2022 (9) TMI 1183 - AT - Income Tax

Tribunal allows appeal, deletes unexplained cash credit, permits property depreciation, orders 80G deduction verification.

M/s. Jet Freight Logistics Limited Versus Commissioner of Income Tax Appeal (NFAC)

M/s. Jet Freight Logistics Limited Versus Commissioner of Income Tax Appeal (NFAC) - TMI Issues Involved:1. Delay in filing of appeal.2. Addition of Rs.2,48,87,000/- as unexplained cash credit.3. Disallowance of depreciation on immovable property.4. Disallowance of donation under Section 80G.Detailed Analysis:1. Delay in Filing of Appeal:The appeal was delayed by 85 days. The delay occurred during the Covid Pandemic period. The Tribunal condoned the delay based on the relaxation granted by the Hon'ble Supreme Court, admitting the appeal for adjudication.2. Addition of Rs.2,48,87,000/- as Unexplained Cash Credit:The assessee, engaged in freight forwarding, deposited Rs.2,48,87,000/- in Specified Bank Notes (SBNs) during demonetisation. The Assessing Officer (AO) questioned the source of these deposits, suspecting them to be unexplained cash credits under Section 68 of the Income Tax Act. The assessee provided detailed explanations and supporting documents, including cash book, bank statements, and confirmations from customers. Despite this, the AO deemed the deposits unexplained and taxed them accordingly. The Tribunal found that the assessee had sufficient cash balance and regularly withdrew cash for business needs. The Tribunal held that the deposits were properly explained and directed the AO to delete the addition of Rs.2,48,87,000/-.3. Disallowance of Depreciation on Immovable Property:The AO disallowed depreciation of Rs.28,36,500/- on a property purchased by the assessee, arguing that the property was registered in the next financial year. The assessee contended that it had beneficial ownership from the date of the agreement (31/03/2017) and had physical possession even before the agreement. The Tribunal referred to Sections 23 and 47 of the Indian Registration Act, 1908, which support the assessee's claim of ownership from the date of the agreement. The Tribunal also cited the Supreme Court decision in Mysore Minerals Ltd. vs. CIT, which allows depreciation for beneficial ownership. The Tribunal allowed the assessee's claim for depreciation.4. Disallowance of Donation under Section 80G:The AO disallowed a donation claim of Rs.84,315/- due to lack of receipts. The assessee sought deduction under Section 80G for Rs.65,000/- of donations made to The Saved Pearl Foundation, providing receipts for verification. The Tribunal directed the AO to verify the receipts and grant the deduction as per law, while the remaining amount of Rs.19,315/- was not contested by the assessee. The Tribunal partly allowed the ground for statistical purposes.Conclusion:The Tribunal allowed the appeal partly for statistical purposes, directing the deletion of the addition of Rs.2,48,87,000/- as unexplained cash credit, allowing the claim for depreciation, and directing verification of donation receipts for deduction under Section 80G.