F.M. Amin Co (Dashrath) Vs Assessment Unit (ITAT Ahmedabad)
ITAT Ahmedabad held that addition towards unexplained cash credit under section 68 of the Income Tax Act not justified since loan transactions were done through banking channels and loans were repaid in short period. Accordingly, addition deleted.
Facts- The assessee is a firm and dealer of Hindustan Petroleum for sale of petrol, diesel and CNG, etc. The return of the assessee was taken for scrutiny assessment. The assessee has shown unsecured loans from Shri Pravinbhai Mavani of Rs. 15,50,000/-, Shri Sagar Mavani of Rs. 1,50,000/- and Smt. Vandanaben Mavani of Rs. 6,50,000/-. The assessee was required to show the identity, genuineness and creditworthiness of the above loan transactions. In response, the assessee filed confirmations from the above creditors. Thus AO is not satisfied with the explanation thereby added the entire unsecured loans of Rs. 23,50,000/- as unexplained income within the meaning of Section 68 of the Act and added to the total income of the assessee and taxed at 60% u/s. 158BBE of the Act and demanded tax thereon.
CIT(A) confirmed addition made by the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that all the loan transactions were done through banking channels, wherein due interest is also paid by the assessee after deducting TDS u/s. 194A of the Act. The corresponding interest income is offered by the unsecured creditors in the Returns of Income filed before their respective Income Tax Authorities. Further the entire loans were repaid through banking channels within a very short period. Thus the above loans transaction cannot be doubted and the additions made on this account is liable to be deleted. Thus, the additions made u/s. 68 of the Act by the Assessing Officer is not sustainable in law and the same are hereby directed to be Consequently, taxing income u/s. 115BBE does not arise.
