIT(A)'s orders. The ITAT directed the AO to delete the additions and disallowances made in the assessment, including unexplained cash credit under section 68, bogus liability under section 41, and disallowance of lorry hire charges on an ad hoc basis. The ITAT found that the authorities had not properly considered the evidence provided by the assessee, leading to the decision in favor of the assessee.

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Issues:
1. Appeal against the order of CIT(A) for the assessment year 2015-16.
2. Treatment of unexplained cash credit u/s 68 of the Income Tax Act, 1961.
3. Addition of bogus liability u/s 41 of the Act.
4. Disallowance of lorry hire charges on an ad hoc basis.

Issue 1 - Appeal against CIT(A) Order:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2015-16. The Registry pointed out that the appeal was time-barred, but the decision of the Hon'ble Supreme Court allowed exclusion of the period of filing appeal during the COVID-19 pandemic for counting the limitation period, treating the appeal as filed within the limitation period.

Issue 2 - Unexplained Cash Credit u/s 68:
The AO added Rs. 76,27,649 as unexplained cash credit u/s 68 of the Act due to the increase in borrowed funds, which the assessee failed to explain. However, the ITAT found that the loans from NBFCs and banks were duly recorded in the balance sheet, and the authorities failed to appreciate the evidence provided by the assessee. The ITAT directed the AO to delete the addition.

Issue 3 - Addition of Bogus Liability u/s 41:
The AO added Rs. 12,72,925 as bogus liability u/s 41 of the Act based on an increase in other current liability without justifying the addition. The ITAT observed that the AO failed to point out any mistake or cessation of the liability, directing the AO to delete the disallowance.

Issue 4 - Disallowance of Lorry Hire Charges:
The AO disallowed Rs. 18,63,232 on an ad hoc basis from lorry hire charges, suspecting inflation of expenses without specific findings on the documents filed by the assessee. The ITAT held that the disallowance on estimation basis without specific defects in the books of accounts is impermissible, citing relevant case laws. The ITAT directed the AO to delete the disallowance.

In conclusion, the ITAT allowed the appeal of the assessee, setting aside the orders of the CIT(A) and directing the AO to delete the additions and disallowances made in the assessment.

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