2021 (1) TMI 93 - ITAT MUMBAI

Validity of assessment under section 153A - addition u/s 68 of long term capital gains as undisclosed income by treating the same as bogus - addition of commission on capital gain, addition under section 68 of loans, addition of interest on loans - HELD THAT:- We note that the co-ordinate bench of ITAT in the case of Shri Vijayrattan Balkrishan Mittal [2019 (10) TMI 439 - ITAT MUMBAI] in similar situation held that, dehorse incriminating Material assessment u/s.153A is not sustainable in the case of unabated assessment.

Addition of long term capital gain as bogus is not sustainable. The case laws relied by the revenue is duly dealt with in the order of the tribunal referred above. Accordingly we set aside the orders of authorities below and delete the addition on merits in this regard. It may not be out of place to mention here that the ITAT in assessee’s own case for A.Y. 2007-08 & 2008-09 has decided the issue of treatment as bogus of the long term capital gain of shares in favour of the assessee. The same has not been reversed yet. Despite that learned CIT(A) erroneously distinguished the same.

We have already held that the long-term capital gain cannot be treated as undisclosed income under section 68 the addition of commission on capital gain done in these cases is consequently not sustainable. Hence we delete the same also.

Addition of unsecured loan - we note that assessing officer has accepted that assessee has submitted the confirmation, ITR, bank statement of the parties. However he rejected by simply observing that investigation wing at Kolkata has reported that some of the entry operators are providing bogus loans at Kolkata. The assessing officer did not make any enquiry of his own the only referred to the date of confirmation of the unsecured loan and drew adverse inference. The learned CIT appeals also has confirmed the assessing officer’s action by simply making general observations that the loan creditors are bogus in as much as they don’t have much income, that the entire TDS have been claimed as refund by them, that they have same IP address of filing return and same corresponding address.

By simply referring to General findings of investigations wing at Kolkata entry operators providing bogus loans the revenue authorities cannot fasten liability of undisclosed income upon the assessee, unless the assessing officer makes enquiry of his own and rebuts the documentary evidences submitted by the assessee. The assessee has duly discharged its onus by submitting the loan confirmation, income tax details and bank statements and financial statement of the loan creditors. Without making enquiry of his own the Assessing Officer has rejected them which is totally unsustainable.

In the present case assessee has also refunded the loan amount to the loan creditor. This aspect further supports the assessee’s plea that these laws cannot be treated as undisclosed income of the assessee. Authorities below have totally ignored this aspect. In this regard case law from Hon'ble Bombay High Court referred by learned counsel of the assessee above supports the proposition that when loan amount is duly repaid the same cannot be treated as undisclosed income under section 68.

Accordingly in the background of aforesaid discussion and precedents in our considered opinion the addition of unsecured loans as undisclosed income of the assessee is not sustainable. Hence, we set aside the orders of authorities below and delete the addition.

Since we have already deleted the addition of unsecured loan as undisclosed income the addition of interest thereon is consequently also not sustainable. Hence, the same is also deleted.