PCIT Vs Ambe Tradecorp Private Limited (Gujarat High Court)
The Gujarat High Court considered the Revenue’s appeal challenging the Appellate Tribunal’s deletion of an addition of ₹32.20 crore made under Section 68 of the Income-tax Act on account of alleged unexplained cash credits. The Revenue proposed the question whether the Tribunal had committed a perverse error in deleting the addition.
The dispute related to Assessment Year 2012-13 and concerned two loan transactions of ₹8.50 crore and ₹23.70 crore received by the assessee from M/s. J.A. Infracon Private Limited and M/s. Satya Retail Private Limited. The Assessing Officer treated the loans as sham transactions on the ground that the lenders’ creditworthiness had not been established and accordingly made an addition under Section 68.
In appeal, the Commissioner of Income Tax (Appeals) examined the material on record and found that both lenders had established their identity, creditworthiness and the genuineness of the loan transactions. The appellate authority recorded that the assessee had furnished ledger accounts and confirmations of both lenders during the assessment proceedings. It also noted that the Assessing Officer had independently issued notices under Section 133(6) of the Act to both companies, which duly complied by furnishing the requisite information.
