KALYANI REFINERIES LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD-2(1), HYDERABAD

We notice at the outset that the assessee’s sole substantive grievance raised in the instant appeal challenges correctness of both lower authorities action treating unsecured loan of Rs.6,40,000/- as unexplained cash credits u/s 68 of the Act. The Assessing officer’s assessment order dated 24.3.2016 held that neither the assessee could produce confirmation nor could it prove identity of the creditor parties. The CIT(A) has also upheld the Assessing officer’s action.

We have given our thoughtful consideration to rival contentions. It emerged during the course of hearing that the impugned sum represents Rs.4,00,000/- and Rs.2,40,000/- from Dr. VV Subba Rao and Smt VV Kalyani whose returns of income, PANs, ledger accounts already form part of the records before the CIT(A). And also that the said two creditor parties are family members of the assessee’s /promoter’s family only. We conclude in this view of the fact that such kind of unsecured loans coming from the directors or promoter’s family members involving smaller amounts cannot be altogether ruled out and more so when the Assessing Officer before us has simply brushed aside all the corresponding details after alleging that assessee had not even proved identity of the loan creditors. We, therefore, hold that both the lower authorities have erred in law and on facts in making the impugned unexplained cash credit addition of Rs.6,40,000/-. The same is directed to be deleted.

This assessee’s appeal is allowed.