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ITAT deleted addition as transactions were through banking channels
ITAT deleted addition as transactions were through banking channels
In West Point Designers Pvt Ltd’s case AO observed that it had received Rs 10 lakhs as unsecured loan from a party, which filed loan confirmation but filed no bank statement or balance sheet. AO made addition of unconfirmed loan amount u/s 68 (of Income Tax Act, 1961). CIT(A) confirmed addition. ITAT deleted addition as transactions were through banking channels and loan confirmations had been filed.-500305
1. West Point Designers Pvt Ltd was in the business of trading in garments.
2. AO observed that assessee had received Rs 10 lakhs as unsecured loan from M/s. Octal Commodities Pvt Ltd.
3. AO asked the assessee to file the loan confirmation.
4. Assessee filed zerox copy of confirmation.
5. AO made enquiries with the Octal Commodities by issuing notice u/s 133(6) (of Income Tax Act, 1961), whereby Octal Commodities filed loan confirmation but no bank statement or Balance Sheet was filed.
6. AO issued reminder notices u/s 133(6) (of Income Tax Act, 1961) which were returned.
7. AO made addition of Rs 5 lakhs loan amount u/s 68 (of Income Tax Act, 1961) which was not confirmed.
8. Assessee paid salary of Rs.2,40,000 to an employee for managing 5 stores, out of which only 4 were actually managed.
9. AO disallowed the 4/5th of the salary
10. CIT(A) confirmed the additions.
On appeal, the ITAT held as under:
11. We are of the considered opinion that addition of Rs. 5 lacs is not sustainable because the transactions are through banking channels, loan confirmations have been filed.
12. The matter is restored to the file of the AO to reconsider the entire issue de-novo and then decide the issue on merits after allowing reasonable opportunity of hearing to the assessee company in accordance with the principles of natural justice.
Case Reference - West Point Designers Pvt. Ltd., vs The Income Tax Officer.
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
I.T.A. No.6980/Mum/2011
(Assessment Year: 2007-08)
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