B.R.A. Textiles Private Limited Vs ITO (ITAT Pune Bench)
Five Lenders, One Borrower, Fully Explained Trail: Pune ITAT Deletes ₹94.46 Lakh Section 68 Addition & Section 14A Disallowance
Summary: The assessee, B.R.A. Textiles Private Limited, was engaged in the textile business. It filed its return declaring nil income. During scrutiny, the AO noticed a fresh unsecured loan of ₹94,46,223 appearing in the name of Shri Yuvraj Dhamale.
The loan confirmation, however, mentioned five other persons: Ajit Shah, Jagdish Shah, Narendra Shah, Ramesh Shah & Sumeet Mandot. The assessee explained that these persons transferred amounts directly from their bank accounts to the company on behalf of Shri Yuvraj Dhamale. Consequently, the loan was recorded in Dhamale’s name, though the money travelled directly from the five persons.
The AO sought explanation regarding the relationship between the assessee, Dhamale & the five remitters. Though confirmations, returns & bank statements were furnished, the AO held that the transaction was not satisfactorily explained because the persons were not produced personally. He therefore added ₹94,46,223 u/s 68 r.w.s. 115BBE.
The AO also noticed investments in shares of various companies. Although no exempt income was earned during the year, he invoked section 14A r.w. Rule 8D & disallowed ₹51,516. The CIT(A) confirmed both additions. The assessee appealed before the Tribunal.
