2022 (3) TMI 672 - AT - Income Tax

Validity of reopening under section 147 - Reassessment based on information of investigation by search party on third, however, in revised grounds of appeal the assessee has raised altogether new grounds of appeal against re-opening - HELD THAT:- We find that no such ground of appeal challenging the validity of reopening was raised. No application for raising such additional or legal grounds of appeal is filed before Tribunal. Therefore, raising of such revised or substituted grounds of appeal are not in order. However, we shall discuss such issue at later stage.

Addition u/s 68 - assessee received unsecured loan - HELD THAT:- The Hon’ble Gujarat High Court in case of Pr.CITVs. Skylark Build [2018 (10) TMI 1513 - BOMBAY HIGH COURT] held that when amount borrowed by the assessee as unexplained cash credit to make the addition by provisions of section 68, no addition can be made when such borrowing was repaid. Further, the Hon’ble Gujarat High Court in case of CIT v. Ayachi Chandrasekhar Narsangji [2013 (12) TMI 372 - GUJARAT HIGH COURT] also held that where the department has accepted repayment of loan in subsequent order, no addition was to be made in the current year for cash credit.

We find that case of assessee is a better footing as the assessee received unsecured loan in the month of October and repaid the same in February, 2007 along with interest. Further, the Revenue has not disputed the payment of loan in the same assessment year. The Hon’ble jurisdictional High Court in case of DCIT Vs Rohini Builders [2001 (3) TMI 9 - GUJARAT HIGH COURT] held that when the Assessing Officer has not disallowed the interest in relation to credit in the assessment year and the assessee as deducted tax at source for the interest paid to the creditors, the Department is not justified in making addition under section 68 of the Act.

When the unsecured loan has been paid within a short span of time for which the assessee has paid interest and deducted tax thereon. Therefore, the Assessing Officer was not justified in making addition under section 68. Thus, substantial ground of appeal is allowed.