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Facts
The assessee filed an appeal challenging the order confirming an addition of Rs. 6.79 crores relating to a cash credit. The addition was made under Section 68 of the Income Tax Act, on the grounds that the loan was taken from a company that had ceased to exist and for which the assessee failed to provide sufficient evidence regarding its identity, creditworthiness, and genuineness.
Held
The Tribunal observed that certain factual aspects were not properly presented by the assessee before the tax authorities. Considering the interest of natural justice, the assessee was granted one more opportunity to present its case properly.
Key Issues
Whether the addition made under Section 68 for cash credit is sustainable when the assessee seeks an opportunity to present further evidence regarding the loan's genuineness, identity, and creditworthiness.
Sections Cited
68
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Income Tax Appellate Tribunal, MUMBAI “B” BENCH : MUMBAI
Before: SHRI B.R. BASKARAN & SHRI SANDEEP GOSAIN
Date of Hearing : 06-03-2025 Date of Pronouncement : 07-03-2025 ORDER PER B.R. BASKARAN, A.M :
The assessee has filed this appeal challenging the order dt. 25-06-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2018-19. The assessee is aggrieved by the decision rendered by the Ld.CIT(A) in confirming the addition of Rs.6.79 crores relating to cash credit added by the AO u/s. 68 of the Income Tax Act, 1961 („the Act‟).
The Ld. Counsel appearing on behalf of the assessee submitted that the assessee had taken a loan of Rs. 6.79 crores from a company, named, M/s. Vivid Finance & Holding Pvt. Ltd. The AO noticed that the above said company has ceased to exist and hence, the AO asked the assessee to prove the loan in terms of section 68 of the Act. Since the assessee did not give any valid explanation, the AO added the same u/s. 68 of the Act. Before the Ld.CIT(A), the assessee submitted that the name of the above said company was struck-off by ROC for non- filing of certain documents and the company is very much in existence. It was submitted that the said company is in the process of revival by filing necessary documents. However, since the assessee did not furnish any evidences to prove the identity, creditworthiness and genuineness of the loan. The Ld.CIT(A) also confirmed the addition made by the AO u/s. 68 of the Act.
The Ld.AR submitted that the assessee could not properly present the facts relating to the above said company before the tax authorities. He submitted that the assessee has repaid part of loans during the very same year and in the subsequent year. He submitted that the loans so repaid should not be added u/s. 68 of the Act as per certain decisions of the Hon‟ble High Courts. The Ld.AR submitted that the assessee would be in a position to prove the loan in terms of sec.68 of the Act. Accordingly, the Ld.AR prayed for an opportunity to present the facts properly before the AO.
We heard the Ld.DR and perused the record. Having regard to the submissions made by the Ld.AR, we notice that certain factual aspects relating to this loan was not properly presented by the assessee and hence the addition has been made by the tax authorities. The assessee now pleads that it would be in a position to furnish relevant details. Accordingly, we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to present its case properly. Accordingly, we set aside the order passed by the Ld.CIT(A) and restore all the issues to the file of the AO for examining them afresh. We also direct the assessee to fully co-operate with the AO for expeditious completion of the assessment. After affording adequate opportunity of being heard to the assessee, the AO may take appropriate decision in accordance with law.
In the result, both the appeals are treated as allowed for statistical purposes.