Case Law Details
ACIT Vs KRBL Foods Ltd (ITAT Delhi)
ITAT Delhi held that addition under section 68 of the Income Tax Act unsustainable in as much as identity, creditworthiness of the creditors and genuineness of the transaction duly proved by the assessee.
Facts- The assessee is an Indian company. A search and seizure operation u/s. 132 of the Act was conducted in case of the assessee as well as other group entities. As a consequence of proceeding notice u/s. 153A of the Act was initiated against the assessee. In response to notice issued u/s. 153A of the Act, the assessee filed its return of income declaring loss of Rs.3,49,55,515/-.
In the course of search and seizure operations, it was found that the assessee had received unsecured loan of Rs.10 crores from M/s. Shashi Foods India Pvt. Ltd. AO ultimately concluding the proceeding stated that the creditworthiness of the creditor and genuineness of the unsecured loan availed of Rs.10 crores could not be established by the assessee.
Accordingly, he treated the unsecured loan of Rs.10 crores as unexplained cash credit u/s. 68 of the Act and added back to the income of the assessee. As a natural corollary, he disallowed the interest paid on such loan. Being aggrieved, the assessee preferred an appeal before the Commissioner (Appeals), wherein, he held that the unsecured loan availed by the assessee cannot be treated as unexplained cash credit u/s. 68 of the Act. For this reason also, he deleted the disallowance of interest paid on such loan.
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