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2023 (3) TMI 354 - AT - Income TaxAddition u/s 68 - Loans unexplained - HELD THAT:- With regard to the statements of certain persons relied upon by the AO, the CIT(A) has noticed that those statements do not turn against the assessee at all. We do not find any reason to interfere with his decision in holding that there is no ground to make addition u/s 68 in respect of the loans. We uphold the order passed by him on this issue. Consequently, the relief granted in respect of interest disallowance relatable to the above said amount of Rs.5.05 crores is also upheld. Addition confirmed by Ld CIT(A), we notice that the Ld CIT(A) as well as AO has placed reliance on a statement given by the director of two companies, viz., M/s Lity Star Constructions Ltd and M/s Pushpanjali Commo Trade P Ltd in some other proceeding before the investigation wing. Thus, the fact remains that the above said statements have not been taken during the course of present assessment proceedings of the assessee. We are of the view that the tax authorities are not justified in placing reliance on the statement given by the director in a third party proceeding without confronting the same with the assessee. On the contrary, the fact remains that both the above said companies have duly responded to the AO during the course of current assessment proceedings by furnishing replies to the notices issued u/s 133(6) of the Act and the summons issued u/s 131 of the Act. All the relevant financial statements have been filed before the AO in respect of above said two companies in order to prove the three main ingredients, viz., identity of the creditor, credit worthiness of the creditor and the genuineness of transactions. Accordingly, we are of the view that the CIT(A) was not justified in sustaining addition relating to the above said two companies. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the addition relating to the above said two companies. Consequently, the interest disallowance made in AY 2013-14 and 2014-15 are directed to be deleted. Assessee appeal allowed.
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