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Facts
The Assessing Officer (AO) made two additions: Rs. 8,70,74,192/- as unexplained cash credit under Section 68 for interest received, and Rs. 8,58,16,078/- as unexplained expenditure under Section 69C for payments made under Section 194J. The assessee provided partial documentation but failed to furnish ITRs, detailed agreements, or confirmations for all parties. The CIT(A) subsequently deleted both additions, prompting the Revenue to appeal this decision to the ITAT.
Held
For the first addition (u/s 68), the Tribunal upheld the CIT(A)'s finding that the assessee sufficiently proved the source of interest income, having offered it to tax, and the AO failed to rebut this. For the second addition (u/s 69C), the Tribunal affirmed the CIT(A)'s decision, noting the assessee discharged its onus with relevant details, and the AO's addition was based solely on the absence of ITRs and unconfirmed 133(6) notices, which the CIT(A) found unwarranted.
Key Issues
Justification of deleting additions made by AO under Section 68 for unexplained interest income and under Section 69C for unexplained expenditure related to payments made under Section 194J.
Sections Cited
Section 68, Section 69C, Section 115BBE, Section 194J, Section 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM:
This appeal preferred by the revenue emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 15.01.2025 for the assessment year 2021-22 as per the following grounds of appeal: “(1) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) was justified in deleting the additions made by AO to tune of Rs.8,70,74,192/- on account of unexplained interest received from parties as unexplained cash credit u/s.68 of the Act relying upon the submission of the assessee and thereby ignoring the facts brought on the record by the AO. (2) Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the additions made by the AO to the tune of Rs.8,58,16,078/- on account of payments made u/s. 194J as un explained expenditure u/s 69C of the Act relying upon the submission of the assessee and thereby ignoring the facts brought on the record by the AO. (3) Any other ground which may be adducted at the time of hearing.”
2. As per the assessment order, there were two additions made by the A.O which are as follows:
“(i) Unexplained interest received from parties (Unexplained cash credit u/s 68 of the Act) : Rs. 8,70,74,192/- As per assessment order, the assessee was asked to furnish list of parties from whom interest payments were received, agreement with parties, ITRs of parties and bank account statement highlighting payments received. The assessee in response to the same has submitted list of parties and supporting bank account statement only but failed to furnish ITRs of parties, transactions in lieu of which interest payment was received as well as agreement with parties. Hence, an amount of Rs.8,70,74,192/- was added to the total income of the assessee as unexplained cash credit u/s 68 as per provision of section 115BBE of the Act. (ii) Payments made u/s 194J (Unexplained expenditure u/s 69C of the Act) : Rs.8,58,16,078/- As per assessment order, the assessee was asked to furnish list of parties to whom payments under 194J were made along with ITRs of parties, agreement with parties, nature of work done and bank account statement highlighting payments made. The assessee in response to the same has submitted list of parties and supporting bank account statement only but failed to furnish ITRs of parties, details of work done by the parties and agreement with the parties. Further, in order to verify the genuineness of the transactions notices u/s. 133(6) of the Act were issued to various parties but no confirmation has been received from any of the party. Hence, in absence of any valid documentary evidences and party confirmations an amount of Rs.8,58,16,078/- was added to the total income of the assessee as unexplained expenditure u/s. 69C as per provisions of section 115BBE of the Act.”
That with regard to the first addition i.e. unexplained cash credit u/s.68 of the Income Tax Act, 1961 (for short ‘the Act’) of Rs.8,70,74,192/, the Bench had directed the Ld. CIT-DR to obtain a report from the jurisdictional A.O who has commented regarding the same. That on this date of hearing, the CIT-DR read out the said findings of the A.O on this addition. The relevant paras of the report submitted by the A.O dated 02.07.20225 are extracted as follows.
From the above, it is observed that major portion of interest income on IT refund of Rs.9,25,27,166/- as per 26AS has already been accounted for by the assessee in his books of accounts and offered for taxation. Therefore, addition made by the A.O NEAC on account of unexplained credit u/s. 68 of the Act is not warranted here.”
The Ld. CIT(Appeals)/NFAC had provided relief to the assessee by observing as follows:
“From perusal of the facts and circumstances of this case, the appellant is sufficiently found proving the source of the interest income and there is found unjust implication of provisions of section 68, as the appellant itself offered the interest income as its income in the profit & loss account. Further, tie interest income offered by the appellant is significantly on account of interest on IT Refund, hence, there cannot be question of any unexplained credit. AO failed to rebut the submission of the appellant and failed to bring on record how the interest income is unexplained credit for the appellant. Therefore, the addition made by the assessing officer is incorrect and without appreciating documentary evidences submitted by the appellant. The addition of Rs.8,70,74,192/- is directed to be deleted. Ground no. 3 is allowed.”
The Ld. CIT-DR fairly conceded as per afore-stated report of the A.O and did not contest the relief provided by the Ld. CIT(Appeals)/NFAC. We, also, find no infirmity with the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld. Thus, the Ground of appeal No.1 raised by the revenue is dismissed.
6. That with regard to the second addition made by the A.O i.e. payment made u/s.194J of the Act i.e. unexplained expenditure u/s. 69C of the Act of Rs.8,58,16,078/-, the A.O submitted a report that was read out by the Ld. CIT-DR during the course of hearing. The relevant paras of the said report dated 02.07.2025 regarding this addition is culled out as follows:
“Since the assessee company had provided the details of parties to whom payments made more than 5 lakh under the head professional charges. The total of the payment comes at Rs.6,01,88,784/- which is more than 70% of the total expenses claimed by the assessee company. Further, as per assessee's submission, out of total expenses incurred on account of professional charges more than 70% of the expenses are paid to various Government entities only.”
The Ld. CIT(Appeals)/NFAC had provided relief to the assessee by observing as follows:
“From perusal of the facts and circumstances appearing of the case, this appeal is inclined to hold that appellant was sufficiently found discharging its onus before AO of providing the relevant details regarding these payments on professional accounts. AO is seen not found making any infirmity in these and addition was based solely for want of ITR of the parties enquired and the enquiries made from 05 parties are also found not confronted with the appellant. Therefore, in consideration of above discussion, this appeal is of considered view that action of AO in charging provisions of section 69C are unwarranted and the disallowance made of Rs.8,58,16,078/- u/s. 69C is directed to be deleted. Ground no. 2 is allowed.”
The Ld. CIT-DR fairly conceded as per the afore-stated report of the A.O and did not contest the relief provided by the Ld. CIT(Appeals)/NFAC. We, also, find no infirmity with the findings of the Ld. CIT(Appeals)/NFAC which is hereby upheld. Thus, the Ground of appeal No.2 raised by the revenue is dismissed.
Ground of appeal No.3 is only general in nature, hence requires no 9. adjudication.
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 06th day of August, 2025.