2023 (4) TMI 113 - HC - Income Tax

Court Allows 370-Day Delay in Tax Appeal, Upholds ITAT's Decision on Loan Creditor Creditworthiness and Income Addition.

PRINCIPAL COMMISSIONER OF INCOME TAX -2, KOLKATA Versus M/s. OVERTOP MARKETING PVT. LTD.

The Calcutta HC condoned a 370-day delay in filing an appeal against the ITAT's order for the 2015-16 assessment year. The revenue's appeal challenged the ... Addition u/s 68 - disallowance of interest - dubious existence of loan creditors and genuineness of related transaction - Facts brought on record by the assessing officer on physical non-existence of the companies extending loans - ITAT deleted the addition - HELD THAT:- Creditworthiness of the lenders of the respondent/assessee have been examined in depth the factual details have been noted and all the lenders of the respondent/assessee have directly submitted documents before the AO. AO proceeded to hold the Company under the control of Shri Raj Kumar Kothari to be sold company only by referring to certain answers given by the selected questions. The said answers have been recorded by the said Mr. Kothari and also specifically alleged that it was obtained under threat and coercion. Both the CIT[A] as well as the tribunal had independently assessed the factual position and arrived at a decision. CIT[A] had also noted the decision of this court in the case of CIT vs. M/s. Dataware Private Limited [2011 (9) TMI 175 - CALCUTTA HIGH COURT] and allowed the appeal filed by the assessee. Tribunal while affirming the said order has given elaborate reasons as to how the creditworthiness of the lenders have been established. No substantial question of law arising for consideration in this appeal. Issues:1. Condonation of delay in filing the appeal.2. Appeal challenging the order of the Income Tax Appellate Tribunal regarding addition of income and disallowance of interest.Condonation of Delay:The appeal before the Calcutta High Court involved a delay of 370 days in filing the appeal. The Court, comprising of Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya, considered the affidavit supporting the condone delay petition. Upon finding sufficient cause for the delay, the Court allowed the application and condoned the delay in filing the appeal.Appeal Against ITAT Order:The appeal was filed by the revenue under section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2015-16. The revenue raised substantial questions of law challenging the ITAT's decision to delete an addition of Rs. 4.51 crores under section 68 of the Act and disallow interest of Rs. 53,70,163. The questions raised included issues regarding the genuineness of loan creditors, existence of loan creditors, and the basis of establishing creditworthiness.Upon hearing both parties, the Court examined the factual details and the creditworthiness of the lenders of the respondent/assessee. The assessing officer had raised concerns about the existence of loan creditors and the genuineness of transactions. However, both the Commissioner of Income Tax [Appeals] and the ITAT had independently assessed the situation and concluded that the creditworthiness of the lenders had been established. The Court noted that the assessing officer's conclusions were based on certain answers obtained under alleged threat and coercion, which were not considered substantial. The Court referred to a previous court decision and affirmed the ITAT's order, finding no substantial question of law for consideration in the appeal.In conclusion, the Court dismissed the appeal filed by the revenue, upholding the ITAT's decision regarding the addition of income and disallowance of interest, as the creditworthiness of the lenders was deemed to have been adequately established based on documentary evidence provided directly to the assessing officer.