ACIT- Panchkula Vs Medisys Universal Pvt. Ltd. (ITAT Chandigarh)
Additions Under Section 68 Unsustainable Due to Mere Address Mismatch, Rules ITAT; ITAT Removes Unexplained Cash Credit Additions Because Transactions Were Through Banking Channels; Rent Expense Disallowance Deleted Because Lack of Notarized Amendment Was Not Sufficient Ground; ITAT Holds AO Cannot Make Section 68 Addition Without Proper Inquiry Into Creditors; Section 68 Addition Deleted Because Assessee Proved Identity and Transactions of Creditors; ITAT Deletes Loan Addition Because Assessee Produced Financial Statements and Debtor Records; Additions Based on Suspicion Alone Cannot Survive Without Evidence, Says ITAT Chandigarh.
The Income Tax Appellate Tribunal Chandigarh Bench partly allowed the assessee’s appeal and dismissed the Revenue’s appeal in a dispute concerning additions made under Section 68 of the Income Tax Act and disallowance of expenses for Assessment Year 2017-18. The assessee, engaged in providing health supplements through e-commerce, challenged additions relating to rent expenses, sundry creditors, and unsecured loans, while the Revenue contested deletion of additions relating to two creditors.
The Assessing Officer had disallowed rent expenses of ₹2.55 lakh on the ground that the amendment increasing rent was not executed through a formal stamped or notarized agreement. The Tribunal observed that the rent was paid through banking channels, the owner had confirmed the arrangement, and no inquiry had been conducted from the property owner. It held that absence of a stamped amendment deed alone could not invalidate the claim and deleted the addition.
