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2022 (5) TMI 1151 - AT - Income TaxUnexplained cash credit u/s 68 - loan from NBFC and increase in the outstanding amount over the period - identity, creditworthiness and genuineness of the lenders. - HELD THAT:- AO made disallowance as unexplained cash credit in respect of increase in cash credit limit from Bank of India. After examining the records before us, we have failed to understand as to how the loans from NBFCs borrowed on long term and short term basis were treated as unexplained cash credit. We also note that all these evidences and records comprising loan confirmations, audited financial accounts, statement of interest paid and also the submissions made before AO as well as Ld. CIT(A) were before the authorities below but these authorizes have failed to appreciate the facts correctly. We find that the assessee has borrowed long term funds from NBFCs which were duly shown in the balance sheet note no. 3 and similarly short term borrowing from Bank of India in the form of cash credit was shown in note no. 3. We are of the considered view that the borrowings from NBFC, Bank can not be treated as unexplained cash credit u/s 68 of the Act which was done by the AO simply on the basis of increase in these borrowings as shown in the balance sheet with doing any verification of evidences filed by the assessee. Similarly the First Appellate Authority has dismissed the appeal on hyper technical ground of non-condoning the delay of 13 days which is against the principle of natural justice and fair play. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Bogus liability u/s 41 - Addition u/s 68 by treating the increase in other current liability as on 31.3.2015 vis a vis 31.3.2014 in the audited balance sheet - HELD THAT:- We find that the AO, on the basis of details filed during the assessment proceedings, noted that there is an increase in other current liability as on 31.03.2015 vis-à-vis the corresponding amount under the head other current liability as on 31.03.2014. AO simply added the difference i.e. increase in other current liability as unexplained without pointing out any mistake or the fact that liability has ceased justifying the addition u/s 41 - We note from the details filed before us that the assessee has filed all the details before the authorities below but instead of finding anything wrong therein, the AO simply added the increase over the last year which is wrong and against the provisions of the Act. Under these circumstances, we find that the addition as made by the AO is unsustainable in law and accordingly we direct the AO to delete the disallowance by setting aside the order of Ld. CIT(A). - Decided in favour of assessee. Disallowance of 1% of lorry hire charges on an ad hoc basis - HELD THAT:- In our considered view the disallowance on estimation basis is not permissible under the Act unless the AO has given specific finding as to defects in the books of accounts of the assessee justifying the disallowance. The case of the assessee is squarely covered by the decision of Hon’ble Co-ordinate Bench of Kolkata in the case of Biswanath Agarwala [2018 (3) TMI 1517 - ITAT KOLKATA] and in the case of Animesh Sadhu [2014 (11) TMI 1170 - ITAT KOLKATA] for AY 2008-09 wherein the co-ordinate bench has held that no disallowance can be made for inability to do independent verification. The Co-ordinate Bench has also held that only specific expenditure which is unverifiable and unvouched could be disallowed. In the present case also the AO has failed to point out the particular expense which is un-vouched and unverifiable and therefore addition made by the AO cannot be sustained. Accordingly we direct the AO to delete the disallowance by setting aside the order of Ld. CIT(A).
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