DCIT Vs Thirumalai Marketing & Investments Limited (ITAT Mumbai)
Revenue filed appeals before ITAT challenging the order of CIT(A) which had deleted an addition of ₹5 crore made u/s 68 , treating it as unexplained cash credit & Quashed a penalty of ₹1.62 crore imposed u/s 271(1)(c) for furnishing inaccurate particulars of income.Background:
Assessee is a registered NBFC. During a search on a third party, it was discovered that the assessee had advanced a loan of ₹6 crore, sourced mainly from ₹5 crore received as share application money. AO during reassessment u/s 147 treated this ₹5 crore as bogus & lacking in creditworthiness. He relied primarily on a field inspector’s report which stated that the lender company did not exist at the stated address. Accordingly, the AO invoked Sec 68 & added the ₹5 crore to the assessee’s income, also initiating penalty proceedings.
Assessee challenged the reassessment & penalty before CIT(A) arguing that the amount was originally received as share application money in FY 2012–13 & later converted into a loan. The lender was a registered company, regularly filing ITRs, & had sufficient capital. The transactions were made via banking channels, supported by ledger accounts, confirmation letters, bank statements & TDS deductions. The change in address was duly intimated to the ROC & reflected in subsequent ITRs.
