Loans Brought Forwarded Can't Form Basis For Addition In Current Year if Genuineness Is Established: Mumbai ITAT

Finding that the genuineness of loan transactions is not verified by the Income tax Authorities, the Mumbai ITAT held that no additions are permitted on account on unsecured loans by disregarding the confirmations & identity of loan creditors produced by assessee. The Divisional Bench of Anikesh Banerjee (Judicial Member) and Prashant Maharishi (Accountant Member) observed that “Related to other loans, which are taken during this year, the assessee submitted the confirmations, PAN, entry in bank account and the identity of loan creditors. There is valid reason to assessee for non-submission of evidence before the authorities”. (Para 6.2) Facts of the case: The assessee is a diamond merchant and also the Executive Chairman of M/s Asian Electronic Ltd. During the impugned assessment year, M/s Asian Electronic Ltd. The assessee had taken secured loans from different banks. On the other hand, the assessee had also taken unsecured loan amount of Rs.7,93,74,917/- as the balance stood during the impugned assessment year. The assessment order was passed by the addition of the loan amount of Rs.7,93,74,917/- and also the interest disallowed amount of Rs.56,08,404/- for rejection of the interest of secured loan from the bank. Observations of the Tribunal: The Bench accepted the arguments of assessee that all the loans are from earlier years and only the balance was carried forward over to current year. The Bench also concurred with the submission of assessee that no addition is called for in the impugned assessment year since it is not related to the said year. “It is in the case of Binita Doshi, the assessee received the amount of Rs.1 crore and the legal case was going on under section 138 of the N.I. Act. So, the assessee argued that entire loan is claimed as genuine considering the action is taken by the loan creditor against the assessee under section 138 of the N.I. Act”, added the Bench. The Bench therefore opined that the additions made by AO are liable to be deleted on the ground that the loans are brought forwarded from earlier years, not related to the impugned assessment year. Since the assessee has shifted the onus by submitting evidence in his favour and the matter is unverified before the revenue authorities, the ITAT remitted the matter back to the file of AO to verify the loan creditor. Counsel for Appellant/ Assessee: Arun B Shah Counsel for Respondent/ Revenue: Manoj Kumar Sinha Case Title: Arun Babulal Shah verses CIT Appeal NFAC Case Number: ITA 2460/Mum/2023 Click here to read/download the Order

Loans Brought Forwarded Can't Form Basis For Addition In Current Year if Genuineness Is Established: Mumbai ITAT

Pankaj Bajpai

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Pankaj Bajpai

Loans Brought Forwarded Can't Form Basis For Addition In Current Year if Genuineness Is Established: Mumbai ITAT

Pankaj Bajpai

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Pankaj Bajpai

This is a premium content
Available exclusively to
Our subscribers