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Facts
The assessee, a partnership firm, received Rs. 16.23 crore as unsecured loans/advances from M/s. Three Seasons Exim Ltd. The Assessing Officer added this amount under Section 68 as unexplained cash credit, contending that the assessee failed to prove the identity, genuineness, and creditworthiness of the creditors, a decision upheld by the CIT(A).
Held
The Tribunal admitted additional evidence and found that the funds originated as a material advance from M/s. Three Seasons Exim Ltd to the assessee-firm, subsequently re-cycled through the partners back to the company. Since the original source of funds was established and transactions occurred via banking channels, the Tribunal held that the addition under Section 68 was not justified.
Key Issues
Whether the addition made under Section 68 for alleged unexplained unsecured loans/advances, where funds were claimed to be re-cycled between related entities, was justified.
Sections Cited
143(3), 143(2), 142(1), 133(6), 68, 115BBE
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Income Tax Appellate Tribunal, VISAKHAPATNAM DIVISION BENCH, VISAKHAPATNAM
Before: SHRIK NARASIMHA CHARY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेशकीप्रनतनलनपअग्रेनर्त/Copy of the order forwarded to:- निर्धाररती/ The Assessee–Three Seasons Ware Housing, D.No. 2-62-8, 1. Pedhireddy Vari Street, Santhi Nagar, Kakinada, Andrha Pradesh- 533003. रधजस्व/The Revenue – Income Tax Officer, Ward-1, O/o. ITO, 2. Deepthi Towers, Main Road, Kakinada, Andhra Pradesh-533001. 3. The Principal Commissioner of Income Tax, आयकरआयुक्त (अपील)/ The Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम/ DR,ITAT, 5. Visakhapatnam गधर्ाफ़धईल / Guard file 6.
आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam