2022 (11) TMI 13 - AT - Income Tax

Tribunal deletes income tax addition, assessee proves loan's genuineness with documents, delay condoned.

The tribunal allowed the appeal, directing the deletion of the addition made under section 68 of the Income Tax Act regarding an unsecured loan received. ... Unexplained cash credit under section 68 of the Income-tax Act, 1961 - identity, creditworthiness and genuineness of lender - reassessment under section 148 of the Income-tax Act, 1961 - condonation of delay in filing appealCondonation of delay in filing appeal - Whether the one-day delay in filing the appeal should be condoned. - HELD THAT: - The Tribunal examined the assessee's petition for condonation and the reasons furnished for the one-day delay. Satisfied with the explanation, the Tribunal exercised its discretion to condone the delay and admitted the appeal for adjudication. [Paras 2]Delay of one day in filing the appeal is condoned and appeal is admitted.Statement from the Bar - Whether Ground No.1 challenging the validity of reassessment, having been not pressed at the hearing, requires adjudication. - HELD THAT: - The authorised representative expressly stated at the hearing that Ground No.1 was not pressed. The Tribunal treated that statement as a bar admission from the counsel and declined to decide the ground on merits. [Paras 3]Ground No.1 is dismissed as not pressed.Unexplained cash credit under section 68 of the Income-tax Act, 1961 - identity, creditworthiness and genuineness of lender - reassessment under section 148 of the Income-tax Act, 1961 - Whether the addition of the unsecured loan of Rs. 21,00,000 as unexplained cash credit under section 68 was justified. - HELD THAT: - The Tribunal considered the material placed on record: bank book of the assessee showing receipt through banking channels, ledger confirmation and confirmation from the lender, bank statements of the lender demonstrating capacity to advance the loan, and the lender's income-tax return acknowledgement for A.Y.2007-08. The assessee had also claimed and been allowed interest paid to the lender in the relevant year. The AO's notice under section 133(6) to the lender had been returned unserved, and the search against the alleged financer occurred years after the loan and repayment transactions. The Tribunal found no material to show falsity of the documents produced, observed that an earlier loan from the same lender had already been accepted by the revenue, and accepted that the assessee satisfied the three recognized constituents under section 68 - identity of the lender, creditworthiness and genuineness of the transactions. Merely because the AO could not procure attendance of the lender years later did not justify rejecting otherwise credible evidence of the loan and its repayment. [Paras 5, 6, 7, 8]Addition made under section 68 in respect of unsecured loan of Rs. 21,00,000 is deleted; grounds challenging the addition are allowed.Final Conclusion: The Tribunal condoned the one-day delay and admitted the appeal; Ground No.1 was dismissed as not pressed; on merits the Tribunal held that the assessee proved identity, creditworthiness and genuineness of the lender and directed deletion of the addition made under section 68 for A.Y.2007-08. Issues involved:Challenge to the validity of reassessment, addition made under section 68 of the Income Tax Act regarding unsecured loan received, delay in filing appeal.Challenge to the validity of reassessment:The appeal addressed a delay in filing by one day, which was condoned after reviewing the reasons provided. The first ground raised by the assessee challenging the validity of reassessment was not pressed by the representative during the hearing and was dismissed accordingly.Addition under section 68 - Unsecured loan received:The main issue revolved around challenging the addition made under section 68 of the Income Tax Act concerning an unsecured loan received by the assessee from a specific entity. The assessee provided various documents to prove the genuineness of the transaction, including confirmations, bank statements, and ledger accounts. Despite the lender not being produced for examination, the loan was treated as unexplained cash credit. However, the tribunal found that the assessee had borrowed the loan through regular banking channels and had repaid it with account payee cheques. The tribunal concluded that the assessee had proven the identity of the lender, creditworthiness, and genuineness of the transaction, directing the deletion of the addition made under section 68.Delay in filing appeal:The delay in filing the appeal was condoned after reviewing the reasons provided in the condonation petition, and the appeal was admitted for adjudication.In conclusion, the tribunal allowed the appeal of the assessee, directing the deletion of the addition made under section 68 of the Income Tax Act regarding the unsecured loan received. The decision was based on the assessee's ability to prove the genuineness of the transaction through various documents and evidence, despite the lender not being available for examination. The delay in filing the appeal was condoned, and the case was decided in favor of the assessee.