Konark Fixtures Ltd. Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that addition under section 68 of the Income Tax Act merely on the basis of statement provided by third party without any iota of evidences unjustified. Accordingly, appeal allowed and addition deleted.
Facts- The assessee company is engaged in business of manufacturing and has filed the return of income for the assessment year 2012-13 on 27/09/2012 disclosing a total income of Rs.1,21,67,790/- and the return of income was processed u/sec. 143(1) of the Act.
Subsequently, AO has received information from DGIT (inv) Mumbai that the assesse has obtained accommodation entries from Shri Vipul Vidur Bhatt group entities. Therefore, the AO has reason to believe that the income has escaped assessment and issued notice u/sec. 148 on 29/03/2017. AO held that the assesse has not satisfied the ingredients u/sec. 68 of the act and made addition of Rs. 1,05,12,704/- and also disallowed the claim of interest paid on unsecured loans u/sec. 37 of the Act of Rs. 5,69,622/- and passed the order u/sec. 143(3) r.w.s. 147 of the act dated 13/12/2017.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the A.O has ignored the information, evidences and audited financial statements and unilaterally made addition u/sec68 of the Act only on the basis of statement provided by third party without any iota of evidences discrediting the evidence furnished by the assessee and the statement of Shri Vipul Vidur Bhatt has been retreated which cannot use as reliable evidence. The information submitted by the assessee satisfied the three ingredients of provisions of Sec. 68 of the Act. Further the loan transactions are not believed and alleged as non genuine and treated as unexplained cash credit U/sec68 of the Act and these unsecured loans were repaid through account payee / banking channels in the subsequent years which is not disputed. The Ld.AR submitted that the assessee has substantiated the stand by submitting the details before the A.O. and CIT(A) and discharged the burden. We considering the facts, circumstances and ratio of judicial decisions referred above, set-aside the order of the CIT(A) and direct the Assessing officer to delete the addition of unsecured loans and disallowance of interest and we allow these grounds of appeal in favour of the assessee.
