ACIT Vs Nitin Garg (ITAT Delhi)
These two Revenue appeals, involving common issues, arose from CIT(A)’s orders dated 28.02.2019 relating to additions u/s 68 & corresponding interest disallowances in the case of Shri Nitin Garg, proprietor of Vishnu Tobacco Products.
For A.Y. 2014-15, AO noticed unsecured loans of ₹ 16.10 Cr from M/s Green Stone Agro Products & Infra Pvt. Ltd.. Despite repeated opportunities, AO held that Assessee failed to produce lender details, bank statements, or confirmation. He therefore treated the amount as unexplained cash credit u/s 68 & disallowed ₹ 1.24 Cr interest thereon.
Before CIT(A), Assessee furnished confirmations, ledger accounts, TDS certificates, audited financials & ITRs of the lender, along with proof of repayment in A.Y. 2016-17 through banking channels. CIT(A) held that the loan was genuine since the lender’s audited accounts reflected interest income of ₹ 5.93 Cr & the money flow was through account-payee cheques. He deleted both additions.
The Department contended that CIT(A) had decided the matter without calling for a remand report & without verifying the source of the lender’s funds.
Tribunal found that CIT(A)’s conclusions lacked factual verification. There was no discussion on how the lender obtained the funds to advance the ₹ 16.10 Cr loan; hence, its credit-worthiness & genuineness could not be conclusively established. Merely showing repayment & interest income could not by itself prove the transaction as genuine when the AO had recorded non-compliance. ITAT held that CIT(A) ought to have sought a remand report from AO & verified all documents before granting relief.
